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On July 7, 2011, the House Appropriations Committee reported H.R. 2434 , the Financial Services and General Government Appropriations Act, 2012. H.R. 2434 would have provided $42.97 billion for agencies funded through the House Financial Services and General Government (FSGG) Appropriations Subcommittee. In addition, H.R. 2112 , the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Bill, 2012, would provide $172 million for the Commodity Futures Trading Commission (CFTC). Total FY2012 funding provided by the House would have been $43.14 billion, about $5.58 billion below the President's FY2012 request and $1.55 billion less than FY2011 enacted amounts. On September 15, 2011, the Senate Appropriations Committee reported its FY2012 financial services bill, S. 1573 . The committee's bill would have provided $44.64 billion for FSGG agencies, including $240 million for the CFTC, for FY2012, which would have been $4.09 billion below the President's FY2012 request and $47.67 million less than FY2011 enacted amounts. On December 23, 2011, President Obama signed the Consolidated Appropriations Act, 2012 ( P.L. 112-74 ), which funded the government through FY2012. FSGG agencies, including the CFTC, were provided a total of $44.41 billion for FY2012, which is $4.31 billion less than the President's request and $277 million below FY2011 funding levels. Table 1 reflects the status of FSGG appropriations legislation at key points in the appropriations process. The House and Senate Committees on Appropriations reorganized their subcommittee structures in early 2007. Each chamber created a new FSGG Subcommittee. In the House, the jurisdiction of the FSGG Subcommittee was formed primarily of agencies that had been under the jurisdiction of the Subcommittee on Transportation, Treasury, Housing and Urban Development, the Judiciary, the District of Columbia, and Independent Agencies, commonly referred to as "TTHUD." In addition, the House FSGG Subcommittee was assigned four independent agencies that had been under the jurisdiction of the Science, State, Justice, Commerce, and Related Agencies Subcommittee. In the Senate, the jurisdiction of the new FSGG Subcommittee was a combination of agencies from the jurisdiction of three previously existing subcommittees. The District of Columbia, which had its own subcommittee in the 109 th Congress, was placed under the purview of the FSGG Subcommittee, as were four independent agencies that had been under the jurisdiction of the Commerce, Justice, Science, and Related Agencies Subcommittee. Additionally, most of the agencies that had been under the jurisdiction of the Subcommittee on Transportation, Treasury, the Judiciary, Housing and Urban Development, and Related Agencies were assigned to the FSGG Subcommittee. As a result of this reorganization, the House and Senate FSGG Subcommittees have nearly identical jurisdictions. The FSGG appropriations bill includes funding for the Department of the Treasury, the Executive Office of the President (EOP), the judiciary, the District of Columbia, and more than two dozen independent agencies. For each title of the regular FSGG appropriations bill, Table 2 lists the enacted amounts for FY2011, the President's FY2012 request, amounts recommended by the House and Senate appropriations committees for FY2012, and enacted amounts for FY2012. This section examines FY2012 appropriations for the Treasury Department and its operating bureaus, including the Internal Revenue Service (IRS). Table 3 lists the enacted amounts for FY2011, the President's FY2012 request, amounts recommended by the House and Senate appropriations committees for FY2012, and enacted amounts for FY2012. The Treasury Department performs a variety of critical governmental functions. They can be summarized as protecting the nation's financial system against a host of illicit activities (particularly money laundering and terrorist financing), collecting tax revenue and enforcing tax laws, managing and accounting for federal debt, administering the federal government's finances, regulating financial institutions, and producing and distributing coins and currency. At its most basic level of organization, Treasury consists of departmental offices and operating bureaus. In general, the offices are responsible for formulating and implementing policy initiatives and managing Treasury's operations, while the bureaus undertake specific tasks assigned to Treasury, mainly through statutory mandates. In the past decade or so, the bureaus have accounted for more than 95% of the agency's funding and work force. With one exception, the bureaus and offices can be divided into those engaged in financial management and regulation and those engaged in law enforcement. In recent decades, the Comptroller of the Currency, U.S. Mint, Bureau of Engraving and Printing, Financial Management Service, Bureau of the Public Debt, Community Development Financial Institutions Fund, and Office of Thrift Supervision have taken on responsibilities related to the management of the federal government's finances or the supervision and regulation of the U.S. financial system. In contrast, law enforcement arguably has been central to the responsibilities handled by the Alcohol and Tobacco Tax and Trade Bureau, Financial Crimes Enforcement Network, and the Treasury Forfeiture Fund. With the advent of the Department of Homeland Security in 2002, Treasury's direct involvement in law enforcement has shrunk considerably. The exception to this simplified dichotomy is the Internal Revenue Service, whose main responsibilities encompass both the collection of tax revenue and the enforcement of tax laws and regulations. The operating budget for most Treasury bureaus and offices comes largely from annual appropriations. This is the case for the IRS, FMS, Bureau of Public Debt, FinCEN, ATB, Office of the Inspector General, Treasury Inspector General for Tax Administration, Special Inspector General for the Troubled Asset Relief Program, and the Community Development Financial Institutions Fund. By contrast, funding for the Treasury Franchise Fund, the U.S. Mint, the Bureau of Engraving and Printing, Office of the Comptroller of the Treasury, and the Office of Thrift Supervision stems from the fees they receive for the services and products they provide. In FY2011, appropriations for the Treasury Department are distributed among 11 accounts, each of which is described briefly below. Departmental Offices (DO): covers the salaries and other expenses of offices in the department that formulate and implement policies in the areas of domestic and international finance, terrorist financing and other financial crimes, taxation, international trade, and the domestic economy. Also provides funding for the department's financial and personnel management, procurement operations, and information and telecommunications systems. Department-Wide Systems and Capital Investments: covers salaries and other expenses associated with the development and operation of new systems to improve the efficiency of interactions among Treasury bureaus and offices or between Treasury and other federal agencies. Office of Inspector General (OIG): covers the salaries and other expenses related to the audits and investigations conducted by OIG staff. These evaluations are intended to promote improved efficiency and effectiveness and prevent waste, fraud, and abuse among departmental operations and programs, as well as to inform the Treasury Secretary and Congress about problems or shortcomings in those activities. Treasury Inspector General for Tax Administration (TIGTA): covers salaries and other expenses related to the audits and investigations conducted by TIGTA staff. These evaluations are intended to promote greater efficiency and effectiveness in the administration of tax law, deter or prevent fraud and abuse in IRS programs and operations, and recommend changes in those activities to resolve problems or remedy deficiencies. Special Inspector General for the Troubled Asset Relief Program (SIGTARP) : covers salaries and other expenses related to the audits and investigations into the management and effectiveness of TARP conducted by SIGTARP staff. The office was established by the same law that created TARP: the Emergency Economic Stabilization Act ( P.L. 110-343 ). Financial Crimes Enforcement Network (FinCEN): covers salaries and other expenses related to the activities of FinCEN, whose main responsibility is to protect the domestic financial system from illicit uses, such as money laundering and terrorist financing. The legal basis for this role is the Bank Secrecy Act (BSA; P.L. 91-508). FinCEN administers the act by developing and implementing regulations and other guidance and working with private financial institutions and eight federal agencies to ensure that the financial sector complies with the BSA's reporting requirements. Financial Management Service (FMS): covers salaries and other expenses related to the operations of the FMS, which is responsible for developing and implementing payment policies and procedures for federal agencies, collecting debts owed to those agencies, and providing financial accounting, reporting, and financing services for the federal government and its agents. Alcohol and Tobacco Tax and Trade Bureau (ATB): covers salaries and other expenses related to the activities of ATB, which was established by the Homeland Security Act of 2002 ( P.L. 107-296 ). The bureau is responsible for enforcing certain laws regarding the domestic sale and production of alcohol and tobacco products and preventing harm to consumers by ensuring that the products they regulate comply with federal consumer safety laws. Bureau of the Public Debt (BPD): covers salaries and other expenses related to the conduct of public debt operations and the promotion of U.S. bonds. Community Development Financial Institutions Fund (CDFI): provides funding for the activities of the CDFI, which makes investments (in the form of loans, grants, and equity acquisitions) in community development financial institutions. These institutions include community development banks, credit unions, and venture capital funds and provide financing for affordable housing projects, small businesses, and community development projects in eligible areas. CDFI also administers the Black Enterprise Award program and the New Markets tax credit. Internal Revenue Service (IRS): covers salaries and other expenses related to the activities of the IRS, whose main responsibilities are to administer federal tax laws and collect revenue. Two critical components of IRS operations and programs are the services it offers to taxpayers to help them understand and meet their tax obligations and the enforcement activities it uses to improve voluntary taxpayer compliance and punish those who violate the law. Some appropriated funds are used to develop or upgrade business operations and information systems, as part of an ongoing effort to improve the effectiveness of taxpayer services and enforcement activities. In FY2011, the Treasury Department is receiving $13.097 billion in appropriated funds, or 2.7% less than the amount enacted for FY2010. As usual, the vast share (92.5%) of the funds is being used to finance the operations of the IRS, which is receiving $12.122 billion in FY2011, or 0.2% less than the amount enacted for FY 2010. The remaining $975 million is distributed among Treasury's other main appropriations accounts in the following amounts: DO (which includes the Office of Terrorism and Financial Intelligence—or TFI—and the Office of Foreign Assets Control), $306 million; department-wide systems and capital investments, $4 million; OIG, $30 million; TIGTA, $152 million; SIGTARP, $36 million; CDFI, $227 million; FinCEN, $111 million; FMS, $233 million; ATB, $101 million; and the BPD, $175 million. The Obama Administration is requesting $14.040 billion (including $600 million in recessions) in appropriations for Treasury in FY2012, or 7.2% more than the amount enacted for FY2011. Under the budget proposal, the IRS would receive $13.284 billion, or about 95% of the total amount. The remaining $756 million would be split among Treasury's 10 other appropriations accounts in the following amounts: DO, $325 million; departmental systems and capital investments, $0 million; OIG, $30 million; TIGTA, $158 million; SIGTARP, $47 million; CDFI, $227 million; FinCEN, $84 million; FMS, $219 million; ATB, $98 million; and BPD, $166 million. All the accounts except FinCEN, FMS, ATB, and BPD would be funded at or above the amounts enacted for FY2011. Relative to FY2011, funding for the IRS would rise by $1.162 billion, while appropriations for all other Treasury accounts would fall by $219 million. Treasury's budget request is intended, in part, to make further progress in accomplishing the same three "high priority performance" objectives that guided its FY2010 and FY2011 budget requests: (1) repair and reform the U.S. financial system, (2) increase voluntary tax compliance, and (3) significantly increase the volume of paperless transactions with the public. The ways in which the proposed budget addresses each objective are examined below. According to Treasury budget documents, the FY2012 budget proposal would allow the department to take a variety of steps aimed at encouraging the repair and reform of the financial system. Several deserve brief mention here. One step is the implementation of a few key provisions of the financial regulatory reform bill enacted in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which is widely known as the Dodd-Frank Act. Under the act, Treasury is responsible for managing the creation of two new independent regulatory agencies (the Consumer Financial Protection Board and the Financial Stability Oversight Council) and is required to create two new offices (the Office of Financial Research and the Federal Insurance Office). Another step involves administering two new programs (the Small Business Lending Fund and the State Small Business Credit Initiative) established by the Small Business Jobs Act of 2010. They are intended to increase the availability of credit to small businesses. In addition, repair and reform of the financial system remains a primary objective of Treasury's continuing efforts to ensure the viability of government-sponsored enterprises such as the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation, promote economic and community development through the CDFI, and manage the TARP program. These initiatives provide part of the rationale for the Administration's request for an additional $20 million in appropriations for DO and an additional $11 million in appropriations for SIGTARP. Of the requested increase in DO funding, $5.5 million would be used to acquire the expertise needed to carry out Treasury's responsibilities under the Dodd-Frank Act. Improving taxpayer compliance remains a top priority for the Treasury Department in FY2012. As has been the case in recent years, the main concern is the size of the gross federal tax gap, which is the difference between taxes owed and taxes paid in full and on time, before collection actions are taken. This gap reached an estimated $345 billion in 2001, the most recent year for which an estimate is available. Recent sharp rises in the federal budget deficit, coupled with a strong congressional interest in finding additional sources of revenue as part of an effort to eliminate projected budget deficits and shrink the burgeoning federal debt, have intensified the pressure on the department to do more to collect delinquent taxes. The budget request would improve voluntary tax compliance through the enactment of several changes in the tax code and targeted investments in IRS enforcement activities, taxpayer service, and business systems modernization. These initiatives are intended to boost tax collections by strengthening tax administration, improving business compliance, and expanding information reporting, "with minimum additional burden on taxpayers." Treasury officials estimate that the initiatives could increase tax collection by more than $10 billion over the next 10 years. Of the requested $1.162 billion increase in IRS appropriations for FY2012, $795 million (or about 68% of the total) would be used for new enforcement initiatives. Treasury's budget request also assigns a high priority to moving the department closer to the goal of the paperless processing of all transactions, including payments and collections. Starting in calendar year 2012, individuals receiving Social Security, Supplemental Security Income, Veterans Administration, Railroad Retirement Board, Office of Personnel Management, and Black Lung benefits will be required to receive the payments electronically, through either direct deposit into a bank account or a Treasury Direct Express debit card. Moreover, Treasury will no longer issue paper savings bonds after December 31, 2011. Once the goal of the complete electronic processing of transactions is reached, Treasury expects to save $525 million and 12 million pounds of paper over the following five years. While the FY2012 budget request seems to designate no funds for new initiatives to accelerate the move toward complete paperless transactions, funding remains available for two initiatives that are supposed to commence in FY2011. Treasury's budget request for FY2011 included $22 million in added funding for departmental systems and capital investments. The funds were to be used to create two new programs: Enterprise Content Management (ECM) and the Financial Innovation and Transformation (FIT). ECM is intended to establish a common approach among Treasury offices and bureaus to modernizing their "document-based business processes." FIT seeks to develop and expand shared government-wide solutions to issues in financial management, such as invoice processing, cash collections, and interagency agreements. The Treasury Department's budget request for FY2012 would do much more than fund activities aimed at achieving its three strategic goals. A substantial share of the requested funding is intended to enable Treasury's bureaus to meet their statutory responsibilities and core missions even when budget planning is difficult. Of particular concern are satisfying conflicting demands to cut costs and improve or enhance services at the same time. The budget request addresses this concern in two ways: by providing the required services at a reduced cost in some cases, and by meeting a perceived need for expanded operations through an increase in funding in other cases. Several notable examples of each approach can be found in the budget request. For instance, the budget request would allow the Treasury Department to reap about $227 million in savings from efficiency improvements and program reductions in FY2012, relative to outlays in FY2011. Planned process improvements at the IRS could yield $190 million in savings; $10.1 million in savings could come from consolidating the administrative and data centers for the FMS; a proposed consolidation of information technology resources at the BPD could provide $6.6 million in savings; consolidating the certification and accreditation operations and data center at TIGTA could produce $2.6 million in savings; $2.1 million could be saved through staffing reductions and improved efficiency in the use of information technology at FinCEN; and planned changes in the departmental offices could provide $15.4 million in savings. The FY2012 budget request also calls for $92.6 million in appropriations for Treasury's Office of Terrorism and Financial Intelligence (TFI), or $7.4 million less than the amount specified for that purpose in FY2011. TFI develops and implements strategies to counter terrorist financing, money laundering, and other financial crimes. It also imposes and enforces trade and financial sanctions on designated countries (e.g., Burma, Iran, and North Korea) in support of foreign policy goals, such as arresting the proliferation of nuclear weapons and combating Islamic terrorism. The proposed reduction in funding for TFI may have little impact on its ability to perform its functions, as the reduction would stem from savings from a cutback in staff travel, the elimination of overseas support for its Brussels liaison, and increased efficiency in the procurement of contracts, information technology licenses, subscriptions, and supplies. Appropriations for improving taxpayer services at the IRS would rise by $114 million under the budget request for FY2012. About $44 million of that amount would be used to raise the level of customer service provided through the agency's toll-free telephone services, while $33 million would be invested in a multi-year effort to upgrade the IRS.gov website so it can handle expected growth in taxpayer demand for electronic tax information. In addition, the budget request would permanently cancel (or withdraw) $600 million and transfer of $30 million to FinCEN from the unobligated balances of the Treasury Forfeiture Fund (TFF). The fund serves as the receipt account for the deposit of assets held by criminal enterprises that have been seized by five federal agencies, including the IRS and the Immigration and Customs Enforcement Bureau at the Department of Homeland Security. Funds in the account normally are used to sustain and improve the capabilities of those agencies to conduct criminal investigations, seizures, and forfeitures, and to cover expenses related to those activities. Still, money may be withdrawn from the TFF to pay for other law enforcement activities undertaken by member bureaus, with the approval of the Secretary of the Treasury. Congress must be notified before such a withdrawal can be made. The enactment of several tax bills in 2009 and 2010 has placed new demands on the administrative capabilities of the IRS. One such law is proving to be especially challenging: the Patient Protection and Affordable Care Act of 2010 (PPACA; P.L. 111-148 ). According to the IRS, the act contains more than 40 provisions that modify different aspects of federal tax law between 2010 and 2018. Some of the provisions needed to be implemented during the 2010 tax year, including a small business tax credit for health insurance, an expanded adoption credit, and a credit for qualified therapeutic discoveries. In 2011, the IRS is to take on the added responsibilities of administering a 10% excise tax on indoor tanning services, an increased penalty for unqualified withdrawals from health savings accounts (HSAs), and a new definition of medical expenses that qualify for flexible spending accounts and HSAs. To implement and administer the tax provisions in the act, the IRS has determined that additional resources are needed to construct new information technology systems; change existing tax processing systems; expand taxpayer services and outreach; enhance notices, collections, and case management systems to address and resolve taxpayer problems in a timely manner; and conduct properly focused examinations. Funding for these resources is spread mainly among three appropriations accounts: taxpayer services, enforcement, and operations support. In FY2010 and FY2011, the IRS is obtaining funds for implementing PPACA provisions through transfers from a fund (the Health Insurance Reform Implementation Fund) managed by the Department of Health and Human Services; a total of $179 million had been transferred through late July 2011. The IRS reportedly has decided that it will not draw upon money in the Fund after FY2011. For FY2012, the IRS is asking Congress for $473 million in appropriations for PPACA implementation. Most of that amount ($391 million) would go into the budget for operations support and be used for the acquisition and development of information technology and infrastructure; about $51 million would come from funds appropriated for enforcement; the remaining $32 million would come out of funds appropriated for taxpayer services. The IRS Oversight Board was established by the IRS Reform and Restructuring Act of 1998 mainly to oversee the IRS's performance in administering the tax laws, managing its operations, and pursuing its strategic goals. Section 7802(d) of the federal tax code requires the board to review and approve the annual budget proposal submitted by the IRS to the Treasury Department. A critical consideration in the assessment is the extent to which the proposal supports the annual and long-term strategic objectives of the agency. The same tax code provision requires the President to submit the board's budget recommendation to Congress together with his budget request for the IRS. For FY2012, the board recommends that the IRS receive $13.342 billion in appropriated funds, or $1.220 billion more than the amount enacted for FY2011, nearly $59 million more than the budget request for FY2012, and $1.826 billion more than the amount recommended in the FY2012 appropriations bill ( H.R. 2434 ) reported by the House Appropriations Committee on July 7, 2011. In the board's view, its budget recommendation is the "minimum imperative for strong and responsible tax administration." Of the recommended amount, $2.35 billion would go to taxpayer services, $5.97 billion to enforcement, $4.67 billion to operations support, $334 million to the BSM, and $18 million to the administration of the health insurance tax credit. These amounts are mostly consistent with the budget request. The primary difference is that the board favors putting more resources into upgrading IRS security systems. Among its budget recommendations, the board assigns the top priority to boosting funding for the BSM. This includes any funds in the operations support account used for the development of the information technology infrastructure needed to support the maintenance of BSM elements that already have been implemented. In the board's view, increased investment in modernizing the core taxpayer account system for individuals is vital to laying the technological foundation for future advances in IRS operational efficiency, taxpayer service, and tax law enforcement. Nearly 60% (or $157 million) of the recommended BSM budget would go into the Customer Account Data Engine 2 (CADE 2) program. At the current pace of progress, CADE 2 is expected to allow for the daily processing of individual taxpayer accounts beginning with the 2012 filing season. When fully operational, the program will have several tangible benefits for taxpayers, including more timely account balance information and faster refunds to the tens of millions of taxpayers who are due a refund each tax year. Achieving an 80% level of service for IRS's toll-free telephone lines during FY2012 is the board's second-highest priority. The level of service, or LOS, measures the percentage of calls that go through to an IRS customer service representative out of all incoming calls over a period. In FY2008, the LOS reached 53%, but it has been rising ever since and stands at 74% according to the IRS, in FY2011. In the board's estimation, appropriations for taxpayer service should be increased by at least $23.3 million from the amount enacted for FY2011 in order to reach that level of service. Tens of millions of taxpayers still depend on the toll-free telephone service to understand their tax obligations and their eligibility for tax credits and other tax preferences, and to resolve their account balances. Recent changes to the tax laws have boosted demand for the service, a trend that is likely to continue in the next few years, as the IRS begins to implement certain PPACA provisions. In addition, the board agrees with the budget request's estimate that the IRS will require additional funding of $473 million in FY2012 and a staff of 1,269 full-time equivalent employees to implement PPACA provisions. About 83% of the funds would come from the operations support account. On July 7, 2011, the House Appropriations Committee reported a bill ( H.R. 2434 ) to fund financial services and general government accounts in FY2012. H.R. 2434 would provide $12.168 billion in appropriations (including $630 in rescissions) for the Treasury Department, or $929 million less than the amount enacted for FY2011 and $1.872 billion less than the amount requested by the Obama Administration. Details on recommended funding for each account and selected issues addressed by the House committee in its report ( H.Rept. 112-136 ) on the bill follow. Departmental Offices In its report on H.R. 2434 , the House committee recommends that DO receive $186 million in appropriated funds in FY2012, or $120 million less than the amount enacted for FY2011 and $139 million less than the budget request. The report specifies that $7 million of those funds be available until September 30, 2013, for information technology and use by the Office of Critical Infrastructure Protection and Compliance Policy. The House committee also notes that it is creating a separate appropriations account for the Office of Terrorism and Financial Intelligence from the DO account beginning in FY2012. Though the report gives no explanation for the change, a likely motive is to give the appropriations committees more control over how much is spent on TFI operations and how those funds are used. On the topic of terrorist financing, the House committee directs the Treasury Secretary to submit a report (with no specified deadline) to the House and Senate Appropriations Committees, the House Financial Services Committee, and the Senate Banking Committee on the "potential risks to U.S. financial markets and economy posed by economic warfare and financial terrorism." Office of Terrorism and Financial Intelligence The House committee recommends an appropriation of $100 million for TFI in FY2012, or the same amount of appropriated funds that is set aside for the office in FY2011 and $7.4 million more than the President's budget request. In its report on H.R. 2434 , the House committee directs the Office of Foreign Assets Control (OFAC) to submit to the House committee a report (with no specified deadline) on the current number of pending applications seeking licenses for travel to Cuba related to educational exchanges not involving academic study, the number of these licenses issued to date, and OFAC's plans for speeding up review of applications in the future. Office of Inspector General The House committee recommends that the OIG receive $30 million in appropriations in FY2012, or the same amount that was enacted for FY2011 and $214,000 less than the amount requested by the Treasury Department. Treasury Inspector General for Tax Administration The House committee recommends an appropriation of $152 million to TIGTA in FY2012, or the same amount that was enacted for FY2011 and $6 million less than the budget request. In its report on H.R. 2434 , the House committee directs TIGTA to submit a report to the House and Senate Appropriations Committees no later than 60 days after the enactment of the bill examining the extent to which IRS employees use tax preparation software or hire tax preparation professionals, how much they pay for those services, and how those fees compare to the fees charged the general public for the same services. Special Inspector General for the Troubled Asset Relief Program The House committee recommends that SIGTARP receive $42 million in appropriated funds for FY2012, or $5.6 million more than the amount enacted for FY2011 but $5.6 million less than the budget request. According to the report on H.R. 2434 , initial funding for the program was mandated in the legislation creating TARP ( P.L. 110-343 ), but the funds were limited and decreased over time. Discretionary appropriations have increasingly filled the gap between those mandatory appropriations and the operating expenses of the program. Financial Crimes Enforcement Network The House committee recommends an appropriation of $111 million for FinCEN in FY2012, or the same amount that was enacted for FY2011 and $26.5 million more than the budget request. Of that amount, $20 million is available until September 30, 2014. In its report on the bill, the House committee says that the recommended funding is intended to continue the agency's multi-year effort to modernize its information systems and to ensure that FinCEN's information is readily accessible to state and local law enforcement personnel, field representative, and the intelligence community. In its budget request, the Treasury Department proposes to reduce funding for making that information more accessible by $3 million. Treasury Forfeiture Fund The House committee recommends a rescission of $630 million of unobligated balances in the Fund, or $230 million more than the amount that was enacted for FY2011 and $30 million more than the budget request. In its report on H.R. 2434 , the House committee points out that the size of the Fund has grown rapidly in recent years because of the "exceptionally large" seizures of property and assets from criminal organizations. Financial Management Service The House committee recommends $217 million in appropriations for FMS in FY2012, or $16 million less than the amount enacted for FY2011 and $2 million less than the budget request. Of that amount, $4 million would be available until September 30, 2014, for upgrading the agency's information systems. According to the report on H.R. 2434 , funding for FMS can be reduced largely because of the savings in operating costs that FMS expects to realize in FY2012. These savings include greater use of paperless transactions, "space and data consolidation," and a "revaluation of new systems." Alcohol and Tobacco Tax and Trade Bureau The House committee recommends that ATB receive $97 million in appropriated funds in FY2012, or $4 million less than the amount that was enacted for FY2011 and $979,000 less than the budget request. According to the report on H.R. 2434 , the reduction in funding should not affect the agency's level of service, as recent efforts by ATB to simplify reporting requirements and reduce overhead expenses have lowered its operating costs. Bureau of the Public Debt The House committee recommends an appropriation of $172 million for the BPD in FY2012, or $13 million less than the amount enacted for FY2011 and about $2 million less than the budget request. Of that amount, $10 million would be available until September 30, 2013. H.R. 2434 contains language that reduces total appropriations by up to $8 million as "definitive security issue fees and Treasury Direct Investor Account Maintenance fees" are collected. Planned cost savings in FY2012 make it possible to reduce funding without affecting the level of service. The savings include greater use of paperless transactions, consolidating the agency's data center, and "decommissioning its legacy information systems." Community Development Financial Institutions Fund The House committee recommends that CDFI receive $183 million in appropriated funds in FY2012, or $43.5 million less than the amount enacted for FY2011 and $44 million less than the budget request. Of that amount, $12 million would be set aside for grants, loans, technical assistance, and job training for native American, Alaskan, and Hawaiian communities. No funds would be provided for two current programs: Bank on USA and the Health Food Financing Initiative (HFFI). In its report on H.R. 2434 , the House committee directs the Government Accountability Office to conduct a study by April 2012 of the extent to which CDFI technical and financial assistance and New Markets Tax Credits (NMTC) are concentrated in urban areas and the contributions to that concentration of the design, administration, and history of the CDFI and the NMTC. The report also directs the Treasury Department to report to the House committee by May 2012 on the operation and effectiveness of the HFFI, including the criteria and processes used to make grant awards. Internal Revenue Service The House committee recommends that the IRS receive $11.516 billion in appropriated funds for FY2012, or $606 million less than the amount enacted for FY2011 and $1.768 billion less than the budget request. Funding for the IRS is spread among five accounts: taxpayer services, enforcement, operations support, BSM, and administration of the health insurance tax credit. Recommended appropriations for each are discussed here. Of the $11.516 billion in recommended appropriations for the IRS, $2.166 billion would be used for taxpayer services. This amount is $108.5 million less than the amount enacted for FY2011 and $179 million less than the budget request. Several taxpayer service grant programs are funded through this account. Under H.R. 2434 , "not less than" $5.1 million would be provided for the Tax Counseling for the Elderly program, $9.5 million in grants for low-income taxpayer clinics, and $12 million in grants for Volunteer Income Tax Assistance (VITA). These amounts match the budget request with the exception of VITA grants, which would receive $4 million less. The House committee further recommends that funding for the administration of the health insurance tax credit established by the Trade Act of 2002 ( P.L. 107-210 ) be folded into appropriations for taxpayer services and that "not less than" $15.5 million be used for that purpose in FY2012. In addition, the House committee expresses approval of the IRS's decision not to develop a pre-filled or simple tax return and makes it clear that it expects the IRS to seek specific authority and appropriations from Congress before embarking on the development of a simple tax return pilot program. As reported by the House committee, H.R. 2434 would provide $5.227 billion in appropriations for tax law enforcement in FY2012, or $266 million less than the amount enacted for FY2011 and $740 million less than the budget request. Of that amount, at least $60 million would be used to support IRS's involvement in the Interagency Crime and Drug Enforcement program. In its report on the bill, the House committee expresses concern over the agency's recent record of improper payments to taxpayers while administering the first-time home buyer tax credit and the earned income tax credit. As a step in the direction of reducing those erroneous payments, the House committee directs the IRS to submit a report within 180 days of the enactment of the bill on steps it has taken in the past year to reduce improper payments, and the steps it is planning to take in the coming year to prevent improper payments related to all refundable tax credits. Another matter of concern to the House committee is IRS's role in the implementation of the Patient Protection and Affordable Care Act of 2010 (PPACA). During FY2010 and FY2011, the agency has received transfers totaling over $90 million from the Department of Health and Human Services to implement certain provisions of the act. The House committee prohibits additional transfers. It also prohibits the IRS from using appropriated funds in FY2012 to verify that taxpayers have health insurance and to impose a penalty on those who lack coverage. These prohibitions are included in the bill as Sections 107 and 108 of the administrative provisions for the IRS. The House committee recommends that the IRS receive $3.793 billion for operations support in FY2012, or $282 million less than the amount enacted in FY2011 and $827 million less than the budget request. At least $2 million of that amount is intended for the operating expenses of the IRS Oversight Board. In its report on H.R. 2434 , the House committee expresses concern about the security of IRS's information systems, especially their vulnerability to identity theft by hackers trying to steal tax refunds. To address this concern, it directs the IRS to submit a report within 30 days of the enactment of the bill on the number of taxpayers who have had their tax return rejected because someone else improperly used their Social Security numbers to commit tax fraud. The report should include such details as the average time taken to resolve such cases and provide a refund, when one is due, and the number of cases that were not resolved within 45 days. H.R. 2434 would provide $330 million in appropriations for the BSM program in FY2012, or $67 million more than the amount enacted for FY2011 but $4 million less than the budget request. As has been the case since the start of the program, the release of those funds is contingent on approval by the House and Senate Appropriations Committees of expenditure plans that have been reviewed the GAO. In its report on the bill, the House committee notes the progress the IRS has made in recent years in developing a new customer account data engine known as CADE 2 and the likely productivity gains among IRS staff that it will make possible. When fully operational, the system would make it possible to store up to 140 million individual taxpayer account records and update them daily, if necessary. Other Issues In its report on the bill, the House committee expressed concern about two issues related to the Dodd-Frank Act that do not involve direct appropriations under current law. One issue is funding in FY2012 for the operations of the Office of Financial Research (OFR), which was created by the Dodd-Frank Act to collect financial data and analyze financial market activities in support of the Financial Stability Oversight Council, which was also created by the act. While OFR's start-up costs have been covered by transfers of funds from the Federal Reserve, the office has the authority to cover its operating expenses after it begins to operate on July 21, 2011, through assessments on bank holding companies with total consolidated assets of $50 billion or more and on non-bank financial companies supervised by the Board of Governors of the Federal Reserve. The House committee holds the view that the OFR should not have unlimited power to charge fees and obligate funds for administrative costs. Thus, language is included in H.R. 2434 that restricts OFR's obligations to $64.5 million in FY2012. A second issue concerns funding in FY2012 for the newly operational Consumer Financial Protection Bureau (CFPB) established by the Dodd-Frank Act. Under Section 1017 of the act, the board receives funds for its start-up and operating costs through transfers from the Federal Reserve. These transfers are capped at 10% of the total operating expenses of the Federal Reserve System in FY2011 (or $404 million), 11% of such expenses in FY2012 (or $445 million), and 12% of such expenses in FY2013 and thereafter (or $485 million). The dollar amounts in FY2013 and thereafter are adjusted for any increases in the employment cost index for total compensation by state and local government workers during the 12 months ending on September 30 of the year before the transfer; the index is computed quarterly by the U.S. Department of Labor. Moreover, funding for the CFPB is not subject to review by the House and Senate Committees on Appropriations. Between early July 2010 and early March 2011, the CFPB requested three fund transfers totaling about $60 million from the Federal Reserve. In its budget request for FY2012, the Treasury Department estimates that the bureau's operating budget will amount to $143 million in FY2011 and $329 million in FY2012, as it works to phase in key functions and construct the necessary technological infrastructure. Expressing disappointment that the bureau has not been not more "forthcoming" about what it plans to do, how it proposes to accomplish those objectives, and how much it will cost to do so, the House committee recommends that fund transfers from the Federal Reserve and the bureau's authority to obligate funds be limited to $200 million in FY2012. In addition, to gain more control over the bureau's budget and operations in the future, the House committee has added a provision to H.R. 2434 that would subject funding for the CFPB to the annual appropriations process beginning in FY2013. The House committee also directs the bureau to submit an operating plan to the House committee within 60 days of enactment of the bill that discusses how the CFPB plans to allocate resources by "type of financial institution, financial product and service, and consumer." A third issue, which is unrelated to the Dodd-Frank Act, deals with funding for Treasury's Office of Financial Stability (OFS), which administers the Troubled Assets Relief Program (TARP). Under the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ), which created OFS and TARP, no limits are placed on appropriations for the office's administrative expenses. Since the House committee holds the view that no federal agency should have "unlimited spending authority for administrative expenses," it recommends that OFS's authority to obligate funds be limited to $200 million in FY2012. According to the report on H.R. 2434 , this amount should be sufficient to meet the office's operating costs, as the bill would also terminate a program that OFS has been administering: the Home Affordable Modification Program. The Senate Appropriations Committee recommends $12.237 billion for Treasury in FY2012. This amount is $859 million less than the amount enacted for FY2011 and $1.801 billion less than the President's budget request. In the case of the President's budget request, 90% of the difference stems from a lower recommendation for IRS appropriations. Details on recommended funding for each Treasury account and certain issues addressed in the committee's report follow. Departmental Offices The Senate committee recommends that DO receive $306 million in appropriations in FY2012, or the same amount that was enacted for FY2011 and $18.5 million less than the President's budget request. In its report on S. 1573 , the Senate committee endorses a proposal included in the request that two offices funded through the account be renamed "international affairs and economic policy" and "domestic finance and tax policy," respectively. Expressing concern about the continuing rash of home mortgage foreclosures, the Senate committee directs the department to focus its resources on finding more effective ways to convince mortgage servicers to grant reductions in loan principal to homeowners at risk of foreclosure so they can afford to remain in their homes, and to make better use of programs like Home Affordable Modification and the Hardest Hit Fund to lower foreclosure rates among homes financed by Fannie Mae and Freddie Mac. The Senate committee does not recommend that funding for the Office of Terrorism and Financial Intelligence be treated as an appropriations account separate from DO, unlike the House–passed version of H.R. 2434 . At the same time, the Senate committee directs the department to fully implement all sanctions and divestment measures imposed on North Korea, Belarus, Burma, Iran, Sudan, and Zimbabwe, and to notify the Senate committee if a lack of resources is hampering the department's ability to do so. To bolster its oversight of the department's management of capital investments, the Senate committee directs it to prepare an annual report on the steps it is taking to improve its handling of those investments and submit it to the House and Senate appropriations committees within 30 days of the release of the President's annual budget request. The Senate committee also directs the department, in consultation with the Department of Homeland Security, to submit a written report within 30 days of the enactment of the bill on the status of a proposed rule to redefine stored value cards as monetary instruments for the purpose of international transport reporting. Office of Inspector General The Senate committee recommends that OIG receive $30 million in appropriations in FY2012, or the same amount that was enacted for FY2011 and $214,000 less than the budget request. In its report on S. 1573 , the Senate committee directs the office to undertake, when feasible, an audit of the Bank Secrecy Act Information Technology Modernization project being managed by FinCEN; it also requires OIG to submit a written report to the Senate committee by March 31, 2012 (and semi-annually thereafter), on the extent to which contractors for the project are adhering to its budget and production schedule. The committee also urges the office to perform audits, as its resources permit, of Treasury's activities to thwart money laundering and terrorist financing, its management of capital investments, and the investment activities of the CDFI. Treasury Inspector General for Tax Administration The Senate committee recommends that TIGTA receive $152 million in appropriations for FY2012, or the same amount that was enacted for FY2011 and $6 million less than the budget request. In its report on S. 1573 , the committee commends the office for its reviews of IRS's BSM program and other technology-improvement projects. At the same time, it urges TIGTA to carefully monitor the IRS's efforts to implement 56 tax provisions from the American Recovery and Reinvestment Act of 2009, as well as the 40 tax provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA). In the case of the latter law, the Senate committee expresses an interest in having TIGTA maintain oversight of IRS's implementation and administration of new requirements concerning taxpayer education and outreach, new tax credits, and the development of an information technology base to support the PPACA initiatives. Provided resources and time allow, the Senate committee would also like TIGTA to undertake projects in FY2012 that evaluate the newly created Return Preparer Program, examine schemes like "phishing" that are intended to lure taxpayers into revealing personal information that could be used to steal their identity and harm tax administration, and identify the best practices and safeguards for reducing threats to the security of IRS employees and its databases and facilities. Special Inspector General for the Troubled Asset Relief Program Commending SIGTARP for the "quality of its audits and investigations" and the written material it has provided to the general public and Congress, the Senate committee recommends that the office receive $42 million in appropriations for FY2012, or $5.5 million above the amount enacted for FY2011, but $5.6 million below the budget request. According to the report on S. 1573 , a portion of FY2012 spending could be covered by funds carried over from the current fiscal year. Financial Crimes Enforcement Network The Senate committee recommends that FinCEN receive $111 million in appropriations in FY2012, or the same amount that was enacted for FY2011 and $26.5 million above the budget request. Acting on a request by Treasury, the Senate committee turns down a proposal to fund part of FinCEN's budget in FY2012 through a transfer of funds from the Treasury Forfeiture Fund. As a result, the increase in appropriations relative to the budget request reflects the Senate committee's view that the entire FinCEN budget be funded from the account designated for FinCEN salaries and expenses. In addition, the Senate committee rejects a proposal in the budget request to cut $2.3 million from the office's funding by reducing access to BSA information by state and local law enforcement agencies. In its report on S. 1573 , the Senate committee defends the rejection on the grounds that it makes no sense to restrict the flow of data that "is a critical tool for investigating serious financial crimes, including money laundering, mortgage fraud, drug trafficking, and terrorist financing" to those authorities. The Senate committee also expresses support for FinCEN's efforts to modernize the information technology infrastructure for collecting and analyzing BSA data. In the Senate committee's view, the "previous infrastructure is outdated and limits the capabilities of (these) users." FinCEN is directed to continue to submit semi-annual reports to the Senate committee on the status of the modernization project; the reports should address "milestones planned and achieved, progress on cost and schedule, management of contractor oversight, strategies to involve stakeholders, and acquisition management efforts." Treasury Forfeiture Fund The Senate committee recommends a rescission of $750 million of unobligated balances in the fund for FY2012. Financial Management Service The Senate committee recommends that FMS receive $218 million in appropriations for FY2012, or $15 million less than the amount enacted for FY2011 and $1 million less than the budget request. In making such a recommendation, the Senate committee notes that the bureau can expect to have at its disposal an estimated $97 million in FY2012 from the fees it charges agencies for its debt collection services. Under Section 111 of S. 1573 , FMS is given the authority to transfer funds from the salaries and expenses account to the Debt Collection Fund to cover the costs of debt collection. Those funds should be reimbursed from the amount of debt collected by FMS. Alcohol and Tobacco Tax and Trade Bureau The Senate committee recommends that ATB receive $100 million in appropriations for FY2012, or $920,000 less than the amount enacted for FY2011 and $2 million more than the budget request. This amount includes $2 million for the cost of hiring special law enforcement agents to combat tobacco smuggling and other criminal activities within the jurisdiction of ATB. Bureau of the Public Debt For FY2012, the Senate committee recommends appropriations of $166 million for BPD, or $9 million below the amount enacted for FY2011 and the same amount as the budget request. Community Development Financial Institutions Fund The Senate committee recommends $200 million in appropriations for the CDFI in FY2012, or $26.5 million less than the amount enacted for FY2011 and $27 million below the budget request. Despite the recommended reduction in funding, the Senate committee expresses support for the basic aims of the fund, especially its role in expanding private investment in community development projects, such as affordable housing, community centers, and increases in lending to small firms. Of the $200 million in funding, $36 million would be used for the Bank on USA program, which promotes improved access to financial services and consumer credit for lower-income households; the Senate committee directs CDFI to submit a detailed spending plan for the program within 120 days of enactment of the bill. Another $22 million would be used to fund the Healthy Food Financing Initiative, which is intended to increase the supply of affordable, wholesome foods in urban and rural communities lacking access to such foods. In addition, the Senate committee recommends that $12 million be set aside for grants, loans, and technical assistance and training programs for native American, Alaskan, and Hawaiian communities. Recognizing the difficulty of attracting private funding in the current economic environment, the Senate committee favors extending the current waiver of matching fund requirements for CDFI programs so they can continue to invest in and assist targeted communities. The requirements would be reinstated "when capital markets return to normal function." Internal Revenue Service The Senate committee recommends that the IRS receive $11.663 billion in appropriations for FY2012, or $459 million less than the amount enacted for FY2011 and $1.621 billion less than the budget request. In its report on S. 1573 , the Senate committee directs the agency to include details on planned reorganizations, job cuts or increases, and changes to current service and enforcement activities in the operating plan the IRS is required to submit along with its annual budget request. The plan should include comments from the IRS Oversight Board. One IRS account provides funding for taxpayer services. The Senate committee recommends that it receive $2.195 billion in FY2012, or $78.5 million less than the amount enacted for FY2011 and $150 million less than the budget request. Of the recommended funding, "not less than" $6.1 million should be used for the tax-counseling for the elderly program, $10 million for low-income taxpayer clinic grants, and $12 million (over two years) for the community volunteer income tax assistance matching grant program. Another $208 million would be used to fund the operations of the Taxpayer Advocate Service (TAS). The Senate committee deems it "imperative" that the IRS continues to staff TAS Centers in Alaska and Hawaii with collection and examination technical advisors, along with other needed staff. In addition, the Senate committee expresses concern about the ability of the agency to handle the added demands placed on its workload by PPACA without compromising the quality and effectiveness of its service to taxpayers. Reflecting the continuing controversy over the constitutionality of the health insurance mandates in the act, the Senate committee directs the IRS to identify in its budget request and operating plan for FY2013 any proposed increases in spending to implement the health care mandates in the law. It also directs the IRS to submit to the Senate committee within 30 days of the enactment of the bill a report addressing the amount and use of funds that the Department of Health and Human Services has transferred to the IRS in order to implement the PPACA provisions, as well as the provisions in the Health Care and Education Reconciliation Act of 2010 for which it is responsible. The largest IRS account covers enforcement activities. For FY2012, the Senate committee recommends that the IRS receive $5.229 billion in appropriations for such activities, or $264 million less than the amount enacted for FY2011 and $738 million less than the budget request. Of the recommended funding, "not less than" $60 million would be transferred to the Interagency Crime and Drug Enforcement program. In its report on S. 1573 , the Senate committee expresses support for current initiatives by the IRS to combat offshore tax evasion by companies and individuals, and to improve income reporting compliance through increased audits of non-corporate (or passthrough) business and high-income individual tax returns. The report also draws attention to two specific compliance issues that may result in substantial losses of revenue. One concerns a series of recent TIGTA reports examining "fraudulent and erroneous payments in the First-Time Homebuyer and Residential Energy tax credit programs." The Senate committee directs the IRS to increase its scrutiny of questionable claims for these and other credits. A second issue is the misclassification of workers as independent contractors. Such an error usually leads to the underreporting and underpayment of employment and payroll taxes by employers and workers. To get a better understanding of the extent of the problem, the IRS is undertaking a three-year study of worker classification and other employment tax issues. Underscoring its concern about the revenue effects from the misclassification of workers, the Senate committee urges the IRS to maintain adequate staffing in a program (SS-8) designed to assist employers in determining a worker's employment tax status. On the matter of collecting overdue individual tax debt, the Senate committee extends a ban on using appropriated funds to administer a debt collection program involving the use of private debt collectors. (See Section 105 of the report.) The ban was first imposed on FY2010 appropriations and was intended to enforce a decision announced by the IRS in March 2009 to terminate a controversial private tax debt collection program that started three years earlier. Operations Support For FY2012, the Senate committee recommends that the IRS receive $3.893 billion for operations support, or $182.5 million below the amount enacted for FY2011 and $727 million less than the budget request. Several stipulations apply to the use of these funds. Up to $250 million would be available for information technology support through the end of FY2013. Another $1 million would be available for research through the end of FY2014, and not less than $2 million would be used to fund the activities of the IRS Oversight Board. In its report on S. 1573 , the Senate committee expressed some concerns about IRS's management of its non-BSM information technology projects. Of particular concern are the classification of investment projects, oversight, risk management, contingency planning, and contractor performance and accountability. As a result, the Senate committee directs the IRS to include in its FY2013 budget request a multi-year funding plan within the Operations Support account for upgrading and modernizing the agency's aging information technology infrastructure. In addition, the IRS must include in the budget justification documents for FY2013 an up-to-date cost and performance schedule for all major information systems funded through the account. Business Systems Modernization A separate account is maintained for funding for the BSM. The Senate committee recommends that the IRS receive $330 million for the program in FY2012, or $69 million more than the amount enacted for FY2011 and $3.4 million below the budget request. To augment these funds, the Senate committee encourages the agency to draw upon user fees collected by the agency from services it provides. In the Senate committee's view, BSM is the IRS's "highest management and administrative priority." Completion of the new core taxpayer account database in time for the 2012 filing season would allow for daily processing of taxpayer accounts, leading to faster direct deposit of refunds for electronic filers, quicker account adjustments, and expedited resolution of taxpayer issues and transactions. Health Insurance Tax Credit Administration The Senate committee recommends that the IRS receive $15.5 million for administering the health insurance tax credit in FY2012, or the same amount that was enacted for FY2011 and $2.5 million less than the budget request. In December 2011, the House and Senate agreed on a measure to provide appropriations in FY2012 for a majority of federal agencies, including the Treasury Department. Under the enacted legislation ( P.L. 112-74 ; the Consolidated Appropriations Act, 2012) Treasury is receiving $12.215 billion, or $882 million less than the amount enacted for FY2011. About 35% of the decrease (or $305 million) is due to reduced funding for the IRS, while another 62% (or $550 million) stems from an increase in rescissions from the Treasury Forfeiture Fund. More details on FY2012 appropriations for all Treasury accounts follow. Departmental Offices P.L. 112-74 provides $308 million in appropriations for DO in FY2012. Of this amount, TFI is to receive $100 million, no more than $26.6 million of which may be used for administrative expenses. The conferees direct OFAC to "fully implement" the sanctions and divestment measures imposed on North Korea, Burma, Belarus, Iran, Sudan, and Zimbabwe. They also specify that Treasury should focus on improving its management of capital projects by integrating all its bureaus into "improvement efforts and institutionalizing improvements." Under P.L. 112-74 , up to $3 million of the appropriated funds for FY2012 will remain available until September 30, 2013, to support Treasury's information technology modernization projects under the DO account. Office of Inspector General P.L. 112-74 provides $30 million in appropriations for the OIG in FY2012. Treasury Inspector General for Tax Administration P.L. 112-74 provides TIGTA $152 million for FY2012. Special Inspector General for the Troubled Asset Relief Program P.L. 112-74 provides SIGTARP $42 million in FY2012 to cover its salaries and other expenses in implementing the provisions in the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ) for which it has responsibility. Financial Crimes Enforcement Network P.L. 112-74 provides $111 million in appropriations for FinCEN in FY2012, of which up to $34.3 million will be available until September 30, 2014. The conference report contains the same language from the House and Senate Appropriations Committees reports rejecting a proposal by the Obama Administration to cut about $3 million from the bureau's budget by reducing field law enforcement support and intelligence support for outside agencies and consolidating state and local access to BSA data. The conferees also turned down a proposed transfer of $30 million from the Treasury Forfeiture Fund to FinCEN for the purpose of supporting the ongoing modernization of BSA's information technology. Treasury Forfeiture Fund P.L. 112-74 rescinds $950 million of the unobligated funds in the fund in FY2012. In their report, the conferees state that the resources in the fund should be used to cover the costs of an "effective asset seizure and forfeiture program," not to "augment agency funding or to circumvent the appropriations process." They also point out that money in the fund can be held in reserve, rescinded, or used to cover any expenses incurred in enhancing the government's forfeiture capabilities. On the matter of allocating large surpluses or rescinding resources in the fund, the conferees direct the Obama Administration to avoid using a "formulaic" method and to consider the needs of programs involved in asset seizure and forfeiture and their funding priorities. Financial Management Service P.L. 112-74 provides FMS $218 million in appropriations in FY2012. Of this amount, $4.2 million is to remain available until September 30, 2014, to support information technology modernization projects. Alcohol and Tobacco Tax and Trade Bureau Under P.L. 112-74 , ATB is receiving $100 million in appropriations in FY2012. Of this amount, $2 million is to be used to hire and train special law enforcement agents for the purpose of combating the smuggling of tobacco products and "other criminal diversion activities." Bureau of the Public Debt P.L. 112-74 provides $174 million in appropriations for the BPD in FY2012. Of this amount, $10 million will be available for obligation through September 30, 2014, to reduce improper payments. In addition, P.L. 112-74 specifies that FY2012 appropriations for the bureau can be reduced by up to $8 million through the collection of definitive security issue fees and Legacy Treasury Direct Investor Account Maintenance fees. As a result, appropriations from the general fund for BPD could total about $166 million. Community Development Financial Institutions Fund CDFI is receiving $221 million in appropriations under P.L. 112-74 for FY2012; the entire amount will remain available until September 30, 2013. Of this amount, $12 million shall be used for financial and technical assistance, training, and outreach programs designed to benefit Native American, Hawaiian, and Alaskan communities and delivered mainly through community development entities with proven expertise in lending in such communities. In addition, $22 million is set aside for the Healthy Food Financing Initiative; $18 million for the Bank Enterprise Awards program; $23 million to administer the New Markets Tax Credit program; and $10.3 million for the cost of direct loans and the cost of administering them. No funding is provided for the Bank on USA Initiative. P.L. 112-74 waives the matching fund requirement for the Native Initiatives and Small and/or Emerging CDFI Applicants programs for FY2012 only. Internal Revenue Service Under P.L. 112-74 , the IRS is receiving $11.817 billion in appropriations for FY2012, or about 97% of Treasury appropriations for the year. This amount is divided among five accounts: taxpayer services, enforcement, operations support, BSM, and the administration of the health care tax credit established by the Trade Act of 2002. Taxpayer Services P.L. 112-74 provides $2.240 billion for taxpayer services in FY2012. Of that amount, at least $9.75 million is to be used for low-income taxpayer clinic grants; $5.60 million for the Tax Counseling for the Elderly program, and $12 million (to be available until September 30, 2013) for the Volunteer Income Tax Assistance grants program. Another $205 million is designated for the operating expenses of the Taxpayer Advocate Service. In addition, the conferees direct the IRS Commissioner to continue to allocate adequate resources to support the ongoing effort to upgrade the IRS's toll-free telephone service for taxpayer assistance by adding new lines and hiring additional staff. Enforcement Under P.L. 112-74 , the IRS is receiving $5.300 billion for its enforcement activities in FY2012. Of this amount, at least $60.3 million shall be used to support the Interagency Crime and Drug Enforcement program. Operations Support Under P.L. 112-74 , the IRS is getting $3.947 billion in appropriations for operations support. in FY2012. Of this amount, up to $250 million shall remain available until September 30, 2013, for the purpose of supporting information technology projects. Another $65 million is to be used for acquiring real property, equipment, construction, and the renovation of facilities. And at least $2 million is to be set aside for expenses of the IRS Oversight Board. To bolster congressional oversight, the conferees direct the agency to submit quarterly reports to the Committees on Appropriations and the GAO explaining in "plain English" the cost and schedule for the previous three months and the expected cost and schedule for the coming three months of certain major information technology projects, including IRS.gov, Returns Remittance Processing, and E-services. They also specify that the GAO is to conduct an annual review of the cost and schedule of the same projects and report its findings to the committees. The IRS is to include with its annual budget justification for FY2013 a "summary" of the cost and schedule for its major information technology systems. Business Systems Modernization P.L. 112-74 provides $330 million for the BSM in FY2012. It attaches two of the same strings to the use of these funds that it included in the appropriations for operations support: quarterly IRS reports to the Committees on Appropriations and GAO on the cost and schedule of CADE2 and MeF for the previous three months and their expected cost and schedule for the coming three months, as well as an annual review of the same projects by the GAO. The FSGG appropriations bill provides funding for all but three offices under the EOP. The White House, the Office of Management and Budget, and the Office of National Drug Control Policy are among the EOP offices funded through FSGG appropriations. Table 4 lists the enacted amounts for FY2011, the President's FY2012 request, amounts recommended by the House and Senate appropriations committees for FY2012, and the enacted amounts for FY2012. The Administration's FY2012 budget requested an appropriation (discretionary funds) of $739.3 million for the EOP and funds appropriated to the President, an increase of $34.1 million or 4.8% above the $705.2 million (discretionary funds) enacted for FY2011. The budget requested the same appropriation as that enacted for FY2011 for the Unanticipated Needs account and increased or decreased appropriations for the following accounts: The White House Office (-$61,000 or -0.1%), the Executive Residence (-$15,000 or -0.1%), the White House Repair and Restoration (-$1.0 million or -50%). The Council of Economic Advisers (+$211,000 or +5.0%), the National Security Council and Homeland Security Council (+$26,000 or +0.2%), and the Office of Administration (+$799,000 or +0.7%). The Office of Management and Budget (-$90,000 or -0.1%). The Special Assistance to the President (-$221,000 or -4.9%), and the Official Residence of the Vice President (-$19,000 or -5.8%). The justification that accompanied the EOP's budget submission noted that the increase requested for the National Security Council and Homeland Security Council "funds requirements commensurate with supporting the President's efforts on cybersecurity, Weapons of Mass Destruction, terrorism, transborder security, information sharing, resilience policy, including preparedness and response, and global engagement, as outlined in Presidential Study-Directive 1 ." According to the justification, the requested funding increase for the Council of Economic Advisers "supports additional economists required for monitoring the state of the economy for the President and his staff and assisting the President in developing economic policies promoting the growth of the economy, creating jobs, and increasing incomes and standards of living for all Americans." The appropriation requested for the account entitled Integrated, Efficient and Effective Uses of Information Technology (IEEUIT) would be used "to establish a coherent Federal strategy for centralized, efficient provision of IT services and infrastructure across the Government." For the accounts under the Federal Drug Control Programs, the President's FY2012 budget requested an appropriation of $355.7 million, a decrease of $50.5 million or 12.4% below the $406.2 million enacted for FY2011. The FY2012 budget justification states that the proposed reduction in funding "reflects a reprioritization of resources." Appropriations for all of the accounts follow. Office of National Drug Control Policy (ONDCP, -$3.7 million or -13.5%). High Intensity Drug Trafficking Areas Program (HIDTAP, -$38.5 million or -16.1%). Other Federal Drug Control Programs (OFDCP, +$3.0 million or +2.1%). Counterdrug Technology Assessment Center (CTAC, a rescission of $11.3 million is requested). H.R. 2434 , as reported by the House Committee on Appropriations would provide an appropriation of $639.5 million for the EOP, which is $65.7 million (-9.3%) less than the FY2011 enacted appropriation and $99.8 million (-13.5%) less than the President's request. The House report states the House committee's disappointment "that the Administration's request did not propose additional reductions for the EOP" and that "Therefore, the Committee has reduced the Salaries and Expenses appropriation for each organization." The appropriations for each of the EOP accounts, as recommended by the House Appropriations Committee are as follows: The White House Office: $55.5 million; 2.9 million (-5%) less than the FY2011 enacted amount and almost $2.9 million (-4.9%) less than the President's request. The House committee report states that this amount includes "sufficient funds" for the Office of National AIDS Policy. Executive Residence, White House: $13 million; $684,000 (-5.0%) less than the FY2011 enacted amount and $669,000 (-4.9%) less than the President's request. White House Repair and Restoration: $1 million; $1 million (-50%) less than the FY2011 enacted amount and the same as the President's request. Council of Economic Advisers: $4.0 million; $210,000 (-5.0%) less than the FY2011 enacted amount and $421,000 (-9.6%) less than the President's request. National Security Council and Homeland Security Council: $12.4 million; $652,000 (-5%) less than the FY2011 enacted amount and $678,000 (-5.2%) less than the President's request. Office of Administration: $109.3 million; $5.7 million (-5%) less than the FY2011 enacted amount and $6.5 million (-5.6) less than the President's request. Of the total, $10.7 million would remain available until expended for continued modernization of the information technology infrastructure within the EOP. The office is directed to report annually to the House Committee on Appropriations, at the same time that the President's budget is submitted, on progress on modernization of information technology, including the amounts obligated and expended and for what purposes, specific milestones achieved, and requirements and specific plans for further investment. Office of Management and Budget: $82.6 million; $9.2 million (-10%) less than the FY2011 enacted amount and $9.1 million (-9.9%) less than the President's request. The House committee encourages OMB and federal agencies to use business management techniques, including continuous process improvement methods, to improve the use of resources. OMB is directed to examine and revise Circular A-94 on cost-benefit analysis, incorporate life-cycle cost analysis, and report to the House Committee on Appropriations on the status of the review within 180 days of the act's enactment. Unanticipated Needs: 0.0; $1 million (-100%) less than the FY2011 enacted amount and the President's request. Partnership Fund for Program Integrity Innovation: 0.0; $20 million less than the President's request. Integrated, Efficient and Effective Uses of Information Technology: 5.0 million; $55 million less than the President's request. The OMB Director could transfer the funds to one or more agencies to carry out projects and would submit monthly reports to the House and Senate Committees on Appropriations identifying the savings achieved by the government-wide information technology reform efforts. Special Assistance to the President: $4.3 million; $227,000 (-5.0%) less than the FY2011 enacted amount and $6,000 (-0.1%) less than the President's request. Official Residence of the Vice President: $307,000; $19,000 (-5.8%) less than the FY2011 enacted amount and the same as the President's request. H.R. 2434 , as reported, would fund the federal drug control accounts at the following levels: ONDCP: $23 million; $4.1 million (-15.1%) less than the FY2011 enacted amount and $413,000 (-1.8%) less than the President's request. Of the total, $250,000 would remain available until expended for policy research and evaluation. ONDCP is expected "to focus resources on the counter-drug policy development, coordination and evaluation functions which are the primary mission of the Office and the original reason for its existence." HIDTAP: $238.5 million; the same as the FY2011 enacted amount and $38.5 million (+19.3%) more than the President's request. Of the total, up to $2.7 million could be used for auditing services and related activities. The ONDCP Director would notify the House and Senate Committees on Appropriations of the initial allocation of FY2012 funding among HIDTAs within 45 days after the act's enactment and of planned uses of discretionary HIDTA funding within 90 days after the act's enactment. OFDCP : $102.0 million; $38.6 million (-27.5%) less than the FY2011 enacted amount and $41.6 million (-29%) less than the President's request. The appropriation would be allocated as follows: $88.6 million for the Drug-Free Communities Program, $8.9 million for anti-doping activities, $1.9 million for the United States membership dues to the World Anti-Doping Agency, and $2.5 million for competitive discretionary grants. An appropriation is not provided for the anti-drug media campaign. Section 628(a)(1) of H.R. 2434 , as reported, would provide the mandatory appropriation for the compensation of the President ($450,000, including $50,000 for expenses). According to the House Committee on Appropriations report, this is an account "where authorizing language requires the payment of funds." Administrative provisions under the appropriation for the EOP and funds appropriated to the President are the following: Section 201 would continue to authorize the OMB Director (or other official designated by the President) to transfer up to 10% of appropriations between the White House, Executive Residence at the White House, White House Repair and Restoration, Council of Economic Advisers, National Security Council and Homeland Security Council, Office of Administration, Special Assistance to the President, and Official Residence of the Vice President accounts, after the House and Senate Committees on Appropriations are notified at least 15 days in advance. An appropriation would not be increased by more than 50% by such transfers. The Vice President would approve transfers from the Special Assistance to the President or Official Residence of the Vice President accounts. Section 202 would rescind $11.3 million in unobligated balances of prior year appropriations from the Counterdrug Technology Assessment Center. Section 203 would prohibit the use of funds to pay the salaries and expenses of any EOP officer or employee to prepare, sign, or approve statements abrogating legislation passed by the House of Representatives and the Senate and signed by the President. Section 204 would require the OMB Director to submit quarterly reports to the House and Senate Committees on Appropriations on the implementation of Executive Order 13563 relating to Improving Regulation and Regulatory Review. The reports would be submitted on January 2, April 2, July 2, and October 1, 2012, and would include information on increasing public participation in the rulemaking process and reducing uncertainty; improving coordination across federal agencies to eliminate redundant, inconsistent, and overlapping regulations; and identifying existing regulations that have been reviewed and determined to be outmoded, ineffective, or excessively burdensome. Section 205 would require the OMB Director to report to the House and Senate Committees on Appropriations, within 30 days after the act's enactment, on the costs of implementing P.L. 111-203 , the Dodd-Frank Wall Street Reform and Consumer Protection Act. The report would include the estimated mandatory and discretionary obligations of funds through FY2016, by federal agency and by fiscal year, including (1) the estimated obligations by cost inputs such as rent, information technology, contracts, and personnel; the methodology and data sources used to calculate such estimated obligations; and the specific section of such act that requires the obligation of funds; and (2) the estimated receipts through FY2016 from assessments, user fees, and other fees by the federal agency making the collections, by fiscal year, including the methodology and data sources used to calculate such estimated collections; and the specific section of such act that authorizes the collection of funds. Section 632 of H.R. 2434 , as reported, would prohibit the use of funds for the White House Director of the Office of Health Reform, the Assistant to the President for Energy and Climate Change, the Senior Advisor to the Secretary of the Treasury assigned to the Presidential Task Force on the Auto Industry and Senior Counselor for Manufacturing Policy, and the White House Director of Urban Affairs. The House committee continues the provision that would prohibit funding for the EOP to request an FBI background investigation except with the express consent of the individual involved or in extraordinary circumstances involving national security at Section 610. S. 1573 , as reported by the Senate Committee on Appropriations, would provide an appropriation of $660.7 million for the EOP, which is $45 million (-6.4%) less than the FY2011 enacted appropriation and $79.1 million (-10.7%) less than the President's request. The appropriations for each of the EOP accounts, as recommended by the Senate Appropriations Committee, are as follows: The White House Office: $57.8 million; $584,000 (-1%) less than the FY2011 enacted amount and $523,000 (-0.9%) less than the President's request. The Senate committee report directs the EOP "to allocate sufficient resources to continue the robust operation of the Office of National AIDS Policy" and "the administration to continue to coordinate a Government-wide effort to develop and implement a domestic AIDS strategy." Executive Residence, White House: $13.5 million; $137,000 (-1.0%) less than the FY2011 enacted amount and $122,000 (-0.9%) less than the President's request. White House Repair and Restoration: $990,000; $1 million (-50.5%) less than the FY2011 enacted amount and $10,000 (-1.0%) less than the President's request. Council of Economic Advisers: almost $4.2 million; the same as the FY2011 enacted amount and $211,000 (-4.8%) less than the President's request. National Security Council and Homeland Security Council: $13 million; the same as the FY2011 enacted amount and $26,000 (-0.2%) less than the President's request. Office of Administration: $114.9 million; $141,000 (-0.1%) less than the FY2011 enacted amount and $940,000 (-0.8) less than the President's request. Of the total, $10.7 million would remain available until expended for continued modernization of the information technology infrastructure within the EOP. This initiative will "refresh the aging information technology infrastructure, strengthen disaster recovery and information security capabilities, and transition the [EOP's] communications architecture to integrate mobile devices while complying with security and records management requirements." The office is directed to "place a top priority on the implementation of comprehensive policies and procedures" to preserve all records, work closely with the National Archives and Records Administration, and fully apprise the committee of funding needed to preserve and retain records. Office of Management and Budget: $90.8 million; $917,000 (-1.0%) less than the FY2011 enacted amount and $827,000 (-0.9%) less than the President's request. The Senate report states that the committee "expects OMB to provide timely and complete responses ... to all requests for information" and directs the agency to report to the committee within 120 days after the act's enactment on "the current capabilities of and deficiencies in the Federal Government's core budgeting system." Unanticipated Needs: $988,000; $10,000 (-1.0%) less than the FY2011 enacted amount and $12,000 (-1.2%) less than the President's request. Partnership Fund for Program Integrity Innovation: 0.0; $20 million less than the President's request. The Administration is directed to leverage the FY2010 funding to continue the initiative. The Senate report reminds the interagency council that semiannual reports must be submitted to the committees, directs that the council "be the exclusive decisionmaking body," and directs the OMB director, as the council chair, "to seek consensus and input to the maximum extent possible from council members and participating Federal and State agencies." Integrated, Efficient and Effective Uses of Information Technology: 0.0; $60 million less than the President's request. The Administration is directed to continue the current reform efforts using funding from the EOP and other sources, to regularly apprise the committee "of how Government-wide IT reform efforts affect agency-specific projects and missions on a case-by-case basis," and to immediately notify the committee of changes in agency spending plans for IT projects. Special Assistance to the President: $4.3 million; $221,000 (-4.8%) less than the FY2011 enacted amount and the same as the President's request. Official Residence of the Vice President: $307,000; $19,000 (-5.8%) less than the FY2011 enacted amount and the same as the President's request. S. 1573 , as reported, would fund the federal drug control accounts at the following levels: ONDCP: $26.1 million; $959,000 (-3.5%) less than the FY2011 enacted amount and $2.7 million (+11.6%) more than the President's request. The increased funding "prevents a reduction-in-force of 20 FTE." Policy research is not funded. The office is directed to provide an update on the implementation of the National Academy of Public Administration's study within 30 days after the act's enactment and is urged to ensure that the staff in the Office of Demand Reduction are experts in drug abuse prevention. The EOP is urged to improve the office's responsiveness in providing critical budget information to the committee. Reports, to be submitted to the committee on a quarterly basis, are to discuss the "continued efforts to address prescription drug abuse." HIDTAP: $238.5 million; the same as the FY2011 enacted amount and $38.5 million (+19.3%) more than the President's request. The office is directed to consult with the HIDTA's prior to allocating funds. Of the total, up to $2.7 million could be used for auditing services and associated activities and up to $500,000 is to be used to continue the operation and maintenance of the Performance Management System. HIDTA funds are to be expeditiously transferred to the appropriate drug control agencies and are to be withheld from a State "until such time as a State or locality has met its financial obligation." OFDCP : $105.9 million; $34.7 million (-24.6%) less than the FY2011 enacted amount and $37.6 million (-26.2%) less than the President's request. The appropriation would be allocated as follows: $92.6 million for the Drug-Free Communities Support Program (DFCSP), including $2 million for National Community Anti-Drug Coalition training; $8.9 million for anti-doping activities; $1.9 million for the United States membership dues to the World Anti-Doping Agency; $1.1 million for activities related to model State drug laws; and $1.4 million for drug court training and technical assistance. For reasons of fiscal austerity and mixed reviews of the campaign's effectiveness, an appropriation is not provided for the anti-drug media campaign. Administrative provisions under the appropriation for the EOP and funds appropriated to the President are the following: Section 201 would continue to authorize the OMB Director (or other official designated by the President) to transfer up to 10% of appropriations between the White House, Executive Residence at the White House, White House Repair and Restoration, Council of Economic Advisers, National Security Council and Homeland Security Council, Office of Administration, Special Assistance to the President, and Official Residence of the Vice President accounts, after the House and Senate Committees on Appropriations are notified at least 15 days in advance. An appropriation would not be increased by more than 50% by such transfers. The Vice President would approve transfers from the Special Assistance to the President or Official Residence of the Vice President accounts. Section 202 would require the ONDCP Director to submit to the Senate and House Appropriations Committees, within 60 days after the act's enactment, and prior to initially obligating more than 20% of the ONDCP funds, "a detailed narrative and financial plan on the proposed uses of all funds under the account by program, project, and activity." The reports must be updated every six months and include any changes in the estimates and assumptions of the previous reports. New projects and changes in the funding for ongoing projects require advance approval by the committees. Section 203 would provide that up to 2% of ONDCP appropriations could be transferred between appropriated programs within ONDCP with advance approval by the Senate and House Committees on Appropriations, but such transfer could not increase or decrease an appropriation by more than 3%. Section 204 would provide that up to $1 million of ONDCP appropriations could be reprogrammed within a program, project, or activity with advance approval by the Senate and House Appropriations committees. Section 205 would rescind $11.3 million in unobligated balances of prior year appropriations from the Counterdrug Technology Assessment Center. The Senate committee continues the provision at Section 610 that would prohibit the use of funds appropriated to the EOP to request an FBI background investigation except with the written consent of the individual involved, within six months prior to the date of the request and during the same presidential administration, or in extraordinary circumstances involving national security. P.L. 112-74 provides appropriations of $57 million for The White House Office, $13.4 million for the Executive Residence, $750,000 for White House Repair and Restoration, $112.9 million for the Office of Administration, and $89.5 million for the Office of Management and Budget. With regard to the Federal Drug Control Programs, $24.5 million is provided for the Office of National Drug Control Policy and $105.5 million is provided for Other Federal Drug Control Programs, to be allocated as follows: Drug-Free Communities Program, $92 million, of which $2 million is for training; Drug court training and technical assistance, $1.4 million; Anti-doping activities, $9 million; World Anti-doping Agency membership dues, $1.9 million; and Discretionary grant, $1.2 million (to be awarded competitively). Funding is not provided for the National Youth Anti-Drug Media Campaign and Performance Measures Development. The conferees support a plan "to preserve the substantial federal investment in anti-drug messaging" of the media campaign. ONDCP is directed to report to the House and Senate Committees on Appropriations on how the remaining unobligated balances for the media campaign will be used within 180 days after the act's enactment. The conference report states the concern that "ONDCP's decision to obligate funds that the President's budget proposed to rescind [from the Counterdrug Technology Assessment Center] demonstrates an inability to effectively manage their funds." The appropriation for the Integrated, Efficient, and Effective Uses of Information Technology ($5 million) is the same as recommended by the House committee. The conference report states that initiatives for reform "shall not be a substitute for consideration of agency requirements." The EOP is directed to inform the House and Senate Committees on Appropriations on changes in spending plans for information technology. The appropriations for the Council of Economic Advisers ($4.2 million), National Security Council and Homeland Security Council ($13 million), Unanticipated Needs ($988,000), and Special Assistance to the President ($4.3 million) are the same as recommended by the Senate committee. The appropriations for the Official Residence of the Vice President ($307,000) and HIDTAP ($238.5 million) are the same as recommended by the House and Senate committees. Among the provisions and directives included in the law are these: The EOP, including ONDCP, is expected to respond to requests for information from the House and Senate Committees on Appropriations in a timely manner. The EOP is directed to improve the responsiveness of ONDCP in this regard. OMB is directed to report to the House and Senate Committees on Appropriations on the current capabilities and deficiencies in the federal government's core budgeting system within 120 days after the act's enactment. OMB is directed to examine Circular A-94, including the potential incorporation of life-cycle cost analysis, and report on the status of the review to the House and Senate Committees on Appropriations within 180 days after the act's enactment. The analysis is to be "as accurate, complete and reflective of the real costs and lifespans of materials as possible, including the use of material-specific discount rates and maintenance scheduled cost" and involve experts in the field of life-cycle cost analysis and industry experts and research centers. The conference report states the policy that "agency staffing decisions should be based on agency workload and the level of funds made available, rather than pre-determined formulaic reductions" and that "Decisions to backfill vacant positions should be based on the number of staff with the combination of skills and qualifications necessary to carry out the agency's mission within available funding levels." Any agencies not adhering to these policies will be identified for the House and Senate Committees on Appropriations in a report to be submitted by the OMB Director each February. OMB is directed to issue guidance on the "use of direct conversions to contract out, in whole or in part, activities or functions last performed by Federal employees" that is consistent with Section 735 of division D of the Omnibus Appropriations Act, 2009, P.L. 111-8 , and Section 739(a)(1) of division D of the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ), and Section 327 of the 2008 National Defense Authorization Act ( P.L. 110-181 ). OMB is expected to honor the terms and conditions of appropriations acts by reviewing reprogramming requests submitted to the House and Senate Committees on Appropriations and reviewing agency activities for compliance. OMB and agencies are to consult with the House and Senate Committees on Appropriations in determining the applicability of Section 608 of this act which provides reprogramming authority. A reprogramming of funds under the section includes reimbursable agreements and other similar funding mechanisms used to reallocate funds. The law includes nine administrative provisions as follows: Section 201 continues to authorize the OMB Director (or other official designated by the President) to transfer up to 10% of appropriations between the White House, Executive Residence at the White House, White House Repair and Restoration, Council of Economic Advisers, National Security Council and Homeland Security Council, Office of Administration, Special Assistance to the President, and Official Residence of the Vice President accounts, after the House and Senate Committees on Appropriations are notified at least 15 days in advance. An appropriation may not be increased by more than 50% by such transfers. The Vice President approves transfers from the Special Assistance to the President or Official Residence of the Vice President accounts. Section 202 requires the OMB Director to submit a report to the House and Senate Committees on Appropriations on the implementation of Executive Order 13563 relating to Improving Regulation and Regulatory Review by April 2, 2012, and include information on increasing public participation in the rulemaking process and reducing uncertainty; improving coordination across federal agencies to eliminate redundant, inconsistent, and overlapping regulations; and identifying existing regulations that have been reviewed and determined to be outmoded, ineffective, or excessively burdensome. Section 203 requires the OMB Director to report to the House and Senate Committees on Appropriations, within 120 days after the act's enactment, on the costs of implementing P.L. 111-203 , the Dodd-Frank Wall Street Reform and Consumer Protection Act. The report is to include the estimated mandatory and discretionary obligations of funds through FY2014, by federal agency and by fiscal year, including (1) the estimated obligations by cost inputs such as rent, information technology, contracts, and personnel; the methodology and data sources used to calculate such estimated obligations; and the specific section of such act that requires the obligation of funds; and (2) the estimated receipts through FY2014 from assessments, user fees, and other fees by the federal agency making the collections, by fiscal year, including the methodology and data sources used to calculate such estimated collections; and the specific section of such act that authorizes the collection of funds. Section 204 requires the ONDCP Director to submit to the House and Senate Committees on Appropriations, within 60 days after the act's enactment, and prior to initially obligating more than 20% of the ONDCP funds, "a detailed narrative and financial plan on the proposed uses of all funds under the account by program, project, and activity." The reports must be updated every six months and include any changes in the estimates and assumptions of the previous reports. New projects and changes in the funding for ongoing projects require advance approval by the committees. Section 205 provides that up to 2% of ONDCP appropriations may be transferred between appropriated programs within ONDCP with advance approval by the House and Senate Committees on Appropriations, but such transfer may not increase or decrease an appropriation by more than 3%. Section 206 provides that up to $1 million of ONDCP appropriations may be reprogrammed within a program, project, or activity with advance approval by the House and Senate Committees on Appropriations. Section 207 rescinds $5.2 million in unobligated prior year balances from the Counterdrug Technology Assessment Center. Section 208 rescinds, from Other Federal Drug Control Programs, $359,958 in unobligated prior year balances for a chronic users study and $5.7 million in unobligated prior year balances for a National Youth Anti-Drug Media Campaign. Section 209 extends the availability of funds under the Partnership Fund for Program Integrity Innovation. Additional funding for this account is not provided for FY2012 and the Administration is directed to continue to leverage funds provided in FY2010 to continue the initiative during FY2012 and FY2013. As a co-equal branch of government, the judiciary presents its budget to the President, who transmits it to Congress unaltered. The President's FY2012 budget request for $7.29 billion is $423 million more than appropriated for FY2010 and $387 million above FY2011 enacted amounts. Table 5 lists the enacted amounts for FY2011, the President's FY2012 request, amounts recommended by the House and Senate appropriations committees for FY2012, and enacted amounts for FY2012. Appropriations for the judiciary—about two-tenths of 1% (0.2%) of the entire federal budget—are divided into budget groups and accounts. Two accounts that fund the Supreme Court (salaries and expenses of the Court and expenditures for the care of its building and grounds) together total about 1% of the total judiciary budget. The structural and mechanical care of the Supreme Court building, and care of its grounds, are the responsibility of the Architect of the Capitol. The rest of the judiciary's budget provides funding for the "lower" federal courts and related judicial services. The largest account, about 73% of the total budget—the Salaries and Expenses account for the U.S. Courts of Appeals, District Courts, and Other Judicial Services—covers the salaries of circuit and district judges (including judges of the territorial courts of the United States), justices and judges retired from office or from regular active service, judges of the U.S. Court of Federal Claims, bankruptcy judges, magistrate judges, and other officers and employees of the federal judiciary not specifically provided for by other accounts. It also covers the necessary expenses of the courts. The remaining 26% of the judiciary budget is disbursed among these accounts: U.S. Court of Appeals for the Federal Circuit, U.S. Court of International Trade, Administrative Office of the U.S. Courts, Federal Judicial Center, U.S. Sentencing Commission, and Judicial Retirement Funds. The judiciary budget does not fund three "special courts" in the U.S. court system: the U.S. Court of Appeals for the Armed Forces (funded in the Department of Defense appropriations bill), the U.S. Court of Appeals for Veterans Claims (funded in the Military Construction, Veterans Affairs, and Related Agencies appropriations bill), and the U.S. Tax Court (funded under Independent Agencies, Title V, of the FSGG bill). Federal courthouse construction is funded within the General Services account under Independent Agencies, Title V, of the FSGG bill. The judiciary also uses non-appropriated funds to offset its appropriations requirement. The majority of these non-appropriated funds are from fee collections, primarily from court filing fees. These monies are used to offset expenses within the Salaries and Expenses account. In some instances, the judiciary also has funds which may carry forward from one year to the next. These funds are considered "unencumbered" because they result from savings from the judiciary's financial plan in areas where budgeted costs did not materialize. According to the judiciary, such savings are usually not under its control (e.g., the judiciary has no control over the confirmation rate of Article III judges and must make its best estimate on the needed funds to budget for judgeships, rent costs based on delivery dates, and technology funding for certain programs). The judiciary also has "encumbered" funds—no-year authority funds for specific purposes, which are used when planned expenses are delayed, from one year to the next (e.g., costs associated with space delivery, and certain technology needs and projects). Judge Julia S. Gibbons, chair of the Budget Committee of the Judicial Conference of the United States, expressed the judiciary's recognition that the country was undergoing very serious financial difficulties and the need to reduce federal spending. In her April 6, 2011, written testimony submitted to the House Subcommittee on the Judiciary's FY2012 budget request, Judge Gibbons stated that the Judicial Conference proposed a FY2012 budget that reflects the judiciary's smallest requested percentage increase on record (an estimated 4.3% over the previous year). She asked that "Congress take into account the impact of the legislative process and law enforcement on the jurisdiction and workload of the federal courts, and ensure that the Judiciary continues to have the resources required to perform its statutory duties and to address a growing workload." She noted that the workload of the federal courts could further increase if the budgets of the Department of Justice and Department of Homeland Security are increased. Judge Gibbons also stated noted that 80% of the judiciary's costs are spent on salaries and rent, and that a funding shortfall would see significant staffing reductions in court clerks and probation and pretrial services nationwide. According to Judge Gibbons, the judiciary has adopted a comprehensive strategy since 2004 to contain costs and allow for more modest budget requests. At the FY2012 budget hearing, she stated that one of the biggest cost-containment efforts has been to limit space costs through process improvements and redesigns so that projected rent payments to the General Services Administration are "nearly $400 million below the 2012 rent projection made prior to initiating our cost-containment efforts." The judiciary has also taken steps to control personnel costs by changing salary and performance policies for court staff in order to reduce future compensation costs. These policies are estimated to save compensation costs by $300 million through FY2019. According to Judge Gibbons, containing information technology costs, such as the consolidation of computer servers at a single location, is expected to save $65 million in cost avoidance. Director of the Administrative Office of the U.S. Courts James Duff, who also testified, stated that a task force had been formed—comprising representatives from every directorate—to examine ways to curtail spending while maintaining court services to the public. The safe conduct of court proceedings and security of judges in courtrooms and off-site continue to be a concern. The 2005 Chicago murders of family members of a federal judge; the Atlanta killings of a state judge, a court reporter, and a sheriff's deputy at a courthouse; and the 2006 sniper shooting of a state judge in his Reno office spurred efforts to improve judicial security. In the 110 th Congress (2007-2008), the President signed into law the Court Security Improvement Act of 2007 ( P.L. 110-177 ), which was designed to enhance security for judges and court personnel as well as courtroom safety for the public. Legislation enacted in the 109 th Congress ( P.L. 109-13 ) included a provision that provided intrusion detection systems for judges in their homes. Threats against judges and the courts, however, have not abated. On January 4, 2010, a lone gunman wounded a deputy U.S. marshal and killed a court security officer at the Lloyd D. George U.S. Courthouse and Federal Building in Las Vegas. The judiciary has been working closely with the U.S. Marshals (USMS) to review the incident to ensure that adequate protective policies, procedures, and practices are in place. USMS has primary responsibility for the protection and security of more than 2,000 sitting federal judges, as well as approximately 5,250 other court officials at over 400 court facilities in the United States and its territories. According to the USMS, the Marshals Service now "Assesses, mitigates and deters approximately 1,400 threats and inappropriate communications against the judiciary each year." The FY2012 budget request would reauthorize a pilot program for the USMS to assume responsibility for perimeter security at selected courthouses that were previously the responsibility of the Federal Protective Service (FPS). This pilot was first authorized in FY2009 as a result of the judiciary's stated concerns that FPS was not providing adequate perimeter security. After the initial planning phase, USMS implemented the pilot program on January 5, 2009, and assumed primary responsibility for security functions at seven courthouses located in Chicago, Detroit, Phoenix, New York, Tucson, and two in Baton Rouge. The judiciary and USMS have been evaluating the program and identifying areas for improvement. The judiciary reimburses USMS for the protective services. Increased court security enhancements might be necessary should more suspects charged with terrorism be tried in federal courts rather than military tribunals. In her April 6, 2011, written testimony to the subcommittee, Judge Gibbons stated that bankruptcy filings are at near record levels due to the downturn in the economy. Such filings increased 29% in 2008, 35% in 2009, and 20% in 2010 to 1,572,597 filings. For 2011, the judiciary projected an additional 20,000 case filings nationwide. She also highlighted the increase in probation and pretrial services. Convicted offenders under the supervision of federal probation officers reached a record 126,642 in 2010 and is projected to increase to 131,000 cases in 2011. Pretrial supervision cases have also grown—110,671 cases in 2010, and a projected increase to 113,000 in 2011. Judge Gibbons also stated at the hearing, "After several years of steady growth, our criminal workload nationally is projected to decline 2 percent, from 78,213 filings in 2010—an all-time high—to 76,500 filings in 2011." Between 2000 and 2010, criminal case filings grew 25% nationally with immigration prosecutions in the judicial districts along the southwest border spurring the increase. She emphasized that the federal judiciary does not determine the workload of the courts but must handle the cases that are brought before the courts. Judicial pay has been an issue of concern to the judiciary for many years. Chief Justice John G. Roberts, Jr. reaffirmed his support for significant increases in judicial salaries in his 2008 Year-End Report on the Federal Judiciary . Chief Justice Roberts maintained that the salary of judges had not kept pace with inflation over the years and led judges to leave the bench in increasing numbers. However, the judicial pay issue was not mentioned in the Chief Justice's last two year-end reports on the federal judiciary. During the 110 th Congress, legislation was introduced in both the House and Senate to substantially increase judicial salaries, but no final action was taken on the bills before Congress adjourned. However, federal judges received a salary adjustment in 2009. In the FY2011 request, the judiciary proposed that federal judges receive the same automatic cost-of-living adjustments that Members of Congress are authorized to receive. However, no cost-of-living adjustment was provided to Members of Congress or judges in FY2011. Near the end of the first session of the 111 th Congress on November 3, 2009, Senator Dianne Feinstein introduced (for herself and Senators Orrin Hatch, Patrick Leahy, and Lindsey Graham) S. 2725 , the Federal Judicial Fairness Act of 2009. The bill would have repealed a law requiring that salary increases for federal judges and Supreme Court Justices be specifically authorized by acts of Congress, and would have applied the same automatic annual cost-of-living adjustment to judicial salaries as takes effect under the General Schedule for civilian federal employees. No further action was taken prior to the adjournment of the 111 th Congress. Although the Senate Appropriations Committee recommended a 2010 salary adjustment for Justices and judges under Section 307 ( S.Rept. 111-43 ), the enacted FY2010 legislation ( P.L. 111-117 ) did not provide for the salary adjustment. In the 112 th Congress, on March 14, 2011, Senator Dianne Feinstein introduced, S. 569 , the Federal Judicial Fairness Act of 2011, legislation similar to S. 2725 . The bill, with nine cosponsors, has been referred to the Senate Judiciary Committee where it is pending. The judiciary did not propose a cost-of-living adjustment for federal judges for FY2012. For FY2012, the judiciary requested $7.29 billion in total appropriations. This represents an increase of $386.9 million over the $6.91 billion enacted FY2011, although the request was released prior to the enactment of the FY2011 act. Approximately 86.1% of the requested increase would cover pay adjustments, benefits, and inflation to maintain current services. The FY2012 request included funding for an additional 523 full-time-equivalent (FTE) positions, including 264 FTEs to meet increased workload requirements, 16 FTE magistrate judges and staff, and 9 FTE police officers and associated costs for the Supreme Court. A total of 35,695 FTEs were requested for FY2012, an increase of 1.5% from the estimated 35,172 FTEs in 2011. The following summarizes the FY2011 enacted amount, the FY2012 judiciary budget request, and the amounts recommended by the House and Senate appropriations committees, and the enacted amounts, for FY2012. The total FY2012 request for the Supreme Court was $84.1 million contained in two accounts: (1) Salaries and Expenses: $75.6 million was requested, a $1.7 million increase over the $73.9 million enacted for FY2011; and (2) Care of the Building and Grounds: $8.5 million was requested, a $0.3 million increase over the $8.2 million enacted for FY2011. The total FY2012 budget request was a $2.0 million increase over the FY2011 appropriation of $82.1 million. The request included pay and benefits increases to maintain FY2011 services, and 9 additional FTE police officers and associated costs (e.g., training) to enhance the Court's security and to staff new posts needed after completion of the Supreme Court Building Modernization Project. The House committee recommendation for FY2012 was $74.8 million for the Salaries and Expenses account, and $8.2 million for the Care of Building and Grounds account for a total of $83.0 million, which would include funds for additional police officers as requested. The Senate committee recommended, and P.L. 112-74 provides, the same amounts recommended by the House committee. This court, consisting of 12 judges, has jurisdiction and reviews, among other things, certain lower court rulings on patents and trademarks, international trade, and federal claims cases. The FY2012 budget request was $35.1 million, which was $2.6 million more than the FY2011 appropriation of $32.5 million. The House committee recommendation for FY2012 was $31.5 million. The Senate committee recommendation for FY2012 was $31.9 million. P.L. 112-74 provides $32.5 million. This court has exclusive jurisdiction nationwide over the civil actions against the United States, its agencies and officers, and certain civil actions brought by the United States arising out of import transactions and the administration as well as enforcement of federal customs and international trade laws. The FY2012 request was $22.9 million, a $1.5 million increase over the FY2011 appropriation of $21.4 million. The budget request would pay for standard pay and other inflationary adjustments, and to maintain current services. The House committee recommendation for FY2012 was $20.6 million. The Senate committee recommendation for FY2012 was $21.0 million. P.L. 112-74 provides $21.4 million. The FY2011 funding request for this budget group covers 12 of the 13 courts of appeals and 94 district judicial courts located in the 50 states, District of Columbia, Commonwealth of Puerto Rico, territories of Guam and the U.S. Virgin Islands, and the Commonwealth of the Northern Mariana Islands. The FY2012 request was $6,912.7 million, a $359.0 million increase over the FY2011 appropriation of $6,553.7 million. The House recommendation for FY2012 was $6,402.9 million. The Senate committee recommendation for FY2012 was $6,568.6 million. P.L. 112-74 provides $6,602.9 million. The account, which comprises more than 90% of the total judicial budget, covers salaries and expenses, the Vaccine Injury Compensation Trust Fund, court security, defender services, and fees of jurors and commissioners. The FY2012 request for this account was $5,236.2 million, an increase of $232 million over the FY2011 appropriation of $5,004.2 million. According to the budget request, this increase is needed primarily for inflationary and other adjustments to maintain the courts' current services. The House recommendation for FY2012 was $4,790.9 million. The Senate committee recommendation for FY2012 was $4,970.6 million. P.L. 112-74 provides $5,015.0 million. Established to address a perceived crisis in vaccine tort liability claims, the Vaccine Injury Compensation Program funds a federal no-fault program that protects the availability of vaccines in the nation by diverting substantial number of claims from the tort arena. The FY2012 request for the Trust Fund account was $5.0 million, a $0.2 million increase from the FY2011 appropriation of $4.8 million. The House and Senate committee recommendation for FY2012 was $4.8 million. P.L. 112-74 provides the requested level of $5.0 million. This account provides for protective guard services, security systems, and equipment needs in courthouses and other federal facilities to ensure the safety of judicial officers, employees, and visitors. Under this account, the majority of funding for court security is transferred to the U.S. Marshals Service to pay for court security officers under the Judicial Facility Security Program. The request would fund salary adjustments and inflationary increases to maintain current services. The FY2012 request was $513.1 million, a $46.4 million increase over the FY2011 appropriation of $466.7 million. The request included 50 additional court security officers for new and renovated existing space expected to be delivered in FY2012, changes in operating expenses based on anticipated billings from the Federal Protective Service, and improvements, and enhancements to security systems and equipment. P.L. 112-74 provides $500.0 million, the same amount proposed by the House and Senate. This account funds the operations of the federal public defender and community defender organizations, and compensation, reimbursements, and expenses of private practice panel attorneys appointed by federal courts to serve as defense counsel to indigent individuals. The cost for this account is driven by the number and type of prosecutions brought by U.S. Attorneys. The FY2012 request for these services was $1,098.7 million, a $73.0 million increase over the FY2011 appropriation of $1,025.7 million. The request includes an additional 61 FTE positions to handle 206,200 defense representations and complex caseloads. The House recommendation for FY2012 was $1,050.0 million. The Senate committee recommendation for FY2012 was $1,034.2 million. P.L. 112-74 provides $1,031.0 million. This account funds the fees and allowances provided to grand and petit jurors, and compensation for jury and land commissioners. The FY2012 request was $59.7 million, a $7.4 million increase over the FY2011 appropriation of $52.3 million. The requested increase would be primarily for adjustments to allow payment for statutory fees and expenses. The House recommendation for FY2012 was $57.3 million. The Senate committee recommendation for FY2012 was $59.0 million. P.L. 112-74 provides $51.9 million. As the central support entity for the judiciary, the AOUSC provides a wide range of administrative, management, program, and information technology services to the U.S. courts. AOUSC also provides support to the Judicial Conference of the United States, and implements conference policies and applicable federal statutes and regulations. The FY2012 request for AOUSC was $88.5 million, a $5.6 million increase over the FY2011 appropriation of $82.9 million. The request would fund adjustments to its base, and maintain current services, including recurring costs such as travel, communications, service agreements, and supplies. Three new positions (two FTEs) were requested for a six-month period to address high priority court support functions (including modernization and consolidation of the judiciary's nationwide accounting system). AOUSC also receives non-appropriated funds from fee collections and carry-over balances to supplement its appropriations requirements. The House recommendation for FY2012 was $80.0 million. The Senate committee recommendation for FY2012 was $82.0 million. P.L. 112-74 provides $82.9 million. As the judiciary's research and education entity, the Federal Judicial Center undertakes research and evaluation of judicial operations for the Judicial Conference committees and the courts. In addition, the center provides judges, court staff, and others with orientation and continuing education and training. The center's FY2012 request was $29.0 million, a $1.7 million increase over the FY2011 appropriation of $27.3 million. The request would cover standard pay and other inflationary adjustments, the hiring of one FTE (two positions), and enhanced education and training initiatives. The House recommendation for FY2012 was $26.3 million. The Senate committee recommendation for FY2012 was $27.0 million. P.L. 112-74 provides $27.0 million. The commission promulgates sentencing policies, practices, and guidelines for the federal criminal justice system. The FY2012 request was $17.9 million, an $0.8 million increase over the FY2011 appropriation of $16.8 million. The increase would cover pay and other inflationary adjustments. The House recommendation for FY2012 was $16.1 million (which included a rescission of $0.1 million). The Senate committee recommended, and P.L. 112-74 provides, $16.5 million for FY2012. This mandatory account provides for three trust funds that finance payments to retired bankruptcy and magistrate judges, retired Court of Federal Claims judges, and the spouses and dependent children of deceased judicial officers. According to the House report, the FY2012 request was $99.0 million, an $8.6 million increase over the FY2011 appropriation of $90.4 million. The House provided for these funds in Title VI of the FSGG bill, rather than in Title III. P.L. 112-74 provides $103.8 million, the same amount proposed by the Senate, which was reported in Title III. The House and Senate committee reports on the FSGG bill ( H.R. 2434 , S. 1573 ) each contained new and continuing language under administrative provisions. Section 301, which would continue language to permit funds for salaries and expenses to be available for employment of experts and consultant services (as authorized by 5 U.S.C. 3109). (The judiciary also proposed this section.) Section 302, which would continue language to permit up to 5% of any appropriation made available for FY2012 to be transferred between judiciary appropriations accounts, provided that no appropriation shall be decreased by more than 5% or increased by more than 10% by any such transfer except in certain circumstances. In addition, the language would provide that any such transfer shall be treated as a reprogramming of funds under Sections 604 and 608 of the bill and shall not be available for obligation or expenditure except in compliance with the procedures set forth in those sections. (The judiciary also proposed this section.) Section 303, which would continue language authorizing not to exceed $11,000 to be used for official reception and representation expenses incurred by the Judicial Conference of the United States. (The judiciary also proposed this section.) Section 304, which would continue language enabling the judiciary to contract for repairs under $100,000. Section 305, which would continue language to authorize a court security pilot program. (The judiciary also proposed this section.) Section 306, which would extend a temporary judgeship in Kansas. Section 307, which would rescind $100,000 of prior year unobligated balances from the United States Sentencing Commission. Section 308, which would require that the President submit to Congress, without change, proposed supplemental appropriations submitted to the President by the legislative branch and the judicial branch. The Senate committee recommended Sections 301, 302, 303, and 305, listed above. Section 304, which would require the Administrative Office to submit an annual financial plan for the judiciary within 90 days of enactment of this act. Section 305, which would grant the judicial branch the same tenant alteration authorities as the executive branch. Section 307, which would extend for one year the authorization of a temporary judgeship in Hawaii and a temporary judgeship in Kansas. P.L. 112-74 contains provisions related to (1) salaries and expenses for employment of experts and consultant services; (2) transfers of up to 5%; (3) limiting official reception and representation expenses incurred by the Judicial Conference of the United States to $11,000; (4) language enabling the judiciary to contract for repairs under $100,000; (5) the continuation of a court security pilot program; and (6) a one year extension of the authorization of a temporary judgeship in Hawaii and a temporary judgeship in Kansas. Additionally, Section 619 of Title VI (General Provisions) of Division C of the act contained the language included in the House report amending 31 U.S.C. 1107 to require the President to "transmit promptly to Congress without change, proposed deficiency and supplemental appropriations submitted to the President by the legislative branch and the judicial branch." The authority for congressional review and approval of the District of Columbia's budget is derived from the Constitution and the District of Columbia Self-Government and Government Reorganization Act of 1973 (Home Rule Act). The Constitution gives Congress the power to "exercise exclusive Legislation in all Cases whatsoever" pertaining to the District of Columbia. In 1973, Congress granted the city limited home rule authority and empowered citizens of the District to elect a mayor and city council. However, Congress retained the authority to review and approve all District laws, including the District's annual budget. As required by the Home Rule Act, the city council must approve a budget within 56 days after receiving a budget proposal from the mayor. The approved budget must then be transmitted to the President, who forwards it to Congress for its review, modification, and approval. On April 1, 2011, the mayor of the District of Columbia submitted a proposed $9.6 billion general operating fund budget, including enterprise funds, to the District of Columbia Council. The mayor's budget includes a proposed plan intended to address a projected $322 million budget shortfall for FY2012. Both the President and Congress may propose financial assistance to the District in the form of special federal payments in support of specific activities or priorities. Table 6 lists the enacted amounts for FY2011, the President's FY2012 request, amounts recommended by the House and Senate appropriations committees for FY2012, and enacted amounts for FY2012. On February 14, 2011, the Obama Administration released its detailed budget requests for FY2012. The Administration's proposed budget requested $716.7 million in special federal payments to the District of Columbia. Approximately three-quarters ($544.7 million) of this budget request would be targeted to the courts and criminal justice system. The President's budget also requested $104.1 million in support of education, including $67 million to support elementary and secondary education, $2 million for a National Guard retention and college access program, and $35.1 million for college tuition assistance. This comprises 14.5% of the Administration's budget request. The President's total budget request of $716.7 million represents a 2.4% increase from the FY2011 appropriations of $700.1 million. On April 1, 2010, the mayor of the District of Columbia submitted a proposed budget to the District of Columbia Council. The mayor proposed a general fund operating budget of $9.6 billion. After its review, the council revised and approved the District's budget on May 25, 2011, and forwarded it to the mayor for his signature. The mayor signed the measure on June 29, 2011, and it was transmitted to Congress for its review on July 8, 2011. The Financial Services and General Government Appropriations Act of FY2012, as reported by the House Appropriations Committee ( H.Rept. 112-136 ) includes $592.3 million in special federal payments to the District of Columbia. This is $107.9 million less than appropriated in FY2011, and $124.4 million less than requested by the President. The bill would reduce federal support for court operations by $19 million below the amount appropriated for FY2011. It would continue to support elementary and secondary education initiatives in the District, including school vouchers, but at a level $17.7 million less than the amount appropriated for FY2011. The bill would prohibit the use of federal funds for a needle exchange program, or to enact rules governing medical marijuana, or to support efforts to achieve congressional voting representation for residents of the District. In addition, it would restrict the use of District and federal funds for abortion services except in cases of incest, rape, or the life of the mother was threatened. S. 1573 , as reported, includes $658 million in special federal payments to the District of Columbia. This is $41 million less than appropriated in FY2011, and $59 million less than requested by the President, but $21 million more than recommended by the House committee bill. The bill would reduce federal support for court operations by $13 million below the $243 million appropriated for FY2011. Like its House counterpart, the bill would continue to support elementary and secondary education initiatives in the District, including school vouchers, but at a level $18 million less than the amount appropriated for FY2011. The Senate committee bill would continue several controversial general provisions included in previous years' appropriations acts that are also included in the House version of the bill. These include provisions that would prohibit the use of federal funds for a needle exchange program, or to enact rules governing medical marijuana, or to support efforts to achieve congressional voting representation for residents of the District. In addition, it would restrict the use of District and federal funds for abortion services except in cases of incest, rape, or if the life of the mother was threatened. The bill also includes two new general provisions. One would allow the Public Defender Service to purchase liability insurance for its attorneys, staff, and board members. The other provision would change, from two years to five years, the frequency that the Government Accountability Office would conduct management audits of the entities charged with chartering District of Columbia public charter schools. P.L. 112-74 appropriated $661 million in special federal payments to the District of Columbia, including $90.4 million in education related activities (resident tuition assistance, school reform, and national guard college access program). Approximately 82% ($540.5) of the special federal payments to the District of Columbia were targeted to the courts and criminal justice system. The act also included provisions approving the District operating budget for FY2012 at $10.8 billion. P.L. 112-74 continues several controversial general provisions included in previous years' appropriations acts that were also included in the House and Senate bills. The act allows the use of District funds, but prohibits the use of federal funds, for a needle exchange, to enact and administer rules governing medical marijuana, and to support efforts to achieve congressional voting representation for residents of the District. The act continues to restrict the use of District and federal funds for abortion services except in cases of incest, rape, or if the life of the mother was threatened. The act also contains two new provisions initially included in the Senate bill. One allows the Public Defender Service to purchase liability insurance; the second directs GAO to conduct management audits of the entities charged with chartering District of Columbia public charter schools every five years rather than two years, which was the previous practice. Title V provides funding for more than two dozen independent agencies which perform a wide range of functions, including the management of federal real property (GSA), the regulation of financial institutions (SEC), and mail delivery (USPS). Table 7 lists the enacted amounts for FY2011, the President's FY2012 request, amounts recommended by the House and Senate appropriations committees for FY2012, and enacted amounts for FY2012. The President requested $88 million for a new Civilian Property Realignment Board (CPRB), which would develop recommendations for the President as to which civilian federal properties should be consolidated, reconfigured, redeveloped, leased, sold, or conveyed. In the House, a similar body would be established under H.R. 1473 , the Civilian Property Realignment Act of 2011. House appropriators recommended no funding for the CPRB, but wrote that "the Committee believes a Civilian Property BRAC is a meritorious idea deserving of serious consideration. Should the Congress move forth with legislation to create a Civilian Property BRAC, the Committee will lend its support as able." The Senate Appropriations Committee also recommended no funding for the board. P.L. 112-74 provides no funding for the CPRB. The Commodity Futures Trading Commission (CFTC) is the independent regulatory agency charged with oversight of derivatives markets. The CFTC's functions include oversight of trading on the futures exchanges, registration and supervision of futures industry personnel, prevention of fraud and price manipulation, and investor protection. Although most futures trading is now related to financial variables (interest rates, currency prices, and stock indexes), congressional oversight remains vested in the agriculture committees because of the market's historical origins as an adjunct to agricultural trade. Appropriations for the CFTC are under the jurisdiction of the Agriculture Subcommittee in the House, and the Financial Services and General Government Subcommittee in the Senate. P.L. 112-10 provided $203 million for the CFTC for FY2011. The President requested $308 million for the CFTC for FY2012, would have been $105 million more than FY2011 enacted appropriations. The House Appropriations Committee recommended $172 million for FY2012, which was $136 million less than the President's request and $31 million below FY2011 enacted appropriations. The Senate Appropriations Committee recommended $240 million, an increase of about $37 million from FY2011, but $38 million below the Administration's request. P.L. 112-74 provides $205 million for the CFTC, $103 million less than the President's request and $2 million more than FY2011 enacted amounts. The Consumer Product Safety Commission (CPSC) is an independent federal regulatory agency whose mission is to reduce the risk of injury from using consumer products. It endeavors to do so by developing safety standards for consumer products; promoting uniformity between state and local regulations; and conducting or encouraging research into the causes of product-related deaths, illnesses, and injuries and ways to prevent them in the future. For FY2011, the CPSC is receiving $115 million in appropriated funds, or about $3 million less than the amount enacted for FY2010. The decrease follows several years of substantial growth in CPSC funding. As recently as FY2007, the largest appropriation CPSC ever received (in nominal dollars) was about $62 million. But in fiscal years 2008 through 2010, Congress approved significant increases in funding for the agency, largely to support major reforms initiated by Consumer Product Safety Improvement Act of 2008 (CPSIA, P.L. 110-314 ). The 110 th Congress passed the act largely in response to a series of highly publicized recalls of imported products, particularly unsafe toys and other items manufactured for children. Section 1574 of the Department of Defense and Full-Year Continuing Appropriations Act, 2011 ( P.L. 112-10 ) directs the Government Accountability Office to conduct a study of the usefulness and reliability of the information on consumer product safety collected by the CPSC through a publicly accessible database that has been up and running since March 11, 2011; the study must be submitted to the House and Senate Committees on Appropriations no later than October 12, 2011. The database was established by Section 6A of the CPSIA and is intended to provide a mechanism for consumers to both report problems with consumer products and investigate the risk of harm associated with specific products. In addition, the database is designed to help the CPSC identify trends in particular product hazards more quickly and efficiently. For FY2012, the Obama Administration requested $122 million in appropriations for the CPSC. Such a level of funding would have allowed the agency to hire an additional 34 full-time equivalent employees (FTEs), bringing the total size of FTE staff to about 584. Relative to the FY2011 budget request, the FY2012 proposal would have reduced the budget for information technology capital and development by $3.1 million, but it would have increased funding for data intake, incident review and investigation by $3.1 million to hire 20 new FTEs. The added funds represented the estimated cost of operating the new public database on consumer product hazards in FY2012. Under the budget request, funding for the replacement of information technology equipment and software would have increased by $0.5 million to $1.5 million. In addition, the proposal would have allocated $400,000 to the creation of an Office of Education, Global Outreach, and Small Business Ombudsman and set aside $665,000 to hire three FTEs to support financial management oversight. In its report on H.R. 2434 , the House Appropriations Committee recommended an appropriation of $111 million for the CPSC in FY2012, or $4 million less than the amount enacted for FY2011 and $11 million less than the budget request. Of that amount, $0.5 million would have been available until September 30, 2013, for the pool and spa grants program established by the Virginia Graeme Baker Pool and Spa Safety Act ( P.L. 110-140 ). The House committee wrote that it had "strong concerns" about the accuracy and reliability of the information that is being collected through the new public database for consumer product safety information. More specifically, it wrote that the database is "of little value to consumers and manufacturers" because the information needed to file a report about harm associated with a product through the database is "insufficient." The House committee wrote that until changes were made in the reporting requirements to improve the reliability and accuracy of reports of harm, the $3 million that was requested to cover expenses linked to the database in FY2012 shall to be used for other purposes, such as risk assessment and enforcement. Section 622 of the bill would have prohibited the use of appropriated funds to manage the database in FY2012. In addition, the House committee expressed misgivings about the application of Section 101 of the CPSIA to youth off-road vehicles. Section 101(a) of the act sets declining limits on the lead content of products designed or intended for children 12 years of age or younger. But Section 101(b) authorizes the CPSC to exclude specific products that exceed the lead limits from those limits if it determines on the basis of sound scientific evidence that the lead in such products will not harm the health of children or have an adverse effect on public health or safety. In early 2009, the Specialty Vehicle Institute of America filed a petition to exclude certain parts used in youth motorized recreational vehicles from the lead limits under Section 101(b). Though the CPSC denied the petition, it decided to issue a stay of enforcement that lasted from March 11, 2009, to May 1, 2011. In its report on H.R. 2434 , the House committee expresses concern that enforcement of the limits under Section 101(a) would lead to greater use of adult off-road vehicles by children, and that such an outcome would pose a greater risk of harm to children than exposure to the lead in the components of such vehicles. Section 630 of the bill would exclude youth off-road vehicles and bicycles from the lead limits in the CPSIA. The Senate Appropriations Committee recommended in its report ( S.Rept. 112-79 ) to accompany S. 1573 that the CPSC receive $114.5 million in appropriations for FY2012, or $288,000 less than the amount enacted for FY2011 and $7.5 million less than the budget request. One issue the report addresses is the performance of the Consumer Product Safety Information Database during the six months following its launch in March 2011. The committee wrote that SaferProducts.gov has been "quite successful in its first 6 months, even resulting so far in a recall of a children's product in July that was demonstrated to have caused serious laceration injuries to children." The committee also directed the commission to submit drywall reports quarterly in FY2012, rather than monthly, and encouraged it to collect and report data annually on playground injuries and deaths. Section 502 of the bill would have given the CPSC the authority to "compel" foreign manufacturers to provide it with requested information on product defects. A lack of such authority is seen to have hindered the commission's investigations in the recent past into reported problems with some imported products, such as drywall imported from China. Section 503 would have required the CPSC to issue a safety standard for button cell batteries, which are used in many consumer products and pose a health hazard to small children who swallow them. The committee noted in the report that the standard should require the batteries to be securely enclosed in compartments and the products containing them to display a warning label. Section 506 would have mandated that the CPSC issue a rule eliminating the risk of strangulation from the cords of window coverings. The commission identified the cords as one of the top five hidden household hazards. In recent years, it has recalled tens of millions of window coverings for this reason. In the committee's view, though a voluntary standard is in place for window blinds, it has not eliminated the risk of strangulation from their cords. The enacted legislation provides $114.5 million in appropriations for the CPSC in FY2012. Of this amount, $500,000 shall remain available until September 30, 2013, to implement the grant program authorized by the Virginia Graeme Baker Pool and Spa Safety Act. P.L. 112-74 also extends the grant program through 2012 and directs GAO to undertake two studies. One is to focus on the safety risks associated with "new and emerging consumer products, including [the] chemicals and other materials used in their manufacture," taking into account the ability and authority of the CPSC to "identify, assess, and assess those risks in a timely manner" and to keep abreast of the effects of new and emerging consumer products on public health and safety. The second study is to address four related issues: (1) the extent to which manufacturers comply with voluntary industry standards for the safety of consumer products, including inexpensive imports; (2) whether there are consequences for manufacturers that fail to comply with such standards; (3) whether the CPSC has the authority and ability to force compliance with voluntary industry standards; and (4) whether certain products and certain manufacturers exhibit a "pattern of non-compliance with such standards." In their report that accompanied P.L. 112-74 , the conferees express support for the agency's efforts to ensure that button cell batteries are securely enclosed in products like toys and sold with appropriate warning labels. They also encourage the parties involved in the process of setting standards for corded window blinds to "redouble efforts to address the strangulation risk posed by corded window coverings in a timely manner." The Election Assistance Commission (EAC) was established under the Help America Vote Act of 2002 (HAVA; P.L. 107-252 ). The commission provides grant funding to the states to meet the requirements of the act and election reform programs, provides for testing and certification of voting machines, studies election issues, and promulgates voluntary guidelines for voting systems standards and issues voluntary guidance with respect to the act's requirements. The commission was not given express rule-making authority under HAVA, although the law transferred responsibilities for the National Voter Registration Act (NVRA; P.L. 103-31 ) from the Federal Election Commission to the EAC; these responsibilities include NVRA rule-making authority. The Department of Justice is charged with enforcement responsibility. For FY2011, the President's budget request included $16.8 million for the EAC, of which $3.25 million was to be transferred to the National Institute of Standards and Technology (NIST). P.L. 112-10 , the Department of Defense and Full-Year Continuing Appropriations Act, 2011, provided $16.3 million for the EAC, of which $3.25 million was to be transferred to NIST. For FY2012, the President's budget request included$13.7 million for the EAC, of which $3.25 was to be transferred to NIST for its work to support the development of testing guidelines for voting equipment. The House Committee on Appropriations recommended $6.9 million for the EAC and noted that the amount was $9.4 million less than in FY2011 and $6.9 million less than the budget request. The House committee recommended the transfer of $1.6 million to NIST, which is $1.8 million less than in FY2011 and $1.6 less than the request. The House committee also expressed its concern about the EAC's high management operating costs and the effectiveness of the agency. The Senate Appropriations Committee recommended $14.8 million for the EAC, $1 million above the budget request, of which $3.25 million was to be transferred to NIST. P.L. 112-74 provides $11.5 million for the EAC, of which $2.75 million is to be transferred to NIST and $1.25 million is for the Office of the Inspector General. 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 communications 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—and sometimes all—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; sometimes, as is the case for FY2012, there is no direct appropriation. For FY2012, the House Appropriations Committee approved $319.0 million for agency salaries and expenses with no direct appropriation (all funding to be obtained through the collection of regulatory fees). This level was $16.8 million less than FY2011 and $39.8 million less than the Administration requested. The House committee recommendation included bill language, similar to that included in previous appropriations acts, which would have allowed collection of $319.0 million in Section 9 (regulatory) fees; a prohibition on amounts collected in excess of $319.0 million from being available for obligation; a prohibition on remaining offsetting collections from prior years from being available for obligation; retention of $85.0 million of proceeds from the use of a competitive bidding system; up to $4,000 for official reception and representation expenses; purchase and hire of motor vehicles; and special counsel fees. The House committee wrote that it remained concerned with the commission's decision to begin regulating the Internet, specifically the precedent that this decision sets and its impact on future innovation. Therefore, the House committee included Section 621 to prohibit funds for implementation of the commission's net neutrality order. The House committee also wrote that it was aware of concerns related to possible interference to Global Positioning System (GPS) devices due to terrestrial broadband service. The House committee wrote that it remained engaged on the issue and awaited the final report by the Technical Working Group. The House committee approved an amendment introduced by Representatives Austria and Yoder that would have prohibited funding for the FCC to remove conditions on or permit certain commercial broadband operations until the FCC had resolved concerns of interference by these operations on GPS devices. The amendment was adopted on a voice vote. The House committee wrote that it believed that FCC involvement in cybersecurity should not result in regulations or activities that duplicate or contradict the multi-agency cybersecurity mitigation and response efforts being lead by the Departments of Defense and Homeland Security. The House committee also wrote that it understood the FCC was promulgating a rule to address abuses in intercarrier compensation related to the modernization of the Universal Service Fund. In addition, the House committee wrote it believed that the service that local exchange carriers provide to rural Americans was "important" and encouraged the commission to maintain a reasonable intercarrier compensation system for rural local exchange carriers. The House committee wrote that it was concerned about the disparity in access to broadband between Puerto Rico and the 50 states. It cited recent studies that have found that only 31% to 37% of residents of Puerto Rico have adopted broadband measured at the lowest speed tracked by the commission. The House committee encouraged the commission to implement policies that increase broadband accessibility and adoption in Puerto Rico. For FY2012, the Senate Appropriations Committee approved the FCC's requested budget of $354.2 million, all of which was to be derived from the collection of fees. This budget level was $18.4 million above the FY2011 enacted level and $35.2 more than what was approved by the House committee. The Senate committee recommendation included bill language, similar to that included in previous appropriations acts, which would have extended FCC's exemption from the Anti-deficiency Act until December 31, 2013. prohibited the FCC from enacting certain recommendations regarding universal service that were made to it by the Universal Service Joint Board. The Joint Board's recommendation would limit universal support to one line, which the Committee wrote would be harmful to small businesses, especially in rural areas, which need a second line for a fax or for other business purposes. encouraged the FCC to maintain a reasonable intercarrier compensation system for rural local exchange carriers as it prepared to promulgate a rule to address compensation rates from the Universal Service Fund. P.L. 112-74 provides $339.8 million for agency salaries and expenses with no direct appropriation (all funding will be obtained through the collection of regulatory fees). This level is $16.8 million less than the FY2011 budget. The legislation also included language to extend the suspension of the application of the Anti-Deficiency Act to the Universal Service Fund until the end of 2013 and prohibit the FCC from using any appropriated funds to "modify, amend, or change its rules or regulations for universal service support payments to implement the February 27, 2004 recommendations of the Federal-State Joint Board on Universal Service regarding single connection or primary line restrictions on universal service support payments." The FDIC's Office of the Inspector General is funded from deposit insurance funds; the OIG has no direct support from federal taxpayers. Before FY1998, the amount was approved by the FDIC Board of Directors; the amount is now directly appropriated (through a transfer) to ensure the independence of the OIG. The FDIC's OIG received $42.9 million in FY2011, and the President requested $45.3 million for FY2012. The House Appropriations Committee concurred with the President, recommending an FY2012 appropriation of $45.3 million. House appropriators wrote that the increase was to enable the OIG to oversee the workload associated with the increase in bank failures, the increase in resolution and receivership activity, and new programs established in response to the economic downturn that has impacted the Deposit Insurance Fund. The Senate Appropriations Committee recommended, and P.L. 112-74 provides, $45.3 million for FY2012. The FEC is an independent agency that administers, and enforces civil compliance with, the Federal Election Campaign Act (FECA) and campaign finance regulations. The agency does so through educational outreach, rulemaking, and litigation, and by issuing advisory opinions. The FEC also administers the presidential public financing system. In recent years, FEC appropriations have generally been noncontroversial and subject to limited debate in committee or on the House and Senate floors. For FY2012, the President requested $67.0 million for the FEC. As in recent years, personnel and information technology (IT) expenses are expected to consume much of the agency's budget in FY2012. The commission requested no new full-time equivalent positions over the current allocation of 375. Among other points, the IT budget was expected to cover ongoing improvements to the FEC website and additional hardware and software to manage and publicly disclose campaign finance data. The House Appropriations Committee recommended an FY2012 appropriation of $66.4 million, $0.65 million less than the President's requested amount and the same amount appropriated in FY2011. The House committee report and legislative language contained no additional instructions except a $5,000 limit on "reception and representation," a prohibition that has long been included in FEC appropriations provisions. A separate section of the FSGG bill also addresses campaign finance issues. Section 738 of the FY2012 bill (concerning government-wide provisions) contained a prohibition on requiring government contractors to provide information about their or their employees' federal campaign contributions, electioneering communications, or independent expenditures as a condition of receiving the contract. As CRS has noted elsewhere, the Obama Administration has reportedly considered issuing an executive order to require additional disclosure of government contractors' political expenditures. Similar language to that in the FSGG bill has also appeared in other legislation currently before Congress. The Senate Appropriations Committee also recommended a $66.4 million appropriation with a $5,000 cap on reception and representation expenses. The Senate committee bill and committee report did not contain additional instructions for the agency. The Senate committee bill appeared not to contain the House committee bill's provisions concerning contractor disclosure. As with the House version of the FSGG bill, P.L. 112-74 contains language prohibiting requiring government contractors from disclosing additional information about certain political spending. Specifically, Section 743 contains a prohibition on requiring government contractors to provide information about their or their employees' federal campaign contributions, electioneering communications, or independent expenditures as a condition of receiving the contract. As CRS has noted elsewhere, the Obama Administration has reportedly considered issuing an executive order to require additional disclosure of government contractors' political expenditures. No such order has been issued, but several measures have proposed barring the disclosure reportedly under consideration. The Federal Trade Commission (FTC) is an independent agency whose mission is to protect consumers and maintain or enhance competition in a wide range of industries. It does so mainly by enforcing laws that prohibit anticompetitive, deceptive, or unfair business practices, and by educating consumers and business owners to foster informed consumer choices, compliance with the law, and a better understanding of the competitive process. Operating funds for the agency come from three sources, listed here in descending order of importance: (1) appropriations, (2) pre-merger filing fees under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, and (3) Do-Not-Call registry fees. In FY2011, appropriations for the FTC totaled $291 million, or $23 million less than the amount requested by the Administration for that year. Pre-merger filing fees were expected to bring in another $93 million, while fees for the Do-Not-Call registry were expected to contribute $21 million. According to an FTC budget document, the agency allocated 57% of its FY2011 operating funds (or $231 million) to the goal of protecting consumers; the remaining $174 million was applied towards maintaining and enhancing competition. For FY2012, the Obama Administration requested $326 million in appropriations for the FTC, or $37 million more than the amount enacted for FY2011. The additional funds would have been used to pay for mandatory contract and building replacement costs, hire 25 new full-time equivalent employees, support increased demand for the FTC's Consumer Response Systems and Services, improve its ability to investigate and litigate complex cases, acquire up-to-date data on the pharmaceutical industry for use in agency cases and reports, and streamline and modernize the agency's information systems. It was assumed in the budget request that pre-merger filing fees would have provided $110 million in added funds, and that Do-Not-Call fees would have contributed another $19 million, giving the FTC a total budget in FY2012 of $455 million. The House Appropriations Committee recommended that that FTC receive $284 million in appropriations in FY2012, or $7 million less than the amount enacted for FY2011 and $42 million less than the budget request. This amount would have been supplemented by an estimated $108 million in pre-merger filing fees and $21 million in Do-Not-Call fees, giving the agency an operating budget of $413 million. Though the House committee's report said little about the use of the recommended appropriated funds, it did direct the FTC not to issue "principles or guidelines" concerning food marketed to children, unless a "peer-reviewed scientific study" conclusively proved that the most effective way to alter eating habits and reduce the obesity rate was to regulate the marketing of food to children. The House committee also expressed the view that the FTC should not rely on any guidance issued by the federal Interagency Working Group on Food Marketed to Children "to engage in enforcement actions under the (Commission's) existing authority." The Senate Appropriations Committee recommended in its report ( S.Rept. 112-79 ) on H.R. 1573 that the FTC receive $312 million in funding in FY2012, or $20 million more than the amount enacted for FY2011 and $14 million below the budget request. Of the recommended funds, $149 million would have come from Hart-Scott-Rodino pre-merger filing fees and $21 million from Do-Not-Call fees, leaving a direct appropriation of $142 million. Slightly more than $20 million of the proposed budget was to replace two "satellite office buildings" in Washington, DC, that the FTC occupies. Funding was also provided to continue the Do-Not-Call initiative in FY2012. The cost of implementing a related initiative, the Telemarketing Sales Rule, was to be covered from the collection of fees. Expressing concern about the potential for anti-competitive behavior by oil and gas companies, the Senate committee directed the FTC to keep it informed about any findings from investigations of gas prices and other aspects of competition in the oil and gas industries. The FTC is responsible for enforcing the provisions in Section 1075 of the Dodd-Frank Wall Street Reform and Consumer Protection Act that concern payment card network companies. In essence, its role is to prevent larger companies in the industry from undermining the small issuer exemption and other benefits for consumers in that section of the act. Mindful of this responsibility, the Senate committee directed the FTC to submit a report one year after the enactment of the bill that discusses the steps it has taken to enforce compliance by payment card network companies with Section 1075 and related regulations. The Senate committee expressed concern that those companies are engaging in practices that diminish the ability of small banks and credit unions to compete with large financial institutions in the debit card market. A legislative proposal to transfer control of the FTC's headquarters building to the National Gallery of Art (NGA) was also addressed in the report. The committee expressed concern that the transaction would deprive taxpayers of a valuable asset without compensation. Under the proposal, private money would have to be raised to pay for renovation of the building, but federal money would be needed to cover the cost of maintenance and repairs. As noted in the report, significant costs could be incurred in building a new facility, or leasing commercial space, for the FTC staff that would be displaced, moving the staff to another facility, and the continuing expenses associated with NGA's use of the headquarters building. To address these concerns, Section 623 of the bill prohibited the transfer of ownership of the headquarters building to another entity unless the federal government receives fair market value for the property. P.L. 112-74 provides the FTC $312 million for FY2012. This amount is partially offset from the collection of pre-merger filing fees (up to $108 million in FY2012) and fees to administer the Telemarketing Sales Rule (up to $21 million in the same year), with the remaining $182.6 million to be provided from the general fund. The enacted legislation does not require the FTC to submit a report on behalf of the Interagency Working Group on Food Marketed to Children to the Committees on Appropriations on voluntary nutrition principles for food marketed to children. Nor does the law allow the agency to use any appropriated funds for FY2012 to complete a draft of such a report, unless the same Interagency Working Group complies with Executive Order 13563. The General Services Administration (GSA) administers federal civilian procurement policies pertaining to the construction and management of federal buildings, disposal of real and personal property, and management of federal property and records. It is also responsible for managing the funding and facilities for former Presidents and presidential transitions. GSA's real property activities are funded through the Federal Buildings Fund (FBF). The FBF is a revolving fund, into which rental payments from federal agencies that lease GSA space are deposited. Revenue in the fund is then made available by Congress each year to pay for specific activities: construction or purchase of new space, repairs and alterations to existing space, rental payments for space that GSA leases, installment payments, and other building operations expenses. These amounts are referred to as "limitations" because GSA may not obligate more funds from the FBF than permitted by Congress, regardless of how much revenue is available for obligation. Certain debts may also be paid for with FBF funds. A negative total for the FBF occurs when the amount of funds made available for expenditure in a fiscal year is less than the amount of new revenue expected to be deposited. A negative total does not mean that no funds are available from the FBF, only that there is a net gain to the fund under the proposed spending levels. GSA's operating accounts are funded through direct appropriations, separate from the FBF. The total amount of funding for GSA is calculated by adding the amount of FBF funds made available to the amount of direct appropriations provided. Table 8 lists the enacted amounts for FY2011, the President's FY2012 request, amounts recommended by the House and Senate appropriations committees for FY2012, and enacted amounts for FY2012. The President proposed a limit of $9.509 billion from the FBF's available revenue for GSA's real property activities in FY2012, $1.911 billion more than was provided in FY2011. The President also requested $332 million for GSA's operating accounts, an increase of $90 million from FY2011 enacted levels. The House Appropriations Committee recommended $7.224 billion from the FBF be made available to GSA for FY2012, $2.285 billion less than the President's request and $374 million below the amount provided for FY2011. The House committee also recommended $241 million for GSA's operating accounts, $1 million less than FY2011 enacted amounts and $91 million less than the President requested. The House language would have established an Information and Engagement for Citizens account, which would have replaced the e-Government fund and the Federal Citizens Information Center accounts. The House committee wrote that the new account would "provide access and understanding of Federal information, benefits, and services to citizens, businesses, other government, and the media." The Senate Appropriations Committee recommended $8.145 billion from the FBF be made available to GSA for FY2012, $1.364 billion less than the President requested and $547 million more than was enacted for FY2011. The Senate committee also recommended $228 million for GSA's operating accounts, $104 million less than the President requested and $14 million less than was enacted for FY2011. The Senate committee, like the House committee, would have replaced the e-Government fund and the Federal Citizens Information Center accounts with an Information and Engagement for Citizens account. P.L. 112-74 provides $8.018 billion from the FBF, which is $1.491 billion less than the President requested and $420 million more than FY2011 enacted amounts. The legislation includes $234 million for GSA's operating accounts, which is $8 million less than provided in FY2011 and $98 million below the President's request. P.L. 112-74 provides no funding for the federal acquisition workforce initiatives fund, and retains the e-Government and Federal Citizens Information Center accounts. Originally unveiled in advance of the President's proposed budget for FY2002, the Electronic Government Fund (E-Government Fund) and its appropriation have been a somewhat contentious matter between the President and Congress. The E-Government Fund was created to support interagency e-government initiatives approved by the Director of OMB. The fund and the projects it sustains historically have been closely scrutinized by congressional appropriators. The President's initial $20 million request for FY2002 was cut to $5 million, which was the amount provided for FY2003, as well. Funding thereafter was held at $3 million for FY2004, FY2005, FY2006, FY2007, and FY2008. In FY2009, President George W. Bush requested $5 million for the E-Government Fund. Congress, however, appropriated no appropriation to the E-Government Fund in FY2009. For FY2012, President Obama requested $34 million for the Electronic Government Fund, $24 million more than the $8 million that was appropriated for FY2011. House appropriators, however, recommended that the Electronic Government Fund be combined with the Federal Citizen Services Fund and renamed the "Information and Engagement for Citizens" account and be appropriated $50 million. House appropriators' said that "[t]he Committee expects the funds provided for these activities, combined with efficiency gains and resource prioritization, will result in increased delivery of information to the public and in the ease of transaction with the government." In FY2011, the Federal Citizen Services Fund was appropriated $34 million. The combined appropriation for both the Electronic Government Fund and the Federal Citizen Services Fund in FY2011 was $42 million, or $8 million less than House appropriators' FY2012 recommendation. Senate appropriators also recommended combining the Electronic Government Fund and the Federal Citizen Services Fund to make the Information and Engagement for Citizens account. According to the Senate report accompanying the bill, the two existing funds "share a common objective—making it easier for citizens to understand and interact with their Government." The report added, "[t]he purpose of this new office is to provide electronic or other methods of providing access and understanding of Federal information, benefits, and services to citizens, businesses, other governments, and the media." Senate appropriators recommended nearly $39.1 million be appropriated to the new account, which was roughly $10.9 million less than was recommended by House appropriators—and $3.0 million less than was appropriated in FY2011 to the Electronic Government Fund and the Federal Citizens Services Fund combined ($42.1 million). At a September 21, 2011, hearing before the House Committee on Science, Space, and Technology's Subcommittee on Technology and Innovation, David McClure, associate administrator at the General Services Administration—the federal agency that serves as a steward for many E-Gov Fund projects—testified that a reduction in the agency's appropriation could force the federal government to limit work to "existing projects rather than fueling new creative ways to save money for the government." As noted in the discussion of GSA's operating accounts, P.L. 112-74 funds the Electronic Government Fund and the Federal Citizen Service Fund as separate entities, with the former provided with $12.4 million for FY2012. As in previous years, Congress required that it be supplied a "proposed spending plan" that includes "an explanation for each project" prior to any funding being allocated to the agencies. Appropriation committees in both chambers would then have 10 days to review the plan before the funding could be transferred. The $12.4 million appropriated for FY2012 is $4.4 million (55%) more than the $8 million appropriated in FY2011. It is $21.6 million (63.5%) less than the $34 million requested by President Obama for FY2012. The Federal Citizen Services Fund also received an individual appropriation of $34.1 million for FY2012. The combined appropriation for the Electronic Government Fund and the Federal Citizen Services Fund for FY2102 is $46.5 million, $3.5 million (7%) less than House appropriators recommended—but $7.4 million (14.8%) more than recommended by Senate appropriators—had the two funds been combined. The FSGG appropriations bill includes funding for four agencies with personnel management functions: the Federal Labor Relations Authority (FLRA), the Merit Systems Protection Board (MSPB), the Office of Personnel Management (OPM), and the Office of Special Counsel (OSC). Table 9 lists the enacted amounts for FY2011, the President's FY2012 request, amounts recommended by the House and Senate appropriations committees for FY2012, and enacted amounts for FY2012, for each of these agencies. The FLRA is an independent federal agency that administers and enforces Title VII of the Civil Service Reform Act of 1978. Title VII is also called the Federal Service Labor-Management Relations Statute (FSLMRS). The FSLMRS gives federal employees the right to join or form a union and to bargain collectively over the terms and conditions of employment. Employees also have the right not to join a union that represents employees in their bargaining unit. The statute excludes specific agencies and gives the President the authority to exclude other agencies for reasons of national security. Agencies that are excluded from the statute include the Federal Bureau of Investigation (FBI), Central Intelligence Agency (CIA), Government Accountability Office (GAO), National Security Agency (NSA), Tennessee Valley Authority (TVA), Federal Labor Relations Authority (FLRA), Federal Service Impasses Panel (FSIP), and the Secret Service. The FLRA consists of a three-member authority, the Office of General Counsel, and the FSIP. The three members of the authority and the General Counsel are appointed to five-year terms by the President with the advice and consent of the Senate. The authority resolves disputes over the composition of bargaining units, charges of unfair labor practices, objections to representation elections, and other matters. The General Counsel's office conducts representation elections, investigates charges of unfair labor practices, and manages the FLRA's regional offices. The FSIP resolves labor negotiation impasses between federal agencies and labor organizations. The President's FY2012 budget proposed an appropriation of $26.4 million for the FLRA, $1.7 million, or 6.9%, more than the agency's FY2011 appropriation of $24.7 million. The House Appropriations Committee recommended $24.1 million in funding for FY2012, which was $0.6 million less than the FY2011 appropriation and $2.3 million less than the amount requested by the President. The Senate Appropriations Committee recommended the FLRA at $24.7 million for FY2012, the same as the appropriation for FY2011 and $1.7 million less than the President's request. P.L. 112-74 provides the FLRA with $24.7 million for FY2012. The amount appropriated for FY2012 is the same as the agency's funding for FY2011. The Merit Systems Protection Board (MSPB) is an independent, quasi-judicial agency established to protect the civil service merit system. The MSPB adjudicates appeals primarily involving personnel actions, certain federal employee complaints, and retirement benefits issues. The President's budget requested an FY2012 appropriation of $44.5 million, including $42.1 million for Merit Systems Protection Board (MSPB) salaries and expenses, an amount that is $1.7 million or 4.0% above the FY2011 funding of $42.8 million. The agency's FTE employment level is estimated to be 217 for FY2012, 6 more than the estimated FTE level of 211 for FY2011. MSPB's authorization expired on September 30, 2007. The 110 th Congress considered, but did not act upon, legislation ( S. 2057 , H.R. 3551 ) that would have reauthorized the MSPB for three years and enhanced the agency's reporting requirements. Legislation to reauthorize the agency was not introduced in the 111 th Congress and has not been introduced in the 112 th Congress. H.R. 2434 , as reported, would have provided an appropriation of $41.8 million, including $39.4 million for salaries and expenses, that is $1.1 million (-2.5%) less than the FY2011 enacted amount and $2.7 million (-6.1%) less than the President's request. S. 1573 , as reported, would have provided an appropriation of $42.6 million, including $40.3 million for salaries and expenses, which is the same as the FY2011 enacted amount, and $1.9 million (-4.4%) less than the President's request. P.L. 112-74 provides the appropriation ($42.6 million) recommended by the Senate committee. The President's budget requested an FY2012 appropriation of $100 million for OPM salaries and expenses, an increase of $2.2 million or 2.3% above the FY2011 enacted appropriation of $97.8 million. This amount includes funding of $6 million for the Enterprise Human Resources Integration (HRI) project and $1.4 million for the Human Resources Line of Business (HRLOB) project. The budget also requested appropriations of $132.5 million for trust fund transfers; $3.8 million for Office of Inspector General (OIG) salaries and expenses; and $21.5 million for OIG trust fund transfers for FY2012. These amounts are $20 million (+17.8%), $662,000 (+21.1%), and $385,000 (+1.8%), respectively, above the FY2011 enacted appropriations. The agency's FTE employment level is estimated to be 5,405 for FY2012, one more than the estimated FTE level for FY2011. OPM's budget submission stated that the budget "will permit OPM to pursue long-term human resources strategies that deliver results and enhance the values of the civil service," and included "funding to maintain timely processing of retirement claims and provide services to annuitants." In addition, it allowed the Office of Inspector General to "continue to advance its prescription drug audit program, which includes audits of pharmacy benefit managers," and to continue the Federal Employees' Health Benefits Program (FEHBP) "claims data warehouse initiative" that "streamlines and enhances the various administrative and analytical procedures involved in the oversight of the FEHBP." H.R. 2434 , as reported, would have provided appropriations (at the same levels as the FY2011 enacted amounts) of $97.8 million for OPM salaries and expenses, $112.5 million for trust fund transfers, $3.1 million for OIG salaries and expenses, and $21.2 million for OIG trust fund transfers. These amounts were, respectively, $2.2 million, $20 million, $662,000, and $385,000 less than the President's request. Section 628(a)(3)(4)(5) of H.R. 2434 would have provided the mandatory appropriations for the health benefits, life insurance, and retirement accounts. According to the House Committee on Appropriations report, "These are accounts where authorizing language requires the payment of funds." The report stated that the Congressional Budget Office estimated the following costs: $10,862.0 million for the Government Payment for Annuitants, Employee Health Benefits; $52 million for the Government Payment for Annuitants, Employee Life Insurance; and $9,979.0 million for Payment to the Civil Service Retirement and Disability Fund. The House committee report directed OPM to provide a report on the ongoing activities to promote diversity among the workforce and managers and executives to the House and Senate Committees on Appropriations within 180 days after the act's enactment. The report also noted that the House committee wanted to encourage federal agencies to increase recruitment efforts within the United States territories. S. 1573 , as reported, would have provided appropriations (at the same levels as the FY2011 enacted amounts) of $97.8 million for OPM salaries and expenses, $112.5 million for trust fund transfers, $3.1 million for OIG salaries and expenses, and $21.2 million for OIG trust fund transfers. These amounts would have been, respectively, $2.2 million (-2.2%), $20 million (-15.1%), $662,000 (-17.4%), and $385,000 (-1.8%) less than the President's request. The Senate report requested that the committee be kept apprised of developments as they occur with regard to the expedited processing of retirement claims and receive quarterly reports and briefings on developments related to modernization of the retirement records system. Updates were to be provided every six months on OPM efforts to use the Intergovernmental Personnel Act Mobility Program to address shortages in nurses and nurse faculty members. The committee also directed OPM to submit a report on options and recommendations to remedy inappropriate use by federal agencies of temporary hiring authority, within 90 days after the act's enactment; to report on the agency's pilot program on wellness, within 90 days after the act's enactment; and to provide quarterly updates on the operation of the Consolidated Business Information System for managing OPM's trust funds. P.L. 112-74 provides the same appropriations as recommended by the House and Senate committees: $97.8 million for salaries and expenses, $112.5 million for trust fund transfers; $3.1 million for Office of Inspector General (OIG) salaries and expenses; and $21.2 million for OIG trust fund transfers. The President's budget requested an FY2012 appropriation of $19.5 million for the Office of Special Counsel (OSC), an amount that is $1 million, or 5.6% above, the FY2011 funding of $18.5 million. The agency's FTE employment level is estimated to be 112 for FY2012, 3 more than the estimated FTE level of 109 for FY2011. The agency's budget submission projected a continued increase in the number of whistleblower disclosure, Hatch Act, and prohibited personnel practice cases received. According to OSC, it will continue to focus on improved performance in the timely handling of cases, the quality of agency products and decisions, and fulfilling responsibilities for education and outreach. OSC's authorization expired on September 30, 2007. The 110 th Congress considered, but did not act upon legislation ( S. 2057 , H.R. 3551 ) that would have reauthorized the agency for three years and included provisions to enhance OSC's reporting requirements. Legislation to reauthorize the agency was not introduced in the 111 th Congress and has not been introduced in the 112 th Congress. H.R. 2434 , as reported, would have provided an appropriation of $18.0 million that is $461,000 (-2.5%) less than the FY2011 enacted amount and $1.5 million (-7.6%) less than the President's request. S. 1573 , as reported, would have provided an appropriation of $19.0 million that was $514,000 (+2.8%) more than the FY2011 enacted amount and $514,000 (-2.6%) less than the President's request. The Senate report stated that the agency "continues to experience dramatic growth in its caseload" and expressed the committee's concern that the unit administering the Uniformed Services Employment and Reemployment Rights Act (USERRA) required two additional staff to ensure that the pilot demonstration program is "minimally viable." P.L. 112-74 provides the appropriation ($19.0 million) recommended by the Senate committee. President Obama requested $422.5 million in FY2012 operating expenses for the National Archives and Records Administration (NARA), which was slightly more than its FY2011 appropriation. Unlike previous recommendations from the Administration, President Obama combined his requests for operating expenses and the Electronic Records Archive (ERA) because development of ERA was largely completed. The Administration recommended that appropriators provide $430.7 million for operations and ERA. In FY2011, the President recommended $348.7 million for operating expenses and $85.5 million for the ERA, for a total of $434.2 million—or 7.5% more than his FY2012 recommendation. According to NARA, the ERA would sustain most of the decrease in appropriations because NARA had cut costs in other areas by "reducing or eliminating a variety of programs." The President also recommended reduction from FY2011 appropriation levels for NARA's inspector general (a 3.3% decrease, from $4.2 million in FY2011 to $4.1 million in FY2012), repairs and restorations (an 18.3% decrease, from $11.8 million in FY2011 to $9.7 million in FY2012), and the National Historic Publications and Records Commission (NHPRC) (a 28.4% decrease, from $7.0 million in FY2011 to $5.0 million in FY2012). House appropriators recommended NARA receive $360.0 million in FY2012, $57.0 million or 13.7% less than the $417.0 million appropriated in FY2011. The House committee recommended that NARA receive $361.0 million in operating expenses, which would include operation of the ERA. This recommendation was $57.0 million (16.8%) less than the FY2011 appropriation for both operating expenses and ERA combined and $47.7 million (11.1%) less than the President's FY2012 request. House appropriators recommended the same funding level as requested by the President for NARA's Office of the Inspector General ($4.1 million). House appropriators, however, recommended $8.7 million for repairs and restoration, $3.1 million (26.5%) less than the FY2011 appropriation and $1.0 million (10.0%) less than the President's request. Appropriators also recommended that NARA direct cost savings from construction projects at the John F. Kennedy Library and the Military Personnel Records Center "toward priorities in NARA's Capital Improvement Plan for the critical repairs, alterations, and improvements to Archives facilities and Presidential Libraries nationwide." House appropriators recommended $1 million in appropriations for the NHPRC, which is $6.0 million (85.7%) less than appropriated in FY2011 and $4.0 million (80.0%) less than the President's FY2012 recommendation. The House committee report did not provide a reason for the reduction. Senate appropriators recommended more than $378.8 million for NARA operating expenses in FY2012, which is roughly $24.9 million (6.2%) less than was requested by the President—but nearly $17.9 million (5.0%) more than was recommended by House appropriators. The recommendation is also nearly $39.8 million (11.7%) more than was appropriated for operating expenses in FY2011. Like the President's request, the Senate appropriation recommendation included appropriations for the ERA, which was previously appropriated as a separate line-item. Senate appropriators matched both the President's request and House appropriators' recommendations for the OIG at $4.1 million. Senate appropriators matched the President's nearly $9.7 million request for repairs and restorations, which is $966,000 (11.1%) more than was recommended by House appropriators. The Senate recommendation was nearly $2.2 million less than was appropriated in FY2011 (18.3%). In its report, the Senate reiterated House appropriators' recommendation to remove restrictions on more than $6.3 million from projects at the John F. Kennedy Presidential Library and Museum and the Military Personnel Records Center so the money can be used for "other capitol endeavors, particularly the top priority National Archives Experience Phase II project." The Senate matched the President's $5.0 million request for the NHPRC, which is $4.0 million (400%) more than the House appropriators' recommendation. The $5.0 million request is almost $2.0 million (28.4%) less than was appropriated in FY2011. P.L. 112-74 provides $373.3 million in appropriations for NARA's FY2012 operating expenses—including continued operations of the ERA. The appropriation was $500,000 less (less than 1% difference) than was recommended by Senate appropriators, but $12.3 million (3.4%) more than House appropriators recommended and $24.6 million (7.1%) more than the President requested for FY2012. Pursuant to the report, the Office of the Inspector General is to receive $4.1 million in FY2012, which matches the President's request and both chambers' recommendations. The conference report also included $9.1 million in appropriations to NARA for repairs and restorations. In addition, pursuant to the report, any unobligated funds that remain after the completion of two statutorily required projects—the Military Personnel Records Center requirement study ( P.L. 108-199 ) and the addition to the John F. Kennedy Presidential Library and Museum ( P.L. 111-8 )—shall be made available to the National Archives and Records Administration Capital Improvement Plan. According to NARA's budget justification to Congress, the capital improvement plan includes the creation of a new exhibit gallery that examines how "the American people have defended the Charters," which include the Declaration of Independence, the Constitution, and the Bill of Rights. The $9.1 million is $600,000 (6.2%) less than both the President's request and the recommendation from Senate appropriators. It is $400,000 (4.6%) more than the $8.7 million recommended by House appropriators. The conference report contains $5 million for the NHPRC in FY2012—the same amount requested by the President and recommended by Senate appropriators. The amount is $4 million (80%) more than recommended by House appropriators. The NCUA is an independent federal agency funded entirely by the credit unions that the agency charters, insures, and regulates. The NCUA manages the Community Development Revolving Loan Fund Program (CDRLF). Established in 1979, the CDRLF assists officially designated ''low-income'' credit unions in providing basic financial services to low-income communities. Low-interest loans and deposits are made available to assist these credit unions. Loans or deposits are normally repaid in five years, although shorter repayment periods may be considered. Technical assistance grants are also available to low-income credit unions. Earnings generated from the CDRLF are available to fund technical assistance grants in addition to funds provided for specifically in appropriations acts. Grants are available for improving operations as well as addressing safety and soundness issues. P.L. 112-10 provides $1.25 million for technical assistance grants for FY2011. The President's budget proposal included $2 million for FY2012, an increase of $750,000 over FY2011 enacted appropriations. The House Committee on Appropriations recommended $500,000 for FY2012, which would be $1.5 million below the President's request and $500,000 less than FY2011 enacted appropriations. The Senate Appropriations Committee recommended, and P.L. 112-74 provides, $1.25 million for FY2012, the same as enacted in FY2011 and $750,000 less than the President's request. Originally established in 2004 by the Intelligence Reform and Terrorism Prevention Act as an agency within the EOP, the Privacy and Civil Liberties Oversight Board (PCLOB) was reconstituted as an independent agency within the executive branch by the Implementing Recommendations of the 9/11 Commission Act of 2007 ( P.L. 110-53 ). The board assumed its new status on January 30, 2008; its FY2009 appropriation was its first funding as an independent agency. Among its responsibilities, the five-member board is to (1) ensure that concerns with respect to privacy and civil liberties are appropriately considered in the implementation of laws, regulations, and executive branch policies related to efforts to protect the nation against terrorism; (2) review the implementation of laws, regulations, and executive branch policies related to efforts to protect the nation from terrorism, including the implementation of information sharing guidelines; and (3) analyze and review actions the executive branch takes to protect the nation from terrorism, ensuring that the need for such actions is balanced with the need to protect privacy and civil liberties. The board is to advise the President and the heads of executive branch departments and agencies on issues concerning, and findings pertaining to, privacy and civil liberties. The board is to provide annual reports to Congress detailing its activities during the year, and board members appear and testify before congressional committees upon request. The PCLOB is currently without members, although President Obama has nominated two people to serve on the board. The President's FY2012 request for the PCLOB is $1.7 million, which is $700,000 above FY2011 enacted appropriations of $1.0 million. The House Appropriations Committee recommended no new appropriations for FY2012 and a rescission of the $1.0 million appropriated for FY2011. The Senate Appropriations Committee recommended $1.0 million for the PCLOB for FY2012 and a rescission of $1.0 million of funds appropriated for FY2011. P.L. 112-74 provides $900,000 for FY2012 and rescinds $998,000 from FY2011 unobligated balances. The Recovery Accountability and Transparency Board (Recovery Board) was established by the American Recovery and Accountability Act of 2009 ( P.L. 111-5 ) to provide oversight and transparency in the expenditure of Recovery Act funds. The Recovery Board is funded through the FSGG appropriations bill for the first time in FY2012. In previous fiscal years, the board was funded by a Recovery Act appropriation which is now exhausted. The President requested $31.5 million for the Recovery Board for FY2012. The House Appropriations Committee recommended $25.0 million, which is $6.5 million less than the President's request. The Senate Appropriations Committee recommended, and P.L. 112-74 provides, $28.4 million, which is $3.1 million less than the President's request. The Securities and Exchange Commission (SEC) administers and enforces federal securities laws to protect investors from fraud, to ensure that sellers of corporate securities disclose accurate financial information, and to maintain fair and orderly trading markets. The SEC's budget is set through the normal appropriations process, but under the Dodd-Frank Act ( P.L. 111-203 ), the agency's appropriations must be offset by the fees the agency collects on the sales of stock and certain other securities transactions, which go to the Treasury Department. To achieve the offset, the act requires the agency to adjust the rates its charges for those fees. In an acknowledgement of the substantial demands that would be placed on the agency in the implementation of various parts of it, the act also authorized successive annual increases in the agency's budget, which was slated to reach $1.5 billion in FY 2012. For FY2012, the Administration requested $1.407 billion, an increase of $222 million over FY2011 appropriations, which were $1.185 billion (and included a supplementary appropriation of $41 million under P.L. 112-10 ). The House Appropriations Committee recommended that the SEC's FY2012 budget remain at FY2011 levels, that is, $1.185 billion, or $222 million (16%) below the Administration's request. The Senate Appropriations Committee recommended $1.407 billion, the amount of the Administration's request. The House-Senate conference agreed on $1.321 billion, or $86 million (6.1%) below the Administration's request. As part of its justification for the $1.407 billion request, which the House-Senate Conference reduced to $1.321 billion, the Administration placed significant emphasis on the special demands placed on the SEC in implementing the Dodd-Frank Act: The enactment of the Dodd-Frank Act has added significantly to the SEC's workload. The law represents the most sweeping changes to the nation's securities laws in decades. In the short term, the Dodd-Frank Act requires the SEC to promulgate more than 100 new rules, create five new offices, and conduct more than 20 studies and reports. The law also assigns the SEC additional responsibilities that will have a considerable long-term impact on the agency's resource needs. The Dodd-Frank Act also established an SEC reserve fund to enable the agency to plan for certain long-term expenses, potentially freeing up other funds for agency use in areas such as enforcement and regulation. The reserve fund is funded by the agency's traditional collections on registration fees. In any single fiscal year, the SEC may not collect more than $50 million in fees for the reserve fund, and it cannot exceed more than $100 million. Collections in excess of these go to the Treasury Department. P.L. 112-74 also includes a $25 million rescission from the reserve fund. The Selective Service System (SSS) is an independent federal agency operating with permanent authorization under the Military Selective Service Act. It is not part of the Department of Defense, but its mission is to serve the emergency manpower needs of the military by conscripting personnel when directed by Congress and the President. All males ages 18 through 25 and living in the United States are required to register with the SSS. The induction of men into the military via Selective Service (i.e., the draft) terminated in 1972. In January 1980, President Carter asked Congress to authorize standby draft registration of both men and women. Congress approved funds for male-only registration in June 1980. Efforts are underway to allow women to serve in combat units which may lead to the modification of registration to include women. Since 1972, Congress has not renewed any President's authority to begin inducting (i.e., drafting) anyone into the armed services. In 2004, an effort to provide the President with induction authority was rejected. Funding of the Selective Service System has remained relatively stable over the years in terms of absolute dollars, but has decreased in terms of inflation adjusted funding. P.L. 111-117 provided $24.28 million for FY2010, an increase of $2.28 million over FY2009 enacted appropriations. For FY2011, it received $24.23 million. For FY2012, the Senate Appropriations Committee recommended, and P.L. 112-74 provides, a Selective Service System appropriation of $23.98 million. The Small Business Administration (SBA) administers a number of programs intended to assist small firms. Arguably, the SBA's four most important functions are to guarantee—principally through the agency's Section 7(a) and 504/Certified Development Company general business loan programs—business loans made by banks and other financial institutions; to make long-term, low-interest loans to small businesses, nonprofit organizations, and households that are victims of hurricanes, earthquakes, floods, other physical disasters, and acts of terrorism; to finance training and technical assistance programs for small business owners, and to serve as an advocate for small business within the federal government. The SBA's FY2011 appropriation was $729.7 million (after an across-the-board rescission of 0.2%), a reduction of $94.3 million from the FY2010 appropriated amount of $824.0 million ( P.L. 112-10 , the Department of Defense and Full-Year Continuing Appropriations Act, 2011). The SBA's FY2011 appropriation included $433.4 million for salaries and expenses, $16.3 million for the SBA's Office of Inspector General (not including $1.0 million to be transferred from the Disaster Loans Program account), $236.0 million for business loans ($3.0 million for microloan subsidy costs, $80.0 million for other loan subsidy costs, and $153.0 million for administrative costs), and $45.5 million for the disaster loans program account. The SBA's FY2011 appropriation supported up to $28.0 billion in business loan guarantees (up to $17.5 billion for 7(a) loans, up to $7.5 billion for 504/Certified Development Company loans, and up to $3.0 billion for Small Business Investment Company debentures) and up to $12.0 billion in guarantees of trust certificates for the secondary market guarantee program. For FY2012, the Obama Administration requested that the SBA receive an appropriation of $985.4 million, an increase of $255.7 million (35%) over the FY2011 enacted amount of $729.7 million ( P.L. 112-10 , the Department of Defense and Full-Year Continuing Appropriations Act, 2011). The Administration recommended an appropriation of $427.3 million for salaries and expenses. Included in that amount is $160.2 million for non-credit programs, such as Historically Underutilized Business Zones (HUBZones), Microloan Technical Assistance, the National Women's Business Council, Native American Outreach, the Service Corps of Retired Executives (SCORE), Small Business Development Centers, Veteran's Business Development, and Women's Business Centers. The Administration also requested $18.4 million for the SBA's Office of Inspector General (not including $1.0 million to be transferred from the Disaster Loans Program account), $9.1 million for the SBA's Office of Advocacy, $0.0 for the SBA's surety bond guarantees revolving loan fund (the Administration indicated that there are sufficient funds in reserve to cover the cost of claim defaults), $363.3 million for the SBA's business loan programs ($3.765 million for microloan subsidy costs, $211.6 million for other loan subsidy costs, and $147.9 million for administrative costs), and $167.3 million for the SBA's disaster loan programs. The Administration's budget request included funding for up to $27.0 billion in business loan guarantees (up to $16.5 billion for 7(a) loans, up to $7.5 billion for 504/Certified Development Company loans, and up to $3.0 billion for Small Business Investment Company debentures) and up to $12.0 billion in guarantees of trust certificates for the secondary market guarantee program. The House Committee on Appropriations recommended that the SBA receive a FY2012 appropriation of $978.3 million, a $248.6 million (34.1%) increase over the FY2011 enacted amount of $729.7 million and a decrease of $7.1 million (-0.7%) from the Administration's request of $985.4 million. The House committee also recommended that the SBA receive an appropriation of $422.3 million for salaries and expenses ($5.0 million less than the Administration's request). Included in that amount is $170.75 million for non-credit programs ($10.5 million more than the Administration's request), such as Historically Underutilized Business Zones (HUBZones), Microloan Technical Assistance, the National Women's Business Council, Native American Outreach, the Service Corps of Retired Executives (SCORE), Small Business Development Centers, Veteran's Business Development, and Women's Business Centers. The House committee recommended $16.3 million for the SBA's Office of Inspector General (not including $1.0 million to be transferred from the Disaster Loans Program account), $9.1 million for the SBA's Office of Advocacy, $0.0 for the SBA's surety bond guarantees revolving loan fund (the Administration indicated that there were sufficient funds in reserve to cover the cost of claim defaults), $363.3 million for the SBA's business loan programs ($3.765 million for microloan subsidy costs, $211.6 million for other loan subsidy costs, and $147.9 million for administration), and $167.3 million for the SBA's disaster loan programs. The Administration had requested $18.4 million for the SBA's Office of Inspector General (not including $1.0 million to be transferred from the Disaster Loans Program account) and the amounts the House Committee on Appropriations recommended for the remaining accounts. The House committee's recommendation would have supported up to $28.0 billion in business loan guarantees (up to $17.5 billion for 7(a) loans, up to $7.5 billion for 504/Certified Development Company loans, and up to $3.0 billion for Small Business Investment Company debentures) and up to $12.0 billion in guarantees of trust certificates for the secondary market guarantee program. The Administration had recommended up to $27.0 billion in business loan guarantees (up to $16.5 billion for 7(a) loans, up to $7.5 billion for 504/Certified Development Company loans, and up to $3.0 billion for Small Business Investment Company debentures) and up to $12.0 billion in guarantees of trust certificates for the secondary market guarantee program. The Senate Committee on Appropriations recommended that the SBA receive a FY2012 appropriation of $955.4 million, a $225.7 million (30.9%) increase over the FY2011 enacted amount of $729.7 million, a decrease of $30.0 million (-0.3%) from the Administration's request of $985.4 million, and a decrease of $22.9 million (-2.3%) from the House Committee on Appropriations' recommendation of $978.3 million. The Senate committee also recommended that the SBA receive an appropriation of $404.2 million for salaries and expenses ($23.1 million less than the Administration's request). Included in that amount was $165.7 million for non-credit programs ($5.5 million more than the Administration's request), such as Historically Underutilized Business Zones (HUBZones), Microloan Technical Assistance, the National Women's Business Council, Native American Outreach, the Service Corps of Retired Executives (SCORE), Small Business Development Centers, Veteran's Business Development, and Women's Business Centers. The Senate committee also recommended $16.3 million for the SBA's Office of Inspector General (not including $1.0 million to be transferred from the Disaster Loans Program account), $9.1 million for the SBA's Office of Advocacy, $0.0 for the SBA's surety bond guarantees revolving loan fund, $358.5 million for the SBA's business loan programs ($3.678 million for microloan subsidy costs, $206.8 million for other loan subsidy costs, and $148.0 million for administration), and $167.3 million for the SBA's disaster loan programs. The Administration had requested $18.4 million for the SBA's Office of Inspector General (not including $1.0 million to be transferred from the Disaster Loans Program account), $363.3 million for the SBA's business loan programs, and the amounts the Senate Committee on Appropriations recommended for the remaining accounts. The Senate committee's recommendation would have supported up to $28.0 billion in business loan guarantees (up to $17.5 billion for 7(a) loans, up to $7.5 billion for 504/Certified Development Company loans, and up to $3.0 billion for Small Business Investment Company debentures) and up to $12.0 billion in guarantees of trust certificates for the secondary market guarantee program. The Administration had recommended up to $27.0 billion in business loan guarantees (up to $16.5 billion for 7(a) loans, up to $7.5 billion for 504/Certified Development Company loans, and up to $3.0 billion for Small Business Investment Company debentures) and up to $12.0 billion in guarantees of trust certificates for the secondary market guarantee program. For FY2012, P.L. 112-74 , the Consolidated Appropriations Act, 2012, provides $918.7 million for the SBA, an increase of $189.0 million (25.9%) over its FY2011 appropriation of $729.7 million ( P.L. 112-10 , the Department of Defense and Full-Year Continuing Appropriations Act, 2011). The SBA was provided an appropriation of $417.3 million for salaries and expenses. Included in that amount is $172.3 million for the following non-credit programs: Veteran's Programs, 7(j) Technical Assistance Programs, Small Business Development Centers, the Service Corps of Retired Executives (SCORE), Women's Business Centers, National Women's Business Council, Native American Outreach, Microloan Technical Assistance, PRIME, Historically Underutilized Business Zones (HUBZones), and the Entrepreneurial Development Initiative. The act also appropriates $16.3 million for the SBA Office of Inspector General (not including $1.0 million to be transferred from the Disaster Loans Program account), $9.1 million for the SBA Office of Advocacy, $358.7 million for general business loans ($3.7 million for microloans, $207.1 million for business loan credit subsidies, and $148.0 million for business loan administrative costs), and $117.3 million for the SBA's disaster loan program. The act also supports up to $28.0 billion in small business loan guarantees ($17.5 billion for the 7(a) loan guaranty program, $7.5 billion for the 504/Certified Development Company loan guaranty program, and $3.0 billion for the Small Business Investment Company Program) and up to $12.0 billion for the secondary market guarantee program. The U.S. Postal Service (USPS) generates nearly all of its funding—about $67 billion annually—by charging users of the mail for the costs of the services it provides. However, Congress does provide an annual appropriation to compensate the USPS for revenue it forgoes in providing free mailing privileges to the blind and overseas voters. Congress authorized appropriations for these purposes in the Revenue Forgone Reform Act of 1993 (RFRA). This act also permitted Congress to provide the USPS with a $29 million annual reimbursement until 2035 to pay for the costs of postal services provided at below-cost rates to not-for-profit organizations in the early 1990s. Funds appropriated to the USPS are deposited in the Postal Service Fund, a revolving fund at the U.S. Department of the Treasury. The Postal Accountability and Enhancement Act (PAEA), which was enacted on December 20, 2006, first affected the postal appropriations process in FY2009. Under the PAEA, both the U.S. Postal Service Office of Inspector General (USPSOIG) and the Postal Regulatory Commission (PRC) must submit their budget requests to Congress and to the Office of Management and Budget (120 Stat. 3240-3241), and the agencies must be paid from the Postal Service Fund. The law further requires USPSOIG's budget submission to be treated as part of USPS's total budget, while the PRC's budget, like the budgets of other independent regulators, is treated separately. For FY2012, the USPS requested $130 million, with $101 million for revenue forgone, and $29 million for the annual RFRA reimbursement. The President requested $78.2 million and no $29 million RFRA reimbursement, and both the House Appropriations Committee and the Senate Appropriations Committee concurred with the President's request; PRC and the President requested $14.5 million. The House Appropriations Committee authorized $13.9 million; and the Senate Appropriations Committee authorized $14.3 million; and USPSOIG and the President requested $244.4 million. The House Appropriations Committee authorized $237.8 million and the Senate Appropriations Committee authorized $241.5 million. Ultimately, Congress appropriated $14.3 million for the PRC, $241.5 million for the USPSOIG, and $78.2 million to the USPS for revenue forgone. The law continues the provision requiring six-day mail delivery, and states that "none of the funds provided in this Act shall be used to consolidate or close small rural and other small post offices in fiscal year 2012." Additionally, the legislation delays the USPS's mandated $5.5 billion payment to the FY2011 Retiree Health Benefits Fund to August 1, 2012. A court of record under Article I of the Constitution, the United States Tax Court (USTC) is an independent judicial body that has jurisdiction over various tax matters as set forth in Title 26 of the United States Code . The court is headquartered in Washington, DC, but its judges conduct trials in many cities across the country. The USTC received $52 million in FY2011. The President requested $60 million for FY2012, an increase of $8 million increase over FY2011 enacted appropriations. The House Committee on Appropriations recommended $51 million for FY2012, which would be $9 million less than the President's request and $1 million less than FY2011 enacted appropriations. The Senate Appropriations Committee recommended $51 million for the USTC for FY2012, the same as the House committee recommendation and $9 million less than the President requested. P.L. 112-74 provides $51 million for FY2012, $1 million below FY2011 funding levels and $9 million less than the President requested. The Financial Services and General Government appropriations language includes general provisions which apply either government-wide or to specific agencies or programs. An Administration's proposed government-wide general provisions for a fiscal year are generally included in the Budget Appendix. Most of the provisions continue language that has appeared under the General Provisions title for several years because Congress has decided to reiterate the language rather than making the provisions permanent. Prohibits the use of funds to implement, administer, enforce, or apply the rule entitled "Competitive Area" published by the Office of Personnel Management in the Federal Register on April 15, 2008. (Section 732 of the budget proposal, Section 740 of S. 1573 , as reported, and Section 739 of P.L. 112-74 . Not included in H.R. 2434 , as reported.) During FY2012, for each employee who retires under the Civil Service Retirement System or the Federal Employees Retirement System during workforce restructuring or receives a payment as an incentive to separate, the separating agency would remit to the Civil Service Retirement and Disability Fund an amount equal to the Office of Personnel Management's average unit cost of processing a retirement claim for the preceding fiscal year. (Section 733 of the budget proposal, Section 743 of S. 1573 , as reported, and Section 741 of P.L. 112-74 . Not included in H.R. 2434 , as reported.) Funds made available and used for Pay for Success projects in this or any other Act would support performance-based awards that are designed to promote innovative strategies to reduce the aggregate level of government investment needed to achieve successful outcomes and impose minimal administrative requirements on service providers, so as to allow for maximum flexibility to improve efficiency and effectiveness. The OMB Director would issue guidance to federal agencies on carrying out such projects. (Section 734 of the budget proposal. Not included in H.R. 2434 , as reported, S. 1573 , as reported, and P.L. 112-74 .) Prohibits the use of funds to require any entity submitting an offer for a federal contract to disclose political contributions. (Section 738 of H.R. 2434 , as reported and Section 743 of P.L. 112-74 . Not included in the budget proposal or in S. 1573 , as reported.) Beginning with FY2012, federal employees in each agency would be managed solely on the basis of, and consistent with, the workload required to carry out the functions and activities of the agency and the funds made available to the agency. The management of federal employees would not be subject to any limitation in terms of work years, full-time equivalent positions [FTE], or maximum number of federal employees, and an agency could not be required to make a reduction in the number of FTE positions, unless such is necessary due to a reduction in funds available to the agency or required under a statute that is enacted after the enactment date of this act and specifically refers to this section. The head of each agency would ensure that federal workers are employed in the number and with the combination of skills and qualifications that are necessary to carry out the functions within the applicable budget activity for which funds are provided. Not later than February 1 of each year, the OMB Director would submit a report to the Senate and House Appropriations Committees on the management of the federal workforce. (Section 744 of S. 1573 , as reported. Not included in the budget proposal, H.R. 2434 , as reported, and P.L. 112-74 .) The financial services appropriations bill often contains provisions that relate to government procurement. With regard to FY2012, P.L. 112-74 includes one such provision. Section 733 prohibits the use of any funds appropriated by this act, or any other appropriations act, to begin or announce a public-private competition for the same fiscal year (FY2012). The prohibition applies to a "public-private competition regarding the conversion to contractor performance of any function performed by Federal employees pursuant to Office of Management and Budget Circular A-76 or any other administrative regulation, directive, or policy." That is, this section apparently applies only to competitions that involve work being performed by federal employees, but it does not apply to public-private competitions involving work being performed by contractor employees. Conversion to contractor performance is only one of the possible outcomes of a public-private competition, however, which might lead some observers to conclude that the provision is somewhat ambiguous. The House Appropriations Committee-approved and Senate Appropriations Committee-approved versions of the FY2012 Financial Services and General Government Appropriations bills, H.R. 2434 and S. 1573 respectively, had several provisions regarding Cuba sanctions, but ultimately none of these were included in the Consolidated Appropriations Act, 2012 ( P.L. 112-74 , H.R. 2055 ), the FY2012 "megabus" appropriations measure. The conference report to H.R. 2055 ( H.Rept. 112-331 ) indicates that language included in the report to H.R. 2434 ( H.Rept. 112-136 ) not changed by the joint explanatory statement would be considered approved by the conference. This means that a Treasury Department report on Cuba pertaining to licenses for people-to-people exchanges to Cuba, and called for in H.Rept. 112-136 , is required. Both H.R. 2434 and S. 1573 had a similar provision, in Section 618 of the House committee bill and Section 620 of the Senate committee bill, that would have continued to clarify during FY2012 the definition of "payment of cash in advance" for U.S. agricultural and medical sales to Cuba to "be interpreted as payment before the transfer of title to, and control of, the exported items to the Cuban purchaser." Such a provision had first been included in the FY2010 omnibus appropriations measure ( P.L. 111-117 , Section 619 of Division C) and was continued in FY2011 in the full-year continuing appropriations measure ( P.L. 112-10 ). The Senate bill had another Cuba provision, in Section 624, related to payment for U.S. exports to Cuba. The provision would have prohibited restrictions on direct transfers from a Cuban financial institution to a U.S. financial institution in payment for licensed agricultural and medical exports to Cuba. The provision was added during the Senate Appropriations Committee's markup of S. 1573 on September 15, 2011, when the committee approved an amendment offered by Senator Jerry Moran by a vote of 20-10. The House bill had a Cuba provision in Section 901 that would have rolled back President Obama's easing of restrictions on family travel and remittances in 2009 and the President's easing of restrictions on remittances for non-family members and religious institutions in 2011. This provision became part of H.R. 2434 during the House Appropriations Committee's markup on June 24, 2011, when the House committee approved an amendment offered by Representative Mario Diaz-Balart by voice vote. In December 2011, a legislative battle ensued over Cuba during consideration of H.R. 2055 , the FY2012 "megabus" appropriations measure. At issue was the potential inclusion of two Cuba provisions: one described above from H.R. 2434 that would have rolled back the Obama Administration's actions easing restrictions on family travel and on remittances; and the second a provision in both H.R. 2434 and S. 1573 that would have continued to clarify, for the third fiscal year in a row, the definition of "payment of cash in advance" for U.S. agricultural and medical exports to Cuba. Ultimately congressional leaders agreed to not include the two Cuba provisions in H.R. 2055 . The White House reportedly had exerted pressure not to include the Cuba provision that would have rolled back the Administration's easing of restrictions on travel and remittances. Dropping the second provision on the definition of "payment of cash in advance" for U.S. agricultural and medical products appears to have been a political tradeoff made to compensate for the travel rollback provision being dropped. Since the early 1960s, U.S. policy toward communist Cuba has consisted largely of efforts to isolate the island nation through comprehensive economic sanctions, including prohibitions on U.S. financial transactions—the Cuban Assets Control Regulations (CACR)—that are administered by the Treasury Department's Office of Foreign Assets Control (OFAC). Despite current U.S. economic sanctions policy, some U.S. commercial agricultural exports to Cuba have been allowed since 2001 pursuant to the Trade Sanctions Reform and Export Enhancement Act of 2000, or TSRA (Title IX of P.L. 106-387 ). However, there are numerous restrictions and licensing requirements for these exports. For instance, exporters are denied access to U.S. private commercial financing or credit, and all transactions must be paid for in cash in advance or with financing from third countries. The Bush Administration tightened sanctions on Cuba in February 2005 by further restricting how U.S. agricultural exporters may be paid for their product. OFAC amended the CACR to clarify that the term "payment of cash in advance" for U.S. agricultural sales to Cuba means that the payment is to be received prior to the shipment of the goods. This differed from the practice of being paid before the actual delivery of the goods, a practice that had been utilized by many U.S. agricultural exporters to Cuba since such sales were legalized in late 2001. U.S. agricultural exporters and some Members of Congress strongly objected to this "clarification" on the grounds that the action constituted a new sanction that violated the intent of TSRA, and could jeopardize millions of dollars in U.S. agricultural sales to Cuba. Then-OFAC Director Robert Werner maintained that the clarification "conforms to the common understanding of the term in international trade." Since 2002, the United States has been one of Cuba's largest suppliers of food and agricultural products, although the level of U.S. exports has declined in the past two years. Cuba has purchased over $3.6 billion in products from United States since the enactment of TSRA. U.S exports to Cuba rose from about $7 million in 2001 to $404 million in 2004 and to a high of $712 million in 2008, far higher than in previous years, in part because of the rise in food prices and because of Cuba's increased food needs in the aftermath of several hurricanes and tropical storms that severely damaged the country's agricultural sector. In 2009, however, U.S. exports to Cuba declined to $533 million, 25% lower than the previous year, and in 2010, they fell again to $368 million, a 31% drop from 2009. In the first eight months of 2011, U.S. exports to Cuba amounted to about $266 million, almost a 7% drop from the same period in 2011. Analysts cite Cuba's shortage of hard currency as the main reason for the decline. As noted above, Congress took action in FY2010 and FY2011 appropriations measures to define "payment of cash in advance" as used in TSRA as payment before the transfer of title to, and control of, the exported item to the Cuban purchaser. This overturned OFAC's February 2005 clarification that payment had to be received before vessels could leave U.S. ports. Both H.R. 2434 (Section 618) and S. 1573 (Section 620) would have continue this interpretation of the term "payment of cash in advance" for agricultural and medical exports to Cuba under TSRA in FY2012. S. 1573 would have gone further with a provision (Section 624) that would have prohibited restrictions on direct transfers from a Cuban financial institution to a U.S. financial institution in payment for licensed agricultural and medical exports to Cuba. In the 111 th Congress, such a provision was included in H.R. 4645 , a measure reported by the House Agriculture Committee in September 2010 that also would have made permanent the clarification of the definition of "payment of cash in advance" and also would have prohibited restrictions on U.S. travel to Cuba. The House Agriculture Committee held a hearing reviewing U.S. agricultural sales to Cuba in March 2010 in which U.S. agricultural exporters argued that a prohibition on direct transfers between Cuban and U.S. financial institutions for payments for U.S. exports made sales transactions more complicated and costly for U.S. businesses. These views were echoed during September 15, 2011, debate on the provision at the markup of the bill by the Senate Appropriations Committee. Supporters of the direct transfers provision also argued that U.S. exports to Cuba have declined, while those opposed maintained that the United States should not open up such direct financial linkages while Cuba is on the State Department's list of states sponsoring international terrorism. Restrictions on travel to Cuba have been a key and often contentious component in U.S. efforts to isolate Cuba's communist government since the early 1960s. Under the George W. Bush Administration, restrictions on travel and on private remittances to Cuba were tightened. In 2003, the Administration eliminated travel for people-to-people educational exchanges unrelated to academic coursework. In 2004, the Administration further restricted family and educational travel, eliminated the category of fully-hosted travel, and restricted remittances so that they could only be sent to the remitter's immediate family. Initially there was mixed reaction to the Administration's 2004 tightening of Cuba travel and remittance restrictions, but opposition to the policy grew, especially within the Cuban American community regarding the restrictions on family travel and remittances. Under the Obama Administration, Congress took action in 2009 to ease some restrictions on travel to Cuba by including two provisions in the FY2009 omnibus appropriations measure ( P.L. 111-8 ), which President Obama signed into law on March 11, 2009. The first provision eased restrictions on family travel, which the Treasury Department implemented by issuing a general license for such travel as it existed prior to the Bush Administration's tightening of family travel restrictions in 2004. The second provision eased travel restrictions related to the marketing and sale of agricultural and medical goods to Cuba, and required the Treasury Department to issue a general license for such travel. Subsequently, in April 2009, President Obama announced that his Administration would go further and allow unlimited family travel and family remittances. Regulations implementing these changes were issued in September 2009. The new regulations also included the authorization of general licenses for travel transactions for telecommunications-related sales and for attendance at professional meetings related to commercial telecommunications. In January 2011, the Obama Administration announced policy changes further easing restrictions on travel and remittances. The measures (1) increase purposeful travel to Cuba related to religious, educational, and people-to-people exchanges; (2) allow any U.S. person to send remittances to non-family members in Cuba (up to $500 per quarter) and make it easier for religious institutions to send remittances for religious activities; and (3) permit all U.S. international airports to apply to provide services to licensed charter flights. These new measures, with the exception of the expansion of eligible airports, are similar to policies that were undertaken by the Clinton Administration in 1999, but subsequently curtailed by the Bush Administration in 2003-2004. The Obama Administration maintains that the policy changes will increase people-to-people contact, help strengthen Cuban civil society, and make Cuban people less dependent on the Cuban state. The changes are being taken at the same time that the Cuban government is laying off thousands of state workers and increasing private enterprise through an expansion of the authorized categories for self-employment. Policy groups in favor of increased U.S. engagement with Cuba largely praised the Administration's action as a significant step forward in reforming U.S.-Cuban relations and as an important means to expand the flow of information and ideas to Cuba and to increase the income of Cubans working in the expanding private sector. The Miami-based Cuban American National Foundation (CANF) strongly supported the Administration's policy changes. According to CANF President Francisco "Pepe" Hernández: "A greater ability to send remittances in conjunction with increased contact and communication with those on the island will help to break the chains of dependency that the Castro regime has used to oppress those inside Cuba." In contrast, policy groups opposed to easing U.S. sanctions have criticized the Administration, maintaining that the policy changes will help prop up Cuba's repressive government when it is most vulnerable because of the difficult economic situation. Opponents of the policy changes argue that sending dollars via increased travel by Americans and increased remittances will actually help the Cuban government maintain in place its repressive policies. They also argue that easing the restrictions on travel and remittances will not bring about respect for human rights in Cuba. As noted above, Section 901 of H.R. 2434 would have rolled back President Obama's easing of restrictions on family travel and remittances, remittances for non-family members, and remittances for religious institutions. ( S. 1573 does not contain a similar provision.) Specifically, the House provision would have repealed any amendments to certain sections of the Cuban Assets Control Regulations relating to family travel ( 31 CFR 515.560(a)(1) and 31 CFR 515.561 ), carrying remittances to Cuba ( 31 CFR 515.560(c)(4)(i) ), and sending remittances to Cuba ( 31 CFR 515.570 ) made since January 2009. According to the provision, such regulations would be restored and carried out as in effect on January 19, 2009, "notwithstanding any guidelines, opinions, letters, Presidential directives, or agency practices relating to such regulations issued or carried out after such date." If the measure were enacted: family travel would again be limited to once every three years for a period of up to 14 days to visit immediate family members only, and would require a specific license from OFAC; licensed travelers would be allowed to carry just $300 in remittances compared to the $3,000 currently allowed; family remittances would be limited to $300 per quarter compared to no limits today; non-family remittances restored by the Obama Administration in 2011, up to $500 per quarter, would not be allowed; and the general license for remittances to religious organizations would be eliminated, although such remittances would still be permitted via specific license on a case-by-case basis. The White House's Statement of Administration Policy on H.R. 2434 , issued July 13, 2011, stated that the Administration opposed Section 901 because it would reverse the President's policy on family travel and remittances, and that the President's senior advisors would recommend a veto if the bill contained the provision. According to the statement, Section 901 "would undo the President's efforts to increase contact between divided Cuban families, undermine the enhancement of the Cuban people's economic independence and support for private sector activity in Cuba that come from increased remittances from family members, and therefore isolate the Cuban people and make them more dependent on Cuban authorities." The House Appropriations Committee report to H.R. 2434 ( H.Rept. 112-136 ) requires a report from OFAC on the current number of pending applications seeking specific licenses to conduct people-to-people exchanges, that is, educational exchanges not involving academic study pursuant to a degree program under the auspices of an organization that sponsors and organizes such programs to promote people-to-people contact. The report also requires information on the number of these licenses that OFAC has approved to date, its plan for getting through the current queue of license applications, and its plan for expeditiously reviewing those applications in the future. This reporting requirement was added to the report via an amendment offered by Representative Jeff Flake approved by voice vote during the House committee's June 24, 2011, markup of the bill. In early July 2011, OFAC confirmed that it had approved the first licenses for U.S. people-to-people organizations to bring U.S. visitors to Cuba, and the first such trips began in August 2011. | The Financial Services and General Government (FSGG) appropriations bill includes funding for the Department of the Treasury, the Executive Office of the President (EOP), the judiciary, the District of Columbia, and more than two dozen independent agencies. Among those independent agencies are the General Services Administration (GSA), the Office of Personnel Management (OPM), the Small Business Administration (SBA), the Securities and Exchange Commission (SEC), and the United States Postal Service (USPS). The Commodity Futures Trading Commission (CFTC) is funded in the House through the Agriculture appropriations bill and in the Senate through the FSGG bill. CFTC funding is included in all FSGG funding tables in this report. On February 14, 2011, President Obama submitted his FY2012 budget request. The request included a total of $48.72 billion for agencies funded through the FSGG appropriations bill, including $308 million for the CFTC. The President's request would have increased funding $4.03 billion above FY2011 enacted amounts. On July 7, 2011, the House Appropriations Committee reported H.R. 2434, the Financial Services and General Government Appropriations Act, 2012. H.R. 2434 would have provided $42.97 billion for agencies funded through the House FSGG Appropriations Subcommittee. In addition, the CFTC would have received $172 million through the FY2012 agriculture appropriations bill, H.R. 2112. Total FY2012 funding provided by the House would have been $43.14 billion, about $5.58 billion below the President's FY2012 request and $1.55 billion less than FY2011 enacted amounts. On September 15, 2011, the Senate Appropriations Committee reported its FY2012 financial services bill, S. 1573. The Senate committee's bill would have provided $44.64 billion for FSGG agencies, including $240 million for the CFTC, for FY2012, which would have been $4.09 billion below the President's FY2012 request and $47.67 million less than FY2011 enacted amounts. On December 23, 2011, President Obama signed the Consolidated Appropriations Act, 2012 (P.L. 112-74), which funded the government through FY2012. FSGG agencies, including the CFTC, were provided a total of $44.41 billion for FY2012, which is $277 million below FY2011 funding levels and $4.31 billion less than the President's request. |
Thousands of oil and chemical spills of varying size and magnitude occur in the United States each year. When a spill occurs, state and local officials located in proximity to the incident generally are the first responders and may elevate an incident for federal attention if greater resources are desired. The National Oil and Hazardous Substances Pollution Contingency Plan—often referred to as the National Contingency Plan (NCP) for short—establishes the procedures for the federal response to oil and chemical spills. The scope of the NCP specifically encompasses discharges of oil into or upon U.S. waters and adjoining shorelines and releases of hazardous substances into the environment more broadly. Several hundred toxic chemicals and radionuclides are designated as hazardous substances under the NCP, and other pollutants and contaminants also fall within the scope of its response authorities. The NCP is codified in federal regulation and is authorized in multiple federal statutes. Unlike most other federal emergency response plans that are administrative mechanisms, the regulations of the NCP have the force of law and are binding and enforceable. After observing the effects of the 1967 Torrey Canyon oil tanker spill off the coast of England, the Johnson Administration developed the initial version of the NCP in 1968. The first NCP was an administrative initiative to coordinate the federal response to potential oil spills in U.S. waters. Congress later enacted the Federal Water Pollution Control Act Amendments of 1972 (often referred to as the Clean Water Act) to provide explicit statutory authority for the federal response to discharges of oil or hazardous substances into or upon U.S. waters within the contiguous zone and the adjoining shorelines. The 1972 amendments also explicitly directed the preparation of the NCP to carry out these authorities. The NCP has been revised multiple times since 1968 to implement additional federal statutory authorities that Congress has enacted in the wake of other major incidents. The discovery of severely contaminated sites in the 1970s, such as Love Canal in New York, led to the enactment of the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA). This statute addresses releases of hazardous substances, pollutants, and contaminants into the environment, and it directed a federal response plan for these incidents to be included in the NCP. Although Congress initially considered including oil spills within the response authorities of CERCLA, petroleum was excluded from the scope of the statute with the intention of addressing oil spills in separate legislation. The 1989 Exxon Valdez oil spill in Alaska led to the enactment of the Oil Pollution Act of 1990 (OPA). This statute clarified and expanded the oil spill response authorities of the Clean Water Act extending to U.S. waters within the Exclusive Economic Zone (EEZ) and directed revisions to the NCP to carry out these authorities. Over time, the NCP has been applied on a routine basis to respond to many varied incidents across the United States involving discharges of oil and releases of hazardous substances. The framework and procedures of the NCP often generate interest among Members of Congress and affected stakeholders in the execution of federal resources to respond to an incident and the participation of state, local, and private entities. Whereas individual incidents may differ in terms of the magnitude, scope, complexity, and associated hazards, effective coordination of the respondents and the adequacy of resources available to carry out a response can be common issues. Larger and more complex spills may garner more prominent attention, such as the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. Some raised questions about the authorities and roles of the entities involved in the response to that incident, including federal agencies, state and local governments, and private parties. This report provides background information on the NCP to address potential questions that may arise in congressional oversight of the federal response to particular incidents. The report discusses the federal statutes that authorize the NCP and related executive orders; mechanisms for reporting incidents to the federal government; the framework under which federal, state, and local roles are to be coordinated; funding mechanisms for federal response actions, including liability for response costs and related damages; and circumstances under which the NCP may be integrated within the National Response Framework (NRF) to address multifaceted incidents, such as major disasters or emergencies. The Appendix to this report provides a chronology of the development of the NCP over time. A list of commonly used acronyms also is provided below. Since its inception in 1968, the NCP has been revised on multiple occasions to establish regulatory procedures for implementing the federal statutory authorities that Congress has expanded over time to respond to incidents involving a discharge of oil or a release of a hazardous substance. These statutes are outlined briefly below in chronological order of enactment. For a discussion of funding authorized under these statutes to carry out response actions and the scope of liability for response costs and related damages, see the section on " Funding and Liability " later in this report. The 1972 amendments to the Clean Water Act added Section 311 to the statute to provide explicit statutory authority for the President to respond to a discharge of oil or a hazardous substance into or upon the navigable waters of the United States and adjoining shorelines, and the waters of the contiguous zone. The original NCP had focused on the federal response to oil spills. Section 311 directed the President to further develop the NCP to govern discharges of both oil and hazardous substances within the above aspects of the natural environment. The statute also required several basic elements to be included in the NCP, including mechanisms to coordinate the federal, state, and local roles in responding to an incident, and specific response procedures. The Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980 established the Superfund program and expanded the authorities of the President to respond to releases of hazardous substances into the environment more broadly than Section 311 of the Clean Water Act. Section 101(8) of CERCLA explicitly defines the term "environment" to include "the navigable waters, the waters of the contiguous zone, and the ocean waters of which the natural resources are under the exclusive management authority of the United States under the Magnuson-Stevens Fishery Conservation and Management Act," and any other surface water, groundwater, surface soil, sub-surface soil, or ambient air within or under the jurisdiction of the United States. CERCLA also expanded federal response authority to address releases of pollutants and contaminants into the environment that may present an imminent and substantial danger to the public health or welfare. Section 105 of CERCLA directed the President to revise the NCP to include a plan for responding to these types of incidents. This plan is codified in Subpart E of the regulations of the NCP. The Superfund Amendments and Reauthorization Act of 1986 (SARA) amended various response, liability, and enforcement provisions of CERCLA. Among these provisions, SARA amended Section 105 of the statute directing the President to further revise the NCP and expand the criteria used to evaluate contaminated sites for placement on the National Priorities List (NPL). The primary purpose of the NPL is to identify—in conjunction with the states—the most threatening sites that warrant federal involvement in long-term remediation. Sites that may require short-term response actions to address emergency situations do not require listing on the NPL to be eligible for federal involvement under the NCP. The Oil Pollution Act of 1990 expanded and clarified the President's authorities under Section 311 of the Clean Water Act specifically to respond to discharges of oil into or upon the navigable waters of the United States and adjoining shorelines, the waters of the EEZ, or that may affect natural resources belonging to, appertaining to, or under the exclusive management authority of the United States. As amended by OPA, Section 311(d) of the Clean Water Act directed the President to further revise the NCP to develop specific procedures for implementing these oil spill response authorities. The procedures are codified in Subpart D of the regulations of the NCP and provide the federal plan for undertaking an oil spill response. Several executive orders have delegated the President's response authorities under the above statutes to the federal departments and agencies tasked with implementing the NCP. The two executive orders discussed below amended previous executive orders that initially had delegated the President's response authorities after the enactment of the amendments to the Clean Water Act in 1972 and the enactment of CERCLA in 1980. Executive Order 12580 was issued in 1987 and delegated the President's authorities to respond to releases of hazardous substances, pollutants, and contaminants under CERCLA, as amended in 1986 by SARA. Executive Order 12777 was issued in 1991 and delegated the President's authorities to respond to discharges of oil under Section 311 of the Clean Water Act, as amended in 1990 by OPA. Under both executive orders, the coordination of the federal response generally is delegated to EPA within the inland zone and to the U.S. Coast Guard within the coastal zone, unless the two agencies agree otherwise. For the purpose of these delegated roles, the coastal zone is defined in the NCP to include "all U.S. waters subject to the tide, United States waters of the Great Lakes, specified ports and harbors on inland rivers, waters of the contiguous zone, other waters of the high seas subject to the NCP, and the land surface or land substrata, ground waters, and ambient air proximal to those waters." Conversely, the NCP defines the inland zone to encompass "the environment inland of the coastal zone excluding the Great Lakes and specified ports and harbors on inland rivers." Although responsibility for coordinating a federal response generally is divided between EPA and the U.S. Coast Guard with respect to these two geographic zones, both executive orders assign EPA the sole responsibility of revising the regulations of the NCP, as warranted. Prior to proposing any revisions to the NCP for public comment, EPA must consult with the U.S. Coast Guard and other federal departments and agencies that serve as standing members of the National Response Team (discussed below). As generally is the case with any federal regulation, revisions to the NCP also are subject to the federal rulemaking process, including the opportunity for public comment. Both executive orders further specify that any proposed or finalized revisions to the NCP would be subject to review and approval by the Office of Management and Budget (OMB). Executive Order 12580 established differing lead agency roles in responding to releases of hazardous substances at federal facilities and vessels. The Department of Defense (DOD) and Department of Energy (DOE) administer most of the federal facilities from which a release of a hazardous substance has occurred. Executive Order 12580 explicitly delegates the President's response authorities under CERCLA to DOD and DOE at facilities and vessels within their respective jurisdiction, custody, or control. DOD also is responsible for responding to incidents involving the removal of military weapons and munitions that are or were under its jurisdiction, custody, or control. Other federal departments and agencies may lead the federal response under CERCLA at facilities and vessels under their jurisdiction, custody, or control only in nonemergency situations. Within their respective zones, EPA or the U.S. Coast Guard would retain the lead role under CERCLA in emergency situations at these federal facilities and vessels. Executive Order 12777 did not similarly delegate the President's oil spill response authorities under Section 311 of the Clean Water Act with respect to federal facilities and vessels. Under the NCP, the U.S. Coast Guard retains the lead role in responding to discharges of oil from federal facilities or vessels within the coastal zone, regardless of which other federal department or agency may have jurisdiction, custody, or control over that facility or vessel. EPA similarly would lead the response to such incidents at federal facilities in the inland zone. In practice, the federal department or agency that administers the facility or vessel still may carry out a response with its own funds, under the direction of the U.S. Coast Guard or EPA within their respective zones. The NCP itself also establishes the lead roles of federal departments and agencies in accordance with the delegation of the President's authorities under these two executive orders. A federal response to a discharge of oil or a release of a hazardous substance may be triggered upon reporting of the incident. The National Response Center serves as the national clearinghouse of all discharges of oil and releases of hazardous substances in the United States that are reported to the federal government. The U.S. Coast Guard is responsible for administering the National Response Center, collecting data on reported incidents, and notifying the appropriate federal departments and agencies that may be involved in responding to an incident under the NCP in coordination with state and local authorities. The U.S. Coast Guard itself generally would be responsible for coordinating a federal response within the coastal zone, but would notify EPA to coordinate the federal response within the inland zone. The parties who discharge oil or release a hazardous substance are required to report the incident to the National Response Center if the quantity of the discharge or release exceeds allowable amounts. Reportable discharges of oil include discharges that would (1) violate applicable water quality standards, (2) cause a film or sheen upon or discoloration of the surface of the water or adjoining shorelines, or (3) cause a sludge or emulsion to be deposited beneath the surface of the water or upon adjoining shorelines. Reportable quantities of hazardous substances vary by individual substance in pounds (and kilograms), and in curies (and becquerels) for individual radionuclides designated as hazardous substances. State or local officials, or members of the public, who witness a discharge or release also may report the incident. Furthermore, state or local officials acting as the first responders on-site may contact the National Response Center to elevate a site for federal attention. Once the National Response Center is notified of an incident, a federal response may be undertaken in accordance with the framework and procedures of the NCP to draw upon available resources to respond to potential hazards, discussed next. The NCP established the National Response System (NRS) as a multi-tiered framework for coordinating the federal response to a discharge of oil or a release of a hazardous substance, pollutant, or contaminant. The NRS establishes the respective roles of federal, state, and local governments in carrying out a federal response, including the party or parties responsible for the incident and other private entities that may wish to contribute resources. As stated in the NCP, the NRS is intended to be "capable of expanding or contracting to accommodate the response effort required by the size or complexity of the discharge or release." Accordingly, the array of respondents and resources used to carry out a response may vary with the magnitude, scope, and complexity of an incident and the associated hazards. The following sections discuss the various components of the NRS, illustrated in Figure 1 as excerpted from the NCP. The National Response Team (NRT) consists of 15 federal departments and agencies ( Figure 1 ). The specific role of each department and agency in responding to a discharge of oil or a release of a hazardous substance is outlined in the NCP. These departments and agencies include Environmental Protection Agency (Chair), U.S. Coast Guard (Vice-Chair), Department of Agriculture, Department of Commerce, Department of Defense, Department of Energy, Department of Health and Human Services, Department of the Interior, Department of Justice, Department of Labor Department of State, Department of Transportation, Federal Emergency Management Agency, General Services Administration, and Nuclear Regulatory Commission. EPA serves as the "standing" Chair of the NRT, and the U.S. Coast Guard serves as the standing Vice-Chair. Consistent with the delegation of the President's response authorities by executive order, the U.S. Coast Guard becomes the "acting" Chair of the NRT for a federal response to a discharge of oil or a release of a hazardous substance within the coastal zone, and EPA becomes the acting Vice-Chair in such instances. Conversely, EPA remains the Chair for a federal response within the inland zone, and the U.S. Coast Guard the Vice-Chair. Due to the nature of their ongoing missions, the NRT departments and agencies employ skilled personnel and maintain specialized equipment that can enhance the effectiveness of the federal response. For example, the Department of Health and Human Services (HHS) maintains expertise that may be drawn upon to assess threats to public health resulting from an incident. Within HHS, the Agency for Toxic Substances and Disease Registry (ATSDR) specifically is responsible for assessing public health threats from the release of a hazardous substance, and the Centers for Disease Control and Prevention (CDC) assesses public health threats from discharges of oil. The CDC played a prominent role in assessing threats to public health from the oil spill in the Gulf of Mexico in connection with the Deepwater Horizon incident. Federal departments and agencies that administer federal facilities and vessels are standing members of the NRT to carry out the response to hazardous incidents that may occur in connection with their own activities. Under the NCP, these departments and agencies also may be called upon to use these capabilities in support of the response to nonfederal incidents that present similar challenges. For example, the U.S. Navy Supervisor of Salvage maintains specialized equipment and capabilities to respond to pollution incidents involving U.S. Naval vessels. These capabilities may be drawn upon to respond to a civilian incident in ocean environments. During the Deepwater Horizon incident, for example, the Navy dispatched oil collection equipment to aid in the federal response under the NCP. In addition, the Department of Justice also serves as a standing member of the NRT to represent the United States in any litigation that may involve the federal response to a discharge of oil or a release of a hazardous substance under the NCP. The NCP provides state, territorial, local, and tribal governments the opportunity to participate in the federal response to an incident through the Regional Response Teams that fall under the NRT ( Figure 1 ). The NCP established 13 Regional Response Teams. (See Figure 2 for a map of these regions, as excerpted from the NCP.) Each federal department or agency that is a standing member of the NRT designates an official to serve on each Regional Response Team (RRT) to represent the federal government. The governor of each state or territory within a region may designate an official to represent the state or territorial government. The state and territorial officials serving on a RRT may invite local governments to participate. Indian tribes within a region may designate an official to represent the tribal government. Because state, territorial, or local officials are likely to be located in closer proximity to incidents that occur within their respective geographic regions, the NCP specifies that they are expected to be the first government representatives on the RRT to arrive at the scene of a discharge or release to take initial response actions. Consequently, state, territorial, or local officials usually are the first responders who may initiate immediate safety measures to protect the public. For example, the NCP indicates that state, territorial, or local officials may be responsible for conducting evacuations of affected populations according to applicable state, territorial, or local procedures. As discussed earlier, state, territorial, or local officials acting as the first responders also may notify the National Response Center to elevate an incident for federal involvement, at which point the coordinating framework of the NCP would be applied. Enacted in 1986, the Emergency Planning and Community Right-to-Know Act (EPCRA) required each state to create a State Emergency Response Commission (SERC), designate emergency planning districts, and establish Local Emergency Planning Committees (LEPCs) for each district. Each LEPC must prepare a local emergency response plan for the emergency planning district. These local emergency plans are integrated into the appropriate geographic-specific area response plan that may cover several local planning districts, discussed in the " Area Committees " section of this report below. Area Committees support the Regional Response Teams in preparing for a response to a discharge of oil or a hazardous substance into U.S. waters and the adjoining shorelines, as authorized under Section 311(j)(4) of the Clean Water Act ( Figure 1 ). The President may designate "qualified" personnel from federal, state, territorial, and local agencies to serve on these committees. The primary function of each committee is to prepare an Area Contingency Plan (ACP) for its designated geographic area within a region. The geographic-specific aspects of an ACP augment the more general provisions of the NCP. When implemented together, these plans are intended to ensure an effective response to a discharge from a vessel, offshore facility, or onshore facility operating in or near the area. CERCLA does not explicitly authorize Area Committees with respect to a release of a hazardous substance into the environment, whereas Section 311 of the Clean Water Act does authorize such committees to cover discharges of hazardous substances into U.S. waters and the adjoining shorelines. In inland areas not covered by the Clean Water Act, the Regional Response Teams may fulfill the planning functions of the Area Committees. Considering the potentially large number of individuals who may be involved in the federal response to an incident under the NCP, one high-level federal official is responsible for directing and coordinating all of the on-the-ground actions at the scene of a discharge of oil or a release of a hazardous substance. A pre-designated On-Scene Coordinator (OSC) for the geographic area where the discharge or release occurs performs this lead role. Within their respective locales, the OSCs also oversee the development of ACPs by the Area Committees to ensure consistency with the regulatory procedures of the NCP. EPA generally is responsible for designating the OSCs for incidents involving a discharge of oil or a release of a hazardous substance that may occur in the inland zone, and the U.S. Coast Guard in the coastal zone. U.S. Coast Guard Captains of the Port usually serve as the OSCs, coordinating the response to discharges of oil from all facilities and vessels operating within the coastal zone. The NCP established these lead agency roles in accordance with the executive orders that delegated the President's response authorities, including exceptions for responses to incidents at federal facilities at which the federal department or agency that administers the facility may serve as the OSC instead. See the section of this report on " Executive Orders ." The OSC is responsible for making final decisions on what specific actions are necessary to carry out the federal response to an incident, the use and allocation of federal funds to carry out those actions, what other federal resources may be needed to carry out those actions, and what specific responsibilities are delegated to each entity participating in the federal response, including the party or parties responsible for the incident. The OSC also determines when the federal response to an individual incident is complete and the regulations of the NCP are satisfied. While state, territorial, or local officials may participate in a federal response under the direction of the OSC, the NCP does not preclude states, territories, or local governments from carrying out response actions under their own authorities. Although EPA and the U.S. Coast Guard usually serve as the OSCs within their respective geographic zones, the Secretary of Homeland Security may assume the lead role in directing a response taken under the NCP in certain circumstances. First, the Secretary of Homeland Security generally has the discretion to assert a lead role in the coastal zone in the capacity of administering the functions of the U.S. Coast Guard within the Department of Homeland Security. Second, Homeland Security Presidential Directive 5 (issued in 2003) more broadly authorizes the Secretary of Homeland Security to be the "principal federal official for domestic incident management" in response to terrorist attacks, major disasters, or other emergencies in any of the following situations: a federal department or agency acting under its own authority has requested the assistance of the Secretary; the resources of state and local authorities are overwhelmed and federal assistance has been requested by the appropriate state and local authorities; more than one federal department or agency has become substantially involved in responding to the incident; or the President has directed the Secretary to assume responsibility for managing the domestic incident. In any of these instances, the procedures and requirements of the NCP still would continue to apply, as the directive is an administrative mechanism that does not preempt existing authorities. In practice, the Secretary of Homeland Security has not been directly involved on a routine basis in leading response actions taken under the NCP. The lead role of the Secretary generally has been reserved for incidents of greater magnitude, scope, and complexity. For example, Secretary Napolitano coordinated the response taken under the NCP during the 2010 Deepwater Horizon oil spill in the Gulf of Mexico. The Secretary's potential role in coordinating a response to other incidents under the NCP generally would depend on the nature of the incident and the need for elevating coordination within the executive branch in the types of situations identified above. The NCP establishes differing roles with respect to the OSC for an oil spill of national significance (SONS). The NCP does not provide a similar counterpart for releases of hazardous substances. The Administrator of EPA is responsible for designating a SONS in the inland zone, and the Commandant of the U.S. Coast Guard is responsible for making such designations in the coastal zone. For a SONS in the inland zone, the Administrator of EPA may appoint a senior agency official to assis t the OSC in "communicating with affected parties and the public and coordinating federal, state, local, and international resources at the national level." For a SONS in the coastal zone, the Commandant of the U.S. Coast Guard may appoint a National Incident Commander (NIC) to assume the role of the OSC in these capacities, rather than merely assist the OSC. Although the designation of a SONS may affect communication and coordination roles, it does not alter the oil response procedures or requirements of the NCP, and does not make any additional funds available to carry out a response. In practice, the designation of a discharge of oil as a SONS is rare. On April 29, 2010, Secretary Napolitano classified the Deepwater Horizon event as a SONS and appointed U.S. Coast Guard Admiral Thad Allen as the NIC for that incident. This was the first spill to receive such a designation. The participation of nongovernmental entities in a federal response may include parties responsible for a discharge of oil or a release of a hazardous substance who perform response actions under the direction of the OSC, private contractors procured either by a responsible party or a federal agency to conduct the physical work, and members of the general public who may wish to contribute resources. In particular, Section 311(j)(5)(D) of the Clean Water Act requires certain types of facilities and vessels to prepare response plans that would ensure the availability of private personnel and equipment to address a worst case discharge of oil or a hazardous substance into or upon navigable waters of the United States, adjoining shorelines, and the Exclusive Economic Zone. These facility and vessel plans must be consistent with the applicable ACPs. In many instances, private facilities and vessels may maintain a contractual relationship with an oil spill removal organization to satisfy this planning requirement for potential oil spills. The NCP also encourages industry groups, academic organizations, and others to commit resources for federal response operations. Commitments of nongovernmental entities may be identified in ACPs, which can be called upon when an incident occurs. Nongovernmental entities also may generate scientific or technical information to assist in the development of response strategies, which can be incorporated into ACPs. Individual volunteers also may participate in the federal response. The NCP requires Area Committees to establish procedures that allow for "well organized, worthwhile, and safe use of volunteers." However, the participation of volunteers in the response to a specific incident may be limited to certain activities more appropriate for their skill level or could be restricted if dangerous conditions exist. Congress has established two dedicated trust funds to finance the costs of a federal response to a discharge or oil or release of a hazardous substance, pollutant, or contaminant. Through its National Pollution Funds Center, the U.S. Coast Guard administers the Oil Spill Liability Trust Fund to finance the costs of responding to a discharge of oil. Currently, revenues for the Oil Spill Liability Trust Fund primarily are derived from a dedicated nine cents per-barrel tax on domestic and imported oil. The tax is scheduled to terminate at the end of 2017. EPA administers the Hazardous Substance Superfund Trust Fund to finance the costs of responding to a release of a hazardous substance, pollutant, or contaminant. The Superfund Trust Fund is financed mostly with revenues transferred from the General Fund of the U.S. Treasury, since the taxes on domestic and imported oil, chemical feedstocks, and corporate income that once financed this trust fund expired at the end of 1995. Neither of these trust funds is available to cover the costs of responding to a discharge of oil or a release of a hazardous substance from a federal facility or vessel. Congress appropriates separate funding directly to the federal departments or agencies with jurisdiction, custody, or control over the facility or vessel from which the discharge or release occurred to pay the response costs of the federal government. These two trust funds differ in terms of how the monies are made available to carry out a response. Monies from the Oil Spill Liability Trust Fund are authorized as mandatory (i.e., permanent) appropriations that do not require a subsequent discretionary appropriation before they are made available to federal agencies for obligation. However, these monies are subject to certain caps on annual withdrawals from the trust fund and total expenditures per incident. Monies from the Superfund Trust Fund are subject to discretionary appropriations before they are made available for response actions. To enable response capabilities, Congress has annually appropriated monies out of this trust fund to EPA's Superfund account and has reserved separate portions of these funds for emergency "removal" actions versus long-term "remedial" actions. These funds remain available indefinitely until they are expended. The federal government may recover its response costs from the responsible parties under the liability provisions of OPA and CERCLA, respectively. Recovered funds are to be deposited back into the respective trust fund that financed the federal response. The responsible parties also may perform and pay for response actions up-front with their own monies, subject to direction by the OSC. In the event that the responsible parties are not financially viable or cannot be identified, the applicable trust fund still may pay for federal response actions, up to the amounts made available from that trust fund and within certain limitations. Financial liability differs somewhat for discharges of oil versus releases of hazardous substances. Section 1002 of OPA establishes the liability of parties responsible for a discharge of oil, including response costs, natural resource damages, certain categories of economic damages, and damages for net costs borne by states and local governments in providing public services in support of a response. Section 107 of CERCLA establishes the liability of parties responsible for a release of a hazardous substance, including response costs, natural resource damages, and the costs of federal public health studies performed by the Agency for Toxic Substances and Disease Registry. Unlike OPA, CERCLA does not establish a separate category of liability for economic damages, with the exception of certain economic losses that may be compensable through natural resource damages based on the loss of the use of resources. Other economic damages attributed to releases of hazardous substances primarily are left to tort law. Notably, CERCLA also does not apply liability to a release of a pollutant or contaminant. The federal government still may respond to such incidents, albeit without a mechanism to recover the costs under CERCLA. For a presidential declaration of an incident as a major disaster or emergency, funds provided under the Robert T. Stafford Disaster Relief and Emergency Assistance Act (the Stafford Act) may finance the federal response costs, rather than the above trust funds. The use of Stafford Act funds usually would entail the Secretary of Homeland Security applying the NCP under the National Response Framework (discussed below) to address a discharge of oil or a release of a hazardous substance associated with a major disaster or emergency. In practice, the use of Stafford Act funds to pay for the federal response to a discharge of oil or a release of a hazardous substance has been more limited to discharges or releases caused by natural disasters or other emergencies for which there is not a responsible party to pursue. In such instances, the President may make a Stafford Act declaration to provide federal assistance to augment state and local resources, in the absence of viable responsible parties to pay for the response. The National Response Framework (NRF) is the federal government's broader administrative mechanism that is intended to coordinate the array of federal response plans. As such, the NRF provides the administrative policies and guiding principles for a unified response from all levels of government, and all sectors of communities, to all types of hazards through the combined scope of the various federal response plans that it incorporates. However, the NRF itself is not an operational plan that dictates a step-by-step process for responding to a specific type of hazard, nor is the NRF codified in federal regulation like the NCP. Through Emergency Support Function (ESF) #10 of the NRF, the Secretary of Homeland Security may apply the operational elements of the NCP for incidents involving the discharge of oil or release of hazardous materials that require a coordinated federal response. (ESF #10 references the term hazardous materials and defines that term to include hazardous substances, pollutants, and contaminants covered under the NCP.) Situations in which the application of the NCP through the NRF may occur include a major disaster or emergency declared under the Stafford Act, when state and local authorities are overwhelmed and federal assistance is requested; an incident to which a federal agency is responding under its own authority and requests support from other federal agencies to respond to aspects of the incident that involve the discharge of oil or release of hazardous materials; or an incident for which the Department of Homeland Secretary determines that it should lead the response because of special circumstances. In practice, the federal response to a discharge of oil or a release of a hazardous substance is most often executed under the regulations of the NCP alone, rather than through the coordinating structures of the NRF under ESF #10. The Secretary of Homeland Security's application of the NCP through the NRF appears to be less common and more limited to multifaceted incidents of greater magnitude, scope, and complexity that may necessitate the coordination of multiple federal response plans. For example, the Department of Homeland Security has stated that the NCP still was applied to the Deepwater Horizon oil spill as a stand-alone regulatory authority without involvement of other federal response plans under the NRF. Regardless of whether the NCP is applied as a stand-alone regulatory authority or through the NRF, the procedures for responding to a discharge of oil or release of a hazardous substance are the same because the NCP remains the operative plan in either instance. Since its inception in 1968, the NCP has been revised on multiple occasions to develop procedures for implementing the federal statutory authorities that Congress has expanded over time to respond to discharges of oil and releases of hazardous substances, pollutants, and contaminants. Major events in the development of the NCP are outlined below. September 1968 : Several departments in the Johnson Administration published the National Multi-Agency Oil and Hazardous Materials Pollution Contingency Plan. This version established a Joint Operations Center, a national reaction team, and regional reaction teams. This first version of the NCP was prepared under an administrative initiative, and some have characterized its legal authority as being "not as straightforward" as subsequent versions codified in federal regulation. April 1970 : The Water Quality Improvement Act of 1970 (P.L. 91-224) directed the President to publish a National Contingency Plan for the removal of oil. The act included specific details such as task forces at major ports, a national coordination center, and a schedule identifying potential dispersant uses. This act also altered the primary response authority provision, stating that "the President is authorized to act to remove or arrange for the removal of such oil at any time, unless he determines such removal will be done properly by the owner or operator of the vessel, onshore facility, or offshore facility from which the discharge occurs." June 1970 : Pursuant to P.L. 91-224, the Council on Environmental Quality (CEQ) published in the Federal Register a National Oil and Hazardous Materials Pollution Contingency Plan. This plan established the National Response Center, National Response Team, Regional Response Team, and the On-Scene Commander roles (later termed On-Scene Coordinator). The plan addressed discharges of oil and "hazardous polluting substances." August 1971 : CEQ made several modifications to the NCP. CEQ changed the name of the plan to the one that still exists today—the National Oil and Hazardous Substances Pollution Contingency Plan. The revised plan established roles for the newly created Environmental Protection Agency (EPA) and National Oceanic and Atmospheric Administration. In particular, the plan designated EPA as the chair of the National Response Team. October 1972 : The Federal Water Pollution Control Act Amendments of 1972 (P.L. 92-500)—often referred to as the Clean Water Act—amended the 1970 statutory authority of the NCP by explicitly requiring it to address hazardous substances as well as oil. August 1973 : Executive Order 11735 delegated presidential authorities pursuant to the 1972 amendments to the Clean Water Act to various federal agencies, including EPA, the Secretary of the Department in which the U.S. Coast Guard is operating, and the Council on Environmental Quality. August 1973 : CEQ published a revised NCP, pursuant to the 1972 amendments to the Clean Water Act and lessons learned from the National Response Team. The NCP was codified in 40 C.F.R. Part 1510. February 1975 : CEQ issued a revised version of the NCP, based on comments regarding the 1973 NCP. December 1977 : The Clean Water Act Amendments of 1977 ( P.L. 95-217 ) required revisions to the NCP to address "imminent threats" of oil and hazardous substance discharges. March 1980 : CEQ revised the NCP based on the 1977 amendments to the Clean Water Act and experiences with several, high-profile spills at that time. The 1980 changes involved, among other things, state participation, local contingency plans, and a national pollution equipment inventory. December 1980 : The Comprehensive Environmental Response, Compensation, and Liability Act of 1980 (CERCLA; P.L. 96-510 ) required the President to develop, and incorporate into the NCP, procedures for prioritizing and responding to releases of hazardous substances, pollutants, and contaminants into the environment. August 1981 : Executive Order 12316, among other provisions, delegated to EPA the authority to amend the NCP. July 1982 : EPA issued a revised NCP pursuant to CERCLA. The existing NCP structure was largely unchanged. EPA added a new subpart in the regulations with authorities and requirements that specifically addressed hazardous substance response activities. November 1985 : EPA revised the NCP regulations to, among other changes, address "applicable or relevant and appropriate requirements" (ARARs) during response activities. October 1986 : The Superfund Amendments and Reauthorization Act of 1986 (SARA; P.L. 99-499 ) amended various response, liability, and enforcement provisions of CERCLA and directed the President to revise the NCP to carry out these authorities. Title III of the act (EPCRA) created SERCs and LEPCs. January 1987 : Executive Order 12580 delegated various functions assigned to the President in CERCLA, as amended by SARA. March 199 0 : EPA revised the NCP based on Executive Order 12580 and the amendments to CERCLA in SARA, including changes to hazardous substance reporting and response provisions, federal department and agency roles for federal facilities and vessels, and state and public participation. October 1990 : Catalyzed by the 1989 Exxon Valdez oil spill in Alaskan waters, Congress enacted the Oil Pollution Act of 1990 (OPA; P.L. 101-380 ). Among other provisions, OPA provided authority to the President to perform cleanup immediately using federal resources, monitor the response efforts of the spiller, or direct the spiller's cleanup activities. The act also required the President to amend the NCP to establish procedures and standards for responding to worst-case oil spill scenarios. October 1991 : Executive Order 12777 delegated various functions assigned to the President in OPA. September 1994 : EPA revised the NCP based on OPA and its amendments to the Clean Water Act. The modifications to the NCP reflected the revised authorities of the President (delegated to the U.S. Coast Guard or EPA) to direct and/or undertake responses to oil spills. Additions to the NCP also included provisions regarding the National Strike Force Coordination Center, Area Committees, Area Contingency Plans (ACPs), vessel and facility oil spill response planning requirements, and other response elements. | Thousands of oil and chemical spills of varying size and magnitude occur in the United States each year. When a spill occurs, state and local officials located in proximity to the incident generally are the first responders and may elevate an incident for federal attention if greater resources are desired. The National Oil and Hazardous Substances Pollution Contingency Plan, often referred to as the National Contingency Plan (NCP), establishes the procedures for the federal response to oil and chemical spills. The scope of the NCP encompasses discharges of oil into or upon U.S. waters and adjoining shorelines and releases of hazardous substances into the environment. The NCP was developed in 1968 and has been revised on multiple occasions to implement the federal statutory response authorities that Congress has expanded over time. Three federal environmental statutes authorized the development of the NCP: the Clean Water Act, as amended; the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) of 1980, as amended; and the Oil Pollution Act of 1990. Several executive orders have delegated the presidential response authorities of these statutes to federal departments and agencies that implement the NCP. The lead federal agency serves as the On-Scene Coordinator to direct the federal response. Generally, EPA leads the federal response within the inland zone, and the U.S. Coast Guard serves as the lead agency within the coastal zone. However, a response to an incident occurring on a federal facility is coordinated by the federal department or agency that administers the facility. The NCP established the National Response System (NRS) as a multi-tiered framework to coordinate 15 federal departments and agencies on the National Response Team in providing specialized resources and expertise and involving state and local officials and other nonfederal entities. Although the framework of the NRS is the same for responding to discharges of oil or releases of hazardous substances, the NCP establishes separate operational elements for responding to each type of incident, and these elements differ in some respects. The source of federal funding to carry out a response also differs. The Oil Spill Liability Trust Fund finances the federal response to a discharge of oil, and the Superfund Trust Fund finances the federal response to a release of a hazardous substance. Monies spent from these trust funds may be recouped from the responsible parties under the liability provisions of the Oil Pollution Act and CERCLA, respectively. For multifaceted incidents (major disasters or emergencies), the NCP also could be invoked under the National Response Framework (NRF) to address an aspect of an incident involving a discharge of oil or release of a hazardous substance. The NRF is a broader administrative mechanism for coordinating the array of federal emergency response plans. However, the NRF itself is not an operational plan that dictates a step-by-step process. The NRF instead merely may apply the NCP as the operational plan to respond to an oil or hazardous substance incident. This report discusses the authorities, relevant executive orders, and federal emergency response framework of the NCP, and identifies the funding mechanisms to carry out a federal response. |
Ongoing concern surrounding energy security and the environment have led to sustained Congressional interest in energy tax policy. The 111 th Congress enacted a number of renewable energy tax incentives as part of the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ). A number of expiring renewable energy tax provisions were extended through the end of 2011 in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 ( P.L. 111-312 ). As various incentives for renewable energy, renewable fuels, and energy efficiency are scheduled to expire at the end of 2011, the 112 th Congress may want to explore various policy options for encouraging investment in renewable energy. The Obama Administration has also repeatedly emphasized the importance of investments in clean energy technologies and infrastructure. President Obama has noted that clean energy investments can enhance domestic energy security, promote environmental objectives, and create jobs. One barrier to investments in renewable energy projects is that such projects are highly capital intensive. Capital intensive renewable energy projects continue to face a number of challenges with respect to financing. Policymakers have been exploring various options for increasing the availability and decreasing the cost of financing for the renewable energy sector. One option for attracting additional capital to the renewable energy sector that Congress may consider is allowing renewable energy activities access to the master limited partnership (MLP) business structure. This report explores the policy option of extending the master limited partnership (MLP) business structure option to renewable energy facilities and related activities. Before evaluating the policy, this report provides a brief overview of the MLP structure, highlighting notable tax issues. This report also provides background on the legislative origins of the MLP structure, and legislative changes affecting MLPs that have been made in recent years. The final sections of this report highlight how the MLP structure might be able to attract additional capital to the renewable energy sector, while also discussing some potential policy concerns. A master limited partnership (MLPs) is a type of business structure that is taxed as a partnership, but whose ownership interests are traded on financial markets like corporate stock. Being treated as a partnership for tax purposes implies that MLP income is generally subject to only one layer of taxation. Income passes through the partnership to its business owners who pay taxes according to the individual income tax system. Publically traded C corporations, however, are subject to two layers of taxation. Their earnings are taxed once at the corporate level, according to the corporate tax system, and then a second time at the individual-shareholder level when dividend payments are made or capital gains are realized. This leads to the so-called "double taxation" of corporate profits. Businesses may be able to attract more capital at a lower cost by choosing to organize as an MLP than would otherwise be possible. Ownership interests of MLPs, which are known as units to distinguish them from corporate stock, are traded on regulated financial exchanges in the same manner as shares of corporate stock. MLP units are an attractive alternative to corporate stock for individual investors, since the single layer of taxation can result in higher after-tax returns. The higher returns to investors corresponds to lower financing costs for the business. And the ability to have their units traded on public exchanges is attractive to the MLP itself since it grants them access to larger and more liquid sources of capital, which can be used to pursue investments. MLPs are typically formed as a limited partnership consisting of thousands of limited partners and at least one general partner. The limited partners are public investors who provide most of the capital to the MLP in exchange for publically tradable units. MLP units pay a periodic cash distribution similar to a dividend and are traded on the New York Stock Exchange, NASDAQ, American Stock Exchange, or over-the-counter market, like stocks. Unit holders are also allocated a portion (determined by units owned) of the partnership's income, deductions, and credits. When a unit is traded, the buying investor replaces the selling investor as a limited partner in the MLP. Currently, there are over 100 publically traded MLPs, the majority of which are energy related (see Appendix ). The MLP's general partner manages the partnership in exchange for a percentage of the partnership's income, called an incentive distribution right (IDR). The exact percentage that the general partner will receive is agreed to when the MLP is formed, but typically involves a 2% share of some baseline amount of distributable cash flow. The general partner may then receive an increasing share of distributable cash flow above the baseline if the yield on the limited partner's units exceed certain thresholds. This payment structure is thought to compensate the general partner for taking on certain risks and encourage them to manage the MLP in a way that maximizes the return to investors. The general partner may be another (parent) company or a group of individuals. To be an MLP at least 90% of a business's gross income must be considered "qualifying income." Qualifying income generally includes dividends, interest, rents, capital gains, and mining and natural resource income. Income related to the exploration, development, mining or production, processing, refining, transportation, storage, and marketing of any mineral or natural resource falls under the latter income category. Recently, the definition of qualifying income was expanded. The expanded definition includes income from the transportation and storage of certain renewable and alternative fuels, including ethanol and biodiesel, and activities involving industrial source carbon dioxide. MLPs will typically own and operate their actual business assets indirectly through a subsidiary, known as an operating company. Historically, owning business assets indirectly through a separate company reduced the administrative burden associated with MLPs being publically traded. At one point, direct ownership of the assets might have required that an MLP file change of ownership documents in every state it had operations in whenever investors traded shares. Today, operating companies are often used by MLPs to limit liability among various ventures operating in different states. The use of an operating company also gives MLPs more options and protection when structuring its debt financing since it can subordinate and separate debt along its various lines of business more easily. Additionally, MLPs can use an operating company to "filter" income generated by a subsidiary that would otherwise violate the qualified MLP income restrictions. This can happen when an MLP has business investments in closely related, but unqualified, lines of business. Although MLP units trade alongside corporate stocks on public exchanges, their tax treatment is fundamentally more complex. This treatment potentially limits the investor pool to the most sophisticated investors. As previously mentioned, each year MLP investors are allocated their share of the partnership's income, deductions, and credits, and pay tax on the net income according to ordinary income tax rate. Tax must be paid on partnership income the year it is earned, regardless of whether the net income was actually distributed to investors or retained within the partnership. If an investor's net income is negative then the loss is considered a passive loss and generally can only be used to offset passive income. Thus, an investor generally could not use a $10,000 loss from an MLP to offset $10,000 of salary income, which is considered active income. In addition, MLP passive activity loss rules are applied on an entity-by-entity basis. Thus, losses from one MLP cannot be used to offset active income from another MLP. The taxation of an investor's periodic cash distributions is different than the taxation of their share of partnership income. Cash distributions may be received on a quarterly basis but they are not taxed until the investor sells their MLP units. Furthermore, when the distributions are taxed, they are generally taxed as capital gains and not ordinary income. To compute the capital gain related to distributions an investor will begin with the unit sales price and subtract their adjusted basis in the MLP. An investor's adjusted basis is the original purchase price of the units decreased by the amount of cash distributions received and increased by their share of the partnership's net income. The basis adjustments ensure that all income is only subject to one layer of taxation. Investors may also have to make various other tax computations when they sell units, including determining their share of depreciation deductions that are subject to recapture (taxation). Another potential tax complexity that may limit who invests in MLPs is unrelated business income taxation (UBIT). The term "unrelated business income" generally means income generated by a tax-exempt organization that is unrelated to the organization's regular business. With regard to MLPs, the issue of UBIT primarily concerns pension funds and tax-preferred accounts such as IRAs and college savings plans that invest in MLPs. These tax-preferred investment and saving vehicles must recognize any income greater than $1,000 earned from MLP investments as unrelated business income and pay tax on that income (UBIT). Unrelated business income is taxed according to the corporate rate schedule. The effect on the after-tax return for pension funds and individuals using IRAs may limit these investors in MLPs. The President's 2010, 2011, and 2012 Budget Outlines along with numerous other proposals in prior Congresses proposed changes to the tax treatment of certain types of "carried interest," which some have been concerned would impact energy-related MLPs. Carried interest refers to the percentage of a partnership's earnings that its general partners (managers) receive as a performance fee. Proposals regarding carried interest have generally been aimed at the financial services industries. Hedge funds and private equity funds, which are typically set up as a partnership, pay management a fee that depends on the performance of the fund. This fee, which represents carried interest, is taxed at the more favorable capital gains rate instead of the ordinary income rates since these firms are involved in the buying and selling of financial assets, which results in capital gains. Past Administration and congressional proposals would have taxed carried interest as ordinary income, stating that the payments represent compensation for services and not capital. Attempts to change the tax treatment of carried interest, currently treated as capital gains, would likely have minimal impact on current and future energy-related MLPs. It is true that the IDR payments made to MLP general partners are a form of carried interest since they represent a fee based on the performance of the partnership. These payments, however, are the result of operating business income and not capital gains income from the buying and selling of assets, as is the case with a hedge fund. As a result, IDR payments are already taxed mostly at ordinary income rates. There may be a small fraction of MLP carried interest related to the occasional sale of capital assets used in the operating business that is taxed as a capital gains right, but this amount is likely minimal. Master limited partnerships first appeared in the early 1980s. The Tax Reform Act of 1986 (TRA86) reduced the top marginal individual income tax rate to a level lower than the top marginal corporate tax rate. As a result, the partnership business structure became more favorable for tax purposes than the corporate structure. Other changes enacted as part of the TRA86, however, limited the attractiveness of MLPs for investors. Specifically, the TRA86 introduced passive loss rules, which prevented investors from using deductions associated with businesses in which they are not actively involved, such as MLPs, to offset other types of income. In 1987, Congress enacted IRC § 7704, which modified the rules publicly traded partnerships (PTPs) and MLPs had been using to avoid being subject to corporate taxation. , Under the new rules, partnerships whose ownership interests were publically traded were to be treated as corporations for tax purposes. An exception was made, however, that allowed partnerships meeting two criteria to continue being taxed as partnerships. The two criteria were (1) the partnership was in existence on December 17, 1987, and (2) at least 90% of its gross income came from passive sources, such as rents, royalties, and natural resource income, among others. If the income criteria was not met, the partnership could be grandfathered for a 10-year period, after which it would be taxed as a corporation or, in the extreme, cease operations. The 1987 rules related to PTPs and MLPs were enacted to address concerns surrounding erosion of the corporate tax base. In the House Report accompanying H.R. 3545 , the 100 th Congress noted "To the extent activities that would otherwise be conducted in the corporate form, and earnings that would be subject to two levels of tax (at the corporate and shareholder levels), the growth of publically traded partnerships engaged in such activities tends to jeopardize the corporate tax base." Further, Congress also observed that PTPs had been used to avoid corporate taxes, noting that the intent of pre-1987 tax law was "being circumvented by the growth in publically traded partnerships that are taking advantage of an unintended opportunity for disincorporation and elective integration of the corporate and shareholder levels of tax." When IRC § 7704 was enacted, effectively subjecting most PTPs and MLPs to corporate taxation, existing PTPs and MLPs were allowed to continue operating as a partnership for 10 years. In 1997, legislation was passed that allowed PTPs and MLPs that had been grandfathered and allowed to continue operating as partnerships an additional choice. Instead of being forced to choose an alternative organizational form, grandfathered PTPs and MLPs were given the option of paying a 3.5% tax on gross income, as an alternative to corporate income taxes. Legislative changes enacted as part of the American Jobs Creation Act of 2004 ( P.L. 108-357 ) potentially expanded the pool of capital able to invest in MLPs. Provisions in this legislation effectively changed rules related to UBIT, which had previously made it unattractive for mutual funds to invest in MLPs. Specifically, the 2004 Jobs Act allowed partnership distributions to be considered qualifying income for mutual funds, thus allowing funds to invest in MLPs without having to worry about UBIT. This change effectively increased the potential pool of MLP investors. Most recently, the definition of qualifying MLP income was expanded to include the transportation and storage of certain renewable and alternative fuels, including ethanol and biodiesel, and other activities involving industrial source carbon dioxide. This change was made as part of the Emergency Economic Stabilization Act of 2008 ( P.L. 110-343 ), at an estimated cost of $119 million over 10 years. The purpose of this change was to allow biofuels pipelines to receive the same tax treatment as petroleum pipelines. Previously, the statutory definition of qualifying income had not been expanded since § 7704 was added to the Internal Revenue Code in 1987. As noted above, policies enacted in the 111 th Congress were designed to support investment and growth in the renewable energy sector. These policies were consistent with the objectives of the Obama Administration, which has emphasized the importance of investments in clean energy technology, including resources and infrastructure. Enhanced use of clean energy resources may be consistent with broader energy policy goals, environmental sustainability, and perhaps domestic energy security. Enhanced investment in and deployment of renewable energy technologies may also have the potential for domestic job creation. During the 111 th Congress, action was taken to address certain challenges in financing renewable energy projects. In the wake of the recent financial crisis, the renewable energy sector was faced with new challenges in financing investment. Prior to 2008, renewable energy investors often relied on tax-equity markets to monetize renewable energy tax benefits (such as the renewable energy production tax credit (PTC)). The ability to monetize federal renewable energy tax incentives was important for renewable energy investors to finance these capital intensive projects. Tax-equity financing became increasingly scarce during 2008 and 2009, leading Congress to enact the Section 1603 grants in lieu of tax credits program. Under this program, qualified taxpayers could elect to receive a one-time grant from the Treasury in lieu of the renewable energy PTC or investment tax credit (ITC). The grant option effectively eliminated the need for tax-equity partnerships for many eligible taxpayers. It has been argued that the Section 1603 grant program prevented what could have been a substantial decline in renewable energy investments, and may have resulted in additional investments in renewable energy generation capacity. Allowing taxpayers to receive a direct grant from the Treasury, and avoid the tax-equity market, has been credited with broadening the pool of renewable energy investors. The success of the Section 1603 program has led some to note the potential value of policies that will attract additional capital to the renewable energy sector. One policy option that proponents note might attract capital to the renewable energy sector would be to allow renewable energy developers to structure as a master limited partnership (MLP). , Should Congress decide to expand the definition of qualifying income to include renewable energy, or make other changes to current tax laws that would allow renewable energy entities to structure as MLPs, Congress may decide to stipulate which clean or renewable energy activities would qualify. In the case of the Section 1603 grant program, qualifying renewable energy technologies were those that were already eligible for the renewable energy PTC or ITC. The MLP structure could be extended to renewable energy technologies already eligible for other renewable energy tax incentives, or expanded to include other technologies that might support expanded use of renewable energy, such as advanced energy storage and transmission technologies. Proponents of extending the MLP structure to renewable electricity generation facilities note that doing so might help attract additional capital to the sector. Additional capital would be attracted to the sector by the higher returns typically offered to investors by MLPs. Additionally, allowing renewable power facilities to structure as MLPs could provide easier access to equity. Being able to sell shares to raise equity is a benefit typically reserved for C-corporations. Given these advantages, MLPs might allow clean energy projects to produce energy at a lower cost, and thus be more competitive with fossil fuels, including coal and natural gas. The MLP structure might also help attract investors to the renewable energy sector, particularly if changes allowing renewables to structure as MLPs were enacted alongside changes to existing passive loss rules. Without accompanying changes to the passive loss rules, the benefits associated with the MLP structure are more limited. As noted above, renewable energy taxpayers have historically turned to the tax-equity market to monetize renewable energy tax incentives (especially prior to the enactment of the Section 1603 grant program in 2009). Under the MLP structure, tax losses pass through to investors. If passive loss rules are restructured to allow investors to use these tax losses to offset other income, renewable energy investments might become more attractive. From this perspective, the renewable energy entity might be able to attract additional capital to the sector with the MLP structure since such a structure could be designed to allow investors to directly benefit from renewable energy tax incentives. While modifications to the passive loss rules would help maximize the benefits investors are able to realize from the MLP structure, extending the MLP structure to renewables without changing the passive loss rules may also provide some benefit, as MLPs are not subject to corporate level taxation and can raise capital by selling additional shares. Allowing renewables to structure as MLPs may help reduce the cost of capital, thereby increasing investment in renewable energy. While expanding the pool of investors and increasing access to capital may help promote investment in renewable energy, the overall value of the ability to structure as an MLP is likely small relative to existing tax benefits for renewable energy entities. Thus, this has led some to observe that "Because MLP s would only increase the eligible investor pool ... by themselves they would most likely not supplant the tax incentives currently in place." Expanding the definition of qualifying income to allow renewable energy producers to structure as MLPs could raise concerns with respect to the size of the corporate tax base. As was noted above, the rules generally treating MLPs as corporations were enacted in 1987 to address concerns about the long-term erosion of the corporate tax base. Expanding the definition of qualifying income and allowing more firms to structure as MLPs would likely result in a decrease in the size of the corporate tax base, and result in federal revenue losses. Under current law, the tax expenditure (revenue loss) associated with allowing certain energy companies to structure as MLPs is estimated to be around $2.8 billion over the 2010 through 2014 time period. The increasing proportion of income flowing through passthroughs as opposed to corporate entities has caught the attention of the Administration and Congress. Senator Max Baucus, chairman of the Senate Finance Committee, in the context of tax reform, has noted "We're going to have to look at passthroughs—say they've got to be treated as corporations if they earn above a certain income. It's one possibility." Treasury Secretary Timothy Geithner has also made reference to the issue of allowing corporations alternative organizational forms, stating "I think, fundamentally, Congress has to revisit this basic question about whether it makes sense for us as a country to allow certain businesses to choose whether they're treated as corporations for tax purposes or not." While much of this concern has been directed at large passthrough entities (those with $50 million or more in revenues), it may still be important to consider when it is appropriate to allow entities to structure as passthroughs, alongside the associated revenue cost. If the concern is that allowing fossil fuel energy entities to structure as MLPs puts renewables at a disadvantage, preventing publicly traded fossil fuel entities from structuring as passthrough entities is another option. Requiring publicly traded companies (energy and other types of MLPs) to structure as C-corporations would broaden the corporate tax base, and ensure that such fossil-fuels energy-related MLPs do not have better access to capital or a preferred tax status not available to renewable energy alternatives. This policy change, however, could place greater capital constraints on, and potentially reduce investment in, industries currently able to use the MLP structure. Allowing renewable energy facilities to structure as MLPs, if enacted jointly with policies that would exempt renewable energy tax benefits from passive activity loss rules, could raise concerns surrounding "gold plating" of renewable energy projects or the possible use of tax shelters. Gold plating can occur when investors look to invest in renewable energy property for the purpose of tax benefits without regard to performance and production. Specifically, if investors are able to use renewable energy tax benefits to offset active income from other sources, the potential for tax shelter opportunities may emerge. During the 1980s, investors using debt to finance large wind projects could generate tax benefits through investment tax credits that were available at the time. The tax benefits were valuable in and of themselves, even if the wind facility did not produce electricity. , Removing passive activity loss rules for renewables eligible for generous investment tax credits could create opportunities for tax shelters like those seen in the 1980s. One final point of potential concern is that MLPs have typically been used to finance proven technologies with stable cash flows. Since the financing structure is particularly well suited to entities with predictable cash flows, many existing MLP operations are involved in transportation of fuels or other midstream operations. Renewable energy technologies that pose technology risk may not be well suited to take advantage of the MLP structure. Capital is most scarce for energy technologies that have been developed beyond the research & development (R&D) laboratory phase, but have not yet reached commercialization. MLPs are not likely to attract additional capital to this capital-scarce sector comprised of technologies that have moved beyond field testing but have not yet been deployed at scale. Additional access to capital has the potential to stimulate investment and growth in the renewable energy sector. MLPs could have the potential to attract additional capital to the renewable energy sector. MLPs could also allow investors to benefit from other renewable energy tax incentives, and thereby avoid tax-equity markets for monetization of renewable energy tax benefits, if changes to existing passive loss restrictions were enacted. Extending the definition of qualifying income to allow renewable energy facilities to structure as MLPs might raise policy concerns. Specifically, expanding the definition of MLPs to include other types of activity could be viewed as a narrowing of the corporate tax base. Further, if changes in current law regarding qualifying income under the MLP structure are coupled with changes in passive activity loss rules, there are concerns that such changes could lead to tax shelter opportunities. The MLP universe has grown and changed in recent decades. In the energy sector alone, the number of energy MLPs increased from 6 in 1994 to 72 in 2010. Over that same time period, total market capitalization of energy MLPs grew from $2 billion to roughly $220 billion. Additionally, since the 1990s, the universe of MLPs has changed to include a larger proportion of energy MLPs, specifically those involved in midstream operations. Figure A-1 illustrates the proportion of MLPs in different industry groups in 1990 and 2010. Over the 20-year period, the share of MLPs in the energy industry has increased. Further, energy MLPs have become more likely to be involved in midstream or transportation activities over time, as opposed to extraction and production. In 1990, 10% of MLPs were oil and gas midstream operations. By 2010, this share had increased to 44%. Over the same period, the proportion of MLPs involved in oil and gas exploration and production decreased from 21% to 10%. Nearly 90% of market capital in MLPs is attributable to energy and natural resources, with more than 70% of total market capitalization attributable to midstream oil and gas operations (see Figure A-2 ). | Expanded investment in clean and renewable energy resources continues to be a policy priority of the Obama Administration and an area of interest to the 112th Congress. In recent years, the primary policy vehicle for promoting investment in renewable energy has been tax credits, particularly the renewable energy investment and production tax credits. A lack of tax liability, however, has limited the renewable energy sector's ability to fully take advantage of these and other tax benefits. The result has been an increased interest in exploring other options for promoting investment in renewable energy. One option might be to allow renewable energy entities access to the master limited partnership (MLP) business organizational form. An MLP is a type of business structure that is taxed as a partnership, but whose ownership interests are traded on financial markets like corporate stock. Being treated as a partnership for tax purposes implies that MLP income is generally subject to only one layer of taxation in contrast to publically traded C corporations, which are subject to two layers of taxation. The ability to access equity markets in a manner similar to corporations allows MLP to obtain greater amounts of capital. Access to a greater pool of capital, when combined with the favorable partnership tax treatment, may allow MLPs to secure capital at a lower cost than similar businesses operating under a different organizational structure. The lower cost of capital, in turn, could increase investment in the renewable energy sector. Congress first established rules relating to MLPs in the 1980s. At that time, the MLP structure was limited to businesses deriving 90% of their income from primary sources, which included dividends, interest, rents, capital gains, and mining and natural resources income. Effectively, this definition allowed oil and gas extraction and transportation activities access to the MLP structure, while renewable energy resources were generally excluded. The Emergency Economic Stabilization Act of 2008 (P.L. 110-343) expanded the definition of income from qualifying sources to include transportation of certain renewable and alternative fuels, such as ethanol and biodiesel. Provisions enacted under the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5) enhanced the value of certain renewable energy tax credits for many renewable energy projects. By transforming existing tax credits into cash grants, the Section 1603 grants in lieu of tax credits program enhanced access to capital for many in the renewable energy sector. The Section 1603 grant program is scheduled to expire at the end of 2011. As Congress evaluates other policies to attract additional capital to the renewable energy sector, allowing renewable energy entities to structure as MLPs might be one option. Extending the MLP structure to renewables could possibly attract additional capital to and stimulate investment in the renewable energy sector. There are, however, a number of potential policy concerns to consider. First, expanding access to the MLP structure could narrow the corporate tax base, which is one of the reasons access to this structure was limited in the first place. Second, if changes to the tax code allowing renewable entities to access the MLP structure are enacted alongside changes to current passive activity loss rules, there may be concerns about the possibility of renewable energy investments being used as a tax shelter. Finally, if the concern is that renewable entities are disadvantaged relative to fossil fuels currently able to use the MLP structure, one option would be to prevent other energy entities from structuring as MLPs. |
The U.S. military justice system exercises jurisdiction over criminal cases pursuant to Article I of the U.S. Constitution and the Uniform Code of Military Justice (UCMJ). Military courts' jurisdiction is limited to trying people connected to the armed forces for crimes defined by the UCMJ. Within these constraints, military courts' jurisdiction is relatively broad. For example, it extends to retired servicemembers such as the defendant in United States v. Stevenson , a case in which military courts convicted a man on the Navy's temporary disability retired list. In Stevenson , the Navy prosecuted the defendant for rape, a crime routinely tried in non-military courts with civilian defendants. In general, the military justice system, including its system of appellate review, is separate and distinct from the civilian judicial system. Some constitutional safeguards and Supreme Court interpretations are inapplicable in military courts. Also, after following appellate review through the military court system, military defendants may appeal to the U.S. Supreme Court only in limited circumstances. Companion bills introduced in the 111 th Congress, H.R. 569 and S. 357 , would have broadend the Supreme Court's statutory jurisdiction by authorizing Supreme Court review of most military cases. This report surveys military courts' jurisdiction, the structure of appellate review for military cases, interactions between military and civilian courts, the Stevenson case, and past legislative proposals. Most criminal cases in the United States are tried either in state courts or in civilian federal courts. The latter derive authority from Article III of the U.S. Constitution. However, the armed forces may prosecute defendants with military connections in military courts, which derive authority from Article I, sec. 8 of the Constitution. The UCMJ, passed by Congress and implemented by the President through the Manual for Courts-Martial (MCM), governs military courts' jurisdiction and procedures. Military courts exercise jurisdiction over officers and enlisted servicemembers on active duty. However, the scope of their jurisdiction may extend beyond individuals serving on active duty. Specifically, such jurisdiction extends to cases involving retired servicemembers who receive military pay or hospital care from an armed force; specified members of reserve units; enemy combatants; and other individuals with connections to military operations or benefits. As noted below in the discussion of United States v. Stevenson , questions remain regarding the scope of military courts' power over retired servicemembers. However, it is clear that military courts' jurisdiction extends to military veterans only when a veteran maintains at least some current relationship with the military. If a defendant's connection with the armed forces is sufficient to establish jurisdiction, a military court may try that defendant for a broad range of offenses, including conduct not related to official military duties, as long as the alleged conduct constitutes a crime under the UCMJ. The UCMJ includes some crimes that are unique to military service. For example, under the UCMJ, a defendant might be prosecuted for effecting unlawful enlistment, appointment, or separation; desertion; or absence without leave. However, the armed forces may also prosecute defendants under the UCMJ for conduct over which civilian courts could also exert jurisdiction. For example, the UCMJ criminalizes murder, rape, robbery, and other common law crimes. Article I military courts handle military cases throughout the chain of appellate review. Appeal to the U.S. Supreme Court is permitted at the end of the process only in specified circumstances. The UCMJ creates various military courts and provides appellate procedures for them. After an initial investigation and a court-martial, which is a trial-level proceeding, military cases undergo various stages of review within the military justice system. First, each court-martial proceeding has a "convening authority," who is a commissioned officer (other than the defendant's accuser) who convenes the investigation and court-martial proceeding and then approves or modifies the court-martial's findings and sentences. Convening authorities do not provide legal review; instead, they provide the equivalent of sentencing determinations by giving "full and fair consideration to matters submitted by the accused and determining appropriate action on the sentence." Under the UCMJ, convening authorities have "substantial discretion" to modify sentences and findings. After a convening authority approves or modifies a court-martial decision, a Court of Criminal Appeals offers the first opportunity for legal review in military cases. Each branch of the armed services has a Court of Criminal Appeals, comprised of panels of military judges established by the Judge Advocate General for each branch. The Courts of Criminal Appeals review cases in panels or, occasionally, en banc . Review is not discretionary; each Judge Advocate General "shall refer" to the relevant Court of Criminal Appeals every case involving a conviction that imposes the death penalty or confinement for one year or more; a bad-conduct or dishonorable discharge; or, in certain cases, dismissal from the respective service. Unlike convening authorities, Courts of Criminal Appeals provide legal review of military cases. They "may affirm only such findings of guilty, and the sentence ... as [they] fin[d] correct in law and fact and determin[e], on the basis of the entire record, should be approved." After a Court of Criminal Appeals has reviewed a case, the United States Court of Appeals for the Armed Forces (CAAF) provides the final opportunity for appellate review within the military court system. The CAAF is an Article I court, housed within the Department of Defense. However, unlike other military courts, the CAAF is comprised of civilian judges, whom the President appoints. In general, the CAAF has discretion to grant or deny petitions for appeals, analogous to the U.S. Supreme Court's discretion to grant or deny writs of certiorari. However, the CAAF must accept appeals in two circumstances: (1) all cases in which the relevant Court of Criminal Appeals has affirmed a death sentence; and (2) all cases in which a Judge Advocate General has sent a case to the CAAF for review after a final Court of Criminal Appeals decision. The CAAF's appellate review is limited. The CAAF must act "only with respect to the findings and sentence as approved by the [court-martial's] convening authority and as affirmed or set aside as incorrect in law by the Court of Criminal Appeals." In other words, appeals to the CAAF must involve issues originally heard by a court-martial and affirmed or denied by a convening authority and the relevant Court of Criminal Appeals. The CAAF cannot hear appeals based on the All Writs Act or other jurisdictional authority unless they aid direct review of court-martial decisions. For example, in Clinton v. Goldsmith , the Air Force had dropped from its rolls a servicemember who had served an earlier sentence for engaging in unprotected sex without telling his partners of his HIV-positive status. The servicemember had petitioned the Air Force Court of Criminal Appeals for injunctive relief under the All Writs Act, but that court denied relief, holding that it lacked jurisdiction. The CAAF then granted injunctive relief enjoining the President and other officials from dropping the servicemember from the active duty rolls. The U.S. Supreme Court held that the CAAF had exceeded its jurisdiction in granting injunctive relief because the relief did not involve review of a court-martial decision. In so holding, the Supreme Court rejected the CAAF's argument that jurisdiction was proper because the Air Force's dropping of the servicemember related to conduct at issue in an earlier court-martial proceeding; instead, the Court emphasized that "there is no source of continuing jurisdiction for the CAAF over all actions administering sentences that the CAAF at one time had the power to review." With respect to appeals from the CAAF, the U.S. Supreme Court has jurisdiction to grant certiorari in four specific circumstances: (1) cases in which a death sentence has been affirmed by the relevant branch's Court of Criminal Appeals; (2) cases that a Judge Advocate General has certified to the CAAF; (3) cases in which the CAAF granted a petition for review; and (4) cases that do not fall in the other categories but in which the CAAF has granted relief. The first two categories represent the two circumstances in which the CAAF must grant appeals. The second category represents cases in which the CAAF has exercised its discretion to grant an appeal. And the final category is a catch-all provision for other cases in which the CAAF might grant relief. Because the Supreme Court's jurisdiction is limited to these four circumstances, its power to review military cases generally extends only to cases that the CAAF has also reviewed. For this reason, the CAAF's discretion over the acceptance or denial of appeals often functions as a gatekeeper for military appellants' access to Supreme Court review. If the CAAF denies an appeal, the U.S. Supreme Court will typically lack the authority to review the decision. In contrast, criminal appellants in Article III courts have an automatic right of appeal to federal courts of appeals and then a right to petition the Supreme Court for review. The U.S. armed forces have a long history of self-regulation. Except for limited interaction with the U.S. Supreme Court, Article I military courts operate separately from the Article III judicial system. As discussed above, military courts have distinct trial procedures and structures for appellate review. In addition, because military courts' jurisdictional authority arises under Article I rather than Article III, defendants in military cases do not have the benefit of certain Article III safeguards, such as lifetime appointments for judges. In addition, although military defendants are entitled to due process rights under the Fifth Amendment to the Constitution, the Supreme Court has upheld a narrowed interpretation of such rights in the context of military courts. Furthermore, legal interpretations by Article III courts do not necessarily create binding precedent for Article I courts, and vice versa. The only Article III court holdings that bind military courts are those of the U.S. Supreme Court. However, military courts sometimes reject even Supreme Court precedents as inapplicable in the military context. For example, in United States v. Marcum , the CAAF declined to follow an interpretation of the constitutional right to privacy that the Supreme Court had handed down a short while earlier. In Marcum , a court-martial had convicted a servicemember of various crimes, including non-forcible sodomy. On appeal, the servicemember argued that with respect to the non-forcible sodomy charge, he was protected by a constitutional right to privacy in intimate relations under the Supreme Court case Lawrence v. Texas . However, the CAAF declined to follow Lawrence . The CAAF's rationale for diverging from Supreme Court precedent in Marcum was that constitutional protections "may apply differently to members of the armed forces than they do to civilians." Thus, although "constitutional rights identified by the Supreme Court generally apply to members of the military," such rights do not apply when "by text or scope they are plainly inapplicable." Similarly, Article III courts are not bound by military courts' decisions. The Supreme Court may consider CAAF decisions or UCMJ provisions as potentially persuasive. For example, the Supreme Court ordered briefs to examine the impact of a military code provision after it handed down its decision in Kennedy v. Louisiana , a case involving the question of a death penalty sentence for a child rapist. In Kennedy , the Supreme Court held that the Eighth Amendment prohibits punishment by death penalty for a defendant who rapes a child but did not cause or intend to cause a child's death. In so holding, the Court emphasized the "national consensus" against the death penalty in such cases. In its petition for rehearing, Louisiana argued that Congress's recent amendment of the UCMJ to include a death penalty punishment in military cases for the rape of a child undermined the Court's "national consensus" argument. However, the Supreme Court decided not to reconsider its Kennedy decision, instead reaffirming its prior ruling with only minor modifications. In its opinion accompanying its denial of rehearing, the Supreme Court disagreed with Louisiana's interpretation of the death penalty language in the UCMJ amendment, but it also emphasized that "authorization of the death penalty in the military sphere does not indicate that the penalty is constitutional in the civilian context." United States v. Stevenson highlights two issues relevant to jurisdiction in military cases. First, it raises questions regarding the scope of military courts' jurisdiction over retired servicemembers. Second, it raises a question regarding Supreme Court jurisdiction to review legal questions when the CAAF denied review. The first question was the basis for the Stevenson appellant's petition to the Supreme Court for certiorari. The United States raised the second question in its brief opposing appellant's certiorari petition. Although the U.S. Supreme Court clearly has jurisdiction over cases in which the CAAF granted review, it is unclear whether the Supreme Court's jurisdiction extends to specific issues that the CAAF declined to address. In Stevenson , Naval Criminal Investigative Service officials had investigated the appellant, a man on the Navy's temporary disability retired list, while he received treatment at a Veterans Affairs hospital. A military court-martial then tried and convicted the appellant for rape. On appeal, the CAAF remanded the case for fact finding regarding blood draws taken while appellee was a patient at the VA hospital. After the United States Navy-Marine Corps Court of Criminal Appeals affirmed the court-martial's decision on remand, the CAAF granted a second review of the case. However, exercising its discretion, the CAAF limited the issues on appeal to potential Fourth Amendment violations, declining to review the question of the military court's jurisdiction over a man on the temporary disability retired list. In his petition to the Supreme Court for certiorari, the appellant in Stevenson requested review of only the issue that the CAAF had declined to address—namely, the issue of military courts' jurisdiction over a case involving a person on the temporary disability retired list. In response, the United States argued in its opposing brief that the Supreme Court's appellate review power does not extend to issues that the CAAF declined to review. Thus, because the CAAF had declined to review that portion of the Criminal Court of Appeals' decision, the United States argued that the Supreme Court lacked jurisdiction over the appeal. Ultimately, the Supreme Court declined to hear the case. On remand to the Navy-Marine Corps Court of Criminal Appeals, for the second time, the court set aside both the findings and the sentence and authorized a rehearing. The questions raised by the petition to the Supreme Court for certiorari remain unanswered. Bills introduced during the 111 th Congress, the Equal Justice for Our Military Act of 2010 ( H.R. 569 ) and the Equal Justice for United States Military Personnel Act of 2009 ( S. 357 ), would have expanded the U.S. Supreme Court's appellate jurisdiction over military cases. Specifically, the legislation would have amended the UCMJ to authorize appeals to the Supreme Court in military cases, regardless of the CAAF's acceptance or denial of an appeal. Bill sponsors emphasized the need for the law to address the "disparity" between the broad right to appeal to the Supreme Court in civilian cases, on one hand, and the limited ability to appeal to the Supreme Court in military cases, on the other hand. When introducing S. 357 , Senator Feinstein stated that because "our U.S. service personnel place their lives on the line in defense of American rights[, it] is unacceptable for us to continue to routinely deprive our men and women in uniform one of those rights." H.R. 569 , reported to the House on July 15, 2010, as amended, included language not found in the companion bill, S. 357 . The amended bill authorized the Supreme Court, through its rules, to prescribe the time limit for application for a writ of certiorari of a decision of the CAAF, or the refusal of the CAAF to grant a petition of review. The bill would have been effective at the conclusion of the 180-day period beginning on the date of enactment and then only to decisions of the CAAF handed down on or after that date. Additionally, the bill provided that the authority of the Supreme Court to prescribe necessary rules shall take effect on the date of enactment of the act. To date, similar legislation has not been introduced in the 112 th Congress. Courts have recognized compelling justifications for a military justice system that is distinct from Article III courts. For example, in Marcum , the CAAF emphasized the importance of ensuring discipline and obedience in the armed forces. The Marcum court also stressed the military's interest in disciplining servicemembers differently according to their rank. However, it is unclear whether such arguments justify a disparity in access to Supreme Court review, especially in the context of servicemembers no longer on active duty or crimes that exist under both military and civilian laws. Military cases follow a unique process of appellate review, moving from courts-martial through the following steps: (1) automatic appeals to Courts of Criminal Appeals for each armed forces branch; (2) potential discretionary review by the highest military court, the CAAF; and (3) review by the U.S. Supreme Court in limited circumstances, usually only when the CAAF has also granted review. Legislative proposals in the 111 th Congress would expand Supreme Court jurisdiction over military cases by authorizing review even if the CAAF denies an appeal. If the proposals became law, they would make moot the question highlighted by United States v. Stevenson regarding the Supreme Court's jurisdiction over specific issues that the CAAF had declined to review. | Military courts, authorized by Article I of the U.S. Constitution, have jurisdiction over cases involving military servicemembers, including, in some cases, retired servicemembers. They have the power to convict for crimes defined in the Uniform Code of Military Justice (UCMJ), including both uniquely military offenses and crimes with equivalent definitions in civilian laws. For example, in United States v. Stevenson, military courts prosecuted a retired serviceman for rape, a crime often tried in civilian courts. The military court system includes military courts-martial; a Criminal Court of Appeals for each branch of the armed services; and the U.S. Court of Appeals for the Armed Forces (CAAF), which has discretionary appellate jurisdiction over all military cases. With the exception of potential final review by the U.S. Supreme Court, these Article I courts handle review of military cases in an appellate system that rarely interacts with Article III courts. Criminal defendants in the Article III judicial system have an automatic right to appeal to federal courts of appeal and then a right to petition the Supreme Court for final review. In contrast, defendants in military cases typically may not appeal their cases to the U.S. Supreme Court unless the highest military court, the CAAF, had also granted discretionary review in the case. Companion bills introduced in the 111th Congress, the Equal Justice for Our Military Act of 2010 (H.R. 569) and the Equal Justice for United States Military Personnel Act of 2009 (S. 357), would have authorized appeals to the U.S. Supreme Court for all military cases, including cases that the CAAF declined to review. While neither of the companion bills passed their respective chamber, the House passed a similar measure, H.R. 3174, during the 110th Congress. To date, however, similar legislation has not been introduced in the 112th Congress. |
Medicaid case management consists of services to assist eligible beneficiaries in obtaining medical and other services necessary for their treatment. Case management is not the direct provision of medical and related services, but rather is assistance to help beneficiaries receive care by identifying needed services, finding providers, and monitoring and evaluating the services delivered. Targeted case management (TCM) refers to case management that is restricted to specific beneficiary groups. Targeted beneficiary groups can be defined by disease or medical condition, or by geographic regions, such as a county or a city within a state. Targeted populations, for example, may include individuals with HIV/AIDS, tuberculosis, chronic physical or mental illness, developmental disabilities, children receiving foster care, or other groups identified by a state and approved by the Centers for Medicare and Medicaid (CMS). TCM and case management are optional services that states may elect to cover, but which must be approved by CMS through state plan amendment (SPAs). The Medicaid statute covering case management has been amended a number of times, most recently by the Deficit Reduction Act of 2005 (DRA, P.L. 109-171 ). Section 6052 of DRA added new language that further defined case management services (including TCM) and directed the Secretary of Health and Human Services to develop rules for states to follow in claiming reimbursement for case management expenditures under Medicaid. To this end, CMS issued an interim final rule governing the use and claiming of Medicaid case management services. As stipulated in DRA, the Secretary's case management interim final rule was open for public comment for 60 days, until February 4, 2008. It became effective March 3, 2008. Almost all states cover TCM benefits. Medicaid expenditures for TCM have increased rapidly. As shown in Table 1 , total federal and state Medicaid TCM expenditures more than doubled between FY1999 ($1.4 billion) and FY2005 ($2.9 billion). Nationally, during the same period, the number of beneficiaries receiving TCM increased 62.6%, from approximately 1.7 million in FY1999 to approximately 2.7 million in FY2005. Average TCM expenditures per beneficiary also increased from FY1999 to FY2005, rising by 26.9%. In comparison, overall Medicaid expenditures also increased rapidly over the same period, rising from approximately $147 billion in FY1999 to $276 billion in FY2005, an approximate 87% increase. The number of Medicaid beneficiaries also increased during this period, rising by 43.1%, from FY1999 (40.3 million) to FY2005 (57.7 million). During the same time period, average spending per Medicaid beneficiary increased by approximately 30.7%, from $3,657 in FY1999 to $4,781 in FY2005. Based on CMS reported data, total federal and state expenditures for TCM services in FY2005 ranged from approximately $535 million in California to approximately $872,000 in Hawaii (see Table 2 ). During the same period, the number of beneficiaries receiving TCM services ranged from 820,000 individuals in Illinois to 1,463 in Hawaii. National per beneficiary TCM expenditures were $1,058 in FY2005, but per beneficiary expenditures for TCM expenditures varied considerably by state, ranging from $5,778 in Massachusetts to $116 per beneficiary in Ohio. In Figure 1 , for comparison, states' per beneficiary expenditures for TCM are displayed in six expenditure level groupings. The majority of states that reported TCM expenditures in FY2005 spent between $500 to $1,500 per beneficiary on TCM. Although most states cover TCM, some do not show TCM expenditures in the Medicaid Statistical Information System (MSIS) database compiled by CMS from state-reported information. As shown in Table 2 , six states and the District of Columbia reported no TCM expenditures in FY2005. Of these seven, Delaware is the only state that indicates it does not cover TCM. In the last days of the Clinton Administration (January 19, 2001), the CMS Director of Medicaid and State Operations issued a letter to state Medicaid and Child Welfare directors. Although the state Medicaid director letter (SMDL) addresses TCM claiming for children in foster care, it is often cited as guidance for states on how to claim TCM expenditures under Medicaid more generally. The SMDL reiterated statutory language that broadly defined TCM and left states substantial flexibility on whether to cover and how to structure TCM services. In addition, the 2001 SMDL described examples that would be considered appropriate claiming of TCM expenditures. Subsequently, in the early years of the Bush Administration, states received indirect guidance on TCM expenditure claiming from GAO and Health and Human Services Office of Inspector General (HHS/OIG) reports that were critical of state and CMS practices on TCM, as well congressional testimony presented by CMS officials. Moreover, in 2004, Maryland's state plan amendment to provide TCM services to children in the state's foster care program was denied, and an administrative appeal upheld that decision. The denial of Maryland's SPA for foster care TCM provided states additional unofficial information but, as found by GAO, contributed to ambiguity on TCM because other states were allowed to continue similar practices. For example, GAO reviewed a sample of Massachusetts and Georgia TCM claims and found a number of claims where TCM services billed to Medicaid were integral parts of other programs, such as foster care. Nevertheless, TCM expenditures continued to increase, raising questions about whether some states were delivering direct medical and social services to beneficiaries through other social services programs (e.g., child welfare, foster care, juvenile justice, special education) and classifying those expenditures as Medicaid TCM. Subsequent HHS/OIG audits found state practices for TCM claiming inconsistent with current CMS policy, federal, or state laws, and/or Medicaid rules. Moreover, Bush administration officials testified that state practices for claiming TCM and other Medicaid services were abusive and violated the federal-state Medicaid partnership by inappropriately shifting costs for other federal programs to Medicaid and claiming services directly delivered by other federal programs as TCM. In 2005, Congress passed DRA, which contained Section 6052, "Reforms of the Case Management and Targeted Case Management." Sec. 6052 refined the case management definition by adding new language that narrowed what services could be considered case management. The DRA case management provision identified case management services, such as assessment, development of care plans, referral and related activities, and monitoring and follow up of beneficiaries, and elaborated on the overall content of these services. The DRA also reiterated that case management, including TCM, excluded the direct delivery of underlying medical, educational, social, and other services. The DRA also specifically explained that federal matching payments would not be permitted to assist non-eligible individuals, including those individuals ineligible for a TCM target group. The DRA also reiterated that Medicaid third-party rules applied to case management, so payments for TCM would be permitted only if no other third parties are available to pay. DRA Section 6052 also specifically noted that states should cost-allocate when costs for case management services were shared between another federally funded program in accordance with OMB circular A-87. The DRA also instructed the Secretary of HHS to promulgate interim final regulations to implement the case management changes. The TCM interim final rule was published on December 4, 2007. The case management interim final rule elaborates on changes to the TCM definition authorized and initiated in DRA by providing specific guidance on how states may claim federal financial participation (FFP) for TCM expenditures. It also directly addresses case management issues that previously might have been considered open to interpretation. CMS stipulated that the case management interim final rule applies to all Medicaid authorities, so that all case management, including TCM and services delivered through waivers, would be covered under the rule. CMS estimated that the case management regulation will reduce federal Medicaid expenditures by approximately $1.28 billion between FY2008 and FY2012. CMS also estimated that federal foster care expenditures would increase by $369 million between FY2008-FY2012. Some of the changes addressed in the proposed rule are outlined below. Federal financial participation (FFP) would be paid for case management provided to individuals who reside in community settings or who want to transition from institutions to community settings. In general, states may not receive FFP for beneficiaries residing in inpatient acute care facilities, although there is an exception for individuals with complex or chronic medical needs (as defined by states). The interim final rule permits states to receive FFP to assist individuals who are able to transition from an institution to a community setting. This provision would enable states to claim FFP to assist individuals in transitioning to community settings during either the last 14 days (for beneficiaries institutionalized for short-term stays) or the last 60 days (for beneficiaries who were institutionalized for long-term stays). However, for states to receive FFP for beneficiaries transitioning to the community, the beneficiary must receive the TCM services for terms that span their inpatient and community placement. In addition, under the new regulations, FFP would be payable only after the date on which beneficiaries' community residence begins. States may use TCM to help coordinate other services, such as housing and transportation, for individuals transitioning to community settings. States that now cover case management services and want to continue to do so after March 2009 would need to amend their Medicaid state plans, specifying, among other things, whether services are or are not targeted (and what beneficiary group is targeted, if applicable), the geographic area served, the kinds of case management services offered, frequency of assessments and monitoring by case managers, the qualifications of service providers, and the payment methodology. States also must prepare separate SPAs for each case management target group and subgroup. States need to establish qualifications for providers who will deliver case management services. In addition, the rule specifies the services case managers can provide, such as assessments to determine beneficiaries' needs, development of specific care plans, referral and related activities, and monitoring and follow-up activities. To ensure beneficiaries have a unified planning process, as well as to reduce fragmentation and maintain quality of care, states would need to assign each beneficiary only one case manager. However, case managers may not serve as gatekeepers or make medical necessity determinations. Further, beneficiaries must have free choice of all qualified case managers, and beneficiaries' access to case management can not be contingent upon use of certain providers. If beneficiaries might fit in several target groups, states must decide which target group to assign beneficiaries. The new regulations would allow for a delayed compliance date for states to transition to one case manager to provide comprehensive services to individuals. Case managers may not provide direct medical and related services, unless such services are billed to Medicaid as services other than case management (e.g., rehabilitation). Medicaid beneficiaries receiving case management services must have treatment plans. Case management excludes diagnostic testing (but testing might be covered under other Medicaid benefit categories). Case managers must maintain detailed case records that document beneficiaries' dates of service; progress toward treatment goals; units of case management delivered; timelines for services described in the treatment plan, as well as reassessment dates; and needs for coordination with case managers of other programs. States may not use bundled payment methodologies. When case management is reimbursed on a fee-for-service basis, the new rules would require states to use unit-of-time reimbursement methodologies based on time intervals of 15 minutes or less. For beneficiaries included in managed care/capitated contracts, states may not claim FFP for case management of medical services. The interim rule indicates that case management is an implicit part of managed care and capitation, and additional FFP for such case management of medical services under managed care would be considered duplicate payment. However, an exception to the managed care exclusion could be made when the case management services extend beyond the medical components of typical managed care contracts to include gaining access to educational, social, and other (non-medical) services. The interim final rule would prohibit FFP to states for the direct delivery of underlying medical, social, educational, or other services funded by other programs. DRA specifically addressed foster care, but the interim final rule would extend the rule to include other programs, such as child welfare and protective services, parole and probation, public guardianship, and special education. In addition, this FFP prohibition would apply to therapeutic foster care because these activities would be considered inherent to the foster care program and are separate from Medicaid. This provision would apply to paying for services delivered by staff of other social service agencies, but the rules would permit FFP for referral services, overseeing placements, training of workers, supervision, court attendance, and compensation for foster care patients. Moreover, the rule would prohibit FFP to states for administrative components of other programs, such as foster care, juvenile justice, parole and probation, guardianship, courts, and special education. Estimates of the financial impact of the interim final rule vary. Some argue that CMS underestimated the impact of the case management and other regulations, and that CMS is attempting to shift Medicaid costs to states. CMS estimated that the TCM changes in the interim final rule will reduce federal Medicaid outlays by $1.28 billion over five years, whereas CBO estimated that the TCM provision in DRA would reduce federal expenditures by $760 million. CBO's estimate of the impact of DRA provisions was for the period FY2006-FY2010, whereas CMS's estimate was for the five year period FY2008-FY2012. In a more recent estimate for the period FY2008-FY2012, CBO forecasted that gross Medicaid outlays would decrease by $2.0 billion for the five year period, with a $1.5 billion net reduction (including effects in foster care administration) in Medicaid outlays for that time period. A survey of state Medicaid directors by the House Committee on Oversight and Government Reform estimated the financial impact of the TCM regulation to be approximately $3.1 billion over the five years from FY2009-FY2013. There are at least three distinct perspectives on TCM policy issues: (1) the perspective of advocates representing children and adults who could receive Medicaid TCM services, (2) state governments and Medicaid agencies, and (3) the federal regulatory agency (CMS) responsible for implementing DRA and enforcing states' compliance with federal Medicaid statutes. As CMS indicates in the interim final rule, DRA required the agency to write regulations. Specific guidance and definitions, CMS contends, were needed to avoid further "excessive" federal outlays. CMS points out that the proposed rule clarifies when Medicaid will, and will not, pay for case management services. CMS further claims the proposed rule will reduce past confusion about the overlap between Medicaid TCM and non-Medicaid programs. Moreover, CMS cites GAO studies, OIG audits, and review of SPAs that document past abuses of Medicaid TCM claiming. Advocates for children and adult Medicaid beneficiaries who receive TCM services contend that the rule is more restrictive than what Congress intended in DRA. Advocates also fear that reduced federal Medicaid funding for TCM will need to come from other programs or services that do not have funding, resulting in cuts to TCM services. States cite administrative complexities of the rule that will increase state costs while decreasing provider participation and beneficiaries' quality of care. Further, states and advocates also believe that the complexity of the rule will make it difficult for states to implement within the specified time frame. Child welfare advocates and organizations representing mentally retarded and developmentally disabled individuals, many of whom need Medicaid TCM, believe that the interim final rule will cut TCM services for these beneficiaries. Child welfare advocates argue that by requiring Medicaid to reimburse providers based on 15-minute billing segments, costs of care would increase and provider participation would decrease. They also argue that new requirements for record keeping and claims processing will discourage provider participation and reduce actual beneficiary services. Advocates claim that states already cannot afford to fund enough TCM services and that with more restrictions, states will be forced to cut services further. According to advocates, with less TCM available, children receiving foster care and protective services will get fewer health care services, causing their existing medical and related conditions to deteriorate. Moreover, they argue, without TCM, these beneficiaries will ultimately require more costly health care treatment in the future. Some Medicaid and other state officials believe that the CMS case management rule will increase costs by creating additional administrative activities. For example, Medicaid agencies have raised objections to the additional reporting requirements and other administrative complexities contained in the interim final rule because they believe these rules will make it harder for them to provide TCM to beneficiaries. Medicaid agencies claim that new delayed billing requirements for providers who assist TCM beneficiaries in transitioning from institutions are burdensome and may reduce patient access to TCM services. As noted earlier, the interim final rule proposes to permit states up to two years to comply with the one-provider provision for case management. The additional time for states to comply suggests that CMS recognizes the complexity for states to adapt their systems and administratively comply with the proposed rules. In the same vein, state Medicaid agencies believe that the effective date of the interim final rule is inadequate to permit states sufficient time to comply with the regulations, so that states' FFP for case management will be withdrawn suddenly or recovered later under auditors' disallowances. Observers maintain that an extension of time for states to comply might help to moderate stakeholder concerns, while giving states the opportunity to provide an orderly transition and realistically comply with the regulations that have been under development for some time. In January 2008, legislation was introduced ( H.R. 5173 and S. 2578 ) that would impose a moratorium on changes to Medicaid case management services until April 1, 2009. The Indian Health Care Improvement Act Amendments of 2008 ( S. 1200 ) was to delay implementation of the case management interim final rule until April 1, 2009. A bill, Protecting the Medicaid Safety Net Act of 2008 ( H.R. 5613 ), was introduced in March that would impose a moratorium until April 1, 2009, on implementation of the TCM and other Medicaid regulations. The House Energy and Commerce Committee voted on April 16, 2008, to send H.R. 5613 to the full House. H.R. 5613 would require the Secretary to submit a report by July 1, 2008, to the House Energy and Commerce and the Senate Finance Committees. The Secretary's report would be required to cover three topics: (1) an outline of specific problems the TCM and other Medicaid regulations were intended to correct, (2) an explanation of how the regulations would address these problems, and (3) the legal authority for the regulations. In addition, H.R. 5613 would require the Secretary to retain an independent contractor to prepare a comprehensive report to be completed by March 1, 2009, which also would be submitted to the House Energy and Commerce and the Senate Finance Committees. The independent contractor's report would describe the prevalence of the specific problems identified in the Secretary's report, identify existing strategies to address these problems, and assess the impact of the Medicaid regulations on each state and the District of Columbia. In the Senate, a similar measure to H.R. 5613 , the Economic Recovery in Health Care Act of 2008 ( S. 2819 ), was introduced in April. Like H.R. 5613 , S. 2819 , would impose a moratorium until April 1, 2009, on implementation of the case management, TCM and five other Medicaid regulations until April 1, 2009. On May 22, 2008, the Senate passed the Supplemental Appropriations Act of 2008 ( H.R. 2642 ). H.R. 2642 included a moratorium until April 1, 2009, on implementation of the TCM and six other Medicaid regulations. The provision in H.R. 2642 covering Medicaid regulations included requirements, similar to H.R. 5613 , for the Secretary to submit reports to the House Energy and Commerce and the Senate Finance Committees. H.R. 2642 was amended by the House and passed on June 19, 2008. The House amendments included moratoria on implementation of six Medicaid regulations, including case management and TCM, until April 1, 2009. In addition, H.R. 2642 retained requirements from H.R. 5613 for the Secretary to report to the House Energy and Commerce and Senate Finance Committees, and to hire an independent contractor to report on the specific impact of Medicaid regulations. On June 26, 2008, the Senate passed H.R. 2642 without changes to the latest House measure, including the moratoria on implementation of six Medicaid regulations (until April 1, 2009). H.R. 2642 also retains the requirements for the Secretary and an independent contractor to submit reports on the Medicaid regulations to the House Energy and Commerce and Senate Finance Committees. The President signed P.L. 110-252 into law on June 30, 2008. Earlier, on June 4 and 5, 2008, the Senate and House, respectively, adopted the final version of the budget resolution ( H.Rept. 110-659 accompanying S.Con.Res. 70 ). Among other provisions, the conference agreement establishes a number of deficit-neutral reserve funds and a sense of the Senate provision that would delay Medicaid administrative regulations, including Medicaid case management and TCM. In addition to the interim final rule, the Bush Administration's FY2009 federal budget submission proposed that legislation is needed to restrict Medicaid TCM claiming to the lower 50% rate provided for administrative activities, rather than federal medical assistance percentage rates for covered benefits. The Administration has not offered legislation restricting TCM claiming rates yet. | Case management services assist Medicaid beneficiaries in obtaining needed medical and related services. Targeted Case Management (TCM) refers to case management for specific Medicaid beneficiary groups or for individuals who reside in state-designated geographic areas. Over the past seven years of available data (1999-2005), total expenditures on Medicaid TCM increased from $1.4 billion to $2.9 billion, an increase of 107%. In comparison, over the same period, total Medicaid spending increased by 87%, from $147.4 billion to $275.6 billion. TCM has been an active concern for both the executive and legislative branches. For instance, the Bush Administration proposed legislative changes to reduce Medicaid TCM expenditures in recent annual budget submissions. In the Deficit Reduction Act of 2005 (DRA, P.L. 109-171), Congress added new statutory language to clarify the definition of case management and directed the Secretary of Health and Human Services to promulgate regulations to guide states' claims for federal Medicaid matching funds for TCM. As a result of DRA requirements, the Centers for Medicare and Medicaid Services (CMS) issued an interim final rule on December 4, 2007 for case management, which took effect March 3, 2008. In the interim final rule, CMS estimated that the new case management rules would reduce federal Medicaid expenditures by approximately $1.3 billion between FY2008 and FY2012. In April, the Economic Recovery in Health Care Act of 2008 (S. 2819), was introduced in the Senate, which would impose a moratorium on implementation of the TCM regulation until April 1, 2009. On May 22, 2008, the Senate passed the Supplemental Appropriations Act of 2008 (H.R. 2642). H.R. 2642 included a moratorium until April 1, 2009, on implementation of the TCM and other Medicaid regulations. H.R. 2642 was amended by the House and passed on June 19, 2008. The House amendments to H.R. 2642 included moratoria on implementation of six Medicaid regulations, including case management and TCM, until April 1, 2009. On June 26, 2008, the Senate passed H.R. 2642 without changes to the House legislation, so that implementation of six Medicaid regulations, including case management and TCM, would be delayed until April 1, 2009. The President signed P.L. 110-252 into law on June 30, 2008. Earlier, on June 4 and 5, 2008, the Senate and House, respectively, adopted the final version of the budget resolution (H.Rept. 110-659 accompanying S.Con.Res. 70). The conference agreement established budget-neutral reserve funds that could be used to impose moratoria on Medicaid rules and administrative actions and also includes a sense of the Senate provision on delaying Medicaid administrative regulations including case management and TCM. This report describes Medicaid case management services, presents major provisions of the proposed Medicaid case management regulation, and provides various perspectives on the TCM interim final rule. This report will be updated to reflect legislative and regulatory activity. |
The ADA Amendment Act (ADAAA), P.L. 110-325 , was enacted in 2008 to amend the Americans with Disabilities Act (ADA). The Americans with Disabilities Act (ADA) is a broad civil rights act prohibiting discrimination against individuals with disabilities. As stated in the act, its purpose is "to provide a clear and comprehensive national mandate for the elimination of discrimination against individuals with disabilities." The ADAAA reiterated this purpose, and also emphasized that it was "reinstating a broad scope of protection" for individuals with disabilities. The threshold issue in any ADA case is whether the individual alleging discrimination is an individual with a disability. Several Supreme Court decisions interpreted the definition of disability, generally limiting its application. Congress responded to these decisions by enacting the ADA Amendments Act, P.L. 110-325 , which rejects the Supreme Court and lower court interpretations and amends the ADA to provide broader coverage. Two of the major changes made by the ADA Amendments Act are to expand the current interpretation of when an impairment substantially limits a major life activity (rejecting the Supreme Court's interpretation in Toyota ), and to require that the determination of whether an impairment substantially limits a major life activity must be made without regard to the use of mitigating measures (rejecting the Supreme Court's decisions in Sutton , Murphy , and Kirkingburg ). On March 25, 2011, the Equal Employment Opportunity Commission (EEOC) issued final regulations implementing the ADA Amendments Act. The ADA Amendments Act defines the term disability with respect to an individual as "(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individual; (B) a record of such an impairment; or (C) being regarded as having such an impairment (as described in paragraph (3))." Paragraph (3) discusses the "regarded as" prong of the definition and provides that an individual is "regarded as" having a disability regardless of whether the impairment limits or is perceived to limit a major life activity, and that the "regarded as" prong does not apply to impairments that are transitory and minor. Although this is essentially the same statutory language as was in the original ADA, P.L. 110-325 contains new rules of construction regarding the definition of disability, which provide that the definition of disability shall be construed in favor of broad coverage to the maximum extent permitted by the terms of the act; the term "substantially limits" shall be interpreted consistently with the findings and purposes of the ADA Amendments Act; an impairment that substantially limits one major life activity need not limit other major life activities to be considered a disability; an impairment that is episodic or in remission is a disability if it would have substantially limited a major life activity when active; and the determination of whether an impairment substantially limits a major life activity shall be made without regard to the ameliorative effects of mitigating measures, except that the ameliorative effects of ordinary eyeglasses or contact lenses shall be considered. The findings of the ADA Amendments Act include statements indicating a determination that the Supreme Court decisions in Sutton and Toyota as well as lower court cases had narrowed and limited the ADA from what was originally intended by Congress. P.L. 110-325 specifically states that the then-current Equal Employment Opportunity Commission (EEOC) regulations defining the term "substantially limits" as "significantly restricted" are "inconsistent with congressional intent, by expressing too high a standard." The EEOC issued final ADAAA regulations on March 25, 2011, which will become effective on May 24, 2011. Proposed regulations were published in the Federal Register on September 23, 2009, and the EEOC received over 600 comments and held a series of "Town Hall Listening Sessions." In general, the final regulations streamlined the organization of the proposed regulations, and moved many examples from the regulation to the appendix. The EEOC notes that the appendix will be published in the Code of Federal Regulations (CFR), and "will continue to represent the Commission's interpretation of the issues discussed in the regulations, and the Commission will be guided by it when resolving charges of employment discrimination under the ADA." The final regulations track the statutory language of the ADA but also provide several clarifying interpretations. Several of the major regulatory interpretations are as follows: including the operation of major bodily functions in the definition of major life activities; adding rules of construction for when an impairment substantially limits a major life activity, and providing examples of impairments that will most often be found to substantially limit a major life activity; interpreting the coverage of transitory impairments; interpreting the use of mitigating measures; and interpreting the "regarded as" prong of the definition. The first prong of the statutory definition of disability, referred to by EEOC as "actual disability," provides that an individual with "a physical or mental impairment that substantially limits one or more of the major life activities of such individual" is an individual with a disability. The final regulations provide a list of examples of major life activities. In addition to those listed in the statute (caring for oneself, performing manual tasks, seeing, hearing, eating, sleeping, walking, standing, lifting, bending, speaking, breathing, learning, reading, concentrating, thinking, communicating, and working), the EEOC includes sitting, reaching, and interacting with others. Major life activities also include major bodily functions. In addition to the statutory examples (functions of the immune system, normal cell growth, digestive, bowel, bladder, neurological, brain, respiratory, circulatory, endocrine, and reproductive functions), the EEOC includes special sense organs, genitourinary, cardiovascular, hemic, lymphatic and musculoskeletal. The final regulations also provide that the operation of a major bodily function includes the operation of an individual organ within a body system. The EEOC emphasizes that the ADAAA requires an individualized assessment but notes that because of the statute's requirement for broad coverage, some impairments will almost always be determined to be a disability. The final regulations list impairments that fall within this category. They include deafness, blindness, an intellectual disability, missing limbs or mobility impairments requiring the use of a wheelchair, autism, cancer, cerebral palsy, diabetes, epilepsy, HIV infection, multiple sclerosis, muscular dystrophy, major depressive disorder, bipolar disorder, post-traumatic stress disorder, obsessive compulsive disorder, and schizophrenia. In addition, the EEOC provides that the focus when considering whether an activity is a major life activity should be on "how a major life is substantially limited, and not on what outcomes an individual can achieve." For example, the EEOC noted that an individual with a learning disability my achieve a high level of academic success but may be substantially limited in the major life activity of learning. The final regulations provide rules of construction to assist in determining whether an impairment substantially limits an individual in a major life activity. Generally, the regulations provide that not every impairment is a disability but an impairment does not have to prevent or severely limit a major life activity to be considered substantially limiting. The term substantially limits is to be broadly construed to provide expansive coverage, and requires an individualized determination. The ADAAA specifically provides that an impairment that is episodic or in remission is a disability if it would substantially limit a major life activity when active. In its appendix to the regulations, the EEOC states that "[t]he fact that the periods during which an episodic impairments is active and substantially limits a major life activity may be brief or occur infrequently is no longer relevant to determining whether an impairment substantially limits a major life activity." For example, the EEOC notes that an individual with post-traumatic stress disorder who has intermittent flashbacks is substantially limited in brain function and thinking. A mitigating measure, for example, a wheelchair or medication, eliminates or reduces the symptoms or impact of an impairment. The ADAAA provided that when determining when an impairment substantially limits a major life activity, the ameliorative effects of mitigating measures shall not be used. However, ordinary eyeglasses and contact lenses may be considered. The EEOC final regulations track the statutory language, and also provide that the negative side effects of a mitigating measure may be taken into account in determining whether an individual is an individual with a disability. Although the EEOC would not allow a covered entity to require the use of a mitigating measure, if an individual does not use a mitigating measure, this may affect whether an individual is qualified for a job or poses a direct threat. The third prong of the statutory definition of disability is "being regarded as having an impairment." The ADAAA further describes being regarded as having an impairment by stating that an individual meets this prong of the definition "if the individual establishes that he or she has been subjected to an action prohibited under this Act because of an actual or perceived physical or mental impairment whether or not the impairment limits or is perceived to limit a major life activity." The statute also provides that the "regarded as" prong does not apply to transitory or minor impairments, and a transitory impairment is defined as an impairment with an actual or expected duration of six months or less. The EEOC final regulations echo the statutory language, and encourage the use of the "regarded as" prong when reasonable accommodation is not at issue. The EEOC emphasizes that even if an individual is regarded as having a disability, there is no violation of the ADA unless a covered entity takes a prohibited action, such as not hiring a qualified individual because he or she is regarded as having a disability. A covered entity may challenge a claim under the "regarded as" prong by showing that the impairment is both transitory and minor, or by showing that the individual is not qualified or would pose a direct threat. However, it should be noted that the defense that an impairment is transitory and minor is only available under the "regarded as" prong. The rules of construction discussed previously concerning the first or actual prong specifically state that the effects of an impairment lasting fewer than six months can be substantially limiting. | The ADA Amendment Act (ADAAA), P.L. 110-325, was enacted in 2008 to amend the Americans with Disabilities Act (ADA) definition of disability. On March 25, 2011, the Equal Employment Opportunity Commission (EEOC) issued final regulations implementing the ADAAA. The final regulations track the statutory language of the ADA but also provide several clarifying interpretations. Several of the major regulatory interpretations are, including the operation of major bodily functions in the definition of major life activities; adding rules of construction for when an impairment substantially limits a major life activity and providing examples of impairments that will most often be found to substantially limit a major life activity; interpreting the coverage of transitory impairments; interpreting the use of mitigating measures; and interpreting the "regarded as" prong of the definition. |
When a President dies, a number of activities and events are set in motion. The vast majority of these activities and events are governed by custom rather than statute, and may be influenced by the wishes of the deceased President's family. Typically, the incumbent President issues a presidential proclamation that serves as an official announcement of the death. By federal law, U.S. flags should be flown at half-staff for 30 days. In recent decades, presidential proclamations have also given specific guidance where the flag should be flown at half-staff, such as "at the White House and on all buildings, grounds, and naval vessels of the United States for a period of 30 days from the day of his death. I also direct that for the same length of time, the representatives of the United States in foreign countries shall make similar arrangements for the display of the flag at half-staff over their Embassies, Legations, and other facilities abroad, including all military facilities and stations." The Commanding General, Military District of Washington, U.S. Army is responsible for state funeral arrangements, as described in detail in the Army pamphlet entitled State, Official, and Special Military Funerals . According to this document, the current President, ex-President, President-elect, and any other person specifically designated by the current President are entitled to an official state funeral. An excerpt from the pamphlet on key responsibilities and delegations follows: 3. Responsibilities. a. The President notifies the Congress that he has directed that a State Funeral be conducted. The Congress, which has sole authority for use of the U.S. Capitol, makes the Rotunda available for the State Ceremony through its own procedures. b. The Secretary of Defense is the designated representative of the President of the United States. The Secretary of the Army is the designated representative of the Secretary of Defense for the purpose of making all arrangements for State Funerals in Washington, D.C. This includes participation of all Armed Forces and coordination with the State Department for participation of all branches of the Government and the Diplomatic Corps. c. The Commanding General, Military District of Washington, U.S. Army as the designated representative of the Secretary of the Army, will make all ceremonial arrangements for State Funerals in Washington, D.C. and will be responsible for the planning and arranging of State Funerals throughout the continental United States. Many variations of ceremonies and traditional events and activities honoring the former President are possible. A short list of possibilities may include the following: A former President's remains may lie in repose for one day and then be moved to the Capitol Rotunda to lie in state , during which time a funeral ceremony and public viewing may occur . A former President, as former C ommander-in- C hief, is entitled to burial and ceremony in the Arlington National Cemetery. If , however, the former President is to be buried outside of Washington, DC , honors may be rendered at a train station, terminal, or airport that serves as a point of departure for the remains.Other honors that may be rendered during ceremonies include musical honors , gun and cannon salutes , and a U.S. Air Force coordinate d flyover . Most recently, following former President Gerald R. Ford's death on December 26, 2006, President George W. Bush announced the death, and also issued a proclamation that U.S. flags on all federal facilities be flown at half-staff. Two days later, President Bush issued Executive Order 13421, which proclaimed January 2, 2007, a day of respect and remembrance for the former President and ordered the closing of federal offices and agencies. A funeral took place in the Capitol Rotunda on December 30, 2006, where former President Ford lay in state, with subsequent services on January 2, 2007, at Washington National Cathedral. Funeral services for the former President were conducted on January 3, 2007, in Grand Rapids, MI, with interment at the Gerald R. Ford Presidential Library and Museum. Note: .mil web addresses may be more easily accessed using Internet Explorer This website contains information on the evolution of state funerals, military honors for former Presidents, ceremonial traditions of past state funerals (including lying in state or repose), military honors, and FAQs. http://www.usstatefuneral.mdw.army.mil/ This Army pamphlet outlines state and official funeral policy, and it contains detailed information on funeral eligibility, procedures, and sequences of events. http://armypubs.army.mil/epubs/DR_pubs/DR_a/pdf/web/p1_1.pdf The White House Historical Association has published a number of online articles and other content on past funerals. A few selected articles are as follows: A Presidential Funeral https://www.whitehousehistory.org/a-presidental-funeral Arlington ' s Ceremonial Horses and Funerals at the White House https://www.whitehousehistory.org/arlingtons-ceremonial-horses-and-funerals-at-the-white-house-1 Modern Mourning Observations at the White House https://www.whitehousehistory.org/modern-mourning-observations-at-the-white-house To view images, documents, and other materials on presidential funerals, see the Association's digital library: https://www.whitehousehistory.org/digital-library Since 1901, Washington National Cathedral has been the location of funeral and memorial services for several U.S. Presidents: https://cathedral.org/history/prominent-services/presidential-funerals/ Presidential libraries and museums provide preservation of and access to historical materials, including funeral information. Similar or other materials may be viewable online within digital collections at each individual library's website: https://www.archives.gov/presidential-libraries The Library of Congress contains a number of historical papers, images, audio recordings, films, narratives, and other content related to Presidents and corresponding funerals and ceremonies. For help with finding specific items, librarian and reference specialists at the main reading room can provide assistance: http://www.loc.gov/rr/main/ Gerald R. Ford: https://www.c-span.org/video/?195963-1/gerald-ford-michigan-service-burial Ronald W. Reagan: https://www.c-span.org/video/?182165-1/ronald-reagan-funeral-service Richard M. Nixon: https://www.c-span.org/video/?56426-1/president-nixon-funeral Lyndon B. Johnson: https://www.c-span.org/video/?182212-1/lyndon-johnson-funeral-service Harry S. Truman: https://www.youtube.com/watch?v=4Nfo1UjjJXE Dwight D. Eisenhower: http://www.dwightdeisenhower.com/155/Final-Post Herbert Hoover: https://www.youtube.com/watch?v=AtZLxjsX39Q John F. Kennedy: https://www.jfklibrary.org/asset-viewer/archives/JFKWHF/WHN28/JFKWHF-WHN28/JFKWHF-WHN28 Franklin D. Roosevelt: https://www.c-span.org/video/?298665-1/president-franklin-roosevelt-funeral Eleven U.S. Presidents have "lain in state" at the U.S. Capitol Rotunda: http://history.house.gov/Institution/Lie-In-State/Lie-In-State/ The Architect of the Capitol (AOC) provides a brief history of President Lincoln's funeral and his catafalque (currently on display at the U.S. Capitol Visitor's Center): https://www.aoc.gov/blog/lincoln-catafalque-us-capitol Concurrent resolutions have authorized commemorative compilations of tributes delivered in Congress for several former Presidents. These volumes are prepared by the Congressional Research Service under the direction of the Joint Committee on Printing. For example, see President Ford's tribute collection: https://www.gpo.gov/fdsys/pkg/CDOC-110hdoc61/pdf/CDOC-110hdoc61.pdf For further assistance in locating these tribute collections for Presidents (or other individuals), please contact CRS. The AOC has an onsite database of approximately 1,000 images of state funerals at the Capitol for the following presidents: Kennedy, Hoover, Eisenhower, Lyndon B. Johnson, Reagan and Ford. The images depict presidents lying in state in the Rotunda and related funerary ceremonies occurring at the Capitol. For more inquiries into accessing the images, congressional staff may fill out an agency contact form at https://www.aoc.gov/contact-form . Martin Nowak, The White House in Mourning: Deaths and Funerals of Presidents in Office (Jefferson, NC: McFarland, 2010). Brady Carlson, Dead Presidents: A n American A dventure I nto the S trange D eaths and S urprising A fterlives of O ur nation 's L eaders (New York: W.W. Norton, 2017). Brian Lamb and C-SPAN, Who 's Buried in Grant 's Tomb : a Tour of Presidential Gravesites. (New York: Perseus Books Group, 2010). Ambassador Mary Mel French, "Ceremonies: State and Official Funerals," in United States Protocol: The Guide to Official Diplomatic Etiquette (Lanham, MD: Rowman and Littlefield, 2010). | This fact sheet is a brief resource guide for congressional staff on funerals and burials for Presidents of the United States. It contains an overview of past practices for presidential funerals and selected online information resources related to official and ceremonial protocols, past presidential funerals, congressional documents, and other documents and books. |
In January 2003, former President George W. Bush proposed that the United States spend $15 billion over the next five fiscal years to fight three diseases worldwide—malaria, tuberculosis (TB), and HIV/AIDS—through the President's Emergency Plan for AIDS Relief (PEPFAR). The plan included $10 billion for programs to combat HIV/AIDS in 15 focus countries; $4 billion for bilateral HIV/AIDS activities in some 100 non-focus countries, global HIV/AIDS research, and international TB projects; and $1 billion for the multilateral Global Fund to Fight AIDS, Tuberculosis, and Malaria (Global Fund). In May 2003, Congress authorized $15 billion in support of the initiative through P.L. 108-25 , the U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act (the Leadership Act). Congress reauthorized the plan through P.L. 110-293 , the Tom Lantos and Henry J. Hyde United States Global Leadership Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization Act of 2008 (the Lantos-Hyde Act). The act authorized $48 billion to be spent from FY2009 through FY2013 on fighting the three diseases; including $5 billion for international malaria programs, $4 billion for global TB efforts, and $2 billion for a contribution to the Global Fund in FY2009. The Leadership Act and subsequent appropriations were considered groundbreaking. Congress had never authorized or appropriated such sums of funds for a global health endeavor. In the five years prior to the launch of PEPFAR, Congress appropriated approximately $3.1 billion for global HIV/AIDS programs. In the first phase of PEPFAR (FY2004-FY2008), the United States spent more than $18 billion on global HIV/AIDS initiatives, including the Global Fund. From FY2009 through FY2012, U.S. spending on international HIV/AIDS assistance reached nearly $26 billion. Since PEPFAR was launched, Congress has consistently provided more than the Administration requested for global HIV/AIDS programs ( Figure 1 ). Unless otherwise specified, references throughout this report to U.S. spending on global HIV/AIDS programs include contributions to the Global Fund. It is important to note, however, that U.S. contributions to the Global Fund support grants aimed at fighting HIV/AIDS, TB, and malaria. Donors contributions to the Global Fund can not be directed at any particular disease. In the first authorization cycle, spending on global HIV/AIDS programs and the Global Fund exceeded the President's proposal by roughly $1.7 billion ( Figure 1 and Table 1 ). By the second phase, however, the trend reversed: requests outpaced spending levels, which no longer increased annually ( Figure 2 ). In FY2011 and FY2012, actual spending on global HIV/AIDS programs was less than the previous fiscal year. It remains to be seen how much Congress will make available in FY2013. Many HIV/AIDS advocates hope larger debates about foreign aid and the federal deficit will not negatively affect PEPFAR funding in the 113 th Congress. During the second phase of PEPFAR (FY2009-FY2013), Congress continued to debate the role of the Global Fund. Some observers are particularly concerned about the growing share of global HIV/AIDS resources allocated to the Global Fund ( Figure 3 ). Although bilateral HIV/AIDS funding has consistently exceeded Global Fund levels, skeptics question whether U.S. priorities can be maintained through an ever-deepening commitment to the Global Fund. Critics also point to concerns about mismanagement of Global Fund resources by some grantees. Supporters, on the other hand, assert the Global Fund complements U.S. efforts by leveraging contributions from other donors and is an important partner in the U.S. fight against global HIV/AIDS. Prompted in part by U.S. concerns, the Global Fund is undergoing reforms. The Board approved the reforms at its 27 th board meeting on September 2012. Congressional appropriations for the Global Fund exceeded requested levels during the Bush and Obama Administrations. The gap between requested and actual spending was the most pronounced, however, throughout the Bush Administration. Presidents Bush and Obama had different views on apportioning bilateral and multilateral HIV/AIDS funds. President Bush never requested that more than 10% of global HIV/AIDS funds be spent on the Global Fund, whereas President Obama requested that up to 27% of global HIV/AIDS funds be reserved for the Global Fund ( Figure 4 ). Despite this difference, both Presidents demonstrated support for the Global Fund. President Bush offered the inaugural pledge, and President Obama made the first U.S. multiyear pledge. The two presidents, however, suggested different funding levels for the Global Fund. While requests for the Global Fund did not exceed $300 million during the Bush Administration, President Obama requested the highest ever pledge to the Global Fund—$1.65 billion in FY2013. The FY2013 request is the final amount of the three-year pledge made by the Obama Administration in 2010 to contribute $4 billion to the Global Fund from FY2011 through FY2013 . Enthusiasm by donors to consistently increase spending on global HIV/AIDS projects has waned, due in part to a weak global economy. Overall spending on HIV/AIDS worldwide, however, has increased. Funding boosts have been driven primarily by budgetary increases among recipient countries. Between 2010 and 2011, funding from domestic public sources grew by more than 15%. Roughly 41% of that growth occurred in sub-Saharan Africa. Of the estimated $16.9 billion spent on fighting HIV/AIDS worldwide in 2011, roughly half was funded by lower- and middle-income countries (LMIC) and LMIC private entities ( Figure 5 ). Despite a more austere funding environment, the United States has remained the largest single donor in the world. Of the $16.9 billion spent worldwide on HIV/AIDS in 2011, the United States accounted for 24% of spending from all sources. Among donor countries, the United States provided roughly 60% of all funds for HIV/AIDS assistance contributions. When resources from multilateral organizations are considered, U.S. contributions account for roughly 48% of all foreign aid for HIV/AIDS and 32% of all Global Fund contributions. Greater spending by recipient countries on HIV/AIDS in recent years might have been precipitated by congressional mandates for stronger country ownership. In the Lantos-Hyde Act, Congress called for the creation of partnership frameworks to bolster country ownership and enhance the sustainability of U.S. investments. Per the legislation, the frameworks are to outline plans for increasing country ownership of the operation and funding of national HIV/AIDS plans. The U.S.-South Africa Partnership Framework Implementation Plan, for example, envisions gradually reducing PEPFAR aid from the FY2012 level of roughly $484 million to $250 million by FY2017. The framework is based on consistent increases in HIV/AIDS spending by the South African Government (SAG). According to the framework, SAG has raised its national HIV/AIDS budget from $576 million in 2008 to roughly $1.25 billion in 2012. As of August 8, 2012, OGAC has signed partnership frameworks with more than 20 countries. Processes for funding global HIV/AIDS programs are changing. Financial contributions from traditional donors are fluctuating, and some global health advocates fear international support for the Global Fund is waning. In November 2011, the Global Fund Board announced that inadequate resources from donors caused it to cancel the scheduled 11 th round of funding. The Global Fund does not expect to offer new funding for grants until 2014, after revisions of funding procedures have been completed. While there is some uncertainty about future funding levels from traditional donors, Brazil, Russia, India, China, and South Africa (BRICS) are playing a greater role in international HIV/AIDS assistance and are transforming from recipient countries into donor nations. Brazil, for example, is helping developing countries manufacture anti-retroviral medicines (ARVs). Russia is donating funds to its neighbors; in 2011, Russia donated $13 million for fighting HIV/AIDS (primarily to border states), and from 2007 to 2010, it contributed $88 million toward AIDS research. India is playing an increasingly important role in offering generic ART to developing countries and is accelerating technology transfer between its pharmaceutical sector and African manufacturers. China is emerging as one of the top five donors for HIV/AIDS research and development (R&D), having provided roughly $18.3 million for research on AIDS vaccines in 2011. South Africa is also increasing its investments in R&D, having spent $10 million on related research in 2011. At the same time, BRICS have increasingly assumed control over their own national HIV/AIDS programs. Over the past five years, the South African government has boosted its national HIV/AIDS budget fivefold, reaching $1.25 billion in 2012. The Brazilian government has paid for all ART provided through its national programs. India committed to cover at least 90% of all HIV/AIDS expenses related to Phase IV of its National AIDS Control Program (2012-2017). China reportedly paid for roughly 80% of all national HIV/AIDS costs in 2011 after having increased spending on HIV/AIDS programs fourfold from $124 million in 2007 to $530 million in 2011. The international community has made tremendous advancements in the fight against HIV/AIDS, with the pace accelerating in recent years. In December 2002, one month before PEPFAR was announced, only 50,000 people of the estimated 4 million requiring anti-retroviral (ARV) medicines in sub-Saharan Africa were receiving treatment. By 2011, more than 8 million people living with HIV/AIDS in low- and middle-income countries were receiving antiretroviral treatment, some 20% more than 2010 levels (6.6 million people). Progress has been made as well in preventing mother-to-child transmission of HIV/AIDS. In 2011, approximately 57% of HIV-positive pregnant women in those regions received drugs to prevent HIV transmission; 48% had access to the therapies in 2010. PEPFAR has played an important role in the global fight against HIV/AIDS. UNAIDS estimates roughly half of all international assistance for combating HIV/AIDS was provided by the United States. Worldwide contributions for countering HIV/AIDS has remained strong even with the global recession and slight declines in HIV/AIDS assistance in 2009 and 2010. Nonetheless, observers question whether global funding for addressing HIV/AIDS will be sustained. Several issues may affect future support for PEPFAR and the global fight against HIV/AIDS, including: PEPFAR Reauthorization. The PEPFAR program has been authorized under two successive authorization acts: the Leadership Act, P.L. 108-25 , and the Lantos-Hyde Act, P.L. 110-293 . The acts authorized the provision of $15 billion and $48 billion, respectively, for fighting HIV/AIDS, TB, and malaria. Authorization for PEPFAR is set to expire at the end of FY2013. The U.S. Congress has become more divided over issues related to foreign aid in general since Lantos-Hyde was enacted. At the same time, key elements within the act remain controversial, including those related to family planning. It is uncertain whether these issues will be sufficiently resolved as to enable reauthorization in the 113 th Congress. If Congress does not extend authorization of PEPFAR, the program could continue to be funded through annual appropriations, but Congress could lose some of its opportunity to direct how its priorities are implemented. Increased Spending by Emerging Economies. The Lantos-Hyde Act emphasized country ownership. It is unclear whether U.S. funding levels for global HIV/AIDS programs will continue to rise as the United States and other donors continue to call on recipient countries to increase their contributions to national HIV/AIDS plans. Secretary of State Hillary Clinton has stated at a number of public events that the United States is invested in PEPFAR "for the long haul." Nonetheless, several AIDS advocates are concerned that growing emphasis on transitioning ownership of programs implies declining support for PEPFAR programs. In 2011, fluctuations in donations for global HIV/AIDS were deflected by heightened spending within national coffers. BRICS countries and other emerging economies might also help to increase the global pool of available resources, as well as reduce the pressure on existing donors for fighting HIV/AIDS. Elevated Political Will Among Recipient Countries. In 2011, the United Nations General Assembly adopted a resolution on HIV/AIDS that, among other things, committed member states to ramp up investments aimed at eliminating HIV/AIDS and work toward closing the estimated $6 billion annual funding gap for combating HIV/AIDS. The declaration called particularly on African countries to allocate at least 15% of their national budgets to the health sector, per the Abuja Declaration and Framework for Action. Some countries, as discussed earlier, have made advancements in this area. Other countries, like Kenya, however, remain heavily reliant upon donors to fund their national HIV/AIDS plans. In 2011, 81% of Kenya's $709 million national AIDS plan was financed by development assistance. Support for the Global Fund. HIV/AIDS advocates are concerned about the fundraising challenges facing the Global Fund and fear that advancements made through the Global Fund and other donors will be compromised should it scale back operations. The Global Fund accounts for roughly 18% of spending by donors on HIV/AIDS in low- and middle-income countries. While the Global Fund did not collect sufficient capital to launch a new round of grants in 2012, support from the United States has not abated; it has grown. Since the United States offered the inaugural $200 million pledge for the Global Fund in 2001, U.S. pledges and contributions have increased significantly. In FY2012, Congress appropriated $1.3 billion for the Global Fund and the Administration requested $1.65 billion for the organization in FY2013. Although Congress has continued to increase resources for the Global Fund, it has included language in annual appropriations restricting portions of the contributions, citing concerns about transparency and fiscal malfeasance. Members of Congress continue to debate the appropriate roles of the Global Fund and PEPFAR. This debate is expected to continue in the 113 th Congress. Alternative Funding Streams. Several low-income countries are increasingly considering alternative approaches to financing their national AIDS plans. In January 2000, Zimbabwe launched an AIDS levy that collects a 3% tax on individual and corporate income. In 2011, some $26 million was collected through the AIDS levy, and an additional $30 million is expected to be raised by the end of FY2012. Finances collected through the AIDS levy initiative and from key donors (PEPFAR, Global Fund and the British aid organization Department for International Development [DFID]) is expected to enable Zimbabwe to achieve universal coverage (defined as at least 80% of people in need of treatment) by the end of 2012. Tanzania, Kenya, and Zambia are reportedly considering similar measures. Rwanda and Uganda have also imposed levies to fund national HIV/AIDS plans, but on mobile phone use. A non-governmental organization called UNITAID has partnered with several countries to develop innovative mechanisms for funding the global fight against HIV/AIDS. Partnering countries, for example, have agreed to invoke taxes on airline tickets, ranging from $1 for economy tickets to $40 for first-class travel. Roughly 70% of UNITAID's revenues are derived from the air levy for distribution in needy countries. UNITAID and other global health groups also advocate raising funds for global health and HIV/AIDS programs by taxing bonds and derivatives. It estimated that nearly $352 billion (€265 billion) could have been raised in 2010 had G20 nations instituted the levies. H.R. 755 , Investing in Our Future Act of 2011, proposes excising a 0.005% levy on currency transactions, in part to fund global health programs, including HIV/AIDS. The bill awaits action by the Committees on Ways and Means and on Foreign Affairs. Cost of Treating HIV/AIDS . While the world has made tremendous advancements in expanding access to HIV/AIDS, two phenomena may raise the cost of treating HIV-positive people: (1) drug resistance and (2) changes in intellectual property rights. Growing resistance to ART medicine may increase the cost of treating HIV/AIDS as people graduate onto more expensive second-line treatments. In the 2012 UNAIDS report, the organization conceded one of the greatest challenges facing the world is "the inevitably rising costs of drug resistance and the need to provide chronic care for people living with HIV over their lifetimes." Despite these concerns, the World Health Organization (WHO) maintains drug resistance rates remain relatively low in low- and middle-income countries at roughly 6.8%. The cost of anti-retroviral treatments has fallen tremendously in developing countries over the past decade, from an average annual price of over $10,000 per person to $116 per person for WHO pre-qualified ART. This decline is a key reason global access to HIV/AIDS treatments has expanded. Indeed, per-patient spending on ART within PEPFAR programs has declined, due in large part to increased use of generic treatments ( Figure A-1 ). In FY2009, roughly 90% of all anti-retroviral drugs (ARVs) purchased in PEPFAR programs were generic formulations, up from approximately 15% in 2005. It is important to note, however, that several factors affect U.S. spending on treatment beyond purchase of anti-retroviral treatments, including investments in building renovation and construction, laboratory and clinical equipment and training of ARV providers ( Figure A-2 ). Generic ARVs that are widely used in low-income countries are manufactured primarily in Brazil and India. Some groups, including UNAIDS, are concerned that emergent bilateral and multilateral trade agreements threaten special intellectual property laws that permitted the proliferation of generic ARVs. Of particular concern are developing agreements between the European Union and India that may limit India's capacity to continue producing generic ARVs. Questions about the pricing of newer, more effective treatments have also prompted some consternation. Members of Congress wrote a letter to the Chairman and Chief Executive Officer of Gilead—a pharmaceutical company that manufacturers ARVs—urging them to consider the impact of elevated ART prices in light of the current economic climate. One of the greatest accomplishments of PEPFAR has been to increase the number of people receiving anti-retroviral (ARV) treatments worldwide, due in large part to increased use of generic formulations. In FY2009, roughly 90% of all ARVs purchased in PEPFAR programs were generics, up from approximately 15% in 2005. Annual per-patient spending in PEPFAR on ART fell from over $1,100 in 2004 to roughly $335 in 2011 ( Figure A-1 ). It is important to note that spending on anti-retroviral therapy includes a range of activities. The purchase of ARVs comprises roughly 40% of all spending on HIV/AIDS treatment ( Figure A-2 ). Non-ARV recurrent costs include clinical staff salaries and benefits; laboratory and clinical supplies; non-ARV drugs for opportunistic infections; building utilities; travel; and contracted services. Investment costs include building renovation and construction; laboratory and clinical equipment; in-service training of ARV providers; and ARV buffer stock to support a reliable supply chain. | The President's Emergency Plan for AIDS Relief (PEPFAR) is the largest bilateral health initiative in the world. The 2003 pledge of President George W. Bush to spend $15 billion over five years on fighting HIV/AIDS, tuberculosis (TB), and malaria was considered groundbreaking. The initiative challenged the international community to reject claims that large-scale HIV/AIDS treatment plans could not be carried out in low-resource settings. In December 2002, one month before PEPFAR was announced, only 50,000 people of the estimated 4 million requiring anti-retroviral (ARV) medicines in sub-Saharan Africa were receiving treatment. By the end of FY2004, 155,000 people were receiving treatment through PEPFAR. As of March 2012, PEPFAR has supported the provision of anti-retroviral therapy (ART) for more than 4.5 million people (up from 155,000 in 2005); testing and counseling for more than 40 million people, including 9.8 million pregnant women; prevention of mother-to-child HIV transmission (PMTCT) services for more than 660,000 HIV-positive pregnant women, curbing some 200,000 HIV infections among infants; and care and support for more than 13 million people, including more than 4 million orphans and vulnerable children (OVC). Congress first authorized funds in support of PEPFAR in 2003 through P.L. 108-25, the U.S. Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act (Leadership Act). The $15 billion authorization was to be spent on global HIV/AIDS, TB, and malaria programs from FY2004 through FY2008. Strong bipartisan support for PEPFAR in particular and global health in general led to annual appropriations amounts that exceeded authorized levels. During the first phase of PEPFAR (FY2004-FY2008), the Bush Administration spent $18.1 billion on global HIV/AIDS programs. As the expiration date of the Leadership Act approached, congressional support for PEPFAR remained enthusiastic. Members debated a range of issues (see CRS Report RL34569, PEPFAR Reauthorization: Key Policy Debates and Changes to U.S. International HIV/AIDS, Tuberculosis, and Malaria Programs and Funding), but ultimately authorized an extension of PEPFAR. The Tom Lantos and Henry J. Hyde United States Global Leadership Against HIV/AIDS, Tuberculosis, and Malaria Reauthorization Act of 2008 (P.L. 110-293, Lantos-Hyde Act) authorized $48 billion to be appropriated from FY2009 through FY2013 for combating the three diseases. From FY2009 through FY2012, the Obama Administration obligated nearly $26 billion on global HIV/AIDS programs. As the September 30, 2013, expiration date for the authorization of the Lantos-Hyde Act approaches, it is unclear whether Congress will again authorize multiyear funding for PEPFAR. Bipartisan support for PEPFAR remains strong; nonetheless, congressional debate about key elements of the program has raised some concerns. For example, some Members question the extent to which family planning programs are integrated into global HIV/AIDS activities. At the same time, growing unease about the federal budget deficit minimizes the likelihood that past trends of ever-increasing appropriations for global HIV/AIDS programs will be sustained. Fiscal pressures may have influenced funding amounts that fluctuated (but mostly remained level) throughout the Obama Administration—a departure from the steady growth in spending seen during the Bush Administration. Financial constraints in the global economy have resulted in similar outcomes during the Obama Administration. Whereas many international donors consistently increased their pledges for fighting global HIV/AIDS throughout the Bush Administration, resources made available by key contributors (such as European nations and the Global Fund) began to stagnate and in some cases declined during the past few years. While contributions by traditional donors have mostly stabilized, Brazil, Russia, India, China, and South Africa (BRICS) are playing a greater role in international HIV/AIDS assistance and are transforming from recipient countries into donor nations. At the same time, some aid recipient countries are increasing investments in their own national HIV/AIDS plans. This report outlines U.S. spending on global HIV/AIDS programs since the inception of PEPFAR, analyzes global HIV/AIDS funding by other donors, and highlights key issues pertaining to funding that will face the 113th Congress as it considers the future of PEPFAR, including whether to reauthorize funding for PEPFAR following the expiration of the Lantos-Hyde Act in FY2013; engagement with emerging economies and other non-traditional donors who are increasing their participation in the global fight against HIV/AIDS; the impact of U.S. efforts to transition ownership of national HIV/AIDS plans to recipient countries; the appropriate funding level for the Global Fund; whether to support innovative fund-raising approaches for global HIV/AIDS programs, such as taxes on financial transactions and income; and developments that might increase HIV/AIDS treatment costs, including intellectual property rights and drug resistance. Program implementation and authorization issues will be addressed more extensively in future related reports. |
The Agriculture appropriations bill—formally known as the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act—provides funding for All of the U.S. Department of Agriculture (USDA) except the Forest Service, which is funded in the Interior appropriations bill. The Food and Drug Administration (FDA; Department of Health and Human Services). In the House, the Commodity Futures Trading Commission (CFTC). In the Senate, the Financial Services bill contains CFTC appropriations. In even-numbered fiscal years, CFTC appears in the enacted Agriculture appropriation. 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 1 . 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 farm bill and child nutrition reauthorizations. In FY2017, discretionary appropriations are 14% ($20.9 billion) in the Agriculture appropriations act ( P.L. 115-31 ). Mandatory spending carried in the bill comprised $133 billion, about 86% of the $153 billion total. 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 1 ). 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. The nutrition program amounts 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 the line of credit. The FY2017 appropriation for Agriculture and Related Agencies was enacted on May 5, 2017, as part of the Consolidated Appropriations Act ( P.L. 115-31 , Division A). The fiscal year started on October 1, 2016, under continuing resolutions (CRs) that lasted for seven months. In regular action, the House and the Senate Appropriations Committees reported their FY2017 Agriculture appropriations bills ( H.R. 5054 , S. 2956 ) in April and May 2016, with some of the earliest subcommittee action in two decades ( Table 1 , Figure 2 ). No further action on the individual bills occurred until they were incorporated into the omnibus appropriation. The last time an Agriculture appropriations bill was enacted as a stand-alone measure was for FY2010 (in calendar 2009). An Agriculture appropriations bill has not cleared a floor vote in either chamber since the FY2012 bill, when it was the vehicle for a three-bill "minibus" measure. Committee action for FY2017 was somewhat earlier than in recent years. The Obama Administration released its FY2017 budget request on February 9, 2016. At the same time, the U.S. Department of Agriculture (USDA) released its 116-page budget summary and multi-volume budget explanatory notes with more programmatic details. The FDA also released a detailed budget justification, as did the CFTC. From these documents, the congressional appropriations committees evaluated the request, began considering their bills in the spring of 2016, and decided how much of the request would be followed. Before the FY2017 appropriation was finalized, the Trump Administration released an outline of its FY2018 budget request on March 16, 2017. The blueprint for FY2018 did not have the detail of a regular budget request and primarily conveyed information at the Cabinet level. Nonetheless it proposed a 21% reduction for USDA, including eliminating funding for some programs. The FY2017 explanatory statement addressed the direction indicated in the FY2018 request by reminding the Administration of Congress's role in determining future appropriations: 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. The Agriculture Subcommittee of the House Appropriations Committee held several hearings on FY2017 appropriations with various USDA agencies, FDA, and CFTC during the spring of 2016. The House Budget Committee developed a FY2017 budget ( H.Con.Res. 125 ) that would have provided less overall discretionary spending than allowed for FY2017 by the Bipartisan Budget Act of 2015 ( P.L. 114-74 ), but the chamber did not adopt that new budget. In the absence of a new budget or affirmation of the limit in the Bipartisan Budget Act of 2015, the House Appropriations committee incrementally made "302(b)" allocations to the subcommittees to facilitate markups. For Agriculture appropriations, the House Agriculture appropriations subcommittee approved a draft bill on April 13, 2016, by voice vote, the earliest action on agriculture appropriations in two decades. The full House Appropriations Committee reported the bill on April 19, 2016, by voice vote ( H.R. 5054 , H.Rept. 114-531 ). It adopted several amendments by recorded votes. The bill was not considered on the floor, but parts of it were incorporated into the omnibus appropriation. The Agriculture Subcommittee of the Senate Appropriations Committee held hearings on the FY2017 appropriations request with various USDA agencies and FDA during the spring of 2016. The Senate Budget Committee did not develop a new budget for FY2017 and chose to follow the limit for FY2017 that was set in the Bipartisan Budget Act of 2015 ( P.L. 114-74 ). The Senate Appropriations Committee divided the total discretionary amount for FY2017 into 302(b) subcommittee allocations on April 18, 2016 ( S.Rept. 114-238 ). For Agriculture appropriations, the Senate Agriculture appropriations subcommittee approved a draft bill on May 17, 2016, by voice vote. The full committee reported it on May 19, 2016, by a vote of 30-0 ( S. 2956 , S.Rept. 114-259 ). It adopted a manager's package and several amendments. The bill was not considered on the floor, but parts of it were incorporated into the omnibus appropriation. In the absence of an FY2017 appropriation, the fiscal year started on October 1, 2016, under a CR that lasted until December 9, 2016 ( P.L. 114-223 , Division C). A second CR lasts until April 28, 2017 ( P.L. 114-254 , Division A). A third CR extended until May 5 ( P.L. 115-30 ). The CRs continued FY2016 funding with a few exceptions explained below. The $20.877 billion discretionary total enacted in the FY2017 Agriculture appropriation is officially $623 million smaller than the FY2016 discretionary appropriation (in terms of the amount that counts against the budget limit, the "302(b)" subcommittee allocation; see Table 2 ). It achieves this primarily by increasing budgetary offsets over the FY2016 level through greater rescissions of prior appropriations and greater scorekeeping adjustments primarily from "negative subsidies" from loan programs that charge fees. Consequently, the budget authority provided to agencies in the major titles of the bill actually increases by $462 million (the top of the shaded bars in Figure 3 ). Mandatory spending carried in the bill—mostly determined in separate authorizing laws—increases $13.5 billion over FY2016. All of this increase is in farm programs, including a $14.4 billion increase in the reimbursement to the Commodity Credit Corporation for higher than expected payments for farm commodity revenue support programs ( Table 3 ). This increase is automatic based on farm bill formulas and does not affect discretionary spending limits. Table 2 compares House- and Senate-proposed amounts to other years by title. Figure 3 illustrates changes in discretionary spending by title over 10 years. Table 3 compares amounts at the agency level, the basis for the rest of the report. Appendix A offers a 20-year historical perspective on trends from FY1996 to FY2016. The budget authority provided to agencies in the major titles of the bill increases by $462 million (the top of the shaded bars in Figure 3 ), even though the official total decreases by $623 million compared with the FY2016 discretionary appropriation. This is achieved primarily by increasing budgetary offsets through greater rescissions and greater scorekeeping adjustments. Discretionary budget changes that are over $10 million within agencies include the following, relative to FY2016 ( Table 3 ): Conservation programs. +$163 million , mostly for $150 million of watershed and flood prevention programs that have not been funded since FY2010. Rural development. +$119 million , mostly for rural water and wastewater programs (+$49 million), rural broadband (+$24 million), and rural housing rental assistance (+$15 million). Food and Nutrition Service. +$65 million , mostly for commodity assistance (+$19 million) and nutrition programs administration (+$20 million) in the regular nutrition title and a $19 million supplemental in the general provisions for commodity assistance. Offset by an $850 million rescission in WIC because of lower prior-year participation than expected. Animal and Plant Health Inspection Service. +$52 million , primarily for increases in emergency preparedness. Food and Drug Administration. +$42 million , including $36 million more for food safety activities. Farm Service Agency. +$29 million , including $23 million more to support a 25% increase in farm loan program authority. USDA administration. +$20 million to modernize headquarters facilities. Food Safety Inspection Service. +$17 million for inspection improvements. Food for Peace grants. -$116 million from less supplemental funding ($134 million) to augment constant base funding of $1.466 billion. Disaster assistance. -$114 million , comprised from $38 million less appropriated for programs than in FY2016 ($206 million in the second CR plus $28 million in the omnibus appropriation) and $76 million more in disaster designation offsets that do not count against budget caps. Agricultural research agencies. -$46 million , comprised primarily of $25 million more for Agriculture and Food Research Initiative (AFRI) grants, and $26 million more for Agricultural Research Service (ARS) operations, offset by $112 million less for ARS buildings and facilities. Sequestration is a process of automatic, largely across-the-board reductions that permanently cancel mandatory and/or discretionary budget authority and is triggered when spending would exceed statutory budget goals. Sequestration is authorized in the Budget Control Act of 2011 (BCA; P.L. 112-25 ) for discretionary spending through FY2021 and for mandatory spending through FY2025. Although the Bipartisan Budget Act of 2013 ( P.L. 113-67 ) raised spending limits in the BCA to avoid sequestration of discretionary accounts in FY2014 and FY2015—and the Bipartisan Budget Act of 2015 ( P.L. 114-74 ) did it again for FY2016 and FY2017—they do not prevent or reduce sequestration on mandatory accounts that arose from the BCA. Thus, sequestration on non-exempt mandatory accounts continues in FY2017. Appendix B provides more detail about sequestration at the individual account level. In the absence of an FY2017 appropriation before the beginning of the fiscal year on October 1, 2016, Congress passed three CRs that lasted for seven months of the fiscal year. 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. The first continuing resolution for FY2017 (Division C of P.L. 114-223 ) lasted until December 9, 2016. It continued FY2016 funding levels and provisions with the following exceptions: Not continuing FY2016 supplemental funding for land rehabilitation programs (Section 101(a)(1)). A 0.496% across-the-board reduction (Section 101(b)). Sufficient funding to maintain mandatory program levels, including for nutrition programs (Section 111). Four other anomalies affected the agriculture portion individually: An increase of about $14 million for the Commodity Supplemental Food Program, a domestic food assistance program that predominantly serves the low-income elderly. Rather than the $222 million FY2016 funding level, the CR provides about $236 million. This anomaly is typically included to maintain current caseload and participation with increased food costs (Section 117). An earlier than normal transfer to the Commodity Credit Corporation (CCC). The CR allows CCC to receive its estimated $13 billion appropriation about a month earlier than usual to avoid running out of money. Most farm bill payments to farmers were due in October; without the anomaly, CCC may have exhausted its $30 billion credit line at the Treasury (Section 118). A higher than normal rate of apportionment for the Rural Housing Rental Assistance Program. 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 (Section 119). An extension of theFDA's Rare Pediatric Disease Priority Review Voucher Program. After the CR was enacted, the Advancing Hope Act ( P.L. 114-229 ) further extended the program until December 31, 2016, and made other changes to the voucher program (Section 120). In the absence of completing the FY2017 appropriation after the 2016 elections, a second CR was enacted that lasted until April 28, 2017 ( P.L. 114-254 , Division A). This CR extends the provisions and anomalies of the first CR, changes the across-the-board reduction rate, and adds several new anomalies for the agriculture portion: A lower across-the-board reduction of 0.1901% (Section 101(2)). Flexible apportionment for the Farm Loan Program so that it can fund all loans that are approved. USDA direct and guaranteed farm loans may face higher than normal demand because of low farm income and since the CR extends into the spring planting season. The anomaly does not increase funding but potentially makes available the entire FY2016 amount during the CR (Section 146). Flexible apportionment for Summer Electronic Benefits Transfer (EBT) demonstration projects so that the program can fully operate by May 2017. These projects, an alternative to the Summer Food Service Program that has operated in select states since FY2011, provide EBT benefits over the summer months to low-income households with school-age children (Section 147). Funding for the National Hunger Clearinghouse. Since FY2010, the Richard B. Russell National School Lunch Act has provided $250,000 annually in mandatory funding. The clearinghouse funding was extended in FY2016 appropriations ( P.L. 114-113 ) and then expired September 30, 2016. Since that time, the USDA-FNS had been funding the clearinghouse using carryover balances (Section 148). Transfer authority within the Rural Utilities Service (RUS) to support increased subsidy costs of Treasury direct telecommunication loans. The FY2016 subsidy rate of 0.03% will increase to 0.89% in FY 2017. By permitting a transfer of budget authority from RUS programs with lower subsidy costs, the CR will allow for support of the Treasury direct loan level as needed (Section 149). Flexible apportionment for the Guaranteed Multi-Family Housing Loan Program at a higher rate than would normally be permitted to fund approved loans. This program offers loan guarantees for the development of affordable rental housing for low- and moderate-income families in rural areas (Section 150). Emergency funding for two USDA land rehabilitation programs––the Emergency Conservation Program (ECP, $103 million) and the Emergency Watershed Protection Program (EWP, $103 million). This funding is not directed to a specific disaster or region, nor is it subject to discretionary budget caps. For more information, see " Disaster Assistance " later in this report (Section 185). New funding for the FDA Innovation Account ($20 million for FY2017) that was established by the 21 st Century Cures Act ( P.L. 114-255 ). The Innovation Account funds agency activities such as changing FDA drug and device approval pathways (Section 193). In addition to setting budgetary amounts, the Agriculture appropriations bill is also a vehicle for policy-related provisions that direct how the executive branch should carry out the appropriation. These provisions may have the force of law if they are included in the text of the appropriation, usually in the General Provisions, but their effect is generally limited to the current fiscal year. The explanatory statement that accompanies the appropriation, and the House and Senate report language that accompanies the committee-reported bills, may also provide policy instructions. These documents do not have the force of law but often explain congressional intent and are expected to be followed by the agencies. Indeed, the committee reports and explanatory statement may need to be read together to capture all of the congressional intent for the fiscal year: Congressional Directives. The explanatory statement is silent on provisions that were in both the House Report (H. Rpt. 114-531) and Senate Report (S. Rpt. 114-259) that remain unchanged by this agreement, except as noted in this explanatory statement.... The House and Senate report language that is not changed by the explanatory statement is approved and indicates congressional intentions. The explanatory statement, while repeating some report language for emphasis, does not intend to negate the language referred to above unless expressly provided herein. The list below describes some of the major policy issues. These and other policy-related issues are discussed in greater detail in relevant sections later in this report. GIPSA r ule. The enacted appropriation does not include language that would prohibit the Grain Inspection, Packers, and Stockyards Administration (GIPSA) from finalizing and implementing a livestock and poultry marketing rule—the "GIPSA rule," as was proposed in the House bill. Horse s laughter. The Food Safety Inspection Service (FSIS) is responsible for horse slaughter inspection if the meat is for human consumption. The FY2017 appropriation prohibits FSIS from inspecting horse slaughter facilities. Poultry imports from China. The FY2017 appropriation prohibits the purchase of processed (cooked) poultry meat imported from China for use in various domestic feeding programs. SNAP- a uthorized r etailers. The enacted appropriation limits the scope of rules for the 2014 farm bill's changes to inventory requirements for SNAP-authorized retailers. SNAP households r eporting r equirements. The enacted appropriation requires SNAP households to report to the state agency a move out of the state beginning in FY2017 and each year thereafter. School m eals n utrition s tandards. The enacted appropriation requires USDA to provide hardship exemptions from a 100% whole grain requirement and prevent USDA from implementing a sodium requirement without scientific evidence. Over the past 10 years, 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 and declined through FY2013. Since then, total Agriculture appropriations have increased ( Figure 3 ). However, whether that increase returns the appropriation to various historical benchmarks depends upon inflation adjustments and other factors. The stacked bars in Figure 3 represent the discretionary spending authorized for each title in the 10 years since FY2007. The total of the positive stacked bars is the budget authority contained in Titles I-VI. It is higher than the official 302(b) discretionary spending limit (the line) because of the budgetary offset from negative amounts in Title VII General Provisions and other scorekeeping adjustments. General Provisions are negative mostly because of limits placed on mandatory programs, which are scored as savings ( Table 3 , Table 15 ). For example, in the FY2017 appropriation, budget authority for the primary agencies in the bill (Titles I-VI) increased $462 million (the top of the stacked bars in Figure 3 ) even though the official discretionary spending allocation decreased $623 million (the line in Figure 3 ). Increases in the use of CHIMPS and other tools to offset discretionary appropriations ameliorated reductions in discretionary budget authority in FY2011 and succeeding years. For example, the official 302(b) discretionary total for the bill was given credit for declining 13.6% in FY2011, while the total of Titles I-VI declined only 6.4% that year ( Figure 3 ). The effect is less pronounced in FY2016, since the offset was smaller, in part because of additional spending in General Provisions for foreign food aid and emergency programs. Some areas have sustained real increases, while others have declined (apart from the peak in 2010). Agencies with sustained real increases (that is, inflation-adjusted; Figure 4 ) since FY2007 include FDA and CFTC (Related Agencies) and, to a lesser extent, foreign food assistance. Areas with real decreases in discretionary spending since 2007 include general agricultural programs and domestic nutrition programs. Rural development and conservation also had a real decrease over the same period, though FY2016 reversed that trend for rural development, and FY2017 reversed it for conservation. Appendix A offers a 20-year historical perspective on other trends from FY1998 to FY2017, such as mandatory versus discretionary, nutrition versus the rest of the bill, and comparisons against other economic factors such as the share of the federal budget, GDP, and population. USDA was created in 1862 and carries out a range of activities through about 17 agencies and a dozen administrative offices staffed by nearly 100,000 employees. About 95% of its funding is in the Agriculture appropriation, covering about two-thirds of those employees. The remainder is the Forest Service and is funded by the Interior and Related Agencies Appropriations bill. This report is organized in the order that the agencies are listed in the appropriations bills. The Agriculture appropriations bill contains several accounts for the general administration of the USDA, ranging from the immediate Office of the Secretary to the Office of Inspector General. For FY2017, the enacted appropriation keeps the amount for most accounts in departmental administration constant compared to the enacted FY2016 appropriation, with a few notable exceptions. Overall, the FY2017 appropriation increases departmental administration by $30.8 million (+8.2%) over FY2016 ( Table 4 ). The FY2017 appropriation increases the buildings and facilities account by the USDA-requested $20 million (+31%), largely to pay for long-planned renovations to the South Building in the USDA headquarters complex. It increases the amounts for the Chief Information Officer (+$5 million) and Chief Financial Officer (+$2 million) to increase cybersecurity and meet new digital accountability standards. The Office of Inspector General receives an increase of $2.5 million, including $1.1 million for additional oversight of the department's information technology upgrades. And it increases the amount for the Office of the Chief Economist by $1.1 million to acquire data and support to prepare for the 2018 farm bill. Agricultural research was one of the founding purposes when USDA was created in 1862. USDA conducts intramural research at federal facilities with government-employed scientists and supports external research at universities and other facilities through competitive grants and formula-based funding. Contemporary research spans traditional, organic, and sustainable agricultural production; bioenergy; nutrition; food safety; pests and diseases of plants and animals; and economics. Four agencies carry out USDA's research, education, and economics mission: The Agricultural Research Service (ARS) , USDA's intramural science agency, conducts long-term, high-risk, basic and applied research on food and agriculture issues of national and regional importance. The National Institute of Food and Agriculture (NIFA) distributes competitive grants and formula-based funding to land grant colleges of agriculture to provide partial support for state-level research, education, and extension. The National Agricultural Statistics Service (NASS) collects and publishes national, state, and county statistics. NASS is also responsible for the five-year cycle of the Census of Agriculture. The Economic Research Service (ERS) provides economic analysis of issues regarding public and private interests in agriculture, natural resources, and food. The enacted FY2017 appropriation provides $2.891 billion for agricultural research, down $45 million from the enacted FY2016 total (-1.5%; Table 5 ). This overall change is comprised of $67 million more for research programming across the four agencies and $112 million less for buildings and facilities than in FY2016. The enacted bill is less of a reduction than either the House or Senate bills, generally providing more to research programs than the House bill proposed and reducing building and facilities by less than the Senate bill proposed. In addition to discretionary appropriations, agricultural research is also funded by state matching contributions and private donations or grants, as well as mandatory funding from the farm bill. The ARS is USDA's in-house basic and applied research agency. It operates approximately 90 laboratories nationwide with about 6,600 employees. ARS also operates the National Agricultural Library, one of USDA's primary information repositories for food, agriculture, and natural resource sciences. ARS laboratories focus on efficient food and fiber production, development of new products and uses for agricultural commodities, development of effective controls for pest management, and support of USDA regulatory and technical assistance programs. For FY2017, the enacted appropriation provides $1.170 billion for ARS salaries and expenses, $26 million more than FY2016 (+2.3%; Table 5 ). The House-reported bill would have increased the FY2016 amount by $8 million and the Senate-reported bill by $34 million. ARS had proposed increases across several programmatic areas for prioritized research projects, coupled with reductions in funding for several existing programs. The enacted appropriation, via the explanatory statement, expressly rejects those specific reductions and reprogramming. The enacted appropriation does not include concerns that were mentioned in the FY2016 appropriation about animal care at ARS research facilities. However, the Animal and Plant Health Inspection Service (APHIS) is instructed in the explanatory statement to continue its inspections of ARS facilities and post the results online. For the ARS buildings and facilities account, the enacted appropriation provides $99.6 million in FY2017, a decrease from the $212 million appropriated in FY2016. USDA had requested $94.5 million for FY2017. The appropriation directs that funding be used for priorities identified in the "USDA ARS Capital Investment Strategy." ARS's priorities include completion of the Foreign Disease and Weed Science Research Unit in Fort Detrick, MD ($30.2 million), and Phase I of the Agricultural Research Technology Center in Salinas, CA ($64.3 million). NIFA provides federal funding for research, education, and extension projects conducted in partnership with the State Agricultural Experiment Stations, the State Cooperative Extension System, land grant universities, colleges, and other research and education institutions, as well as individual researchers. These partnerships include the 1862 land-grant institutions, 1890 historically black colleges and universities, 1994 tribal land-grant colleges, and Hispanic-serving institutions. Federal funds enhance capacity at universities and institutions by statutory formula funding, competitive awards, and grants. For FY2017, the enacted appropriation provides $1.363 billion for NIFA, an increase of $36 million over FY2016 (+2.7%; Table 5 ). The President had requested slightly more discretionary funding for NIFA plus an increase in mandatory funding as described below. The Agriculture and Food Research Initiative (AFRI)—USDA's flagship competitive grants program with 25% of NIFA's total budget—received the Administration's requested increase of $25 million for a $375 million appropriation. The Administration had also requested an additional $325 million of new mandatory money to "fully fund" AFRI at its farm-bill authorized level of $700 million. New mandatory funding is generally more germane to the authorization process (such as the farm bill) rather than the annual appropriations, and the House and Senate did not include this request in their bills or the final appropriation. Formula-funded programs in both research and extension are held constant under the FY2017 appropriation, though the Administration had requested an increase for the Evans-Allen program that supports historically black colleges of agriculture. The FY2017 appropriation continues to direct that at least 15% of NIFA's competitive grant funding be available for research enhancement awards such as USDA-EPSCoR. The President's request again proposed to consolidate federal science, technology, engineering, and mathematics (STEM) education funding so that USDA would no longer fund Higher Education Challenge Grants, Graduate and Post-graduate Fellowship Grants, the Higher Education Multicultural Scholars Program, the Women and Minorities in STEM Program, Agriculture in the Classroom, and Secondary/Postsecondary Challenge Grants. As in prior years, the enacted appropriation rejected that proposal and continues to fund these STEM programs in USDA. In fact, an additional $500,000 was appropriated to Rural Development to develop a plan to increase access to STEM education in rural areas via the Distance Learning and Telemedicine program. NASS conducts the Census of Agriculture and provides official statistics on agricultural production and indicators of the economic and environmental status of the farm sector. For FY2017, the enacted appropriation provides NASS $171 million, an increase of $2.8 million over FY2016 (+2.7%). Most of that increase ($1.6 million) is targeted to expand a feed cost survey at the national level. The House report language directs NASS to restart surveys and reports for pecans. The Senate report language directs continuing coverage of chemical use and integrated pest management, especially for fruits and vegetables, and additional organic production surveys. ERS supports economic and social science information analysis on agriculture, rural development, food, commodity markets, and the environment. It collects and disseminates data concerning USDA programs and policies to various stakeholders. For FY2017, the enacted appropriation provides ERS $86.8 million, a $1.4 million increase over FY2016 (+1.6%). USDA had requested a larger increase to $91 million. The enacted increase is supposed to support additional research on groundwater modeling and drought resilience, as indicated in both the joint explanatory statement and in the House report language. The Senate report language directs ERS to expand its organic data analysis. Three agencies carry out USDA's marketing and regulatory programs mission area: the Animal and Plant Health Inspection Service (APHIS), the Agricultural Marketing Service (AMS), and the Grain Inspection, Packers and Stockyards Administration (GIPSA). APHIS is responsible for protecting U.S. agriculture from domestic and foreign pests and diseases, responding to domestic animal and plant health problems, and facilitating agricultural trade through science-based standards. Prominent concerns include avian influenza (AI), bovine spongiform encephalopathy (BSE or "mad cow disease"), foot-and-mouth disease (FMD), invasive plant pests (e.g., emerald ash borer, the Asian long-horned beetle, glassy-winged sharpshooter), and animal disease and traceability. APHIS also administers the Animal Welfare Act, which protects animals used in research and public exhibitions, and the Horse Protection Act, which supports inspections at horse shows and sales to prohibit the practice of soring. APHIS also administers the Wildlife Services Program to resolve human/wildlife conflicts and to protect against wildlife damage (e.g., predator control, feral swine control). For FY2017, the enacted appropriation would provide $946.2 million for APHIS, plus $3.2 million for building and facilities ( Table 6 ). This is $51.8 million more than FY2016 (+5.8%), and $45.0 million more than requested by the Administration. From the Animal Health budget line, the bill provides $55.3 million for avian health. The Animal Welfare appropriation includes an increase over FY2016 of $400,000 to provide oversight of animal research at ARS facilities. In addition, a general provision (Section 739) prohibits any funding supporting licensing for Class B dealers who sell dogs and cats for use in research, experiments, teaching, or testing. In addition to the Specialty Crop Pests budget line, Section 757 of the enacted appropriation provides an additional $5.5 million to address citrus greening. Section 738 of the enacted appropriations requires APHIS to conduct international animal health status audits based on seven factors as defined in regulations for determinations of animal health status (9 C.F.R. 92.2), and APHIS is to promptly make audit reports publicly available. The section also requires that the audits be conducted in a manner consistent with U.S. international trade agreements. The Agricultural Marketing Service (AMS) administers numerous programs that facilitate the marketing of U.S. agricultural products in domestic and international markets. AMS each year receives appropriations in two different ways. A discretionary appropriation of about $80 million funds a variety of marketing activities. A larger mandatory spending amount of about $1.3 billion (funds for strengthening markets, income, and supply; or "Section 32") finances various types of ad hoc decisions that support agricultural commodities (such as meat, poultry, fruits, and vegetables) that are not supported through the commodity support programs for the primary field crops (corn, soybeans, wheat, rice, and peanuts) and dairy. User fees also support some AMS activities. For FY2017, the enacted appropriation provides $86.2 million for AMS salaries and expenses, including $1.2 million for payments to states and possessions for marketing activities. This is $3.7 million higher than enacted in FY2016. The enacted legislation places a $61.2 million limit on the amount of user fees that AMS may collect for grading and classifying cotton and tobacco. The AMS discretionary appropriation funds four main marketing activities: market news service, shell egg surveillance and standardization, market protection and promotion, and transportation and marketing. The market news program collects, analyzes, and disseminates market information on a wide number of commodities. The shell egg program ensures egg quality and reviews and maintains egg standards. As part of market protection and promotion programs, AMS administers the pesticide data program, the National Organic Program (NOP), the seed program, the country-of-origin labeling (COOL) program, and 22 commodity research and promotion programs (checkoffs). AMS monitors the agriculture transportation system and conducts market analysis that supports the transport of agricultural products domestically and internationally. The appropriation for payments to states and possessions are for the Federal-State Marketing Improvement Program, which provides matching grants to state marketing agencies to explore new market opportunities for U.S. food and agricultural products, and to encourage research and innovation to improve marketing efficiency and performance. In addition to the cotton and tobacco inspection and classification fees (limited to $61.2 million), AMS collects user fees and reimbursements to cover product quality and process verification programs, commodity grading, and Perishable Agricultural Commodities Act (PACA; 7 U.S.C. 499a) licensing. AMS expects to collect about $175 million in FY2017 for these activities. AMS also administers several 2014 farm bill programs that have mandatory funding and are designed to support specialty crops, farmers markets, local foods, and organic certification. The National Organic Standards Board (NOSB) has completed its sunset review of the National List of substances and ingredients allowed and prohibited in organic production. In the enacted legislation's explanatory statement, Congress directs USDA to fully consider available scientific information and stakeholder comments as it reviews the NOSB sunset review recommendations in the rulemaking process. Congress also directs USDA to "stay within the parameters of the required study" included in the National Bioengineered Food Disclosure Standard (P.L. 114-216). AMS's mandatory appropriation reflects a transfer from the so-called Section 32, which is a program created in 1935 to assist agricultural producers of non-price-supported commodities. The Section 32 account is funded by a permanent appropriation of 30% of the previous calendar year's customs receipts (estimated at $10.9 billion in FY2017). This amount is reduced by various mandatory transfers ($9.6 billion in FY2017) to child nutrition and other programs. The remaining Section 32 monies available for obligation by AMS have been used at the Secretary's discretion to purchase agricultural commodities like meat, poultry, fruits, vegetables, and fish, which are not typically covered by mandatory farm programs. These commodities are diverted to school lunch and other domestic food and nutrition programs. Section 32 has also been used to fund surplus removal and farm economic and disaster relief activities. The 2008 farm bill (Section 14222) capped the annual amount of Section 32 funds available for obligation by AMS in FY2017 at $1.322 billion. Also, to increase the amount of fruits and vegetables purchased under Section 32, Congress limited USDA's discretion in two ways: (1) Section 4304 of the 2008 farm bill established a fresh fruit and vegetable school snack program funded by carving out Section 32 funds (set at $40 million in 2008, rising to $150 million in 2011, and adjusted for inflation for each year thereafter), and (2) Section 4404 of the 2008 farm bill required additional purchases of fruits, vegetables, and nuts (set at $190 million in FY2008, rising to $206 million in FY2012, and remaining at that level each year thereafter). For FY2017, P.L. 115-31 authorizes $1.322 billion of Section 32 funds for AMS, as provided in the 2008 farm bill. After a rescission of $231 million, a sequestration cut of $80 million, and required transfers for fresh fruit and vegetable programs, $886 million is available for AMS activities. Section 715 of the enacted legislation, a provision that has been in enacted agricultural appropriations since FY2012, effectively prohibits the use of Section 32 funds for emergency disaster payments: [N]one of the funds appropriated or otherwise made available by this or any other Act shall be used to pay the salaries or expenses of any employee of the Department of Agriculture or officer of the Commodity Credit Corporation to carry out clause 3 of Section 32 of the Agricultural Adjustment Act of 1935 (P.L. 74-320, 7 U.S.C. 612c, as amended), or for any surplus removal activities or price support activities under section 5 of the Commodity Credit Corporation Charter Act. The Grain Inspection, Packers and Stockyards Administration (GIPSA) oversees the marketing of U.S. grain, oilseeds, livestock, poultry, meat, and other commodities. The Federal Grain Inspection Service establishes standards for the inspection, weighing, and grading of grain, rice, and other commodities. The Packers and Stockyards Program monitors livestock and poultry markets to ensure fair competition and guard against deceptive and fraudulent trade practices. For FY2017, the enacted appropriation provides GIPSA $43.5 million for salaries and expenses, $425,000 more than enacted for FY2016. The enacted legislation authorizes GIPSA to collect up to $55 million in user fees for inspection and weighing services. If grain export activity requires additional services, the user fee limit may be exceeded by up to 10% upon notification to the Committee on Appropriations in both the House and Senate. The general provisions of the enacted appropriation do not include language regarding the GIPSA rule that was proposed in 2010 nor the Farmer Fair Practices Rules that were issued in December 2016. From FY2012 to FY2015, enacted appropriations riders prohibited USDA from finalizing and implementing most parts of the GIPSA rule. The FY2016 appropriations act did not include such a provision. Subsequently, USDA reissued parts of the original rule in three separate rules: The first was an interim final rule that holds that harm to an individual could be a violation of the Packers and Stockyards Act ( 7 U.S.C. §181 et seq.) without a finding of harm to competition. The other two proposed rules addressed (1) criteria for determining unfair practices and undue preferences and (2) criteria that could be used to determine if the poultry tournament system was in violation of the Packers and Stockyards Act. In January 2017, the Trump Administration delayed the effective dates and extended the comment periods of the Farmers Fair Practices Rules. In April 2017, USDA further delayed the effective date of the interim final rule to October 19, 2017. USDA also asked for comments on whether or not the interim final rule should (1) become effective, (2) be suspended indefinitely, (3) delay the effective date further, or (4) be withdrawn. The Food Safety and Inspection Service (FSIS) is responsible for inspecting U.S. supplies of meat, poultry, and processed egg products to ensure that they are safe, wholesome, and properly labeled. The FSIS Meat and Poultry Inspection Program conducts continuous inspections at federal meat and poultry plants and ensures that state inspection programs have standards that are at least equivalent to federal standards. The Egg Products Inspection Program ensures that liquid, frozen, and dried egg products are also safe, wholesome, and correctly labeled. In addition, FSIS inspects U.S. imports of meat, poultry, and egg products, and ensures that they are produced under standards equivalent to U.S. inspection standards. For FY2017, the enacted appropriations act provides FSIS $1.03 billion, $17.2 million more than enacted for FY2016. The FSIS appropriations are divided between five subaccounts: federal inspection ($915.8 million), state inspection ($61.6 million), international inspection ($16.5 million), Codex Alimentarius ($3.7 million), and the Public Health Data Communications Infrastructure System ($34.6 million). The appropriation authorizes FSIS to collect $1.0 million in laboratory accreditation fees. It requires that FSIS have no fewer than 148 full-time equivalents dedicated to the inspection and enforcement of the Humane Methods of Slaughter Act in FY2017. The appropriation directs FSIS to continue to implement catfish inspection that was transferred from the Food and Drug Administration to USDA in the 2008 farm bill (P.L. 110-246, §11016) and 2014 farm bill (P.L. 114-79, §12106). FSIS issued the final rule on catfish inspection in December 2015, and it went into effect on March 1, 2016, with a phase-in period continuing until September 1, 2017. In the explanatory statement of the enacted appropriation, Congress directs FSIS to re-inspect all imported catfish and to complete equivalency determinations for foreign countries exporting catfish to the United States no later than 180 days following the end of the phase-in period of September 1, 2017. For FY2017, Section 762 of the enacted appropriations prohibit FSIS from using funds to inspect horse slaughter facilities, as well as the use of voluntary inspection fees. Horses are an amenable species under the Federal Meat Inspection Act and FSIS is responsible for horse slaughter inspection if the horsemeat is for human consumption. However, the FY2006 and FY2007 appropriations acts prohibited FSIS from funding horse slaughter inspections. In subsequent appropriations (FY2008-FY2011 and FY2014-FY2016), the inspection bans were expanded to include a prohibition on voluntary, fee-based horse slaughter inspections. Inspection bans were not in force during FY2012 and FY2013, but no horse slaughter facilities opened before the appropriations ban was reinstated. Section 728 of the FY2017 appropriation prohibits the purchase of processed (cooked) poultry meat imported from China for use in the school lunch program under the Richard B. Russell National School Lunch Act (42 U.S.C. 1751 et seq.), the Child and Adult Food Care Program under Section 17 of such act (42 U.S.C. 1766), the Summer Food Service Program for Children under Section 13 of such act (42 U.S.C. 1761), or the school breakfast program under the Child Nutrition Act of 1966 (42 U.S.C. 1771 et seq.). This provision has been included in appropriations acts since FY2015 after FSIS concluded that China could export processed poultry to the United States. This raised concern among some Members of Congress because of China's poor food safety record. In August 2013, FSIS determined that China's processed poultry system is equivalent to the U.S. system. This determination allows China to source raw poultry slaughtered in the United States or countries eligible to export raw poultry to the United States, process the raw product, and then export the processed poultry. In November 2014, China provided FSIS a list of four processing plants that meet processing equivalency requirements and thus could send processed poultry to the United States. To date, no Chinese processed product has been exported to the United States. But FSIS is in the process of writing a proposed rule that recognizes the equivalency of China's poultry slaughter system and would allow China to export processed poultry that is domestically raised. A positive equivalency determination for China's slaughter system would likely result in U.S. imports of poultry from China. USDA's Farm Service Agency (FSA) is probably best known for administering the farm commodity subsidy programs and the disaster assistance programs. It makes these payments to farmers through a network of county offices. In addition, FSA also administers USDA's direct and guaranteed farm loan programs and certain mandatory conservation programs (in cooperation with the Natural Resources Conservation Service) and supports certain international food assistance and export credit programs administered by the Foreign Agricultural Service and the U.S. Agency for International Development. For FY2017, the enacted appropriation provides $1.513 billion to FSA for salaries and expenses (including $1.206 billion for regular FSA salaries and expenses, plus the transfer within FSA of $307 million for farm loan program salaries and expenses), an increase of $5.9 million over FY2016 ( Table 7 ). The joint explanatory statement indicates that the increase in the appropriation is for $5 million to improve security at county offices, $500,000 to support youth-serving organizations, $250,000 to establish a pilot network to mentor beginning farmers, and $90,000 to train veteran farmers to be prequalified for direct farm ownership loans. Regarding information technology (IT), the enacted appropriation continues strong requirements that began in FY2015 about FSA's implementation of IT plans. The intention is to address the Modernize and Innovate the Delivery of Agricultural Systems (MIDAS) plan that was flagged for concern by the Federal IT Dashboard in December 2012 but has shown progress in 2015 and 2016. FSA has struggled with the scope and schedule of work on MIDAS and did not deliver the expected results. The Government Accountability Office (GAO) and the USDA Office of Inspector General continue to observe management and schedule problems in recent reports. Specifically, the statutory language continues a requirement begun in FY2015 that FSA—before it can spend more than 50% of the $101 million for IT—submit to Congress and GAO a detailed IT plan that meets several specific criteria. Regarding office closures and staff reductions, the enacted FY2017 appropriation prohibits FSA from closing any county offices and prohibits FSA from permanently relocating any county employees if it results in two or fewer employees, unless the Appropriations Committees approve. The FY2015 and FY2016 appropriations similarly prohibited county office closure and contained the relocation provision, but these were the first time that FSA office closure had been mentioned in appropriations since FY2006-FY2008. The recent one-year moratoriums in appropriations act surpass a permanent provision in statute from the 2008 farm bill (7 U.S.C. 6932a; P.L. 110-246 , §14212) that sets conditions and requires congressional notification and local hearings before FSA can close or consolidate a county office. FSA makes and guarantees loans to farmers and is a lender of last resort for family farmers who are unable to obtain credit from commercial lenders. USDA provides direct farm loans (loans made directly from USDA to farmers), and it also guarantees the timely repayment of principal and interest on qualified loans to farmers from commercial lenders. FSA loans are used to finance farm real estate, operating expenses, and recovery from natural disasters. An appropriation is made to FSA each year to cover the federal cost of making direct and guaranteed loans, referred to as a loan subsidy. Loan subsidy is directly related to any interest rate subsidy provided by the government, as well as a projection of anticipated loan losses from farmer non-repayment of the loans. The amount of loans that can be made—the loan authority—is many times larger than the subsidy level. For FY2017, the enacted appropriation exceeds the Administration's request and the House and Senate proposals, likely due to the delay in enactment and new information about higher demand for farm loans. Overall, the FY2017 appropriation provides $90 million of loan subsidy to support $8.0 billion of loan authority. The loan subsidy is increasing 29% over FY2016, and the loan authority is increasing 25% over the FY2016 appropriation ( Table 8 ). Following the global financial crisis that began in 2008, the farm loan program has grown in size, reflecting farmers' borrowing needs. Supplemental appropriations in FY2009 and FY2010 raised loan authority by $2 billion to the $6 billion level, and, with the exception of fiscal pressures in FY2011-FY2013, recent appropriations have sustained and increased loan authorities to about $6.4 billion. Low default rates and interest rates have allowed this increase at lower budgetary costs compared to a decade ago. As an indicator of the rapid demand for USDA farm loans, in FY2016 USDA used supplemental authority that was provided in the appropriation to increase the guaranteed farm ownership program loan authority by $500 million to $2.5 billion. An appropriations provision allows USDA to increase the loan authority of programs that are self-funding (from loan application fees such as the farm ownership loan program) by 25% with prior notification to the Appropriations Committees. The FY2017 appropriation increases the base amount for this loan program to $2.75 billion (+37%) and retains the provision that would allow USDA to increase it by another 25% if needed (§726). The FY2017 appropriation also increases the loan authority for the direct farm operating loan program to $1.53 billion (+22%) and the guaranteed farm operating loan program to $1.96 billion (+41%). The enacted appropriation continues to not fund the Individual Development Accounts program, though the Administration's request and the Senate bill would have provided $1.5 million. The enacted appropriation increases funding for administrative expenses in the loan program by $2.2 million, largely to support service to veteran farmers. Veteran farmers would also benefit from the Administration's plan to waive certain loan fees. The CCC is the funding mechanism for most of the agriculture-related mandatory spending programs in the 2014 farm bill ( P.L. 113-79 , the Agricultural Act of 2014). These include farm subsidy and disaster payments, as well as a host of other programs that receive mandatory funding, such as conservation, trade, food aid, research, rural development, and bioenergy. (Programs with different mandatory funding sources other than the CCC include crop insurance, SNAP, child nutrition, and Section 32.) Supplemental spending has also been paid from the CCC, particularly for ad hoc farm disaster payments, direct market loss payments because of low farm commodity prices, and disease eradication efforts. Separate discretionary appropriations to various agencies pay for salaries to administer the CCC-funded programs. The CCC is a wholly owned government corporation that has the legal authority to borrow up to $30 billion at any one time from the U.S. Treasury to finance program spending (15 U.S.C. 714, et seq .). The CCC may earn a small amount of money from activities such as buying and selling commodities and receiving interest payments on loans. But because the CCC never earns more than it spends, its borrowing authority is replenished through a congressional appropriation. Mandatory outlays for the commodity programs rise and fall based on market or weather conditions (e.g., crop prices below program trigger levels generate farm payments). Funding needs are difficult to estimate, which is a primary reason that the programs are mandatory rather than discretionary and that the CCC uses a Treasury line of credit. The congressional appropriation may not always restore the line of credit to the previous year's level or may repay more than was spent. For these reasons, the appropriation to the CCC may not reflect current year outlays. Moreover, the CCC appropriation is several billion dollars greater than the amount of farm commodity subsidies because other programs (e.g., certain conservation and biofuels programs) are also paid from CCC. To replenish CCC's borrowing authority, the enacted FY2017 appropriation continues to provide an indefinite appropriation ("such sums as necessary"). The amount estimated for FY2017 is $21.291 billion (triple the amount provided in FY2016 and higher than estimates in 2016 that were in the Administration's request and the House and Senate markups). The increase does not indicate any action by Congress to raise spending but rather follows market conditions and the payment timelines. In policy matters, the enacted appropriation creates a pilot program (Section 772), to be available during FY2017, within one of the new farm commodity support programs under the 2014 farm bill. Concerns have been raised that the Agricultural Risk Coverage (ARC) county-level payments have not been equitable across certain adjacent counties. The issue is the accuracy of yields calculated at the county level under methods allowed by the farm bill (primarily, the availability of sufficient data in standard sources). The pilot would allow USDA state offices to use alternative calculations for the 2016 crop year if they believe that the current formula results in discrepancies among adjacent counties. A supplementary payment would make up any difference between the alternative calculation (if higher) and the original yield estimate. The appropriation provides $5 million for the pilot program and allows the Secretary to choose participating states. This one-year pilot (and last year's permanent change that allows commodity certificates to again be used) is a way of adjusting the farm bill without "reopening" it. The enacted appropriation does not make any changes to add cottonseed as an eligible oilseed for the farm commodity program. In February 2016, USDA said that it did not have the authority to make that declaration administratively. In the House and Senate markups of the appropriation, report language included statements expressing disappointment that the Secretary had not used his authority to provide such assistance and encouraged him to do so, but neither bill would have compelled any change. The joint explanatory statement directs the Secretary to issue a report within 60 days that describes administrative options and recommends legislative actions for the cotton industry. Regarding ad hoc disaster assistance allowed under the CCC Charter Act, both the House-reported and Senate-reported bills continue a provision (§715) that has appeared since FY2012 that effectively prohibits the use of the CCC for emergency disaster payments to farmers: [N]one of the funds appropriated or otherwise made available by this or any other Act shall be used to pay the salaries or expenses of any employee of the Department of Agriculture or officer of the Commodity Credit Corporation to carry out clause 3 of Section 32 of the Agricultural Adjustment Act of 1935 (P.L. 74-320, 7 U.S.C. 612c, as amended), or for any surplus removal activities or price support activities under section 5 of the Commodity Credit Corporation Charter Act. Finally, for the first time since FY2011, neither the House-reported nor Senate-reported bills contain a provision that prevents USDA from providing marketing assistance loans for mohair. The federal crop insurance program is administered by USDA's Risk Management Agency (RMA). It offers basically free catastrophic insurance to producers who grow an insurable crop. Producers who opt for this coverage have the opportunity to purchase additional insurance coverage at a subsidized rate (ranging between 38% and 80%). Policies are sold and serviced through approved private insurance companies that have their program losses reinsured by USDA and are reimbursed by the government for their administrative and operating expenses. Two separate appropriations support the federal crop insurance program. The first provides discretionary funding for the salaries and expenses of the RMA. The second provides mandatory funding for the Federal Crop Insurance Fund (FCIC), which finances other program expenses, including premium subsidies, indemnities, and reimbursements to the insurance companies. For the discretionary salaries and expenses of the RMA, the enacted FY2017 appropriation is the same as FY2016, $74.8 million. The Administration had requested a smaller discretionary appropriation ($66.6 million) plus $20 million of mandatory funding from the crop insurance fund. Congress did not concur with the requested change for this use of mandatory funding. For the mandatory appropriation to the Federal Crop Insurance Fund, the enacted appropriation provides an indefinite amount ("such sums as necessary"), estimated at $8.667 billion. This is about $800 million more than FY2016 (+10%) but does not reflect any change by Congress to increase program benefits. The actual amount required is subject to change and is based on actual crop losses and farmer participation rates in the program. The explanatory statement for the enacted appropriation identifies "livestock products" as separate and distinct from "livestock" for purposes of developing new insurance products. This distinction supports the development of new insurance products. The authorizing statute refers only to livestock and lists types of livestock in the definition (7 U.S.C. 1523(b)) but lists no livestock products. There is no indication that Congress intended for livestock products to fall under the limitation of livestock insurance policies, and this restriction has hindered the availability of policies for livestock products like milk. The act encourages the Risk Management Agency (RMA) to present this reinterpretation to the Federal Crop Insurance Corporation board at the next scheduled meeting and develop additional policies for milk to provide dairy farmers with more robust risk management options before the end of the year. USDA offers several programs to help producers recover from natural disasters. Most of these programs are permanently authorized and do not require a federal disaster designation. Most receive mandatory funding ("such sums as necessary") and are not subject to annual appropriations. However, agricultural land rehabilitation programs receive discretionary funding on an ad hoc basis. In recent years, funding has been incorporated into annual appropriations bills, even though it remains supplemental in nature and amounts vary over time. For FY2017, the second CR ( P.L. 114-254 , Division A, Section 185) provided new emergency funding for two USDA land rehabilitation programs––the Emergency Conservation Program (ECP, $103 million) and the Emergency Watershed Protection Program (EWP, $103 million). Funding was not directed to a specific disaster, event, or geographic region. The final, enacted FY2017 appropriation ( P.L. 115-31 , Division A, Section 714) provides an additional $28.7 million for ECP for emergencies not declared a major disaster. Under ECP and EWP, a national or state emergency does not have to be declared in order to receive assistance. Recent years' funding, however, have required that all or a portion of the funds be used for activities carried out pursuant to the Robert T. Stafford Disaster Relief and Emergency Act (Stafford Act). The Stafford Act requirement limits the type of eligible disaster to those with a national or state declared emergency. The enacted FY2017 funding does not include the Stafford Act requirement; instead it requires that the funds be used for non-Stafford Act emergencies. USDA administers a number of agricultural conservation programs that assist private landowners with natural resource concerns. These include working land programs, land retirement and easement programs, watershed programs, technical assistance, and other programs. The two lead agricultural conservation agencies within USDA are the Natural Resources Conservation Service (NRCS), which provides technical assistance and administers most programs, and the Farm Service Agency (FSA)—which administers the Conservation Reserve Program (CRP). Most conservation program funding is mandatory, funded through the CCC and authorized in omnibus farm bills (about $5.2 billion of CCC funds for conservation in FY2017). Other conservation programs—mostly technical assistance—are discretionary and funded through annual appropriations. The enacted appropriation includes reductions to mandatory conservation programs and provides an increase from FY2016 levels for discretionary programs. All discretionary conservation programs are administered by NRCS. The largest program and the account that funds most NRCS activities is Conservation Operations (CO). The enacted FY2017 appropriation provides $864 million—more than the FY2016 enacted amount and the Obama Administration's request and House-reported bill and the same as the Senate-reported bill. The enacted appropriation directs CO funding for a number of conservation programs ( Table 9 ). The enacted FY2017 appropriation also contains funding for watershed activities, including $150 million for Watershed and Flood Prevention Operations (WFPO)—a program that assists state and local organizations to plan and install measures to prevent erosion, sedimentation, and flood damage. This is the first appropriated funding for the WFPO program since FY2010. Beginning in FY2006, the Administration requested no funding for WFPO, citing program inflexibility and a backlog of congressionally designated projects that were frequently not merited. The Administration's FY2017 request proposed no funding for the program, purportedly preferring fully funding other mandatory conservation programs. Since FY2014 Congress has directed a portion of CO funds to select WFPO activities. Similar directive language ($5.6 million, see Table 9 ) is in the FY2017 appropriations, in addition to the $150 million made available for the program as a whole. The enacted FY2017 appropriation includes $12 million for the Watershed Rehabilitation program––the same level enacted in FY2016. The Watershed Rehabilitation program repairs aging dams previously built by USDA under WFPO. The Obama Administration proposed no funding, contending that the maintenance, repair, and operation of dams are local responsibilities. The 2014 farm bill ( P.L. 113-79 ) provided additional mandatory funding for the program to remain available until expended. Mandatory conservation programs are generally authorized in omnibus farm bills and receive funding from the CCC, thus not requiring an annual appropriation. But Congress has reduced mandatory conservation programs through CHIMPS in the annual agricultural appropriations law every year since FY2003. Because money is fungible, the savings from these reductions are not necessarily applied toward other conservation activities. The enacted FY2017 appropriation includes $235 million in CHIMPS to conservation programs—less than both the House- and Senate-reported bills but more than the Obama Administration's proposal. The CHIMPS for FY2017 include $179 million from the Environmental Quality Incentives Program (EQIP), $54 million from the Watershed Rehabilitation program, and $2 million from the Agricultural Management Assistance (AMA) program. Sequestration further reduces available funding for these and other mandatory conservation programs in FY2017. Estimated sequestration combined with proposed CHIMPS would result in an estimated total reduction of over $500 million, or roughly 9% of all mandatory conservation funding. Continued funding reductions to certain conservation programs may be one cause for the increasing number of unfunded applications. For example, the annual funding authority for EQIP increases incrementally from $1.35 billion in FY2014 to $1.75 billion in FY2018. Despite this increase in authority, annual sequestration and CHIMPS continue to reduce the amount available to an average of $1.34 billion annually over the past three fiscal years. In FY2015, 23% of all eligible EQIP applications were funded, down from 37% in FY2014 and 46% in FY2013. The FY2017 budget request marked the first time in over a decade that the Administration (under both G. W. Bush and Obama) did not request CHIMPS to EQIP. The enacted FY2017 appropriation, however, contains CHIMPS to EQIP by limiting funding to $1.357 billion––$293 million less than its authorized level of $1.65 billion. The stagnant EQIP funding levels may be only one reason for the decline in funded applications; however, further funding reductions appear unlikely to reverse the decline. For more discussion, see CRS In Focus IF10041, Reductions to Mandatory Agricultural Conservation Programs in Appropriations Law . Three agencies are responsible for USDA's rural development mission area: the Rural Housing Service (RHS), the Rural Business-Cooperative Service (RBS), and the Rural Utilities Service (RUS). This mission area also administers Rural Economic Area Partnerships and the National Rural Development Partnership. Overall, the enacted FY2017 appropriation provides a total of $2.94 billion in discretionary budget authority for rural development programs. This is $166.2 million more than enacted for FY2016 ( Table 10 ). The bill will support approximately $37.3 billion in loan authorization, $602.2 million more than FY2016. Salaries and expenses within Rural Development are funded from a direct appropriation plus transfers from each of the agencies. The enacted appropriation House bill provides a combined salaries and expenses total of $675.8 million for FY2017, $7.0 million less than in FY2016. The bill also includes a general provision (Section 768) directing $500,000 from the salaries and expenses account to develop an implementation plan for increasing access to education in the fields of science, technology, engineering, and mathematics in rural communities through the Distance Learning and Telemedicine program. Another general provision (Section 750) requires that 10% of the funding for various loan and grant programs administered by RHS, RBS, and RUS be used to support programs in counties designated as "persistent poverty counties." The enacted appropriation provides $2.1 billion in budget authority for RHS programs (before transfers of salary and expenses). This is approximately $32 million (+1.6%) more than FY2016 and $23 million more than requested. With this budget authority, the bill will provide approximately $28.1 billion in loan authority, $586.6 million more than FY2016. The single-family housing loan program (Housing Act of 1949, §502) is the largest housing loan account, representing 89% of RHS's total loan authority. The bill provides loan authority of $25 billion for Section 502 loan guarantees, $100 million more than for FY2016. For Section 502 direct loans, the enacted appropriation provides $1 billion in loan authority, $100 million more than FY2016, and $67.7 million for loan subsidies. Section 725 also directs RHS to establish an intermediary loan packaging program based on the pilot program in effect for FY2013 for packaging and reviewing section 502 single family direct loans. Rental Assistance Program grants (Housing Act of 1949, §521) are the largest budget authority line item in RHS, accounting for approximately 68% of the total RHS budget authority appropriation in FY2017 ( Table 10 ). The enacted appropriation provides $1.40 billion in new budget authority, an increase of $15.3 million over FY2016 (+1.1%) and the same as requested. Section 771 addresses concerns by Congress that, as mortgages mature, housing units will be removed from RHS's affordable housing program. This will put low-income residents in jeopardy of facing unaffordable rent increases. The provision directs RHS to modify the pilot program initiated March 1, 2017, designed to preserve affordable rental housing through nonprofit transfer or acquisition of Section 515 properties with expiring mortgages. RHS also administers the Rural Community Facilities program, which provides direct loans, loan guarantees, and grants for "essential community facilities" in rural areas with less than 20,000 in population. The enacted appropriation provides $47.1 million in new budget authority for the program to support a loan authorization level of $2.75 billion in direct and guaranteed loans, $400 million more than FY2016. Several other programs are supported through the Community Facilities appropriation: the Rural Community Development Initiative ($4.0 million), Economic Impact Initiative Grants ($5.8 million), and Tribal College grants ($4.0 million). These programs are funded at the same level as FY2016. The enacted appropriation provides $102 million to the RBS before the Cushion of Credit rescission and transfers of salaries and expenses. If the Cushion of Credit rescission is incorporated as in the Appropriations committee tables, the net RBS budget authority provided would be -$30 million. For loan authority, the enacted appropriation provides $988 million for the various RBS loan programs. For Rural Cooperative Development Grants, the House bill would provide $26.5 million for FY2017, $4.5 million more than FY2016, with the increase focused on Value Added Product Development grants. Overall, this includes cooperative development grants ($5.8 million), Appropriate Technology Transfer for Rural Areas ($2.7 million), Value-Added Product Development grants ($15 million), and grants to assist minority producers ($3 million). The enacted appropriation provides the same level of funding for all but the Value-Added Product Development Grant program ($10.7 million). For the Rural Business Program account, the enacted appropriation provides $65.3 million in loan subsidies and grants to support Business and Industry loan guarantees ($35.3 million), Rural Business Enterprise grants ($24 million), and the Delta Regional Authority ($6.0 million). The subsidies for the Business and Industry Loan Guarantee program will support $919.8 million in loan authority. The enacted appropriation provides of $5.5 million in budget authority to support loans of nearly $19.0 million under the Intermediary Relending Program. The bill also provides $8.0 million for the Rural Energy Savings Program authorized in the 2014 farm bill. For the first time, the appropriation provides funding for the Healthy Food Financing Initiative (HFFI, $1 million in Section 767). The HFFI was authorized in the 2014 farm bill ( P.L. 113-79 , §4206). The enacted appropriation provides $673 million in budget authority for RUS (before transferring salaries and expenses), about $79 million more than FY2016. This level would support $8.2 billion in loan authorization, the same as in FY2016. Loan subsidies and grants under the Rural Water and Waste Disposal Program account represent the largest share of FY2017 enacted budget authority under RUS programs, approximately 85%. The enacted appropriation provides $571 million in loan subsidies and grants, $49 million more than FY2016 and $110 million more than the Administration requested. Most of the increase goes to loan subsidies and water and waste disposal grants. The bill will support $1.25 billion in direct and guaranteed loans, the same as FY2016. Besides loan support, the appropriation is divided among several grant accounts: Water/Waste Disposal grants ($392.0 million), Direct Loan Subsidies ($52.1 million), Solid Waste Management grants ($4.0 million), Individual Well Water grants ($993,000), Water and Waste Water revolving fund ($1.0 million), Circuit Rider program ($16.9 million), Technical Assistance ($20 million), Grants to Colonias and Alaska and Hawaii Natives ($64 million), and High Energy Cost grants ($10 million). The appropriation authorizes loan levels of $6.25 billion for the electrification program, the same level as FY2016. For the combined distance learning, telemedicine, and broadband account, the enacted appropriation provides $65.6 million in budget authority, $28.7 million more (78%) than FY2016. Within the account, the bill provides $34.5 million for rural broadband grants, $24.1 million more than FY2016, and loan authority of $27.0 million, an increase of $6.5 million. Domestic food assistance represents over two-thirds of USDA's budget. Funding is largely for open-ended appropriated mandatory programs—that is, it varies with program participation (and in some cases inflation) under the terms of the underlying authorization law. The largest mandatory programs include the Supplemental Nutrition Assistance Program (SNAP, formerly the Food Stamps Program) and the child nutrition programs (including the National School Lunch Program and School Breakfast Program). The three largest discretionary budget items are the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC); the Commodity Supplemental Food Program (CSFP); and federal nutrition program administration. The enacted FY2017 appropriation would provide over $108 billion for domestic food assistance ( Table 11 ). This is a decrease of approximately $1.7 billion from FY2016. SNAP's declining participation is responsible for most of the difference. In addition to the accounts' appropriations language, the enacted appropriation's general provisions include additional funding, rescissions, and/or policy changes. These general provisions are summarized in the sections to follow. For the Under Secretary's office, the enacted appropriation would provide approximately $0.8 million. This office received approximately equal funding in FY2016. The enacted appropriation (§732) requires the coordination of FNS research efforts with USDA's Research, Education and Economics mission area. This is to include a research and evaluation plan submitted to Congress. Appropriations under the Food and Nutrition Act (formerly the Food Stamp Act) support (1) SNAP (and related grants), (2) a Nutrition Assistance Block Grant for Puerto Rico and nutrition assistance block grants to American Samoa and the Commonwealth of the Northern Mariana Islands (all in lieu of SNAP), (3) the cost of food commodities as well as administrative and distribution expenses under the Food Distribution Program on Indian Reservations (FDPIR), (4) the cost of commodities for the Emergency Food Assistance Program (TEFAP)—but not administrative/distribution expenses, which are covered under the Commodity Assistance Program budget account—and (5) Community Food Projects. The enacted appropriation would provide approximately $78.5 billion for programs under the Food and Nutrition Act. This FY2017 level is approximately $2.4 billion less than FY2016 appropriations. This reduction is largely due to a forecasted reduction in SNAP participation. The enacted appropriation provides $3 billion for the SNAP contingency reserve fund, equal to past appropriations but less than the $5 billion requested by the Administration. The SNAP account also includes mandatory funding for TEFAP commodities. The enacted bill provides $297 million for TEFAP commodities as well as an additional $19 million via a general provision (§748). (TEFAP also receives discretionary funding for storage and distribution costs, as discussed later under the heading " Commodity Assistance Program .") SNAP-Authorized Retailers. Only SNAP-authorized retailers may accept SNAP benefits. On December 15, 2016, FNS published a final rule that would change retailer requirements for authorization. The final rule would have implemented the 2014 farm bill's changes to inventory requirements for SNAP-authorized retailers ( P.L. 113-79 , §4002). Namely, the farm bill increased the varieties of "staple foods" and perishable varieties that SNAP retailers must stock. In addition to codifying the farm bill's changes, the final rule would have changed how staple foods are defined, clarified limitations on retailers' sale of hot foods, and added a minimum number of stocking units. An enacted appropriation policy provision (§765) requires USDA to change how "variety" is defined in the final rule and requires USDA is to implement the "acceptable varieties and breadth of stock" in place prior to P.L. 113-79 until such regulatory amendments are made. As of May 2017, USDA-FNS's website on the final rule reflects that P.L. 115-31 "has delayed implementation of the [final rule] until further notice." (The committee-reported bills had also contained policy provisions about the retailer standards proposed rule. ) SNAP Households' Reporting Requirements. Under current household reporting requirements for the commonly selected state option of "simplified reporting," participants do not have to report to the SNAP state agency when they move out of the state. USDA's FY2017 budget justification proposed to amend SNAP's authorizing law to allow state agencies to require this household reporting. An enacted appropriation policy provision (§744) requires SNAP households to report to the state agency a move out of the state beginning in FY2017 and each year thereafter. This language had also been included in committee-reported bills (§744 in both). Appropriations under the child nutrition account fund a number of programs and activities authorized by the Richard B. Russell National School Lunch Act and the Child Nutrition Act. These include the National School Lunch Program, School Breakfast Program, Child and Adult Care Food Program (CACFP), Summer Food Service Program, Special Milk Program, assistance for child-nutrition-related state administrative expenses, procurement of commodities for child nutrition programs (in addition to transfers from separate budget accounts within USDA), state-federal reviews of the integrity of school meal operations ("Administrative Reviews"), "Team Nutrition" and food safety education initiatives to improve meal quality and safety in child nutrition programs, and support activities such as technical assistance to providers and studies/evaluations. (Child nutrition efforts are also supported by mandatory permanent appropriations and other funding sources discussed in the section " Other Nutrition Funding Support .") The enacted appropriation provides approximately $22.8 billion for child nutrition programs. This is approximately $650 million greater (+2.9%) than the amount provided in FY2016 and reflects a transfer of over $9.5 billion from the Section 32 account. The enacted appropriation funds certain child nutrition discretionary grants. These grants include the following: School Meals Equipment Grants. The law provides $25 million, $5 million less than was provided in FY2016. Summer EBT (Electronic Benefit Transfer) Demonstration Projects. These projects provide electronic food benefits over summer months to households with children, in order to make up for school meals that children miss when school is out of session and as an alternative to the Summer Food Service Program meals. These projects were originally authorized and funded in the FY2010 appropriations law ( P.L. 111-80 ). The law provides $23 million for these projects in FY2017, the same level as FY2016. The Obama Administration had requested $23 million to continue these projects in FY2017 while also requesting a change in the authorizing law to make Summer EBT permanent and nationwide. The child nutrition programs and WIC are currently up for reauthorization. Many provisions of the operating law nominally expired at the end of FY2015, but nearly all operations continued via the FY2016 appropriation law's funding and now continue via the FY2017 law's funding. This enacted appropriations law extends through September 30, 2017, several expiring provisions: mandatory funding for an Information Clearinghouse and USDA's food safety audits. Committees of jurisdiction marked up bills in the 114 th Congress, but Congress did not complete reauthorization. Current operations and legislative activity are discussed in CRS Report R44373, Tracking the Next Child Nutrition Reauthorization: An Overview .) School Meals Nutrition Standards. Implementing the Healthy, Hunger-free Kids Act of 2010, FNS updated the nutrition standards for the school meals programs (National School Lunch Program and School Breakfast Program). FY2015 and FY2016 appropriations laws (1) required USDA to allow states to exempt school food authorities that meet hardship requirements from the 100% whole grain requirements, and (2) prevented USDA from implementing a reduction in sodium scheduled to take effect in school year 2017-2018 until "the latest scientific research establishes the reduction is beneficial for children." The enacted appropriation (§747) contains related policy provisions. It extends the prior laws' policy provisions and adds a new policy. It extends the whole grain exemptions through SY2017-2018 and (using different language from past years) limits enforcement of sodium limits to Target 1 levels. A new appropriations provision was added that requires USDA to allow states to grant special exemptions to serve flavored, low-fat milk (instead of only fat-free flavored). Note: Several days before the enactment of P.L. 115-31, Secretary of Agriculture Sonny Perdue announced plans to amend the whole grain, sodium, and dairy aspects of the nutrition standards regulations in ways that are similar to the FY2017 appropriations provision. See CRS Insight IN10700, USDA Announces Plans to Modify School Meal Nutrition Standards: Background and Context . Processed Poultry from China. In addition, the enacted appropriation includes a policy provision (§728) to prevent any processed poultry imported from China from being included in the National School Lunch Program, School Breakfast Program, Child and Adult Care Food Program (CACFP), and Summer Food Service Program. This policy has been included in FY2015 and FY2016 enacted appropriations laws. (See " Food Safety and Inspection Service (FSIS) " for information about poultry processing in China.) Although WIC is a discretionary program, since the late 1990s, the Appropriations Committees' practice has been to provide enough funds for WIC to serve all projected participants. The enacted appropriation provides $6.35 billion for the WIC program funding. However, the law also rescinds available carryover funding from past years (discussed further in the next section). The same amount, $6.35 billion, had also been provided in the FY2016 appropriations law. The enacted appropriation also includes set-asides for WIC breastfeeding peer counselors and related activities ("not less than $60 million") and infrastructure ($13.6 million). These set-asides are approximately equal to FY2016 levels. The enacted appropriation (§745) rescinds $850 million in prior-year (or carryover) WIC funds. (Reflected in Table 16 ). The enacted appropriation's explanatory statement indicates that WIC participation has been decreasing since FY2010. The House committee's report language (dated April 26, 2016) stated that "USDA is estimating recovery and carryover funds to be much higher than average at more than $600 [million]," and that "the Secretary has a sufficient WIC contingency reserve fund." The National WIC Association, an advocacy group, expects that the FY2017 funding, even with the rescission, "will most likely be sufficient to serve all applicants." The Commodity Assistance Program budget account supports several discretionary programs and activities: (1) the Commodity Supplemental Food Program (CSFP), (2) funding for TEFAP administrative and distribution costs, (3) the WIC Farmers' Market Nutrition Program (FMNP), and (4) special Pacific Island assistance for nuclear-test-affected zones in the Pacific (the Marshall Islands) and in the case of natural disasters. The enacted appropriation provides over $315 million for this account, an increase of approximately $19 million compared to FY2016. The increase is mostly for CSFP (+$14 million). The law also increases TEFAP administrative costs by $5 million. In addition to this discretionary TEFAP funding, states may convert up to 10% of their TEFAP entitlement commodity funding (included in the SNAP account above) for administrative and distribution costs. The law keeps WIC FMNP at the FY2016 level. This budget account funds federal administration of all the USDA domestic food assistance program areas noted previously, special projects for improving the integrity and quality of these programs, and the Center for Nutrition Policy and Promotion, which provides nutrition education and information to consumers (including various dietary guides). For FY2017, among other requests, the President's budget requested additional funding for relocating the Food and Nutrition Service offices. The enacted appropriation provides nearly $171 million for this account, an increase of approximately $20 million from FY2016. About $17.7 million is set aside for relocation and related expenses. These funds are available until expended. As in the House-reported bill, the law sets aside $1 million for an independent study to consolidate and coordinate reporting requirements under the child nutrition programs. As in FY2016 and prior years, the law sets aside $2 million for the fellowship programs administered by the Congressional Hunger Center. Domestic food assistance programs also receive funds from sources other than appropriations: USDA provides commodity foods to the child nutrition programs using funds other than those in the Child Nutrition account. These purchases are financed through permanent appropriations under "Section 32." For example, about $480 million out of a total of $1.1 billion in commodity support in FY2008 came from outside the Child Nutrition account. Historically, about half the value of commodities distributed to child nutrition programs has come from Section 32. The Fresh Fruit and Vegetable Program for selected elementary schools nationwide is financed with permanent, mandatory funding. The underlying law (Section 4304 of the 2008 farm bill) provides funds at the beginning of every school year (July). However, the enacted appropriation (§715) delays until October 2017 the availability of a portion of the funds ($125 million) that were scheduled for July 2017, similar to past years' appropriations. This delay allocates the total annual spending for the Fresh Fruit and Vegetable program by fiscal year rather than school year with no reduction in overall support (though budgetary savings are scored in Table 15 ). The Food Service Management Institute (technical assistance to child nutrition providers) is funded through a permanent annual appropriation of $4 million. The Senior Farmers' Market Nutrition program receives nearly $21 million of mandatory funding per year (FY2002-FY2018) outside the regular appropriations process. The Foreign Agricultural Service (FAS) administers overseas market promotion and export credit guarantee programs designed to improve the competitive position of U.S. agriculture in the world marketplace and to facilitate export sales. It shares responsibility with the U.S. Agency for International Development (USAID) to administer international food aid programs. Each year's agricultural appropriation provides nearly $2 billion of discretionary funding to FAS, which is more than three-quarters of the financial resources available to them. Other budget authority for agricultural export and food aid programs is with mandatory spending and is not subject to annual appropriations. About $500 million of funding for these mandatory programs is provided directly by the CCC under other statutes. The FAS appropriation addresses trade policy issues on behalf of U.S. agricultural exporters to support trade promotion activities and engage in institutional capacity building and food security activities in developing countries with promising market potential. For FY2017, the enacted appropriation provides $196.6 million for salaries and expenses of FAS. This amount is equal to the Administration's budget request and would represent an increase of $5 million, or 2.5%, compared with the $191.6 million that Congress appropriated for FY2016. The Administration's FY2017 budget request included an additional $8.5 million to cover salaries and expenses for the export credit guarantee programs—an increase of $1.8 million over the FY2016 appropriation—which the Administration claimed as necessary to offset underfunding of the Farm Service Agency for support it has provided to GSM export credit guarantee loan programs in the past. The enacted appropriation fully funds the $8.5 million request. Credit guarantees are the largest FAS export assistance program, operating mainly to facilitate the direct export of U.S. agricultural commodities and products. No budgetary outlays are associated with credit guarantees unless a default occurs. The 2014 farm bill authorized $5.5 billion of credit guarantees each year to guarantee the repayment of commercial loans extended by private banks in the event that a borrower defaults. For FY2017, the Administration proposed to make available $5 billion of credit guarantees under GSM-102 to facilitate U.S. agricultural exports and $500 million under the Facility Guarantee Program to build or expand agricultural facilities in emerging markets that enhance sales of U.S. products. Both House and the Senate appropriators required the Secretary of Agriculture to outline a plan for reorganizing the international trade functions at USDA. The report is to include the establishment of the position of Under Secretary of Agriculture for Trade and Foreign Affairs within USDA and is to be transmitted to Congress within 180 days of enactment. This directive follows in the wake of a similar directive in the enacted FY2016 appropriation act that provided $1 million to carry out this task. The directive stems from the 2014 farm bill, which mandated that the Secretary prepare a proposal, in consultation with the House and Senate Agriculture Committees and Appropriations Committees, for reorganizing USDA's international trade functions in tandem with the creation of the position of Under Secretary of Agriculture for Trade and Foreign Affairs. The original deadline for the reorganization plan of 180 days from the enactment of the farm bill on February 7, 2014, has since been pushed forward several times. The enacted appropriation provides $901,000 for the office. The Senate Appropriations Committee report recommends that $2.65 million within the FAS budget be allocated to the Borlaug Fellows Program (training for scientists and policymakers from developing countries) and $5.3 million be provided for the Cochran Fellowship Program (short-term technical training in the United States for international participants). The enacted appropriation does provide that "funds made available for the Borlaug International Agricultural Science and Technology Fellowship program ... shall remain available until expended" but is silent regarding the Cochran Fellowship Program. The Senate committee report further states that it expects FAS to fund the Foreign Market Development Cooperator Program and to continue full mandatory funding for the Market Access Program (MAP; see footnote 111 ), including administering MAP as authorized without changing the eligibility requirements of cooperatives, small businesses, trade associations, and other entities. The Food for Peace Program (formerly known as P.L. 480) includes four areas, each with its own title: Title I—economic assistance and food security, Title II—emergency and private assistance programs, Title III—food for development, and Title V—the farmer-to-farmer (F2F) program. No funding for Title I (long-term concessional credits) or Title III activities has been requested since 2002, while the last Title I concessional commodity shipment occurred in 2006. Title V funding is mandatory in nature and linked to the overall pool of funding under the Food for Peace Act—not less than the greater of $15 million or 0.6% of the amounts made available to the Food for Peace Act during any fiscal year (FY2014-FY2018) shall be used for the F2F program. In contrast, the Title II program relies on annual discretionary appropriations. Title II programs are both the largest and most active component of international agricultural food aid expenditures. They provide primarily in-kind donations of U.S. commodities to meet foreign humanitarian and development needs. Despite being funded in agricultural appropriations, Title II programs are administered by USAID. Title II funding has been embroiled in a long-running debate between previous Administrations (Bush and Obama) and Congress over how Title II funds may be used. The previous Administrations wanted to increase the share of Title II funds available as cash transfers or food vouchers or for local and regional procurement of commodities in the proximity of the food crises in order to provide a more immediate (and lower-cost) response to emergencies. In contrast, Congress has opted to use Title II funds to purchase U.S. commodities and ship them on U.S.-flag vessels to foreign countries with food deficiencies. Title II funding allocations are also affected by a provision in the 2014 farm bill ( P.L. 113-79 ; §3012) that states that the minimum funding requirement for nonemergency food aid shall not be less than $350 million. The Obama Administration's FY2017 budget request proposed $1.35 billion in Title II funding, of which 25% ($337.5 million) would be exempt from any U.S. purchase requirement and would instead be available as cash-based food assistance for emergencies. The enacted FY2017 appropriation provides $1.466 billion of base funding, plus a one-time supplement of $134 million to address ongoing famine crises. Furthermore, this combined $1.6 billion appropriation is made without any in-kind purchase exemption. The act also includes language requiring the U.S. Agency for International Development to notify Congress and the public when reducing the amount of non-emergency assistance required by the Food for Peace Act. In FY2016, congressional appropriators provided a total of $1.716 billion for Title II program grants, including a one-time supplement of $250 million in response to ongoing food assistance requirements as a result of international conflicts (particularly in Syria, Yemen, Iraq, and South Sudan, where there have been large increases in internally displaced persons) and areas suffering from natural disasters. Of the $1.716 billion, $20 million was specifically to reimburse the Bill Emerson Humanitarian Trust for disbursements made in 2015. The McGovern-Dole International Food for Education and Child Nutrition Program provides donations of U.S. agricultural products and financial and technical assistance for school feeding and maternal and child nutrition projects in developing countries. It is administered by FAS. For FY2017, the Obama Administration requested $182 million in funding for the McGovern-Dole program with the stipulation that $5 million of this funding again be used for local and regional procurement (LRP, described in the next heading). The enacted 2017 appropriation provides $201.6 million to the McGovern-Dole program (the same as in FY2016), of which $5 million is available for LRP projects. Under an LRP project, USDA (in consultation with USAID) awards cash grants to eligible organizations to carry out field-based projects to purchase eligible commodities from markets close to the target population in response to food crises and disasters. LRP was authorized as a permanent project under the 2014 farm bill ( P.L. 113-79 ). However, its funding became discretionary under the 2008 farm bill. No discretionary funding was enacted for LRP during FY2014 and FY2015. However, for both FY2016 and FY2017 Congress has appropriated $5 million for LRP but sourced from within the McGovern-Dole program funding (as described above). The Obama Administration had proposed $20 million for FY2016 and $15 million for FY2017 to support LRP in addition to the $5 million from McGovern-Dole funding. Industrial hemp is an agricultural commodity that is cultivated for a range of hemp-based goods, including foods and beverages, cosmetics and personal care products, nutritional supplements, fabrics and textiles, yarns and spun fibers, paper, construction/insulation materials, and other manufactured goods. It is, however, a variety of Cannabis sativa , the same plant species as marijuana, and is therefore subject to U.S. drug laws. The 2014 farm bill provided that certain research institutions and state departments of agriculture may grow industrial hemp as part of an agricultural pilot program, if allowed under state laws. The production of industrial hemp is addressed in both the enacted FY2017 Agriculture appropriation and the Commerce-Justice-Science (CJS) appropriation. The enacted Agriculture appropriation states that none of the funds made available by the Agriculture or any other appropriation may be used in contravention of the 2014 farm bill provision or "to prohibit the transportation, processing, sale, or use of industrial hemp that is grown or cultivated" in accordance with the farm bill provision "within or outside the State in which the industrial hemp is grown or cultivated" (P.L. 115-31, Division A, §773). The FY2016 Agriculture appropriation contained similar language. In addition, the Senate committee report (S.Rept. 114-259) urges USDA "to clarify the Agency's authority to award Federal funds to research projects deemed compliant with Section 7606 of the Agricultural Act of 2014." The latter provision addresses questions by a number of state and private research institutions about the extent to which industrial hemp initiatives might be eligible for U.S. federal grant programs (both USDA and non-USDA program funds). Previously, in November 2015, several Members of Congress sent a letter to USDA requesting clarification of the agency's research funds for industrial hemp. The CJS appropriation (Division B of P.L. 115-31) states that "none of the funds made available by this Act may be used in contravention of section 7606 ('Legitimacy of Industrial Hemp Research') of the Agricultural Act of 2014 (Public Law 113-79) by the Department of Justice or the Drug Enforcement Administration." The enacted FY2015 and FY2016 CJS appropriation contained similar language to block federal law enforcement from interfering with state agencies, hemp growers, and agricultural research. In addition to the USDA agencies mentioned above, the Agriculture appropriations subcommittees have jurisdiction over appropriations for three related agencies: 1. The Food and Drug Administration (FDA) of the Department of Health and Human Services (HHS), 2. The Commodity Futures Trading Commission (CFTC)—in the House Agriculture Appropriations subcommittee only, and 3. The Farm Credit Administration (FCA), which does not receive an appropriation but rather oversight via a limit on its spending from fees paid to the agency. The Food and Drug Administration (FDA) regulates the safety of foods, cosmetics, and radiation-emitting products; the safety and effectiveness of drugs, biologics (e.g., vaccines), and medical devices; and public health aspects of tobacco products. Although FDA has been a part of the Department of Health and Human Services (HHS) since 1940, the Appropriations Committees do not consider FDA within the rest of HHS under the Subcommittee on Labor, Health and Human Services, and Education, and Related Agencies. Jurisdiction over FDA's budget remains with the Subcommittees on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies, reflecting FDA's beginnings as part of the Department of Agriculture. FDA's total program level , the amount that FDA can spend, is composed of direct appropriations (also referred to as budget authority) and user fees. In FDA's annual appropriation, Congress sets both the amount of appropriated funds and the amount of user fees that the agency is authorized to collect and obligate for that fiscal year. The enacted FY2017 appropriation provides a total program level of $4.725 billion, a decrease of $20 million (-0.4%) compared to the FY2016 enacted appropriation. The enacted appropriation provides $2.771 billion in direct appropriations —an increase of $43 million (+1.6%) over the FY2016 enacted level and $1.954 billion in user fees to be collected through authorized programs to support specified agency activities—a decrease of $63 million (-3%) compared to the enacted FY2016 amount. In addition to the amounts above, Section 752 of the enacted appropriation provides an additional $10 million (to the Salaries and Expenses account) for FDA to "prevent, prepare for, and respond to emerging health threats, including the Ebola and Zika viruses, domestically and internationally and to develop necessary medical countermeasures and vaccines, including the review, regulation, and post market surveillance of vaccines and therapies, and for related administrative activities ... to remain available until expended." Also, FDA received $20 million in the second CR ( P.L. 114-254 ), pursuant to Section 1002 of the 21 st Century Cures Act ( P.L. 114-255 ). Note that this additional $30 million is not included in the FY2017 total program level shown in Table 12 . Consistent with the Administration and congressional committee formats, each program area in Table 12 includes funding designated for the responsible FDA center and the portion of effort budgeted for the agency-wide Office of Regulatory Affairs to commit to that area. The human drugs program comprises the largest portion of FDA's total program level (28% in FY2017). According to the joint explanatory statement, the FY2017 enacted appropriation provides an increase of $10.9 million for medical product safety initiatives, including $2.5 million for efforts to support the Precision Medicine initiative, $4 million for Pediatric Device Consortium Grants and postmarket activities within the Medical Device program, and $4.4 million for animal drug and medical device review activities. The enacted appropriation also provides a $2.5 million increase for foreign high-risk inspections. The enacted appropriation continues to include the FY2016 funding to evaluate over-the-counter sunscreen products. The bill does not make mention of the $75 million in mandatory funding for the Cancer Moonshot Initiative requested by the Obama Administration. In addition to comments on specific amounts of funding, the House and Senate Appropriations committees lay out in the joint explanatory statement (and in the committee reports) their concerns with specific FDA activities and provide various directives and encouragements to the agency. While directions and suggestions in the explanatory statement and reports do not have statutory or legal authority, they convey the committee concerns that could determine future appropriations. The joint explanatory statement reminds FDA "of its responsibility to ensure that federal employees handle information, including information received from the employees, offices, or Committees of the Congress, in a professional and confidential manner according to the federal government's code of conduct, standards, regulations, and statutes." It also "strongly urges" FDA to continue its work with Congress on plans to regulate Laboratory Developed Tests. In the explanatory statement, Congress also states concern with FDA's draft memorandum of understanding issued pursuant to FFDCA Section 503A regarding pharmacy compounding, stating that FDA "appears to exceed the authority granted in the statute by redefining 'distribution' in a manner that includes dispensing." The appropriation contains additional policy riders related to FDA regulation of medical products: Section 734 prohibits FDA from using funds to "propose, promulgate, or implement any rule, or take any other action" that would allow or require information intended for the prescriber of a drug or biologic to be provided to the prescriber electronically (instead of on paper) unless a federal law is enacted that would allow it. This language was included in the House and Senate bills. The House report acknowledged FDA proposals that would permit "the distribution of prescription drugs without printed prescribing information on or within the packages from which such drugs are to be dispensed" and that FDA intended to replace printed labels with an electronic labeling system. Section 736 prohibits FDA from using funds provided by the enacted appropriation to accept any investigational new drug application for "research in which a human embryo is intentionally created or modified to include a heritable genetic modification." This language was also included in the House and Senate Appropriations Committee bills and was further explained in the House committee report. Section 752 provides an additional $10 million for FDA to prevent, prepare for, and respond to emerging health threats, such as the Ebola and Zika viruses. Section 756 directs the agency to issue final regulations with respect to medical gases by July 15, 2017. The House bill had a similar provision, as did both the House and Senate committee reports. FDA's Foods program covers the agency's food safety activities, as well as certain other food-related programs. The program plays a major food safety role, assuring that the nation's food supply, quality of foods, food ingredients, and dietary supplements (and also cosmetic products) are safe, sanitary, nutritious, wholesome, and properly labeled. In recent years, congressional appropriators have increased funding for FDA Foods program, more than doubling funding over the past decade. Largely, this increase has been in response to comprehensive food safety legislation enacted in the 111 th Congress, as part of the FDA Food Safety Modernization Act (FSMA, P.L. 111-353 ). FSMA was the largest expansion of FDA's food safety authorities since the 1930s. FDA's Foods program has also had to adapt to the increasing variety and complexity of the U.S. food supply, including rising import demand for products produced outside the United States, as well as other market factors, including emerging microbial pathogens, natural toxins, and technological innovations in production and processing. FDA's Foods program budget accounts for roughly one-third of FDA's total appropriation. FDA's total budget for food safety programs and activities, however, extends beyond the agency's Foods program, encompassing other food and veterinary medicine programs at FDA. For FDA's food safety activities, the enacted FY2017 appropriation provides an additional $35.7 million to support FSMA implementation. Of this amount, $18.7 million is to be used for the National Integrated Food Safety System and $16.9 million for the safety of imported foods. The FY2017 agreement notes that "FSMA implementation places additional requirements on State governments and private stakeholders, and therefore urges the FDA to provide sufficient resources to State education and inspection programs to address these needs." For FY2017, the Obama Administration requested an additional net increase of $18.4 million in budget authority. This included a requested $25.3 million increase in budget authority to implement FSMA, partially offset by proposed reductions in other programs. The requested increase to implement FSMA would (1) "support state capacity" to implement FDA's "Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption" regulation (or produce standards rule) by "delivering education and technical assistance to farmers and providing on-going compliance support and oversight" ($11.3 million) and also (2) implement the FDA's "Foreign Supplier Verification Programs (FSVP) for Importers of Food for Humans and Animals" regulation and fund inspections and the agency's overseas presence to ensure food imports meet U.S. food safety standards. Funding amounts requested by the former Administration and amounts provided by congressional appropriators is considerably lower than funding levels recommended by the states, industry, and consumer advocacy groups. In particular, the states are concerned about the lack of resources to fully implement FSMA and for state and local authorities to support FDA and conduct inspections and risk analytics as well as provide technical assistance to regulated farms and food facilities. The National Association of State Departments of Agriculture (NASDA) recommended that Congress provide $100 million annually. Additional funding for FSMA implementation and FDA food safety enforcement was also recommended by many food industry companies and organizations. Congressional appropriations are augmented by existing (currently authorized) user fees. Existing fees, as authorized under FSMA, include food and feed recall fees, food reinspection fees, and voluntary qualified importer program fees. In recent years these fees have generated less than $18 million per year. The Obama Administration's request included $193.2 million in user fees, covering existing user fees plus new proposed user fees of $105.3 million in new import fees and $61.3 million in food facility and registration fees. Enacted appropriations in the years since FSMA was signed into law have not approved any new user fees. Moreover, members of the House Appropriations Committee have repeatedly called on the Administration to stop requesting additional user fees but rather to "request the resources [FDA] needs to fully implement" FSMA. Industry representatives also continue to actively oppose such fees. User fees are generally established in law by the authorizing committees and not by appropriators. The appropriation, along with statements in the House and Senate committee reports, include a number of provisions requiring FDA to take additional food safety and food-related actions. These include provisions that reflect concerns about FDA's development of FSMA regulations. The enacted law further states that "none of the funds made available by this or any other Act" may be used to implement FSMA requirements regarding the regulation of the production, distribution, sale, or receipt of dried spent grain byproducts of the alcoholic beverage production process. Such byproducts are often used as animal feed. The Senate committee report also expresses concerns about FSMA regulations on cotton ginning and cottonseed for use as animal feed. Both committees also addressed a number of issues regarding fish and seafood, covering labeling and safety, disease research, and consumer fraud. The enacted law includes a provision regarding the "acceptable market name of any salmon that is genetically engineered" and a provision regarding crab nomenclature. Both committees also directed FDA to submit a report to Congress that looks at sampling of off-the-shelf olive oil bottles offered for sale to consumers to determine if they are adulterated with seed oil. The enacted appropriation and committee bills also contain other policy riders for FDA's Foods program that are not necessarily related to the agency's food safety activities. For example, the appropriation places restrictions regarding partially hydrogenated oils and sodium and also allows states to exempt schools from certain whole grain requirements. The CFTC is the independent regulatory agency charged with oversight of derivatives markets. The CFTC's functions include oversight of trading on the futures exchanges, oversight of the swaps markets, registration and supervision of futures industry personnel, self-regulatory organizations and major participants in the swaps markets, prevention of fraud and price manipulation, and investor protection. The Dodd-Frank Act (P.L. 111-203) brought the bulk of the previously unregulated over-the-counter swaps markets under CFTC jurisdiction as well as the previously regulated futures and options markets. Since the swaps market is much larger than the futures market, a lingering question is whether CFTC has sufficient resources to meet the agency's newly added responsibilities. For FY2017, the enacted appropriation provides $250 million (Division E of P.L. 115-31 ) in the Financial Services portion of the appropriation. (Differing House-Senate appropriations jurisdiction alternates placement in the enacted appropriation.) This amount is the same as in the House-reported Agriculture appropriations bill (H.R. 5054), the Senate-reported Financial Services bill ( S. 3067 ), and the FY2015 and FY2016 enacted amounts. The Administration had requested $330 million. Following enactment of the FY2016 appropriation, CFTC Chairman Timothy Massad issued a statement criticizing the lack of any increase for the agency despite its expanded oversight over the swaps market: "The failure to provide the CFTC even a modest increase in the fiscal year 2016 budget agreement sends a clear message that meaningful oversight of the derivatives markets, and the very types of products that exacerbated the global financial crisis, is not a priority." He added that the flat appropriation failed to take into account the need for added resources to enforce oversight of the expanded, technologically complex swaps markets. The Farm Credit Administration (FCA) is the federal regulator for the Farm Credit System (FCS), which is a borrower-owned cooperative lender operated as a government-sponsored enterprise. Neither the FCS nor the FCA receives a federal appropriation. The FCA is funded by assessments on the FCS entities that it regulates; FCS is funded by agency bonds sold on Wall Street and loans repaid by its borrowers. As part of its congressional oversight, however, the Agriculture appropriations bill sets a limitation (a maximum operating level) on FCA administrative expenses. This serves as a check on the size of the FCA and the amount that FCA can collect. For FY2017, the enacted appropriation limits the FCA budget to $68.6 million, a $3 million increase over FY2016 but $1.2 million less than requested. Agriculture appropriations acts in recent years have contained over $1 billion in net offsets that effectively reduce the cost of appropriations in the rest of the bill, though the net offset in FY2016 was somewhat smaller at $770 million because of one-time additional spending. These reductions occur in Title VII General Provisions through rescissions and Changes in Mandatory Program Spending (CHIMPS), and in separate Congressional Budget Office (CBO) scorekeeping adjustments. Other appropriations are also made but are relatively small compared to the reductions. Limitations and rescissions are used to score budgetary savings that help meet the discretionary budget allocation. By offsetting spending elsewhere in the bill, they help provide relatively more to regular discretionary accounts (or help avoid deeper cuts) than might otherwise occur. For FY2017, the enacted appropriation benefits from over $1.8 billion of net reductions through general provisions and scorekeeping adjustments ( Table 14 ). This is an increase of nearly $1.1 billion of such reductions, which lets the act show an official reduction in its total spending, even though the amount provided to agencies increases ( Figure 3 ) The General Provisions title also contains many important policy-related provisions that affect how the executive branch carries out the appropriation and authorizing laws, many of which have no budgetary effect. Some of these policy-related provisions are discussed earlier in this report under the relevant agency heading. For FY2017, the enacted appropriation contains $743 million in savings attributable to CHIMPS, of which $380 million are from programs authorized in the 2014 farm bill. These totals are smaller than compared with FY2016 ( Table 15 ). The programs affected by CHIMPS typically include conservation, rural development, bioenergy, and some smaller nutrition assistance programs. CHIMPS have not affected the farm commodity programs or the primary nutrition assistance programs (such as SNAP). Mandatory programs are usually not part of the appropriations process, since formulas and eligibility rules are set in multi-year authorizing laws (such as the 2014 farm bill). Funding is usually assumed to be available based on the statute and without appropriations action. However, for more than a decade, appropriators have placed limits on mandatory spending authorized in statutes such as the farm bill ( Table 15 ). CHIMPS are usually reductions to mandatory spending authority, but they may also be increases in spending authority. Although many CHIMPS have an effect for one year, rescissions may be made to mandatory spending programs to permanently cancel budget authority (also considered a CHIMP here and by CBO). When appropriators limit mandatory spending, they do not change the authorizing law. However, their action has a similar effect through CHIMPS—but usually only for the one year to which the appropriation applies. Appropriators put limits on mandatory programs by using language such as this: "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 $[...]." Limits usually appear in Title VII, General Provisions, of the Agriculture appropriations bill. Historically, most allocations to spend budgetary resources originated from the Appropriations Committees. The division over who should fund certain agriculture programs—appropriators or authorizers—has roots dating to the 1930s. Variable outlays for the farm commodity programs were difficult to budget and resembled entitlements. Mandatory funding—through the CCC—was created to remove the unpredictable funding issue from the appropriations process, and those decisions generally rested with the authorizing committee. The dynamic further changed after the 1996 farm bill, when mandatory funds were used for programs that had usually been discretionary. Appropriators had not funded some programs as much as authorizers had desired, and authorizing committees wrote farm bills to more broadly use the mandatory funding at their discretion. Tension arose over who should fund certain activities. Some question whether the CCC should be used for outlays that are not uncertain. Rescissions are a method of permanently cancelling the availability of funds that were provided by a previous appropriations law. When scoring a bill to determine its budget effect, a rescission results in budgetary savings. As a budgetary offset, rescissions can allow more spending in an appropriations bill. But unlike a CHIMP, a rescission can prevent an unobligated budget authority from being reallocated or repurposed by future appropriations since the cancellation is permanent. Often rescissions relate to the unobligated balances of funds that were appropriated a year or more ago that still remain available for a specific purpose (e.g., buildings and facilities funding that remains available until expended for specific projects, or disaster response funds for losses due to a specific hurricane). For FY2017, the enacted appropriation rescinds $854 million from two discretionary programs, primarily the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), as discussed in the section " WIC: General Provisions and Committee Report Language ." The General Provisions title contains appropriations for activities that are not part of regular agency appropriations. These sometimes include supplemental or disaster appropriations and may be offset in scorekeeping adjustments by emergency spending designations. The appropriations for FY2017 contain $206 million for disaster programs from the continuing resolutions (further offset by a disaster designation), as well as $29 million of disaster programming through the regular appropriation. The regular appropriation also contains $237 million of other appropriations for various accounts ( Table 17 ). Scorekeeping adjustments are a final part of the accounting of the appropriations bill that are not necessarily shown in the tables published by the Appropriations Committees. These adjustments are critical, however, for the bill to reach the desired total amount that complies with the 302(b) spending limit for each subcommittee. Some of these amounts are not necessarily specified by provisions in the bill but are related to program operations, such as direct and guaranteed loan programs. CBO calculates and reports these scorekeeping adjustments in unpublished tables. The "negative subsidy" from various USDA loan programs has increased in recent years. Negative subsidies effectively reflect "income" to the government when a loan program operates at lower cost than it receives in appropriations via the collection of fees or better-than-expected loan repayment. These negative subsidies have become larger in recent years and are helping to offset more of the regular appropriation. Prior to FY2013, these negative subsidies were cumulatively less than $100 million. In FY2017, these negative subsidies are scored to be a total of $534 million. Appendix A. Historical Trends This appendix offers a 20-year historical perspective on trends in Agricultural appropriations from FY1997 to FY2017. Comparisons are made using nominal and real data across (1) mandatory versus discretionary spending, (2) nutrition spending compared to the rest of the bill, and (3) agriculture appropriations relative to the entire federal budget, economy, and population ( Figure A-1 through Figure A-7 , Table A-2 through Table A-4 ). Historical trends in the appropriations are also summarized as compounded annualized percentage changes over various time periods ( Table A-1 ). A shorter, 10-year comparison across the major titles in the agriculture appropriation is shown in Figure 3 earlier in the report, and agency-level data are presented for a four-year period in tables throughout the report. Appendix B. Budget Sequestration Sequestration is a process of automatic, largely across-the-board reductions that permanently cancel mandatory and/or discretionary budget authority and is triggered when spending would exceed statutory budget goals. The current requirement for sequestration is in the Budget Control Act of 2011 (BCA; P.L. 112-25 ). Table B-1 shows the rates of sequestration that have been announced so far and the amounts of budget authority that have been cancelled from accounts in the Agriculture appropriations bill. Although the Bipartisan Budget Act of 2013 (P.L. 113-67) raised spending limits in the BCA to avoid sequestration of discretionary accounts in FY2014 and FY2015—and the Bipartisan Budget Act of 2015 (P.L. 114-74) did it again for FY2016 and FY2017—they do not prevent or reduce sequestration on mandatory accounts that originated in the BCA. In fact, the original FY2021 sunset on the sequestration of mandatory accounts has been extended three times to pay for avoiding sequestration of discretionary spending in the near term or as a general budgetary offset for other bills. 1. First, Congress extended the duration of mandatory sequestration by two years (until FY2023) as an offset in the Bipartisan Budget Act of 2013. 2. Second, Congress extended it by another year (until FY2024) to maintain retirement benefits for certain military personnel (P.L. 113-82). 3. Third, Congress extended sequestration on non-exempt mandatory accounts another year (until FY2025) as an offset in the Bipartisan Budget Act of 2015. 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 the Office of Management and Budget (OMB). Generally speaking, the experience since FY2013 is that OMB has ruled most of crop insurance as exempt from sequestration, while the farm commodity programs have been subject to it. Regarding the 2014 farm bill, the first farm commodity program payments from the 2014 farm bill began in October 2015, and USDA indicated that they would be subject to the 6.8% reduction applicable to FY2016. Since enactment of the BCA, OMB has ordered budget sequestration on non-exempt, non-defense discretionary accounts only once, in FY2013 ( Table B-1 ), and on mandatory accounts annually in FY2013-FY2017 ( Table B-2 ). | 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). (For CFTC, the Agriculture appropriations subcommittee has jurisdiction in the House but not in the Senate.) 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. The FY2017 appropriation for Agriculture and Related Agencies was enacted on May 5, 2017, as part of the Consolidated Appropriations Act (P.L. 115-31, Division A). The fiscal year started on October 1, 2016, under continuing resolutions (CRs) that lasted for seven months. About a year earlier, the House and the Senate Appropriations Committees reported their FY2017 Agriculture appropriations bills (H.R. 5054, S. 2956) in April and May 2016. The discretionary total of the enacted appropriation is $20.877 billion, which is $623 million less than enacted in FY2016 (-2.9%). It achieves this primarily by increasing budgetary offsets over the FY2016 level through greater rescissions of prior appropriations and greater scorekeeping adjustments. However, the budget authority for FY2017 provided to agencies in the major titles of the bill actually increases by $462 million compared to FY2016. Increases primarily include $163 million more for discretionary conservation programs than in FY2016, $119 million more for rural development, $65 million more for discretionary domestic nutrition programs, $52 million more for animal and plant health programs, $51 million more for agricultural research programs, $42 million more for the Food and Drug Administration, $29 million more for the Farm Service Agency, $20 million more for USDA administrative facilities, and $17 million more for food safety inspections. Reductions primarily come from a rescission of unused domestic nutrition assistance funding ($850 million rescission), supplemental funding for international food aid ($116 million less than in FY2016), agricultural research facilities ($112 million less), greater use of a disaster designation that does not count against budget caps ($76 million extra offset), and disaster assistance ($38 million less). The appropriation also carries mandatory spending that totaled about $132.5 billion. The overall total of the FY2017 Agricultural appropriation therefore exceeded $153 billion. In addition to setting budgetary amounts, the Agriculture appropriations bill is also a vehicle for policy-related provisions that direct how the executive branch should carry out the appropriation. Notable policy provisions in the FY2017 appropriation include provisions prohibiting inspection of horse slaughter facilities, importing processed (cooked) poultry meat from China, rules about inventory requirements for SNAP-authorized retailers, requirements for SNAP households to report moves out of state, and waivers for schools to not meet whole grain and sodium requirements. |
The Defense Production Act of 1950, as amended (DPA), provides the President a broad set of authorities to ensure that domestic industry can meet national defense requirements. In the DPA, Congress has found that "the security of the United States is dependent on the ability of the domestic industrial base to supply materials and services for the national defense and to prepare for and respond to military conflicts, natural or man-caused disasters, or acts of terrorism within the United States." Through the DPA, the President can, among other activities, prioritize government contracts for goods and services over competing customers, and offer incentives within the domestic market to enhance the production and supply of critical materials and technologies when necessary for national defense. Since 1950, the DPA has been reauthorized over 50 times by Congress, most recently in 2018 (Sec. 791 of P.L. 115-232 ). The majority of DPA authorities will expire on September 30, 2025, unless reauthorized. This report examines some of the extensive history of the DPA, focusing primarily on its creation and most recent legislative reauthorization. This report also discusses the foremost active authorities of the DPA. Nevertheless, this report is not intended to evaluate all authorities of the DPA comprehensively. For example, though significant authorities for the Committee on Foreign Investment in the United States (CFIUS) are included in the DPA, CFIUS is generally considered separate and distinct from the DPA and this report defers to other CRS reports for in-depth discussion on that issue. This report also identifies relevant delegations of the President's DPA authorities made in Executive Order (E.O.) 13603, National Defense Resources Preparedness . Finally, this report provides a brief overview of issues Congress may consider in its oversight of executive branch use of DPA authorities, as well as the implementation of changes made in the most recent reauthorization. The report also discusses congressional considerations for expanding, restricting, or otherwise modifying the authorities provided by the DPA through new legislation. As appendices to this report, several supplementary tables provide: additional resources related to various DPA subjects; a tabled analysis of key provisions of the DPA and related portions of E.O. 13603 and in regulations; the delegation of Title I priorities and allocations authority to Cabinet Secretaries in E.O. 13603; and a chronology of laws reauthorizing DPA authorities since first enactment. There is also an appendix discussing how DPA authorities changed as a result of the last major reauthorization of the law that included reforms ( P.L. 113-172 , To reauthorize the Defense Production Act, to improve the Defense Production Act Committee, and for other purposes). The DPA was inspired by the First and Second War Powers Acts of 1941 and 1942, which gave the executive branch broad authority to regulate industry during World War II. Much of this authority lapsed at the end of that war, but the beginning of the Cold War with the Soviet Union in the late 1940s and the North Korean invasion of South Korea in June of 1950 caused the Truman Administration to reconsider the need for stronger executive authority in the interest of national defense. The original DPA, enacted on September 8, 1950, granted broad authority to the President to control national economic policy. Containing seven separate titles, the DPA allowed the President, among other powers, to demand that manufacturers give priority to defense production, to requisition materials and property, to expand government and private defense production capacity, ration consumer goods, fix wage and price ceilings, force settlement of some labor disputes, control consumer credit and regulate real estate construction credit and loans, provide certain antitrust protections to industry, and establish a voluntary reserve of private sector executives who would be available for emergency federal employment. Four of the seven titles (Titles II, IV, V, and VI), those which related to requisitioning, rationing, wage and price fixing, labor disputes, and credit controls and regulation, terminated in 1953 when Congress allowed them to lapse. Though commonly associated with industrial production for the DOD, the DPA currently lies within the jurisdiction of the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs. Prior to 1975, House rules did not permit simultaneous referral of bills to two or more committees. Precedents in both chambers did not allow divided or joint referrals, regardless of bill content. Instead, bills were assigned to committees based on the preponderance of their subject matter. Because much of the President's proposal dealt with economic policy, what became the Defense Production Act was assigned in 1950 to the House and Senate Committees on Banking and Currency (their successors are the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs). Although the parts of the act dealing with the requisitioning of materials, wages and prices, labor, and credit are no longer in force, these committees have retained jurisdiction. In addition to the standing committees of jurisdiction, the original statute created a Joint Committee on Defense Production. This committee was composed of selected members from the standing Committees on Banking and Currency of the Senate and House. This committee was intended to review the programs established by the DPA and advise the standing committees whenever they drafted legislation on the subject. Although the provision in the DPA establishing the Joint Committee on Defense Production was officially repealed in 1992, in effect, the Joint Committee has not existed since 1977, when salaries and expenses for the committee were last funded. The DPA has been amended and reauthorized numerous times since its original enactment. Most notably, with the passage and enactment of P.L. 85-95, Congress reauthorized Titles I, III, and VII while allowing Titles II, IV, V, and VI of the DPA to expire in 1953. The Defense Production Act, like the War Power Acts that preceded it, included a sunset provision that has required periodic reauthorization and offered the opportunity for amendment. Congress passed the DPA in 1950 and has thus far reauthorized it 53 times, including many short-term "stop-gap" extensions. From time to time, the DPA has expired without Congress passing a law reauthorizing and extending its termination date. In such circumstances, Congress has often ultimately passed a law retroactively setting the effective date for the law to the previous expiration date. Most notably, for example, the DPA expired on October 20, 1990, and was not reauthorized until August 17, 1991. However, upon passage of P.L. 102-99 , the effective date of the law was set to October 20, 1990. The DPA was most recently reauthorized by the 115 th Congress, in Section 1791 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 ( P.L. 115-232 ). This extended the termination of the act by six years, from September 30, 2019, to September 30, 2025, when nearly all DPA authorities will terminate. See Table A-4 in the Appendix for a full chronology of reauthorizations. This section provides summaries of the major authorities granted to the President in the three remaining active titles of the DPA. Each summary describes how the DPA authorities are delegated to Cabinet officials or other offices of the U.S. government in the issued Executive Order (E.O.) 13603, National Defense Resource Preparedness . It is not intended to comprehensively evaluate all authorities in the DPA. The information provided below is reviewed in Table A-2 for select provisions of the DPA. Table A-1 also provides a list of additional materials, information, and resources on various topics of the DPA that may be of use to Congress. The DPA provides the President an "array of authorities to shape national defense preparedness programs and to take appropriate steps to maintain and enhance the domestic industrial base." [Italics added.] DPA authorities are tied to the definition of national defense , as the use of any major DPA authority must be interpreted to promote, support, or otherwise be deemed needed or essential for the national defense. National defense is currently defined in the statute as programs for military and energy production or construction, military or critical infrastructure assistance to any foreign nation, homeland security, stockpiling, space, and any directly related activity. Such term includes emergency preparedness activities conducted pursuant to title VI of The Robert T. Stafford Disaster Relief and Emergency Assistance Act [42 U.S.C. §§5195 et seq.] and critical infrastructure protection and restoration. Further reference can be made to Title VI of the Stafford Act for a definition of "emergency preparedness" activities. It states that emergency preparedness: means all those activities and measures designed or undertaken to prepare for or minimize the effects of a hazard upon the civilian population, to deal with the immediate emergency conditions which would be created by the hazard, and to effectuate emergency repairs to, or the emergency restoration of, vital utilities and facilities destroyed or damaged by the hazard. Therefore, the use of DPA authorities extends beyond shaping U.S. military preparedness and capabilities, as the authorities may also be used to enhance and support domestic preparedness, response, and recovery from hazards, terrorist attacks, and other national emergencies, among other purposes. In its original 1950 form, the DPA defined national defense as "the operations and activities of the armed forces, the Atomic Energy Commission, or any other department or agency directly or indirectly and substantially concerned with the national defense... " Over the many reauthorizations and amendments to the DPA, Congress has gradually expanded the scope of the definition of national defense, as recently as 2009. At that time, Congress included critical infrastructure assistance to any foreign nation and added homeland security to the definition. The DPA statute also includes both a full Congressional "Findings" and "Statement of Policy," as set forth in the "Declaration of Policy" section of the DPA. This section of the law gives additional guidance—though not explicit legal requirements—to the executive branch on why and how the DPA authorities should be used in order to provide for the national security. For example, in the "Findings" section, with regards to national defense and energy security, Congress stated that to further assure the adequate maintenance of the domestic industrial base, to the maximum extent possible, domestic energy supplies should be augmented through reliance on renewable energy sources (including solar, geothermal, wind, and biomass sources), more efficient energy storage and distribution technologies, and energy conservation measures. As another example, as guidance to the executive branch on how the defense industrial base should be encouraged to develop, in the "Statement of Policy," Congress stated that it is the policy of the United States that... in order to ensure productive capacity in the event of an attack on the United States, the United States Government should encourage the geographic dispersal of industrial facilities in the United States to discourage the concentration of such productive facilities within limited geographic areas that are vulnerable to attack by an enemy of the United States. Section 101(a) of Title I of the DPA states The President is authorized (1) to require that performance under contracts or orders (other than contracts of employment) which he deems necessary or appropriate to promote the national defense shall take priority over performance under any other contract or order, and, for the purpose of assuring such priority, to require acceptance and performance of such contracts or orders in preference to other contracts or orders by any person he finds to be capable of their performance, and (2) to allocate materials, services, and facilities in such manner, upon such conditions, and to such extent as he shall deem necessary or appropriate to promote the national defense. The priority performance authority allows the federal government to ensure the timely availability of critical materials, equipment, and services produced in the private market in the interest of national defense, and to receive those materials, equipment, and services through contracts before any other competing interest. Under the language of the DPA, a person (including corporations, as defined in statute) is required to accept prioritized contracts/orders, though regulations implementing Title I authorities provide practical exemptions to this mandate. The limited allowances for when a person is required to or may optionally reject a prioritized order can be superseded by the direction of the implementing federal department. In executing a contract under the DPA, a contractor is not liable for actions taken to comply with governing rules, regulations, and orders (e.g., prioritization requirements), including any rules, regulations, or orders later declared legally invalid. The government can also prioritize the performance of contracts between two private parties, such as a contract between a prime contractor and a subcontractor, if needed to fulfill a priority contract and promote the national defense. Title I also allows the President to allocate or control the general distribution of materials, services, and facilities. Allocation authority relates historically to the controlled materials programs of World War II, when the distribution of critical materials and resources had to be managed to maximize the production of goods needed in the war effort. No allocation action has been taken by the President since the end of the Cold War. There are several notable restrictions to the priorities and allocation authority. For example, it cannot be used for contracts of employment. Additionally, unless authorized by a joint resolution of Congress, the authority cannot be used for wage or price controls. Private persons are also not required to assist in the production or development of chemical or biological weapons unless directly authorized by the President or a Cabinet secretary. Title I also contains several provisions related to domestic energy. Section 101(c) specifically authorizes the President to allocate and prioritize contracts relating to materials, equipment, and services to maximize domestic energy supplies in certain circumstances. However, Section 101(c) also restricts this use unless the President makes certain findings. Further, Section 105 of the DPA restricts the authorities from being used to ration the end-use of gasoline without the approval of Congress. Section 106 of Title I, as amended, also designates energy as a strategic and critical material. This designation enables other authorities in the DPA, especially Title III authorities discussed below, to be used for policy purposes related to energy. In statute, Title I priorities and allocation authority can only be used to "promote national defense." In E.O. 13603, the President further constrains that authority so that it "may be used only to support programs that have been determined in writing as necessary or appropriate to promote the national defense" by either the Secretary of Defense, the Secretary of Homeland Security, or the Secretary of Energy, depending on the issue involved. The Secretary of Defense makes determinations related to military production and construction, military assistance to foreign nations, military use of civil transportation, stockpiles managed by DOD, space, and directly related activities; the Secretary of Energy makes determinations related to energy production and construction, distribution and use, and directly related activities; and the Secretary of Homeland Security makes determinations related to all other national defense programs, including civil defense and continuity of government. Once a program is determined to promote the national defense, other Secretaries who have been delegated the priorities and allocation authority can use their authority for those pre-designated program purposes. E.O. 13603 provides for the delegation of the President's priorities and allocation authority to six different Cabinet Secretaries based upon their areas of expertise in different resource and material sectors. These resource areas are further defined in Section 801 of E.O. 13603. In practice, the priorities authority held by one Cabinet Secretary is frequently allowed to be used by other federal agencies, thereby allowing one agency to use another agency's authorities (e.g., DHS was allowed to use the Department of Agriculture's priorities authority related to food resources). Table A-3 in the Appendix summarizes this delegation of priorities and allocation authority. Each of the six federal agencies to which the President delegated priorities and allocations authority are required by law to issue and annually review regulations that "establish standards and procedures by which the priorities and allocations authority under this section is used to promote the national defense, under both emergency and nonemergency conditions." Five of the six delegated the authority—the Departments of Agriculture, Commerce, Energy, Health and Human Services, and Transportation—have issued those regulations. DOD has not issued its regulation as it relates to using the priorities and allocation authority for water resources, as of November 20, 2018. However, DOD has indicated that its regulation is in preliminary draft. Historically, the Department of Commerce's rule establishing the Defense Priorities and Allocations System (DPAS) has been the most frequently used by the executive branch. As encouraged by statute, the DPAS regulation was used as a model to create a "consistent and unified Federal priorities and allocations system." This system is referred to as the "Federal Priorities and Allocations System" (FPAS). Each of the regulations that make up the FPAS establish two levels of priority for issued orders notated as "DO" and "DX." In the DPAS regulations, a "DO" rating is lower than a "DX" rating. A "DO" rating order for a product means that it must be prioritized over all other nonrated orders. However, if a product that has a "DO" rated order is needed for a different "DX" rated order, the "DX" rated order takes precedence. As a matter of practice, few select programs may receive a "DX" rating. The authority to prioritize contracts is routinely employed by DOD. These prioritized contracts are typically issued under the Department of Commerce's (DOC's) delegated authority with respect to materials, services, and facilities, including construction materials, and under its Defense Priorities and Allocations System (DPAS) regulations guiding the use of this authority. DOD has reported that it "includes a priority rating as a standard clause in virtually all eligible contracts and orders for items under DOC's resource jurisdiction. Some past examples of DOD's use of Title I priorities authority include supporting the Integrated Ballistic Missile Defense System, the B-2 Bomber, the VC-25A Presidential Aircraft (i.e., Air Force One), and Mine Resistant Ambush Protected (MRAP) Vehicles. While the priorities authority is used far less frequently by other departments and agencies, it has been used for both the prevention of terrorism and natural disaster preparedness. For example, the Federal Bureau of Investigation has prioritized contracts in support of the Terrorist Screening Center program and the U.S. Army Corps of Engineers prioritized contracts in support of the Greater New Orleans Hurricane and Storm Damage Risk Reduction System program. The Federal Emergency Management Agency used the authority extensively during the 2017 disaster season, including prioritizing contracts for manufactured housing units, food and bottled water, and the restoration of electrical transmission and distribution systems in Puerto Rico. Further, U.S. allies have used the authority to assist with defense-related procurement issues. The specific Title I prioritization and allocation authorities related to domestic energy (Section 101(c) of the DPA) was used by the Department of Energy to ensure that emergency supplies of natural gas continued to flow to California utilities, helping to avoid threatened electrical blackouts in early 2001. Unlike the prioritization authority, the allocation authority has not been used since the Cold War. The authority does support the Civil Reserve Air Fleet (CRAF) program, which was created initially in 1951, and is now managed by the U.S. Department of Transportation. Under the CRAF program, civilian aircraft are "allocated" for the potential use, if required, by the DOD so that it may augment its airlift capability with civilian aircraft during a national defense related crisis. In return for their participation in the CRAF program, civilian carriers are given preference in carrying commercial peacetime cargo and passenger traffic for the DOD. Title III authorities are intended to help ensure that the nation has an adequate supply of, or the ability to produce, essential materials and goods necessary for the national defense. Using Title III authorities, the President may provide appropriate financial incentives to develop, maintain, modernize, restore, and expand the production capacity of domestic sources for critical components, critical technology items, materials, and industrial resources essential for the execution of the national security strategy of the United States. The President is also directed to use Title III authorities to ensure that critical components, critical technology items, essential materials, and industrial resources are available from reliable sources when needed to meet defense requirements during peacetime, graduated mobilization, and national emergency. Sections 301 and 302 of Title III of the DPA authorize the President to issue loan guarantees and direct loans to reduce current or projected shortfalls of industrial resources, critical technology items, or essential materials needed for national defense purposes. Loan guarantees and direct loans can be issued to private businesses to help them create, maintain, expedite, expand, protect, or restore production and deliveries or services essential to the national defense. A direct loan is a loan from the federal government to another government or private sector borrower that requires repayment, with or without interest. A loan guarantee allows the federal government to guarantee a loan made by a nonfederal lender to a nonfederal borrower, either by pledging to pay back all or part of the loan in cases when the borrower is unable to do so. These authorities, for instance, could be used to provide a loan, or to guarantee a loan, to a defense contractor that is responsible for the provision of critical services essential to the national defense when credit is otherwise unavailable in the private market. There are a number of restrictions placed on the executive branch before these loan authorities may be used in the interest of national defense. First, the budget authority for guarantees and direct loans must be specifically included in appropriations passed by Congress and enacted by the President before such loan mechanisms can be issued. Except during periods of national emergency declared by Congress or the President, the DPA statute also requires the President to determine that loan guarantees or direct loans meet a number of conditions before issuance. One of the conditions in using the loan authority is that the loan or loan guarantee is the most cost-effective, expedient, and practical alternative method for meeting the need. There are also a number of determination requirements for loan guarantees and direct loans that may help ensure that the loan is repaid by the recipient. For example, the President is required to determine that there is "reasonable assurance" that a recipient of a loan or loan guarantee will be able to repay the loan. Section 303 of Title III grants the President an array of authorities to create, maintain, protect, expand, or restore domestic industrial base capabilities essential to the national defense. These authorities include, but are not limited to purchasing or making purchase commitments of industrial resources or critical technology items; making subsidy payments for domestically produced materials; and installing and purchasing equipment for government and privately owned industrial facilities to expand their productive capacity. In general, Section 303 authorities can be used by the President to provide incentives for domestic private industry to produce and supply critical goods that are necessary for the national defense. The scope of Section 303 authorities allows for these incentives to be structured in a number of ways, including direct purchases or subsidies of such goods. Therefore, whereas Title I authorities help ensure that the government has priority access to goods that are already being produced by domestic industries, Section 303 authorities help create a sufficient supply of these essential goods in the interest of national defense. Prior to using Section 303 authorities, the law requires the President, on a nondelegable basis, to determine that there is a "domestic industrial base shortfall" for a particular industrial resource, material, or critical technology item that threatens the national defense. This determination includes finding that the industry of the United States cannot reasonably be expected to provide the capability for the good in a timely manner, and that purchases, purchase commitments, or other actions are the most cost effective, expedient, and practical alternative method for meeting the need. For projects that cumulatively cost more than $50 million to address an industrial base shortfall, the projects must first be authorized by an act of Congress. Additionally, the President is required to notify the committees of jurisdiction, and give the committees 30 days to comment, when the actions to remedy the shortfall are expected to exceed $50 million. Generally, very few Title III projects exceed the $50 million threshold. The President is authorized to waive the determination and notification provisions in periods of national emergency or in situations that the President, on a nondelegable basis, determines the industrial base shortfall would severely impair national defense. In E.O. 13603, the "head of each agency engaged in procurement for national defense" is delegated the majority of the authorities of Sections 301, 302, and 303 of Title III of the DPA. These agencies are specifically identified in E.O. 13603. This delegation includes the ability to make all determinations not explicitly cited in the statute as being nondelegable. However, this delegation does not include the authority to encourage the exploration, development, and mining of strategic and critical materials and other materials. This authority is provided to the President in the statute, and is delegated only to the Secretaries of Defense and the Interior. Title III of the DPA establishes a Treasury account, the Defense Production Act Fund, which is available to carry out all of the provisions and purposes of Title III. The DPA Fund is also used to collect all proceeds from DPA activities under Title III, such as the resale of DPA-procured commodities or products. The monies in the DPA Fund are available until expended. However, the unobligated balance in the DPA Fund at the end of any fiscal year cannot exceed $750 million, excluding monies appropriated for that fiscal year. Table 1 provides the appropriations to the DPA Fund between FY2010 and FY2019. It is possible for appropriations to the DPA Fund to be made in any of the bills providing funding to the numerous agencies delegated Title III authorities. All recent discretionary appropriations directly to the DPA Fund have come from DOD appropriations acts. As noted in Table 1 , however, in FY2014-2016, the Department of Energy was authorized, and subsequently made, transfers of $45 million to the DPA Fund each year from another appropriation. In addition, Title III projects that are paid for through the DPA Fund have been funded through transfers of budget authority from DOD and other federal agencies. Since 2000, the average total project size for Title III projects has been $25.13 million. Of that total, an average of $14.02 million was provided by the DPA Fund, while an average of $0.95 million came from other government funding, and an average of $10.21 million was provided by private sector partners as a cost-share. The President is required to designate a "Fund manager" to carry out general accounting functions for the fund. The Secretary of Defense has been designated to be the Fund Manager in E.O. 13603. As the Fund Manager, the Secretary of Defense (or official to whom the authority is further delegated in DOD) is responsible for the financial accounting of the fund, but does not necessarily have decision-making authority over the use of the fund. According to the Defense Production Act Committee, the federal government has not used the loan authorities provided in Section 301 or Section 302 of Title III in more than 30 years. Rather, current projects are initiated under Section 303 of Title III of the DPA. During FY2017, the DOD reported that it "managed 22 [Title III] projects and oversaw 7 projects in the monitoring phase. Three projects were completed, eight projects were in active acquisition, and seven projects were explored as potential future efforts." Examples of Title III projects include an "Advanced Drop-In Biofuel Production Project" to accelerate the commercialization of drop-in biofuels for military and commercial use, and several projects to support radar and electronic warfare, including to establish a domestic, economically viable, open-foundry merchant supplier production capability for Ka-band gallium nitride (GaN) MMICs [monolithic microwave integrated circuits]. Like many other Title III projects, these are meant to establish a domestic capacity to produce advanced technologies deemed essential for national defense by the President. Title VII of the DPA contains various provisions that clarify how DPA authorities should and can be used, as well as additional presidential authorities. Some significant provisions of Title VII are summarized below. Two provisions in the DPA direct the President to accord special preference to small businesses when issuing contracts under DPA authorities. Section 701 reiterates and expands upon a requirement in Section 108 of Title I directing the President to "accord a strong preference for small business concerns which are subcontractors or suppliers, and, to the maximum extent practicable, to such small business concerns located in areas of high unemployment or areas that have demonstrated a continuing pattern of economic decline, as identified by the Secretary of Labor." The DPA statute historically has included a section of definitions. Though national defense is perhaps the most important term, there are additional definitions provided both in current law and in E.O. 13603. Over time, the list of definitions provided in both the law and implementing executive orders has been added to and edited, most recently in 2009, when Congress added a definition for homeland security to place it within the context of national defense . To appropriately use numerous authorities of the DPA, especially Title III authorities, the President may require a detailed understanding of current domestic industrial capabilities and therefore need to obtain extensive information from private industries. Under Section 705 of the DPA, the President may "by regulation, subpoena, or otherwise obtain such information from ... any person as may be necessary or appropriate, in his discretion, to the enforcement or the administration of this Act [the DPA]." This authority is delegated to the Secretary of Commerce in E.O. 13603. Though this authority has many potential implications and uses, it is most commonly associated with what the DOC's Bureau of Industry and Security calls "industrial base assessments." These assessments are often conducted in coordination with other federal agencies and the private sector to "monitor trends, benchmark industry performance, and raise awareness of diminishing manufacturing capabilities." The statute requires the President to issue regulations to insure that the authority is used only after "the scope and purpose of the investigation, inspection, or inquiry to be made have been defined by competent authority, and it is assured that no adequate and authoritative data are available from any Federal or other responsible agency." This regulation has been issued by DOC. Normally, voluntary agreements or plans of action between competing private industry interests could be subject to legal sanction under anti-trust statutes or contract law. Title VII of the DPA authorizes the President to "consult with representatives of industry, business, financing, agriculture, labor, and other interests in order to provide for the making by such persons, with the approval of the President, of voluntary agreements and plans of action to help provide for the national defense." The President must determine that a "condition exists which may pose a direct threat to the national defense or its preparedness programs" prior to engaging in the consultation process. Following the consultation process, the President or presidential delegate may approve and implement the agreement or plan of action. Parties entering into such voluntary agreements are afforded a special legal defense if their actions within that agreement would otherwise violate antitrust or contract laws. Historically, the National Infrastructure Advisory Council noted that the voluntary agreement authority has been used to "enable companies to cooperate in weapons manufacture, solving production problems and standardizing designs, specifications and processes," among other examples. It could also be used, for example, to develop a plan of action with private industry for the repair and reconstruction of major critical infrastructure systems following a domestic disaster. The authority to establish a voluntary agreement has been delegated to the head of any federal department or agency otherwise delegated authority under any other part of E.O. 13603. Thus, the authority could be potentially used by a large group of federal departments and agencies. Use of these voluntary agreements is tracked by the Secretary of Homeland Security, who is tasked under E.O. 13603 with issuing regulations that are required by law on the "standards and procedures by which voluntary agreements and plans of action may be developed and carried out." The Federal Emergency Management Agency (FEMA), which at the time was an independent agency and tasked with these responsibilities under the DPA, issued regulations in 1981 to fulfill this requirement. FEMA is now a part of DHS, and those regulations remain in effect. The Maritime Administration (MARAD) of the U.S. Department of Transportation manages the only currently established voluntary agreements in the federal government, the Voluntary Intermodal Sealift Agreement (commonly referred to as "VISA") and the Voluntary Tanker Agreement. These programs are maintained in partnership with the U.S. Transportation Command of DOD, and have been established to ensure that the maritime industry can respond to the rapid mobilization, deployment, and transportation requirements of DOD. Voluntary participants from the maritime industry are solicited to join the agreements annually. Title VII of the DPA authorizes the President to establish a volunteer body of industry executives, the "Nucleus Executive Reserve," or more frequently called the National Defense Executive Reserve (NDER). The NDER would be a pool of individuals with recognized expertise from various segments of the private sector and from government (except full-time federal employees). These individuals would be brought together for training in executive positions within the federal government in the event of an emergency that requires their employment. The historic concept of the NDER has been used as a means of improving the war mobilization and productivity of industries. The head of any governmental department or agency may establish a unit of the NDER and train its members. No NDER unit is currently active, though the statute and E.O. 13603 still provide for this possibility. Units may be activated only when the Secretary of Homeland Security declares in writing that "an emergency affecting the national defense exists and that the activation of the unit is necessary to carry out the emergency program functions of the agency." Appropriations for the purpose of the DPA are authorized by Section 711 of Title VII. Prior to the P.L. 113-172 , "such sums as necessary" were authorized to be appropriated. This has been replaced by a specific authorization for an appropriation of $133 million per fiscal year and each fiscal year thereafter, starting in FY2015, to carry out the provisions and purposes of the Defense Production Act. Table 1 shows that the annual average appropriation to the DPA Fund between FY2010 and FY2019 was $109.1 million, with a high of $223.5 million in FY2013 and a low of $34.3 million in FY2011. Monies in the DPA Fund are available until expended, so annual appropriations may carry over from year to year if not expended. Recently, the only regular annual appropriation for the purposes of the DPA has been made in the DOD appropriations bill, though appropriations could be made in other bills directly to the DPA Fund (or transferred from other appropriations). The Committee on Foreign Investment in the United States (CFIUS) is an interagency committee that serves the President in overseeing the national security implications of foreign investment in the economy. It reviews foreign investment transactions to determine if (1) they threaten to impair the national security; (2) the foreign investor is controlled by a foreign government; or (3) the transaction could affect homeland security or would result in control of any critical infrastructure that could impair the national security. The President has the authority to block proposed or pending foreign investment transactions that threaten to impair the national security. CFIUS initially was created and operated through a series of Executive Orders. In 1988, Congress passed the "Exon-Florio" amendment to the DPA, granting the President authority to review certain corporate mergers, acquisitions, and takeovers, and to investigate the potential impact on national security of such actions. This amendment codified the CFIUS review process due in large part to concerns over acquisitions of U.S. defense-related firms by Japanese investors. In 2007, amid growing concerns over the proposed foreign purchase of commercial operations of six U.S. ports, Congress passed the Foreign Investment and National Security Act of 2007 ( P.L. 110-49 ) to create CFIUS in statute. The CFIUS review process is a voluntary system of notification by investors. Firms largely comply with the provision, because foreign acquisitions that do not notify CFIUS remain subject indefinitely to divestment or other actions by the President. Upon receiving written notification of a proposed acquisition, merger, or takeover of a U.S. firm by a foreign investor, the CFIUS process can proceed potentially through 3 steps: (1) a 30-day maximum national security review; (2) a 45-day maximum national security investigation; and (3) a 15-day maximum presidential determination. The President can exercise authority to suspend or prohibit a foreign investment, subject to a CFIUS review, if (1) credible evidence exists that the foreign investor might take action that threatens to impair the national security; and (2) no other laws provide adequate and appropriate authority for the President to protect the national security. Title VII of the DPA also includes a "sunset" clause for the majority of the DPA authorities. All DPA authorities in Titles I, III, and VII have a termination date, with the exception of four sections. As explained in Section 717 of the DPA, the sections that are exempt from termination are 50 U.S.C. §4514, Section 104 of the DPA that prohibits both the imposition of wage or price controls without prior congressional authorization and the mandatory compliance of any private person to assist in the production of chemical or biological warfare capabilities; 50 U.S.C. §4557, Section 707 of the DPA that grants persons limited immunity from liability for complying with DPA-authorized regulations; 50 U.S.C. §4558, Section 708 of the DPA that provides for the establishment of voluntary agreements; and 50 U.S.C. §4565, Section 721 of the DPA, the so-called Exon-Florio Amendment, that gives the President and CFIUS review authority over certain corporate acquisition activities. P.L. 115-232 extended the termination date of Section 717 from September 30, 2019, to September 30, 2025. In addition, Section 717(c) provides that any termination of sections of the DPA "shall not affect the disbursement of funds under, or the carrying out of, any contract, guarantee, commitment or other obligation entered into pursuant to this Act" prior to its termination. This means, for instance, that prioritized contracts or Section 303 projects created with DPA authorities prior to September 30, 2025, would still be executed until completion even if the DPA is not reauthorized. Similarly, the statute specifies that the authority to investigate, subpoena, and otherwise collect information necessary to administer the provisions of the act, as provided by Section 705 of the DPA, will not expire until two years after the termination of the DPA. For a chronology of all laws reauthorizing the DPA since inception, see Table A-4 . The Defense Production Act Committee (DPAC) is an interagency body originally established by the 2009 reauthorization of the DPA. Originally, the DPAC was created to advise the President on the effective use of the full scope of authorities of the DPA. Now, the law requires DPAC to be centrally focused on the priorities and allocations authorities of Title I of the DPA. The statute assigns membership in the DPAC to the head of each federal agency delegated DPA authorities, as well as the Chairperson of the Council of Economic Advisors. A full list of the members of the DPAC is included in E.O. 13603. As stipulated in law, the Chairperson of the DPAC is to be the "head of the agency to which the President has delegated primary responsibility for government-wide coordination of the authorities in this Act." As currently established in E.O. 13603 delegations, the Secretary of Homeland Security is the chair-designate, but the language of the law could allow the President to appoint another Secretary with revision to the E.O. The Chairperson of the DPAC is also required to appoint one full-time employee of the federal government to coordinate all the activities of the DPAC. Congress has exempted the DPAC from the requirements of the Federal Advisory Committee Act. The DPAC has annual reporting requirements relating to the Title I priority and allocation authority, and is also required to include updated copies of Title I-related rules in its report. The annual report also contains, among other items, a "description of the contingency planning ... for events that might require the use of the priorities and allocations authorities" and "recommendations for legislative actions, as appropriate, to support the effective use" of the Title I authorities. The DPAC report is provided to the Senate Committee on Banking, Housing, and Urban Affairs and the House Committee on Financial Services. A new DPAC report, fulfilling the revised requirements of P.L. 113-172 , is required to be submitted by March 31, 2015, and every year thereafter. Offsets are industrial compensation practices that foreign governments or companies require of U.S. firms as a condition of purchase in either government-to-government or commercial sales of defense articles and/or defense services as defined by the Arms Export Control Act (22 U.S.C. §2751, et seq.) and the International Traffic in Arms Regulations (22 C.F.R. §§120-130). In the defense trade, such industrial compensation can include mandatory co-production, licensed production, subcontractor production, technology transfer, and foreign investment. The Secretary of Commerce is required by law to prepare and to transmit to the appropriate congressional committees an annual report on the impact of offsets on defense preparedness, industrial competitiveness, employment, and trade. Specifically, the report discusses "offsets" in the government or commercial sales of defense materials. Congress may consider whether to add more extensive notification and reporting requirements on the use of all or specific authorities in the DPA. These reporting or notification requirements could be added to the existing law, or could be included in conference or committee reports accompanying germane legislation, such as appropriations bills or the National Defense Authorization Act. Additional reporting or notification requirements could involve formal notification of Congress prior to or after the use of certain authorities under specific circumstances. For example, Congress may consider whether to require the President to notify Congress (or the oversight committees) when the priorities and allocations authority is used on a contract valued above a threshold dollar amount. Congress might also consider expanding the existing reporting requirements of the DPAC, to include semi-annual updates on the recent use of authorities or explanations about controversial determinations made by the President. Existing requirements could also be expanded from notifying/reporting to the committees of jurisdiction to the Congress as a whole, or to include other interested committees, such as the House and Senate Armed Services Committees. Congress may consider reviewing the agencies' compliance with existing rulemaking requirements. A rulemaking requirement exists for the voluntary agreement authority in Title VII that has been completed by DHS, but it has not been updated since 1981 and may be in need of an update given changes to the authority and government reorganizations since that date. One of the agencies responsible for issuing a rulemaking on the use of Title I authorities has yet to do so. Congress may also consider potentially expanding regulatory requirements for other authorities included in the DPA. For example, Congress may consider whether the President should promulgate rules establishing standards and procedures for the use of all or certain Title III authorities. In addition to formalizing the executive branch's policies and procedures for using DPA authorities, these regulations could also serve an important function by offering an opportunity for private citizens and industry to comment on and understand the impact of DPA authorities on their personal interests. Since its enactment, the House Committee on Financial Services, the Senate Committee on Banking, Housing, and Urban Affairs, and their predecessors have exercised legislative oversight of the Defense Production Act. The statutory authorities granted in the various titles have been vested in the President, who has delegated some of these authorities to various agency officials through E.O. 13603. As an example of the scope of delegations, the membership of the Defense Production Act Committee (DPAC), created in 2009 and amended in 2014, includes the Secretaries of Agriculture, Commerce, Defense, Energy, Labor, Health and Human Services, Homeland Security, the Interior, Transportation, the Treasury, and State; the Attorney General; the Administrators of the National Aeronautics and Space Administration and of General Services, the Chair of the Council of Economic Advisers; and the Directors of the Central Intelligence Agency and National Intelligence. In order to complement existing oversight, given the number of agencies that currently use or could potentially use the array of DPA authorities to support national defense missions, Congress may consider reestablishing a select committee with a purpose similar to the former Joint Committee on Defense Production. As an alternative to the creation of a new committee, Congress may consider formally broadening DPA oversight responsibilities to include all relevant standing committees when developing its committee oversight plan. Should DPA oversight be broadened, Congress might consider ways to enhance inter-committee communication and coordination of its related activities. This coordination could include periodic meetings to prepare for oversight hearings or ensuring that DPA-related communications from agencies are shared appropriately. Finally, because the DPA was enacted at a time when the organization and rules of both chambers were markedly different to current practice, Congress may consider the joint referral of proposed DPA-related legislation to the appropriate oversight committees. While the act in its current form may remain in force until September 30, 2025, the legislature could amend the DPA at any time to extend, expand, restrict, or otherwise clarify the powers it grants to the President. For example, Congress could eliminate certain authorities altogether. Likewise, Congress could expand the DPA to include new authorities to address novel threats to the national defense. For example, Congress may consider creating new authorities to address specific concerns relating to production and security of emerging technologies necessary for the national defense. The "Declaration of Policy" in the DPA describes the general intentions of Congress in granting the authorities conferred on the President. Congress may amend this section of the statute in order to expand, restrict, or clarify the overall purpose of the authorities. For instance, given the wide variety of circumstances in which DPA authorities have been employed, Congress could include an expanded discussion of the specific conditions in which it would find DPA authorities appropriate for use by the President. Though this section serves as a guide for the overall use of DPA authorities, changes to the Declaration of Policy may not fully endow or deny the President's authorities covered in the titles of the DPA without also amending the DPA's other provisions. Congress may amend the definitions of key terms found in the DPA to shape the scope and use of the authorities, especially the definition of national defense . As an example, Congress could amend the definition of national defense to remove space from the definition, thus weakening the President's ability to support space-related projects through the use of DPA authorities. On the other hand, for example, Congress could amend the definition of national defense to specifically include counter-narcotics, cybersecurity, or organized crime. Doing so would more explicitly enable the use of DPA authorities to address these homeland security and national defense concerns. Congress may consider limiting the use of certain DPA authorities to specific agencies. To do so, Congress could amend the President's delegation of DPA authorities, superseding those made in E.O. 13603, by amending the statute to assign specific authorities to individual Cabinet Secretaries rather than the President. Further, Congress could expand the use of the legislative clause "on a nondelegable basis" to ensure that the authority is not delegated beyond the person identified in the statute. In considering these options, Congress may determine that the use of some authorities by certain agencies is appropriate and necessary for the national defense, but not for others. Congress could adjust future appropriations to the DPA Fund in order to manage the scope of Title III projects initiated by the President (see Table 1 for appropriations to the DPA Fund since FY2010). The use of the DPA Fund, however, is specific to Title III. Therefore, adjusting appropriations to the DPA Fund is unlikely to have an effect on the President's ability to exercise authorities under the other titles of the DPA, unless Congress drafts legislation changing the nature of the Fund itself or authorizing its use beyond a specific title. Congress may also reintroduce a separate provision in Section 711 of the DPA authorizing only certain appropriation amounts over a given time period for Title III or other DPA authorities. Likewise, Congress may direct the use of such funds more specifically, such as has been done in relation to past Title III projects. Congress may also consider including specific restrictions or reporting requirements related to the DPA in the appropriations made to other accounts that could be used to pay for Title I activities, such as the Disaster Relief Fund managed by FEMA. | The Defense Production Act (DPA) of 1950 (P.L. 81-774, 50 U.S.C. §§4501 et seq.), as amended, confers upon the President a broad set of authorities to influence domestic industry in the interest of national defense. The authorities can be used across the federal government to shape the domestic industrial base so that, when called upon, it is capable of providing essential materials and goods needed for the national defense. Though initially passed in response to the Korean War, the DPA is historically based on the War Powers Acts of World War II. Gradually, Congress has expanded the term national defense, as defined in the DPA. Based on this definition, the scope of DPA authorities now extends beyond shaping U.S. military preparedness and capabilities, as the authorities may also be used to enhance and support domestic preparedness, response, and recovery from natural hazards, terrorist attacks, and other national emergencies. Some current DPA authorities include, but are not limited to Title I: Priorities and Allocations, which allows the President to require persons (including businesses and corporations) to prioritize and accept contracts for materials and services as necessary to promote the national defense. Title III: Expansion of Productive Capacity and Supply, which allows the President to incentivize the domestic industrial base to expand the production and supply of critical materials and goods. Authorized incentives include loans, loan guarantees, direct purchases and purchase commitments, and the authority to procure and install equipment in private industrial facilities. Title VII: General Provisions, which includes key definitions for the DPA and several distinct authorities, including the authority to establish voluntary agreements with private industry; the authority to block proposed or pending foreign corporate mergers, acquisitions, or takeovers that threaten national security; and the authority to employ persons of outstanding experience and ability and to establish a volunteer pool of industry executives who could be called to government service in the interest of the national defense. These are not the exclusive authorities of the DPA, but rather some of the most pertinent because of their historical or current use. The authorities of the DPA are generally afforded to the President in the statute. The President, in turn, has delegated these authorities to department and agency heads in Executive Order 13603, National Defense Resource Preparedness, issued in 2012. While the authorities are most frequently used by, and commonly associated with, the Department of Defense (DOD), they can be and have been used by numerous other executive departments and agencies. Since 1950, the DPA has been reauthorized over 50 times, though significant authorities were terminated from the original law in 1953. Congress last reauthorized the DPA in Section 1791 of the John S. McCain National Defense Authorization Act for Fiscal Year 2019 (P.L. 115-232). This extended the termination of the act by six years, from September 30, 2019, to September 30, 2025, when nearly all DPA authorities will terminate. A few authorities of the DPA, such as the Exon-Florio Amendment (which established government review of the acquisition of U.S. companies by foreigners) and anti-trust protections for certain voluntary industry agreements, have been made permanent by Congress. The DPA lies within the legislative jurisdiction of the House Committee on Financial Services and the Senate Committee on Banking, Housing, and Urban Affairs. Congress may consider enhancing its oversight of executive branch activities related to the DPA in a number of ways. To enhance oversight, Congress could expand executive branch reporting requirements, track and enforce rulemaking requirements, review the activities of the Defense Production Act Committee, and broaden the committee oversight jurisdiction of the DPA in Congress. Congress may also consider amending the DPA, either by creating new authorities or repealing existing ones. In addition, Congress may consider amending the definitions of the DPA to expand or restrict the DPA's scope, amending the statute to supersede the President's delegation of DPA authorities made in E.O. 13603, or consider adjusting future appropriations to the DPA Fund in order to manage the scope of Title III projects initiated by the President. |
The length of time a congressional staff member spends employed in Congress, or job tenure, is a source of recurring interest among Members of Congress, congressional staff, those who study staffing in the House and Senate , and the public. There may be interest in congressional tenure information from multiple perspectives, including assessment of how a congressional office might oversee human resources issues, how staff might approach a congressional career, and guidance for how frequently staffing changes may occur in various positions. Others might be interested in how staff are deployed, and could see staff tenure as an indication of the effectiveness or well-being of Congress as an institution. This report provides tenure data for 16 staff position titles that are typically used in House Member offices, and information for using those data for different purposes. The positions include the following: Administrative Director Casework Supervisor Caseworker Chief of Staff Communications Director Counsel District Director Executive Assistant Field Representative Legislative Assistant Legislative Correspondent Legislative Director Office Manager Press Secretary Scheduler Staff Assistant Publicly available information sources do not provide aggregated congressional staff tenure data in a readily retrievable or analyzable form. The most recent publicly available House staff compensation report, which provided some insight into the duration which congressional staff worked in a number of positions, was issued in 2010 and relied on anonymous, self-reported survey data. Data in this report are instead based on official House pay reports, from which tenure information arguably may be most reliably derived, and which afford the opportunity to use complete, consistently collected data. Tenure information provided in this report is based on the House's Statement of Disbursements (SOD), published quarterly by the House Chief Administrative Officer, as collated by LegiStorm, a private entity that provides some congressional data by subscription. House Member staff tenure data were calculated for each year between 2006 and 2016. Annual data allow for observations about the nature of staff tenure in House Member offices over time. For each year, all staff with at least one week's service on March 31 were included. All employment pay dates from October 2, 2000, to March 24 of each year are included in the data. Utilizing official salary expenditure data from the House may provide more complete, robust findings than other methods of determining staff tenure, such as surveys; the data presented here, however, are subject to some challenges that could affect the interpretation of the information presented. Tenure information provided in this report may understate the actual time staff spend in particular positons, due in part to several features of the data. Overall, the time frame studied may lead to some underrepresentation in tenure duration. Figure 1 provides potential examples of congressional staff, identified as Jobholders A-D, in a given position. Since tenure data are not captured before October 2, 2000, some individuals, represented as Jobholder A, may have an unknown length of service prior to that date that is not captured. This feature of the data only affects a small number of employees within this dataset, since many tenure periods completely begin and end within the observed period of time, as represented by Jobholders B and C. The data last capture those who were employed in House Members' personal offices as of March 31, 2016, represented as Jobholder D, and some of those individuals likely continued to work in the same roles after that date. Data provided in this report represent an individual's consecutive time spent working in a particular position in the personal office of a House Member. They do not necessarily capture the overall time worked in a House office or across a congressional career. If a person's job title changes, for example, from staff assistant to caseworker, the time that individual spent as a staff assistant is recorded separately from the time that individual spent as a caseworker. If a person stops working for the House for some time, that individual's tenure in his or her preceding position ends, although he or she may return to work in Congress at some point. No aggregate measure of individual congressional career length is provided in this report. Other data concerns arise from the variation across offices, lack of other demographic information about staff, and lack of information about where congressional staff work. Potential differences might exist in the job duties of positions with the same or similar title, and there is wide variation among the job titles used for various positions in congressional offices. The Appendix provides the number of related titles included for each job title for which tenure data are provided. Aggregation of tenure by job title rests on the assumption that staff with the same or similar title carry out the same or similar tasks. Given the wide discretion congressional employing authorities have in setting the terms and conditions of employment, there may be differences in the duties of similarly titled staff that could have effects on the interpretation of their time in a particular position. As presented here, tenure data provide no insight into the education, age, work experience, pay, full- or part-time status of staff, or other potential data that might inform explanations of why a congressional staff member might stay in a particular position. Staff could be based in Washington, DC, district offices, or both. It is unknown whether or to what extent the location of congressional employment might affect the duration of that employment. Tables in this section provide tenure data for selected positions in the personal offices of House Members and detailed data and visualizations for each position. Table 1 provides a summary of staff tenure for selected positions since 2006. The data include job titles, average and median years of service, and grouped years of service for each positon. The "Trend" column provides information on whether the time staff stayed in a position increased, was unchanged, or decreased between 2006 and 2016. Table 2 - Table 17 provide information on individual job titles over the same period. In all of the data tables, the average and the median length of tenure columns provide two different measures of central tendency, and each may be useful for some purposes and less suitable for others. The average represents the sum of the observed years of tenure, divided by the number of staff in that position. It is a common measure that can be understood as a representation of how long an individual remains, on average, in a job position. The average can be affected disproportionately by unusually low or high observations. A few individuals who remain for many years in a position, for example, may draw the average tenure length up for that position. A number of staff who stay in a position for only a brief period may depress the average length of tenure. The median represents the middle value when all the observations are arranged by order of magnitude. Another common measure of central tendency, the median can be understood as a representation of a center point at which half of the observations fall below, and half above. Extremely high or low observations may have less of an impact on the median. Generalizations about staff tenure are limited in at least three potentially significant ways, including: the relatively brief period of time for which reliable, largely inclusive data are available in a readily analyzable form; how the unique nature of congressional work settings might affect staff tenure; and the lack of demographic information about staff for which tenure data are available. Considering tenure in isolation from demographic characteristics of the congressional workforce might limit the extent to which tenure information can be assessed. Additional data on congressional staff regarding age, education, and other elements would be needed for this type of analysis, and are not readily available at the position level. Finally, since each House Member office serves as its own hiring authority, variations from office to office, which for each position may include differences in job duties, work schedules, office emphases, and other factors, may limit the extent to which aggregated data provided here might match tenure in a particular office. Despite these caveats, a few broad observations can be made about staff in House Member offices. Between 2006 and 2016, staff tenure, based on the trend of the median number of years in the position, appears to have increased by six months or more for staff in three position titles in House Member offices. The median tenure was unchanged for 13 positions. This may be consistent with overall workforce trends in the United States. Although pay is not the only factor that might affect an individual's decision to remain in or leave a particular job, staff in positions that generally pay less typically remained in those roles for shorter periods of time than those in higher-paying positions. Some of these lower-paying positions may also be considered entry-level positions in some House Member offices; if so, House office employees in those roles appear to follow national trends for others in entry-level types of jobs, remaining in the role for a relatively short period of time. Similarly, those in more senior positions, which often require a particular level of congressional or other professional experience, typically remained in those roles comparatively longer, similar to those in more senior positions in the general workforce. There is wide variation among the job titles used for various positions in congressional offices. Between October 2000 and March 2016, House and Senate pay data provided 13,271 unique titles under which staff received pay. Of those, 1,884 were extracted and categorized into one of 33 job titles used in CRS Reports about Member or committee offices. Office type was sometimes related to the job titles used. Some titles were specific to Member (e.g., District Director, State Director, and Field Representative) or committee (positions that are identified by majority, minority, or party standing, and Chief Clerk) offices, while others were identified in each setting (Counsel, Scheduler, Staff Assistant, and Legislative Assistant). Other job title variations reflect factors specific to particular offices, since each office functions as its own hiring authority. Some of the titles may distinguish between roles and duties carried out in the office (e.g., chief of staff, legislative assistant, etc.). Some offices may use job titles to indicate degrees of seniority. Others might represent arguably inconsequential variations in title between two staff members who might be carrying out essentially similar activities. Examples include: Seemingly related job titles, such as Administrative Director and Administrative Manager, or Caseworker and Constituent Advocate Job titles modified by location, such as Washington, DC, State, or District Chief of Staff Job titles modified by policy or subject area, such as Domestic Policy Counsel, Energy Counsel, or Counsel for Constituent Services Committee job titles modified by party or committee subdivision. This could include a party-related distinction, such as a Majority, Minority, Democratic, or Republican Professional Staff Member. It could also denote Full Committee Staff Member, Subcommittee Staff Member, or work on behalf of an individual committee leader, like the chair or ranking member. The titles used in this report were used by most House Members' offices, but a number of apparently related variations are included to ensure inclusion of additional offices and staff. Table A-1 provides the number of related titles included for each position used in this report or related CRS Reports on staff tenure. A list of all titles included by category is available to congressional offices upon request. | The length of time a congressional staff member spends employed in a particular position in Congress—or congressional staff tenure—is a source of recurring interest to Members, staff, and the public. A congressional office, for example, may seek this information to assess its human resources capabilities, or for guidance in how frequently staffing changes might be expected for various positions. Congressional staff may seek this type of information to evaluate and approach their own individual career trajectories. This report presents a number of statistical measures regarding the length of time House office staff stay in particular job positions. It is designed to facilitate the consideration of tenure from a number of perspectives. This report provides tenure data for a selection of 16 staff position titles that are typically used in House Member offices, and information on how to use those data for different purposes. The positions include Administrative Director, Casework Supervisor, Caseworker, Chief of Staff, Communications Director, Counsel, District Director, Executive Assistant, Field Representative, Legislative Assistant, Legislative Correspondent, Legislative Director, Office Manager, Press Secretary, Scheduler, and Staff Assistant. House Members' staff tenure data were calculated as of March 31, for each year between 2006 and 2016, for all staff in each position. An overview table provides staff tenure for selected positions for 2016, including summary statistics and information on whether the time staff stayed in a position increased, was unchanged, or decreased between 2006 and 2016. Other tables provide detailed tenure data and visualizations for each position title. Between 2006 and 2016, staff tenure appears to have increased by six months or more for staff in three position titles in House Member offices, based on the trend of the median number of years in the position. For 13 positions, the median tenure was unchanged. These findings may be consistent with overall workforce trends in the United States. Pay may be one of many factors that affect an individual's decision to remain in or leave a particular job. House Member office staff holding positions that are generally lower-paid typically remained in those roles for shorter periods of time than those in generally higher-paying positions. Lower-paying positions may also be considered entry-level roles; if so, tenure for House Member office employees in these roles appears to follow national trends for other entry-level jobs, which individuals hold for a relatively short period of time. Those in more senior positions, where a particular level of congressional or other professional experience is often required, typically remained in those roles comparatively longer, similar to those in more senior positions in the general workforce. Generalizations about staff tenure are limited in some ways, because each House office serves as its own hiring authority. Variations from office to office, which might include differences in job duties, work schedules, office emphases, and other factors, may limit the extent to which data provided here might match tenure in another office. Direct comparisons of congressional employment to the general labor market may have similar limitations. An employing Member's retirement or electoral loss, for example, may cause staff tenure periods to end abruptly and unexpectedly. This report is one of a number of CRS products on congressional staff. Others include CRS Report R43947, House of Representatives Staff Levels in Member, Committee, Leadership, and Other Offices, 1977-2016 and CRS Report R44323, Staff Pay Levels for Selected Positions in House Member Offices, 2001-2014. |
Title IX of the Dodd-Frank Wall Street Reform and Consumer Protection Act deals with investor protection and securities regulation. Within that general rubric, the title contains a very broad range of provisions. Parts of Title IX address aspects of the securities markets that are commonly viewed as directly involved in the financial crisis, such as credit ratings and securitization. In developing the legislation, however, Congress also addressed issues not directly related to the financial crisis. In particular, the Madoff and Stanford Ponzi schemes, discovered in late 2008 and early 2009, raised questions about the quality of regulation by the Securities and Exchange Commission (SEC). As a result, numerous provisions in Title IX address the SEC's performance and resources. Other key provisions deal with the duty of care that investment industry professionals owe to their clients and mechanisms by which shareholders can exert more effective control over corporate management. This report provides brief summaries of selected provisions in Title IX. It attempts to include those provisions that create new SEC authority, that were controversial during the legislative process, or that appear likely to have far-reaching consequences for the regulation of securities markets. Among the provisions omitted are sections making marginal enhancements to SEC authority in particular areas of securities law. Numerous such provisions, which were generally included at the request of the SEC and appear to make incremental changes in law and regulation, are not included in the interest of flow and brevity. Sections 911 and 915 of Dodd-Frank create two entities within the SEC: an Investor Advisory Committee (IAC) and an Office of the Investor Advocate (IA). Section 911 establishes a statutory mandate for the IAC, which was created by the SEC in 2009 using its existing authority. The IAC is to advise and consult with the SEC on (1) regulatory priorities of the Commission; (2) the regulation of securities products, trading strategies, and fee structures, and the effectiveness of disclosure; (3) initiatives to protect investors; and (4) initiatives to promote investor confidence and market integrity. Members of the IAC will include the Investor Advocate, a representative of state securities commissions, and a representative of the interests of senior citizens. In addition, the SEC will appoint between 10 and 20 individuals, including individuals representing the interests of individual equity and debt investors (including investors in mutual funds) and the interests of institutional investors (including the interests of pension funds and registered investment companies). IAC members must be knowledgeable about investment issues and decisions and have reputations of integrity. The SEC is not bound to follow the IAC's recommendations, but it must issue a public statement assessing such recommendations and stating whether it intends to implement them. Section 915 creates a new Office of the Investor Advocate. The IA, who is appointed by and reports to the Chairman of the SEC, will assist retail investors in resolving significant problems investors may have with the SEC or with self-regulatory organizations (SROs); identify areas in which investors would benefit from changes in the rules of the SEC or the SROs; identify problems that investors have with financial service providers and investment products; analyze the potential impact on investors of proposed SEC and SRO regulations; and (to the extent practicable) propose to the SEC and to Congress any changes that may be appropriate to mitigate problems and to promote the interests of investors. Section 919D creates an Ombudsman position in the Office of the Investor Advocate, to act as a liaison between the SEC and retail investors in resolving problems that retail investors may have with the SEC or SROs and to make recommendations regarding policies and procedures to encourage persons to present questions to the IA regarding compliance with the securities laws. The Ombudsman will be appointed by the IA. Both SEC-registered broker-dealers and investment advisers frequently give their customers advice regarding securities investments. Under federal securities law, however, the two classes of investment professionals are held to different standards as to the quality of advice they must provide. Investment advisers are under a fiduciary duty as defined in the Investment Advisers Act of 1940 and the associated jurisprudence. The essence of the fiduciary duty is that investment advice must be in the best interest of the customer. Broker-dealers, under the Securities Exchange Act of 1934, must meet a standard of suitability: their recommendations must not be unsuitable to the needs of a particular customer. Since many securities firms employ both brokers and advisers—and many individuals are registered in both capacities—there is the possibility that customers may not understand the difference. When a customer is advised to buy a certain mutual fund, for example, is the advice influenced by the compensation that the seller receives? If the adviser is under a fiduciary duty, the answer should be no, even though the recommended fund may be a suitable investment for the customer. Section 913 deals with the issue of a fiduciary duty that would apply to broker-dealers and investment advisers alike. The House and Senate took different approaches: the House-passed version of H.R. 4173 directed the SEC to create a single fiduciary standard by regulation, while the Senate-passed version called for a study of the issue. The conference version adopted both approaches: the SEC is to study the fiduciary duty question and report to Congress within six months of enactment. At the same time the legislation gives the SEC authority to establish a uniform fiduciary duty by rule. The SEC is not required to issue such a rule. The SEC has the right of approval over all proposed rules of self-regulatory organizations (SROs) in the securities industry—the stock and options exchanges and (the Financial Industry Regulatory Authority (FINRA, formerly the National Association of Securities Dealers), which registers brokers and handles many customer complaints. Section 916 responds to industry concerns that the SEC has not always approved (or disapproved) proposed rules in a timely manner. The section sets timetables for SEC consideration of proposed SRO rules: generally, the SEC must act within 45 days, but extensions are possible, particularly for rule proposals that are lengthy or complex or raise novel regulatory issues. Section 919C calls for a Government Accountability Office (GAO) study of the financial planning industry and the use of the "financial planner" designation. The study is to consider, among other things, the possible risk posed to investors and other consumers by individuals who otherwise use titles, designations, or marketing materials in a misleading way in connection with the delivery of financial advice; the ability of investors to understand licensing requirements and standards of care that apply to those who hold themselves out as financial planners; and the possible benefits of enhanced regulation and professional oversight of financial planners. The Senate Banking Committee considered provisions that would have created an SRO for individuals who called themselves financial planners, but the bill reported out of committee included the study, as did the version that passed the House. Section 922 seeks to create a robust whistleblower program within the SEC to encourage individuals with knowledge of securities fraud to come forward. The program is modeled on the Internal Revenue Service whistleblower program. A key element is the establishment of minimum awards—whistleblowers whose tips result in successful enforcement actions shall receive not less than 10% of the monetary sanctions collected in the action. SEC, SRO and other law enforcement personnel are not eligible, nor are auditors or persons convicted of criminal charges in the case where they brought forward information. The section also provides appeal rights in cases where the SEC decides not to make an award and confidentiality protections for whistleblowers. Section 921 addresses a controversial practice in securities markets—customers opening brokerage accounts often must agree to submit disputes to arbitration, waiving their right to take their broker to court. Critics of mandatory arbitration characterize features of the process as unfair to investors. For example, the securities industry controls the pools of individuals from which arbitrators are selected, and customers bringing complaints are limited in their ability to compel brokerage firms to produce documents. On the other hand, defenders of arbitration point to cost savings that benefit investors and argue that the results of arbitration cases do not show any pro-industry bias. The legislation amends the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940 to authorize the SEC to issue rules that prohibit or restrict the use of agreements that require customers or clients of any broker, dealer, adviser, or municipal securities dealer to arbitrate any future dispute between them arising under federal securities law or regulation, or SRO rules, if the SEC finds that such action is in the public interest and for the protection of investors. Regulation D permits private offerings of securities, where issuers are not required to make the financial disclosures required of publicly traded companies. To qualify for Regulation D, issuers must abide by certain conditions and restrictions: generally, they may sell only to accredited investors, they may not advertise their offerings to the general public, and there are restrictions on the resale of private securities. Under the SEC's Rule 506, issuers may sell an unlimited amount of securities without registering or filing reports with the SEC. Section 926 of Dodd-Frank prohibits "bad actors"—persons who have been convicted of violating securities law or been subject to certain enforcement actions by federal or state financial regulators—from issuing securities using the exemptions provided under Rule 506. (Similar prohibitions already applied to other forms of Regulation D offerings.) Subtitle B includes 35 separate sections, most of which provide enhancement or clarification of SEC enforcement authority or resources. These provisions include clarifying SEC authority over unlawful margin lending (Sec. 929); amendments to Fair Fund procedures, whereby defrauded investors may recover some of their losses (Sec. 929B); giving the SEC authority to serve subpoenas nationwide, regardless of where a particular case is filed (Sec. 929E); expanding the SEC's authority to punish aiders and abettors of securities fraud (Secs. 929M and 929N); and various amendments to the Securities Investor Protection Act (which reimburses investors when their brokers fail), including an increase in the minimum assessment paid into the insurance fund by broker-dealers and an increase in cash advances available to customers of failed brokerages from $100,000 to $250,000, which amount may be adjusted annually for inflation beginning 2011. (Secs. 929H and 929V.) Credit rating agencies took a large share of the blame for the financial crisis. They assigned triple-A ratings to thousands of complex subprime mortgage-backed bonds that plunged in value when the housing boom stalled, triggering uncertainty about the true value of those securities and contributing to market-wide panic. Several distinct approaches to rating agency reform were considered: stricter regulation by the SEC, to ensure that conflicts of interest (e.g., between the rating and sales operations of the businesses) did not compromise the integrity or accuracy of ratings; enhanced accountability through private litigation, by lowering the pleading standard for damage claims against rating agencies based on losses attributable to faulty ratings; reducing the significance of ratings in the securities marketplace by removing references to ratings in law and regulation, in order to remove any hint of government imprimatur; and increasing transparency, by requiring rating agencies to disclose information about their methods and models, and about the facts underlying the rating, to allow investors to perform independent evaluations of securities. The first two approaches are somewhat at odds with the third—the first two implicitly assume that ratings will remain a critical tool for investment decisions and seek to improve their accuracy, while the third considers them inherently fallible, and views any implicit or explicit government endorsement of ratings as undermining market discipline. The fourth approach in a sense bridges the gaps between the others. In Dodd-Frank, Congress adopted all these approaches. Subtitle C includes provisions enhancing the SEC regulatory scheme for "nationally recognized statistical rating organizations" (NRSROs) that was created by the Credit Rating Agency Reform Act of 2006 ( P.L. 109-291 ). Dodd-Frank follows the 2006 act in that it does not permit the SEC to regulate or evaluate rating methodologies or models, but it does seek to ensure that ratings are actually based on an objective application of those methodologies, and that commercial considerations do not influence rating decisions. Section 932 creates an Office of Credit Ratings in the SEC, imposes more stringent conflict-of-interest regulation (for example, the act includes "revolving door" restrictions on rating agency employees who go to work for companies whose securities they rated), and gives rating agency compliance officers additional responsibilities, including an annual report to the SEC. Section 936 requires rating analysts to meet standards of training, experience, and competence necessary to produce accurate ratings, and to be tested for knowledge of the credit rating process. Section 932 also requires NRSROs to have boards of directors with at least half the members independent of the NRSRO. Section 939F addresses what many observers believe to be the central conflict of interest in the ratings business: the "issuer pays" model, where companies not only compensate the rating agency but also choose the agency that will perform the rating. Section 939F directs the SEC to study the issue and create by rule a mechanism whereby the selection of an NRSRO to rate an asset-backed security issue is made on a random or semi-random basis. The mechanism is to be that set out in Section 939D of the Senate-passed version of H.R. 4173 (the Franken amendment), unless the SEC determines that an alternative mechanism would better serve the public interest and protect investors. Under the Franken amendment, the SEC is to define a pool of "qualified" NRSROs, and establish a board to assign initial credit ratings for certain complex securities and to determine rating agency compensation for performing such ratings. Section 933 increases legal liability by lowering the pleading standard in private lawsuits seeking money damages from a credit rating agency. Under the new standard, it shall be sufficient, for purposes of pleading any required state of mind in relation to such action, that the complaint state with particularity facts giving rise to a strong inference that the credit rating agency knowingly or recklessly failed (1) to conduct a reasonable investigation of the rated security with respect to the factual elements relied upon by its own methodology for evaluating credit risk; or (2) to obtain reasonable verification of such factual elements (which verification may be based on a sampling technique that does not amount to an audit) from other sources that the credit rating agency considered to be competent and that were independent of the issuer and underwriter of the security. Section 933 also states that credit ratings are not to be considered "forward-looking statements" for the purposes of Section 21E of the Securities Exchange Act, which provides a safe harbor for certain corporate disclosures (such as estimates of future earnings) from private lawsuits alleging untrue statements of material fact. Dodd-Frank also contains provisions intended to reduce market reliance on ratings. Section 939 repeals several statutory provisions that make reference to credit ratings—including, for example, the provision in the Federal Deposit Insurance Act that prohibits federally insured thrift institutions from holding bonds that are rated below-investment-grade by a nationally recognized statistical rating organization (NRSRO). As a substitute for ratings, the FDIC (and other federal agencies) are directed to establish their own standards of credit-worthiness. In addition, Section 939A requires each federal agency to review its regulations, identify any references to credit ratings, and remove any reference to or requirement of reliance on credit ratings. In substitution, each agency is to establish standards of credit-worthiness that are appropriate for the purposes of the regulations. The intent of removing references to credit ratings from law and regulation is to eliminate any sense that ratings carry a government imprimatur, and to encourage investors to perform their own analyses. Section 939B removes rating agencies' exemption from the SEC's fair disclosure rules (Regulation FD). This means that corporations can no longer provide the agencies rating their securities with proprietary, non-public financial information (a common practice in the past) unless such information is simultaneously made public. As a result, investors should no longer believe that ratings are based on information superior to what they themselves can obtain. Section 939G nullifies Rule 436(g) under the Securities Act of 1933, which exempted NRSROs from certain liability when ratings are included in an SEC registration statement or a securities offering prospectus. In the absence of Rule 436(g), an issuer that includes a credit rating issued by an NRSRO in a registration statement would be required to obtain the consent of the rating agency. As a result, the rating agency would be subject to potential Securities Act liability for false or incomplete disclosure. Since NRSROs receive no benefit from the inclusion of ratings, it might be expected that they would refuse to consent and that ratings would appear less frequently in offering materials. Section 932 includes extensive disclosure requirements. Each NRSRO rating must be accompanied by a form (in paper or electronic form, at the SEC's discretion) that contains information that can be used by investors and other users of credit ratings to better understand ratings, including the assumptions underlying the credit rating procedures and methodologies, the data that were relied on to determine the credit rating, and any problems or limitations with those data. Specific disclosure requirements apply to ratings of asset-backed securities—rating agencies must provide data on the underlying assets, as well as (if applicable) how and with what frequency the agency uses servicer or remittance reports to conduct surveillance of the credit rating. The nature and results of any due diligence investigation of the facts underlying a rating must also be disclosed. Section 938 deals with universal rating symbols and addresses concerns that rating symbols can mean different things in different classes of securities. For example, the probability of default for a municipal bond rated AA might be significantly lower than for a corporate bond with the same rating. Section 938 requires NRSROs to apply any symbol used in a manner that is consistent for all types of securities for which the symbol is used. The section does not, however, prohibit an NRSRO from using distinct sets of symbols to denote credit ratings for different types of securities. The asset securitization process, where home mortgages or other loans are sold by the original lenders, pooled, and resold to bond investors, produced the assets that came to be called "toxic" during the crisis. Losses in value accruing to mortgage-backed securities, together with uncertainty as to the true value of such securities, were a key factor in the freezing of interbank credit flows, as market participants came to doubt the credit-worthiness of banks and the reliability of balance sheets. Subtitle D addresses the asset-backed securities (ABS) market by imposing new obligations on "securitizers"—issuers of an ABS, or persons who organize and initiate ABS transactions by selling or transferring assets to an issuer—and (in some cases) on "originators," those who, through an extension of credit or otherwise, create a financial asset that collateralizes an asset-backed security and sell that asset directly or indirectly to a securitizer. The basic approach of Subtitle D is to require securitizers to have "skin in the game," that is, to retain a material portion of the credit risk in any ABS that they sell. By aligning the interests of sellers and buyers of ABS, the intent is to create incentives such that securitizers will take more care in selecting assets of good quality and that they will be less likely to create securities of such complexity that valuation is difficult in normal times and impossible when markets are under stress. Section 941 directs the SEC and the banking regulators (Fed, OCC, and FDIC) to write rules that require any securitizer to retain an economic interest in a portion of the credit risk for any asset that the securitizer, through the issuance of an asset-backed security, transfers, sells, or conveys to a third party. With regard to securitization of residential mortgages, the Secretary of HUD and the director of the Federal Housing Finance Agency (FHFA) will also participate in the rulemaking. The rules will address classes of securitized assets separately—individual risk retention requirements will be tailored to securitizations of home mortgages, commercial mortgages, commercial loans, auto loans, and any other asset class that the regulators deem appropriate. Securitizers must retain at least 5% of the total credit risk, unless the securitized assets meet standards of low credit risk to be established by the regulators for each asset class. In such cases, the amount of risk retained may be below 5%. Regulators must further define "qualified residential mortgages," taking into consideration underwriting and product features that historical loan performance data indicate result in a lower risk of default. Securitizations where all assets are qualified residential mortgages will be exempt from risk retention requirements. Risk retention requirements may be divided between securitizers and originators, but only if the SEC and banking regulators jointly consider (1) whether the assets sold to the securitizer have terms, conditions, and characteristics that reflect low credit risk; (2) whether the form or volume of transactions in securitization markets creates incentives for imprudent origination of the type of loan or asset to be sold to the securitizer; and (3) the potential impact of the risk retention obligations on the access of consumers and businesses to credit on reasonable terms. Section 941 gives regulators broad authority to exempt any securitization from the risk retention rules, provided that such exemptions help ensure high quality underwriting standards, encourage appropriate risk management practices by the securitizers and originators, improve the access of consumers and businesses to credit on reasonable terms, or otherwise are in the public interest and protect investors. Several types of securitizers are automatically exempt: Farm Credit System institutions, municipal issuers, and securitizations of certain assets insured or guaranteed by the United States or an agency of the United States. For purposes of this section, Fannie Mae, Freddie Mac, and the Federal Home Loan Banks are not considered to be agencies of the United States, although the regulators may, at their discretion, exempt securities issued by those government-sponsored enterprises. Section 941 authorizes the regulators to craft risk retention rules that are appropriate to second-degree securitizations, where the assets being pooled and securitized are themselves ABS. Such complex securities, known as collateralized debt obligations (CDOs), or "CDO-squared," were among the instruments that lost the most value during the crisis. The exemption for qualified residential mortgages does not apply to second-degree securitizations. Section 942 directs the SEC to adopt regulations governing disclosure of information about the assets underlying any ABS. Such disclosures shall include asset-level or loan-level data, if such data are necessary for investors to independently perform due diligence, including data having unique identifiers relating to loan brokers or originators; the nature and extent of the compensation of the broker or originator of the assets backing the security; and the amount of risk retention by the originators and the securitizer of such assets. To the extent feasible, the disclosures should permit investors to compare the performance of different ABS. The SEC has authority to exempt any issuers from the disclosure requirements. Section 943 deals with representations and warranties, which are essentially promises by originators to securitizers that assets meet certain credit standards. When rating an ABS, NRSROs must describe the representations, warranties, and enforcement mechanisms available to investors in the particular security and how they differ from the representations, warranties, and enforcement mechanisms in similar ABS. With regard to problem loans in the asset pool, securitizers must disclose fulfilled and unfulfilled repurchase requests across all trusts aggregated by the securitizer, so that investors may identify asset originators with clear underwriting deficiencies. Section 945 directs the SEC to write rules that require issuers of ABS to perform a due diligence review of the underlying assets and to disclose the nature of that review. Many analyses of the causes of the financial crisis assign a role to flawed compensation structures: when executives and traders receive much of their pay in the form of a bonus that reflects a single year's results, they may have an incentive to take long-term risks that boost short-term earnings. In most years, they profit, and when the rare loss comes, they keep their past bonuses. Subtitle E contains a number of provisions intended to align the incentives and interests of long-term shareholders and employees. Section 951 gives shareholders a "say-on-pay" vote, to approve or disapprove the compensation of executives. The vote will occur every one, two, or three years, at the shareholders' option. Another shareholder resolution vote will involve "golden parachute" payments, or severance pay received by executives in the event of a merger or takeover. Neither resolution will be binding on the company or its board of directors. Section 952 requires each stock exchange to adopt listing standards that require all listed companies to have a compensation committee of the board made up entirely of directors who are independent of the company. The listing standards shall permit compensation committees to hire compensation consultants (after taking into consideration SEC rules regarding compensation consultant independence) and to hire outside legal counsel. Section 953 requires companies to include in their annual proxy statements disclosures that permit shareholders to compare executive compensation actually paid to the financial performance of the issuer. The disclosures shall include a comparison of the compensation of the CEO with the median pay of all employees of the company. Section 954 requires the stock exchanges to adopt listing standards that require executives to repay erroneously awarded compensation under certain circumstances. If a company files an accounting restatement due to "material noncompliance" with any financial reporting requirement, the company will recover from any current or former executive officer who received incentive-based compensation (including stock options awarded as compensation) during the three-year period preceding the date on which the issuer is required to prepare the restatement, the difference between the amount that was actually paid and what would have been paid to the executive officer had the original financial statement been accurate. Section 956 gives regulators broad authority to deal with the types of incentive-based compensation structures that some observers identify as a cause of the crisis. The banking regulators (the Fed, OCC, FDIC, and NCUA), the FHFA, and the SEC are directed to jointly issue regulations or guidelines to require covered financial institutions to disclose information about compensation structures (not individual pay packages) sufficient to allow regulators to determine whether an institution's pay structure provides compensation, fees, or benefits that (1) are excessive, or (2) could lead to material financial loss to the covered financial institution. The regulators are directed to prohibit incentive-based compensation structures that encourage inappropriate risks by covered financial institutions. A "covered financial institution," for purposes of Section 956, means a depository institution or depository institution holding company, as such terms are defined in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813); a broker-dealer registered with the SEC; an investment adviser, as such term is defined in section 202(a)(11) of the Investment Advisers Act of 1940 (15 U.S.C. 80b-2(a)(11)); a credit union, as described in section 19(b)(1)(A)(iv) of the Federal Reserve Act; Fannie Mae or Freddie Mac; and any other financial institution that the appropriate federal regulators, jointly, by rule, determine should be treated as a covered financial institution for purposes of this section. This section does not apply to financial institutions with less than $1 billion in assets. Subtitle F is in significant part a response to perceived failures at the SEC. The Bernard Madoff Ponzi scheme, which was investigated several times by the SEC but not detected, raised questions about the competence of some SEC employees and about managerial and organizational weaknesses. Specifically, some of the SEC staff assigned to inspect Madoff's firm were inexperienced and took Madoff's false assertions at face value. Others failed to take simple steps, such as making a phone call or sending a letter to verify accounts where Madoff claimed to hold customer securities, that would have brought the fraud to light much earlier. There was little or no communication between divisions of the SEC: in one case, a team of investigators did not realize that another SEC investigation of Madoff had recently concluded. SEC supervisors did not support the efforts of front-line staff, in some cases transferring them to other projects before their Madoff inspections had reached a conclusion. Section 961, modeled after the Sarbanes-Oxley Act, requires the SEC to submit an annual report to Congress containing an assessment of the effectiveness of the Commission's internal supervisory controls and procedures applicable to SEC staff who perform examinations of registered entities, enforcement investigations, or reviews of corporate financial filings. The report shall include a certification, signed by the directors of the Division of Enforcement, the Division of Corporation Finance, and the Office of Compliance Inspections and Examinations, that the SEC has adequate internal supervisory controls to carry out its duties. In addition, at least once every three years, the GAO shall review the adequacy and effectiveness of the internal supervisory control structure, and furnish Congress with a summary of that review. Section 962 mandates that the GAO submit to Congress every three years an evaluation of the effectiveness of personnel management at the SEC. The GAO shall consider the effectiveness of supervisors in using the skills, talents, and motivation of SEC employees; the criteria for promoting employees to supervisory positions; the fairness of the application of the promotion criteria; the competence of the professional staff of the Commission; the efficiency of communication between the units of the SEC regarding the work of the Commission and efforts to promote such communication; the turnover within subunits of the SEC, including the consideration of supervisors whose subordinates have an unusually high rate of turnover; whether there are excessive numbers of low-level, mid-level, or senior-level managers; any initiatives that increase the competence of the staff of the Commission; actions taken regarding employees who have failed to perform their duties and circumstances under which the SEC has issued to employees a notice of termination; and such other factors relating to the management of the SEC as the Comptroller General determines are appropriate. Section 963 requires the GAO to submit annually to Congress a report that describes the responsibility of the management of the SEC for establishing and maintaining an adequate internal control structure and procedures for financial reporting, and contains an assessment of the effectiveness of that internal control structure and the procedures for financial reporting of the SEC during the previous fiscal year. Federal securities law provides for the existence of a national securities association to play a self-regulatory role in the securities industry, under the oversight of the SEC. The only national securities association now extant is FINRA. Section 964 requires GAO to submit to Congress every three years an evaluation of SEC oversight of national securities associations. The GAO shall consider the governance of such national securities associations; examinations carried out, including the expertise of the examiners; executive compensation practices; arbitration services; regulation of advertising; cooperation with state securities administrators by the national securities associations to promote investor protection; funding; and other matters. SEC compliance examiners work in the Office of Compliance, Inspections, and Examinations (OCIE). Section 965 of Dodd-Frank requires that the SEC's Division of Trading and Markets (which regulates broker-dealers and securities exchanges) and Division of Investment Management (which oversees investment advisers and mutual funds) also employ compliance examiners. The intent of the provision is to ensure that SEC examiners have expertise regarding the business of the entity they are examining. Section 967 calls for the SEC to hire an independent consultant of high caliber and with expertise in organizational restructuring and the operations of capital markets to examine the internal operations, structure, funding, and the need for comprehensive reform of the SEC, as well as the SEC's relationship with and the reliance on self-regulatory organizations and other entities relevant to the regulation of securities and the protection of securities investors that are under the SEC's oversight. Specific areas of study shall include possible elimination of unnecessary or redundant units at the SEC; improving communications between SEC offices and divisions; the need to put in place a clear chain-of-command structure, particularly for enforcement examinations and compliance inspections; the effect of high-frequency trading and other technological advances on the market and what the SEC requires to monitor the effect of such trading and advances on the market; the SEC's hiring authorities, workplace policies, and personal practices; and whether the SEC's oversight and reliance on self-regulatory organizations promotes efficient and effective governance for the securities markets. Shareholder groups have for many years sought legislation or regulations that allow shareholders to nominate candidates for a company's board of directors, and to have those candidates included next to management's candidates on the company's proxy materials that are mailed to shareholders each year before the annual meeting. Section 971 clarifies the SEC's authority to issue rules permitting the use by a shareholder of proxy solicitation materials supplied by an issuer of securities for the purpose of nominating individuals to membership on the board of directors of the issuer, under such terms and conditions as the Commission determines are in the interests of shareholders and for the protection of investors. On August 25, 2010, the SEC adopted a final rule allowing holders of 3% of a company's stock who have held the shares for three years to place a nominee for director in the company's proxy materials. Section 972 requires companies to disclose in their annual proxy report the reasons why the issuer has chosen the same person to serve as chairman of the board of directors and CEO or why the company has chosen to have different individuals fill those two positions. The financial crisis raised a number of concerns about municipal securities markets. A number of towns and counties were sold complex derivatives contracts that proved very costly, and concerns persisted about "pay-to-play" abuses by politically connected intermediaries. Subtitle H makes a number of significant changes to the regulation of municipal markets. Section 975 creates a new class of registrants under federal securities law. "Municipal advisors" are defined as persons who are not employees of a municipal entity but who provide advice to a municipal entity with respect to municipal financial products or the issuance of municipal securities, including advice relating to the structure, timing, and terms of securities offerings, or who undertake solicitations of a municipal entity. Municipal advisors include financial advisors, guaranteed investment contract brokers, third-party marketers, placement agents, solicitors, finders, and swap advisors, but do not include broker-dealers or municipal securities dealers serving as an underwriter (as defined in section 2(a)(11) of the Securities Act of 1933), SEC-registered investment advisers, or CFTC-registered commodity trading advisors. Municipal advisors must register with the Municipal Securities Rulemaking Board (MSRB), which is directed to make rules governing the business conduct of municipal advisors, and the SEC shall enforce those rules. Section 975 also amends the composition of the Municipal Securities Rulemaking Board—the board will now have 15 members, eight of whom shall be public members, independent of the industry. That is, the majority of the board will consist of members not associated with any municipal securities broker, municipal securities dealer, or municipal advisor. The eight independent board members shall include at least one representative of investors in municipal securities, one representative of municipal entities, and at least one shall be a member of the public with knowledge of or experience in the municipal securities industry. The seven board members from the industry shall include representatives of bank and non-bank municipal securities dealers and at least one individual who is associated with a municipal advisor. Each member of the board shall be knowledgeable of matters related to the municipal securities markets. Sections 976 and 977 call for GAO to conduct (1) a study of the adequacy of disclosures made to investors in municipal securities, and (2) a broad review of the market, including an analysis of trading mechanisms; the needs of the markets and investors and the impact of recent innovations; recommendations for how to improve the transparency, efficiency, fairness, and liquidity of trading in the municipal securities markets; and potential uses of derivatives in the municipal securities markets. Section 978 establishes a source of funding for the Government Accounting Standards Board (GASB), which formulates accounting standards for the voluntary use of state and local governments. The section authorizes to SEC to require FINRA to collect reasonable accounting support fees from its members (who are broker-dealers and other securities professionals) and to remit such fees to the Financial Accounting Foundation (GASB's parent organization). Responding to concerns that in recent years the SEC has devoted fewer resources to the oversight of municipal markets, Section 979 establishes the Office of Municipal Securities within the SEC. The Office shall be staffed sufficiently to carry out the requirements of this section, and must include individuals with knowledge of and expertise in municipal finance. Subtitle I contains 19 sections dealing with a range of different topics. Section 981 deals with the authority of the Public Company Accounting Oversight Board (PCAOB) to exchange information with foreign regulatory bodies. If the PCAOB determines that it is appropriate and necessary to protect investors, it may share confidential and privileged information gathered in the course of its oversight of U.S. auditing firms with a foreign auditor oversight authority, provided that the foreign agency supplies (1) such assurances of confidentiality as the PCAOB may request; (2) a description of the applicable information systems and controls of the foreign auditor oversight authority; and (3) a description of the laws and regulations of the foreign government of the foreign auditor oversight authority that are relevant to information access. Section 982 requires that all auditors of registered broker-dealers be regulated and examined by the PCAOB, whether or not the broker-dealer is a public company. (In general, PCAOB oversees only auditors of publicly traded firms.) This provision is related to the Madoff Ponzi scheme case—Madoff's broker-dealer was audited by an unregulated accounting firm with only two employees. Section 983 amends the Securities Investor Protection Act of 1970 (SIPA), which protects customers from certain losses caused by the insolvency of their broker-dealer. Customers of failed broker-dealers may be reimbursed up to $500,000. Under previous law, the protections of SIPA did not extend to futures contracts (other than security futures). As a result, customers who used futures to hedge against drops in securities prices were not afforded SPIA protection across their entire portfolio. Section 983 will enable customers to include both securities and related futures products in a single "portfolio margining account." SIPA protection will be based upon the net risk of the positions in the account. When insured depository institutions fail, and there is a material loss to the FDIC's deposit insurance fund, the Inspector General of the primary federal regulator of the failed institution is required to review the agency's supervision of the failed institution, including the agency's implementation of Prompt Corrective Action; ascertain why the institution's problems resulted in a material loss to the deposit insurance fund; and make recommendations for preventing any such loss in the future. Before Dodd-Frank, the threshold for a material loan loss review was a loss of $25 million. Section 987 raises the threshold of "material loss" to $200 million for losses that occur in 2010 and 2011, to $150 million for losses in 2012 and 2013, and $50 million thereafter. The purpose of this section is to eliminate duplicative and repetitive reviews of many bank failures experienced in the crisis that are generally attributable to the same causes. In addition, Section 987 directs the Inspectors General to prepare a semi-annual report on nonmaterial losses to determine if there were cases with unusual features that might justify a full loan loss review even though the materiality threshold was not reached. Those reports shall be made available upon request to any member of Congress. Section 989A directs the Bureau of Consumer Financial Protection to establish a program to provide grants of up to $500,000 per fiscal year to individual states to investigate and prosecute misleading and fraudulent marketing practices or to develop educational materials and training to reduce misleading and fraudulent marketing of financial products toward seniors. States may use the grants for staff, technology, equipment, training and educational materials. To receive these grants, states must adopt rules on the use of designations in the offer or sale of securities, insurance products, or investment advice; on fiduciary or suitability requirements in the sale of securities; and on the sale of annuity products by insurers. The section authorizes $8 million to be appropriated for these purposes for fiscal years 2011 through 2015. Section 989B amends Section 8G of the Inspector General Act of 1978 to clarify the delegation of authority to the Inspectors General of the Federal Labor Relations Authority, the National Archives and Records Administration, the National Credit Union Administration, the National Endowment for the Arts, the National Endowment for the Humanities and the Peace Corps. Section 989C provides for a more transparent peer review process among federal inspectors general to increase accountability. Section 989D provides that, in federal agencies for which a board or commission is the head of the entity, an inspector general may be removed only with the written concurrence of two-thirds of the board or commission. Section 989E establishes a Council of Inspectors General on Financial Oversight, made up of the inspectors general of the banking agencies, the SEC, the CFTC, the Departments of Treasury and HUD, and the FHFA. The Council shall meet quarterly to discuss the ongoing work of each inspector general, with a focus on concerns that may apply to the broader financial sector and ways to improve financial oversight. Section 989H requires the Chairmen of the Federal Reserve, the CFTC, the SEC, the NCUA, and the Director of the Pension Benefit Guaranty Corporation (PBGC) to take action to address deficiencies identified by a report or investigation of the Inspector General of the establishment concerned, or to certify to Congress that no action is necessary or appropriate in connection with such deficiency. Section 989G provides an exemption from Section 404(b) of the Sarbanes-Oxley Act for public companies with a market capitalization of less than $75 million. Section 404(b) requires that a company's internal accounting controls be audited by the firm's outside accountant. Section 404(a), which requires management to certify its responsibility for establishing and maintaining adequate internal controls, remains in force for all public companies. In addition, the SEC is directed to study and report to Congress on the effect of extending the 404(b) exemption to companies with market capitalization below $250 million. Section 989I directs the GAO to study the impact of Section 989G, in terms of number of accounting restatements, cost of capital, investor confidence, and voluntary compliance. Section 989J states that certain insurance or endowment policy or annuity contracts, the values of which do not vary according to the performance of a separate account, shall be treated as exempt securities under the Securities Act of 1933. This means that the sale of such contracts will be regulated by state insurance commissions rather than by the SEC. The exemption will only apply in states that adopt suitability or fiduciary standards that meet or exceed model codes developed by the National Association of Insurance Commissioners (NAIC). Subtitle J changes the way the SEC is funded. Since its creation in the 1930s, the SEC has collected fees on a variety of securities market transactions. Usually, the amount of such fee collections has exceeded the SEC's budget. Since 2000, the excess has gone not to the Treasury general fund, but rather to a special account available only to appropriators to fund the SEC. Under Dodd-Frank, one of the two major fees (a percentage of the proceeds from all sales of corporate stock) will be adjusted periodically so that the amount collected is approximately equal to the SEC's annual appropriation. The other major fee (a percentage of the value of all new securities registered for public sale) will go to the Treasury general fund. Target collection amounts are set out through FY2020. Subtitle J establishes a Reserve Fund in the SEC which may hold up to $100 million in excess fee collections. The Fund may be used to achieve flexibility and continuity in spending, in order that delays in enacting appropriations bills do not impede multi-year spending projects. In addition, the law provides for the SEC to submit its budget request directly to Congress, rather than through the Office of Management and Budget. Appropriations for the SEC are authorized through FY2015, when the amount will be $2.25 billion, about double the SEC's 2010 budget. | Title IX of the Dodd-Frank Wall Street Reform and Consumer Protection Act (P.L. 111-203) contains 10 subtitles and 113 separate sections amending federal securities laws intended to improve investor protection. The range of Title IX's provisions is very broad: some sections will bring significant changes to the securities business, while others are little more than technical clarifications of the Securities and Exchange Commission's (SEC's) authority. This report provides brief summaries of those provisions that create new SEC authority, that were controversial during the legislative process, or that appear likely to have far-reaching consequences. Some of the most noteworthy sections of Title IX address issues viewed as central to the financial crisis that erupted in 2007. These include enhanced regulation of credit rating agencies, whose triple-A ratings of "toxic" mortgage-backed bonds set the stage for panic; more stringent regulation of asset-backed securities, including a "skin in the game" requirement that issuers of such securities retain some of the risk; and a number of provisions relating to executive compensation, including authority to prohibit pay structures that create inappropriate risk in financial institutions. Another driving force behind Title IX was the Bernard Madoff Ponzi scheme, which repeated SEC examinations and investigations failed to detect. Many sections seek to improve the SEC's performance, including creation of an Investor Advocate and Investor Advisory Committee within the SEC; establishment of a whistleblower program to produce tips about securities fraud; various measures to improve SEC management, including a wide-ranging outside consultant study and various Government Accountability Office audits; and more budget flexibility and authorization for higher appropriations levels. Another group of provisions addresses the rights of investors and shareholders: the SEC may impose a fiduciary duty on broker-dealers who give investment advice, similar to the duty that already applies to investment advisers; municipal financial advisors must register with the SEC, and a majority of the Municipal Securities Rulemaking Board must be independent of the industry; and new disclosures and shareholder votes relating to executive compensation and corporate performance and governance, including SEC authority to allow certain shareholders to nominate candidates for the board of directors. Because of the diversity of these and other provisions, it is difficult to characterize the scope and thrust of Title IX in its entirety. Some observers, however, describe it as the most significant change to securities law since the enactment of the original federal statutes in the 1930s. This report provides a selective overview, and will not be updated. |
Many analysts and officials have indicated that this is a critical time in the research, development, and deployment of lethal autonomous weapon systems (LAWS), both in the United States and throughout the world. As discussed below, autonomous weaponry may play an increasingly important role in Department of Defense (DOD) plans for continued U.S. asymmetric advantage in combat. Such autonomy, however, also raises numerous concerns and some vocal opposition. These concerns are of three general types: (1) the belief that risks associated with such new weapons outweigh benefits, (2) concerns about whether lethal autonomy violates the international law of war, and (3) doubts regarding the moral impropriety of machines making apparently "discretionary" decisions to take a human life. Congress has an important role to play, either as part of the public discourse regarding the future of such capabilities and appropriate policy to address them, or "behind the scenes" via its funding authority and oversight responsibilities Questions related to the research on, and development and deployment of lethal autonomous weapon systems (LAWS) have been controversial for many years. However, several factors may call for congressional attention and potential action on LAWS at this time. A nuanced understanding of LAWS and related issues may assist Congress in its role regulating the manning, funding, and equipping of U.S. military forces. LAWS are a component of the DOD's ongoing "third offset" strategy. This strategy is one way the DOD conceptualizes and integrates plans for ensuring continued asymmetric combat advantage for the United States, with particular focus on the incorporation of future technologies not easily replicated by competitor states or non-state entities. Robotics and autonomous systems have been highlighted by the DOD as a component of this overall future effort of the U.S. military. Congress also sets the legal standards for the conduct of United States forces during armed conflict through the Uniform Code of Military Justice, as well as other statutory regulation. The use of LAWS involves many moral, ethical, and strategic issues beyond considerations of military advantage. For example, as discussed below, opponents of the development of LAWS argue, variously, that such weapon systems entail unrecognized long-term risks: strategic, such as undesirable escalation or difficulty maintaining control of the technology; legal, such as the inability of LAWs to discriminate between civilian and military targets; and ethical, because they place a machine in position to make a "discretionary" decision about human lives. The DOD currently internally regulates the research, development, and deployment of autonomous weapon systems via DOD Directive (DODD) 3000.09, Autonomy in Weapon Systems (2012). In the absence of congressional or executive action, some analysts consider this DOD directive as the de facto policy of the United States on this controversial topic. Finally, Congress is an instrumental part of U.S. participation in internationally binding bodies and agreements, both via funding and treaty approval. There has been some recent consideration of LAWS at the United Nations via the Convention on Certain Conventional Weapons (CCW), the treaty that serves to restrict or ban internationally the use of certain weapons that are indiscriminant or that cause unnecessary suffering, which the United States ratified in 1995. States parties to the CCW and its various protocols agreed in 2013 to a mandate to review issues associated with LAWS, and convened meetings of experts in 2014 and 2015 to discuss these issues. Numerous international nongovernmental organizations (NGOs) view the CCW as the vehicle for advocating for multinational regulation or prohibition of LAWS. Senate approval would be required for any potential international treaty or additional protocol to the CCW, and congressional implementation may be required for any less formal agreement on the subject. A variety of options have been proposed in response to the near-term development and possible appearance of LAWS in the battlespace. The option most often discussed is the proposal to enact a complete ban on research, development, and deployment of "fully" autonomous weapon systems. Proponents argue that such bans have been effective in the past—in areas such as biological and chemical weapons they have restricted use among major nation states and thereby retarded development—and could significantly curtail development and deployment, even among nations that do not voluntarily participate in the ban. Opponents of the ban argue, in contrast, that a ban would be both undesirable and ineffective. They argue that it would be undesirable because of the substantial possibility that research in this area could eventually lead to the development of autonomous weapon systems that are more compliant with the law of armed conflict (LOAC) and other international law than current systems, as discussed below. It is also argued that such a ban would be ineffective because of two factors: (1) rapid development of civilian dual-use technologies, such as drone guidance systems and unmanned vehicles, and (2) non-U.S. peer development of these technologies. It is argued that peers will not agree to a ban, that such a ban will be unenforceable because of the ambiguity of such terms as "fully autonomous," and that such a ban, even if states publically agreed to it, would be unenforceable without a comprehensive and unlikely enforcement regime. Proponents of a ban have noted, though, that similar arguments have been raised with respect to bans on other technologies, such as blinding lasers, antipersonnel landmines, or cluster munitions, that have been negotiated and enforced. Another option for action, advocated by both proponents and opponents of a ban, is regulation of the technology—both its development and deployment. Proponents of this idea suggest that autonomous weapon development should continue, but international bodies should develop regulatory guidelines, embodied in a binding agreement like a protocol to the CCW, to describe the appropriate contours for the use of autonomous systems. In the United States, the only regulatory document currently applying to autonomous weapon systems is the Department of Defense Directive 3000.09 – lauded by some in the international community for providing a model framework for testing and basic guiding principles. Others note that regulation at the international level can be coupled with transparency, particularly regarding LOAC compliance-testing methods and systems even if the autonomous source code remains secret, to ensure that developed systems are tested as vigorously and broadly as possible, minimizing the likelihood of unexpected decisions. In sum, in the absence of a complete ban, both opponents and supporters of a complete ban on lethal autonomous weapon systems agree that LAWS should be regulated and managed. Congress would likely play a central role in any such ban or regulation of the technology, in a variety of ways. Of course, if a ban or control regime was developed via international treaty, then ratification of the treaty would require Senate approval. However, even in the absence of international action, Congress could set the legal bounds for the process of researching, developing, and deploying such systems within the DOD. Although the DOD Directive discussed above provides current standards for review and regulation of autonomous weapons, Congress could provide additional or alternate standards of review and employment. Even if Congress does not seek to supplant the specific standards developed by the DOD in its directive, there are opportunities for congressional regulation and oversight. For example, although DODD 5000.01, Defense Acquisition Systems , requires legal review of weapon acquisitions, and there are pre-existing procedures for these reviews within each of the individual services, the weapons review process may not be adequate to handle the complexity, nuance, and transparency needed for autonomous weapon review. For example, as discussed below, an understanding and review of the nature and reliability of an autonomous system's behavior is required for adequate legal analysis. However, unlike traditional weapon reviews, lawyers making judgments about autonomous systems may require technical insight or even simulation capability currently unnecessary (and therefore unavailable) when evaluating more conventionally understood effects (such as explosive radius, etc.). To meet these challenges, weapons review in this and perhaps other areas of emerging technology may benefit from more detailed standardization and centralization, or the provision of additional resources. Furthermore, the complex issues and high international profile of these weapon systems might make it appropriate to require congressional reporting and thereby oversight at intermediate stages in the acquisition and legal review process not always necessary for other weapon systems. Finally, Congress will almost certainly be presented with regulatory issues that relate to the development and employment of these technologies, but which do not directly relate to the standards of development and use within the United States. For example, Congress may be asked to consider statutory action to assist in LAWS development or prevent proliferation, perhaps by carefully regulating the export of dual use technologies in this area. Even in the absence of statutory regulatory action, congressional budgetary action on weapon system funding, as well as areas of research and development, will provide a direction for military development. There are various ways to discuss autonomy in weapon systems. The definitions of the terms, and even the taxonomy of existing systems, are not always consistent among authors on the subject. As discussed in the text box, "What is Autonomy?" the synthesized view of the many definitions acknowledges a continuum of "autonomy" in weapon systems based primarily on two factors: (1) the target specificity (the geographic, temporal, and descriptive guidance designating the target of lethal force) provided by human operators when the weapon system is set into motion, and (2) the execution flexibility (scope of potential self-initiated action) in service to assigned goals. Both the target specificity and execution flexibility of an autonomous system may vary by conflict, mission, or even individual objective. Therefore, a particular weapon system occupies a range rather than a point within the continuum of autonomy determined by its potential uses, and has a specific degree of autonomy only upon being set into motion with these parameters assigned. Discussions of the "autonomy" of a weapon system as a whole frequently refer to circumstances under which the system acts in a maximally autonomous manner. This convention may be misleading and lead lawmakers and regulators to evaluate autonomy on a per platform basis, rather than defining permissible and impermissible conditions of employment that apply across devices. The variety of military systems in use that automate some processes, or that include some degree of autonomy, is large, and a short survey may help to understand both their ubiquity and the scope of the systems' autonomy as perceived by various parties. Military automation extends well beyond lethal autonomy to force-multiplication technologies, which are not explicitly considered in this report. This includes such disparate capabilities as automated drone flight (including takeoff and landing), auto-loitering capabilities of human-targeted weapons, and automated selection of high-interest imagery for intelligence analysis. Even the new Joint Light Tactical Vehicle, a replacement for the Humvee, was planned to be manufactured by Oshkosh—a firm that offers software ("TerraMax") allowing their vehicles (including the model sold to the Army) self-driving capabilities. Autonomous systems of these types, which do not incorporate independent selection of targets or initiation of lethality, are not themselves controversial but nonetheless create both the technological and doctrinal basis for more hotly debated LAWS. Another set of systems that incorporate some degree of autonomy along with lethality, but with less controversy, are autonomous defenses. The U.S. Navy, for example, has used the Phalanx system to defend ships against missile attack since the 1970s, with little comment from the civilian community. In cases where the ship defense systems recognize an incoming threat that requires a response faster than a human operator is capable of providing, the defense system is empowered to initiate a lethal response without human involvement. Likewise, a similar land-based system (C-RAM) has been deployed by the United States at forward-operating bases in Iraq. The C-RAM system, like the Israeli Iron Dome that performs a similar counter-rocket, artillery, and mortar function, can perform its defensive function only by detecting, targeting, and firing in a decision-cycle too fast for human operators to be involved. In these defensive systems, the human operator does not designate a specific target and initiate the use of lethal force. While the absence of human control over targeting is often expressed as the break point for autonomous warfare, these systems are nonetheless frequently granted either a carve-out from otherwise restrictive regulations (as in the DODD), or treated as non-autonomous precursors to genuinely autonomous systems. This is likely related to both the high target specificity provided by the "defensive" nature of the weapons (targeting predetermined based on a specific set of geographic, temporal, and evaluative characteristics) and the relative lack of execution flexibility (these weapons simply shoot down objects that meet strictly defined criteria). These dual factors have led some, otherwise highly critical of autonomous weapon systems, to even decline to label them as autonomous—calling them "automated" instead. Another area of ubiquitous incorporation of some degree of autonomy is in weapon systems that exercise some degree of execution flexibility but have very high target specificity (see Figure 1 ). For these weapons, the specific individual target or group of targets (e.g., a specific plane or formation of planes, a specific structure) is designated by a person at the time of weapon initiation. This category includes, for example, cruise missiles, as well as the many air-to-air missiles that choose a target from among those available once launched into position by the human operator. Like defensive systems, these types of flexibly executing but very specifically targeted systems are generally considered to raise limited if any risk-based, legal, or moral/ethical issues associated with autonomy. Other systems in this category, such as encapsulated torpedoes, have less specific targeting, and thereby have the potential to generate some controversy. An encapsulated torpedo is a stationary "mine" prepositioned in a guarded area that, when activated, targets and fires a torpedo at a hostile ship that enters the guarded area. In this case, the encapsulated torpedo shares some of the targeting specificity of defensive systems, but that specificity is reduced by its temporal separation from the human operator (it is prepositioned) and the potentially more nuanced and complex judgments required if the protected waterways are also used for civilian shipping. At the same time, these systems also incorporate the execution flexibility —via the torpedo's action—normally associated with systems featuring very specifically targeted lethality. A number of existing or proposed systems may already exhibit behavior that might be considered autonomous under generally prevailing standards. The Israeli Harpy system is an aerial drone that loiters in a target area, generally over enemy territory. Upon detecting a hostile radar source, the Harpy drone targets and initiates a lethal strike against that source. Because this system initiates lethal force against a target that has not been specifically designated by a human operator, it is plausibly considered an autonomous system by most definitions. Likewise, South Korea has deployed to the DMZ emplaced gun towers with autonomous lethal capacity, although their current operational assignment requires human consent before lethal response can be initiated. A wide variety of topics are subject to debate in the policy and academic literature regarding the consideration and development of lethal autonomous weapon systems. Although an exact taxonomy does not exist, the numerous issues under debate can be usefully divided into those regarding (1) risks and potential benefits; (2) legal issues; and (3) moral/ethical concerns (see Figure 2 ). Although authors' positions vary in terms of nuance, much of the primary discussion centers on whether a ban (international or unilateral by the United States) on the research, development, and deployment of LAWS is appropriate. That autonomous lethality provides tremendous potential value in the context of armed conflict is uncontroversial. With non-lethal military systems, traditional automation provides an immediate force-multiplier by taking repetitive or analytically arduous tasks and removing the need to hire, train, and support personnel to perform them. Autonomous action is more valuable, as complex systems that incorporate tools such as learning algorithms and contextual awareness allow for the "automation" of far more numerous and difficult (in terms of both training and incentive) tasks that require judgment and situational awareness. As a simple example, automation of some or all flight requirements of remote-controlled drones, if reliable, would allow for significant savings and multiplication of efforts by allowing remote-control pilots to assume direct control only during the actual operational use of the weapon system—automating the flight to and from the depot. In addition, autonomous systems are generally capable of reacting substantially faster than humans. One way to conceptualize the critical element of initiative, as well as overall command and control competence, is the "OODA loop." The OODA loop consists of the key steps of (O)bserve, (O)rient, (D)ecide, and (A)ct. Under this concept, when considering two opposing forces, whether on the individual, tactical, or strategic level, whichever force has the ability to cycle through these steps the most quickly will control the initiative of the conflict—thereby forcing the opponent to react rather than initiate. In practice, this effect snowballs, as the faster force is able to counter-react before the opponent's initial reaction cycle completes, and each cycle of reaction delay drives the opponent more out of synch with appropriate response to the current situation. Some observers assert that the initial reaction advantage of autonomous systems will snowball into a potentially insurmountable advantage in warfare. Finally, one of the primary concerns with today's non-autonomous remote controlled weapon systems is the problem of both unreliable connections to the remote pilot and the possibility of enemy interference. Like the presence of an on-board pilot, autonomous action by the weapon system itself minimizes the requirement for continuous communication and the possibility for enemy interference with control signals during deployment. Although the presence of software-driven decision-making raises the possibility of the enemy "hacking" autonomous control systems, it is unclear to what degree this risk is substantially greater than that already posed with modern non-autonomous weapon systems, almost all of which rely on sophisticated computer controls and, frequently, network communication. However, these potential advantages are counterbalanced, even for many of those who do not support an outright ban, with concern for operational risks involved in LAWS development and deployment. While these risks are discussed in more detail below, they include the possibility that programming error, novel situations, or adversary activity could lead to a loss of control or predictability. Unlike idiosyncratic human decision-making, software control systems may be replicated across the fleet of LAWS, and so the damage potential of a simultaneous failure by all similar LAWS in the inventory must be considered, not only the consequences of a single system failure. This could result in disproportionately high damage versus human controlled or only partially autonomous, systems, with consequences including mass fratricide or undesired escalation of conflict. Focus on lethal autonomous weapon systems may also be potentially beneficial for the United States because it capitalizes on current advances in civilian autonomous technology. The United States is a global leader in this area, and one of the imperatives of military technology is to maximize areas where an asymmetric advantage is available that is difficult for opponents to replicate. Synergistic technologies of stealth, reconnaissance, and precision weapons developed by the United States gave substantial and persistent advantage to the military precisely because these technologies represented areas of U.S. leadership and were difficult for opponents to replicate. Furthermore, investment by the United States in these areas of research and development will likely drive development of industrial capacity and commercial development in a virtuous cycle. Military and civilian developments in autonomous capability could therefore have a symbiotic relationship. Translation of civilian developments in autonomy into weapon systems, however, may also result in an "arms race" dynamic, where competitor states are forced to invest in LAWS to retain military competitiveness; it could allow for the proliferation of lethal autonomy to entities, such as sub-state actors, who lack the organic R&D to otherwise develop such systems. Many authors, both opponents and supporters of a ban on LAWS, have highlighted the potential benefits of autonomous technology for ethical warfare in the sense that they could facilitate compliance with the law of armed conflict—at least in some areas. LAWS as currently conceived are not susceptible to emotional effects, such as shock or anger that may result in abuses by human soldiers. Finally, the presence of LAWs in mixed teams with human soldiers, particularly if LAWS have independent capacity to judge ethical conduct, may restrict the willingness and ability of those soldiers to engage in inappropriate or unlawful conduct. In addition, introducing autonomous weapon systems into an environment where all or almost all of the potential targets are lawful, or have already been vetted, seems to potentially provide humanitarian benefits. For example, if the alternative is between introducing a lethal explosive device or a lethal autonomous system with some capability to avoid accidental or collateral casualties, the LAWS would likely be clearly legally and ethically desirable—even if the system's ability to distinguish non-combatants is unreliable. In this sense, autonomous decision-making at the moment of lethal action may be an improvement on the precision of weapon systems, eliminating some of the error created by imperfect intelligence and distance in time between the initiator and target. However, these proposed benefits are questioned by many, including supporters of a ban, arguing that such "better ethical decision-making" technology does not exist and is unlikely to ever exist. There are also concerns that ethical decision-making would not be employed by potential state and non-state opponents of the United States in a prospective arms race, even if the United States reliably did it. The extensive legal and ethical critique of autonomous weapon systems arising from these questions is discussed in more detail below (under the " Legal Issues " and " Moral/Ethical Issues " sections). A common concern regarding the development of LAWS is that it will encourage inappropriate aggression. The justification for initiating armed conflict is generally described by the concept of jus ad bellum , or Just War theory. However, although sometimes couched as such, the concern that LAWS will lead to more warfare is not actually a legal one, since use of LAWS does not affect the legal evaluation of the propriety of war initiation. Rather, the argument is that LAWS would create a moral hazard for national leadership. This presupposes that current or future leaders are willing and desire to engage in unlawful war-making but are inhibited by the likelihood that it will result in military casualties, either for moral reasons or because of spin-off effects of those casualties. If these suppositions are accurate, then LAWS would appear to increase the likelihood that leaders would engage in unlawful aggression since it would minimize these casualties. Some argue, however, that this objection seems excessively generic. They contend that any weapon system that minimizes casualties, or gives a substantial advantage to one side in armed conflict, would trigger this same moral hazard. Another potential risk to the development of LAWS that has been noted is that it will trigger wider arms races. This argument takes two forms. First, that because of the tremendous tactical advantage associated with the development of LAWS, peer and near-peer competitors will be forced to develop autonomous capabilities for their own weapon systems. Second, asymmetric competitors, such as international terrorist organizations, would have access to the technology once it becomes widely used in warfare. For both of these versions of an "arms race," one harm contemplated, in addition to the inherent instability associated with arms race dynamics , is that competitors will have either less incentive or less capacity to control the behavior of LAWS, resulting in development or fielding of LAWS that fail to comply with the laws of war (generally, this is conceived as competitors developing indiscriminate LAWS, since automation is far easier to accomplish than discrimination or ethical decision-making). A number of counterpoints have been presented to this risk. First, many contend that an arms race is already in progress, with peer and near-peer competitors currently developing autonomous weapon systems—regardless of U.S. development of these systems. It is argued these nations would refuse to adopt, or successfully evade enforcement of, any potential multilateral ban. Second, it is argued that asymmetric competitors may be capable of taking advantage of technological development, particularly civilian sector advancements, even if not actively developed for military purposes by nation-states. Under this argument, once the basics of autonomy in machines are developed for civilian purposes, weaponization of these autonomous systems is relatively trivial. Another risk associated by some with the development of LAWS is an increased likelihood of attacks on civilian targets, particularly in the United States itself. The argument is that the development of LAWS will result in the absence of U.S. soldiers from the war zone. Enemies of the United States, it is argued, will see no political/strategic benefit in attempting to fight, or carry out attacks on autonomous weapon systems if the United States is not suffering human casualties. The opponent, under this argument, is therefore incentivized to carry out attacks on civilian rather than military targets. Counter-arguments presented by others include at least one made against the discussion in the " Likelihood of War/ Jus Ad Bellum " section above, in that any generic technological advantage that makes U.S. service-members less susceptible to enemy attack appears to create the same risk. In the same vein, a DOD analyst has noted that this argument essentially "blames the victim," by discouraging protection of soldiers because of the enemy's presumed willingness to violate the laws of war by assaulting civilians. Finally, it has been pointed out, considering the history of nuclear strategy as well as terrorist targeting, that both peers and asymmetric opponents are not generally reluctant to place civilians in jeopardy if it serves strategic ends, and therefore the presence or absence of U.S. casualties away from the battlefield is irrelevant. Another perceived risk with the use of autonomous weapon systems is that reliance on autonomous systems increases the military's vulnerability to hacking or subversion of software and hardware. The replication of software, as well as the complexity and interdependence involved with widespread use of autonomous weapon systems could also significantly magnify the harmful impact if a security vulnerability or exploitable system malfunction were discovered by an adversary. Potential consequences could include mass fratricide, civilian targeting, or unintended escalation (as discussed under " Loss of Command/Control " below). One response to that argument, however, is that "on-board" autonomous capability may counter subversion or hacking of current and future remote systems. Also, even weapon systems that do not include autonomous capabilities rely on computer hardware and software. This automation is no less susceptible to hacking and subversion, and the presence of autonomy may make a system more resilient than an equally computerized but less internally controlled non-autonomous weapon system. Another risk discussed in the literature is the possibility that large-scale adoption of autonomous weapon systems may result in "run-away" escalation that results in warfare that otherwise would not have occurred. When considering this possibility, some of the military advantages of autonomous systems become disadvantages. First, the complexity, interdependence and flexibility of the system that allows it to perform complex mission sets may result in unpredictable and unintended lethality. In addition, some have maintained that the danger of uncontrolled escalation is significantly greater precisely because of the speed with which LAWS are capable of decision-making and action—one of the primary military advantages—creates a significant time delay between failure and corrective action. Some analysts of LAWS argue that in an environment with multiple autonomous systems—likely on both sides of a tense, armed confrontation—armed conflict may begin without either party intending it because of an initial error snowballing into a full-scale response, triggering an automated response in a vicious cycle. The counter-argument is that there is nothing inherently more destructive about autonomous weaponry; it is simply conventional weaponry directed by an autonomous system. Because of this it is not clear why autonomous systems are more susceptible to inadvertent escalation than humans under the same circumstances. Some also question the plausibility of a scenario in which numerous free-ranging autonomous weapon systems come into contact with one another while empowered to engage in lethality independent of human tasking or authorization. The final, and frequently primary, risk perceived by many is in the area of reliability and predictability. For various reasons, almost all involved in LAWS analysis recognize difficulties inherent in ensuring reliable decisionmaking. Proponents of a ban generally take the position that the decision-making of an autonomous weapon system is fundamentally or irreducibly unpredictable, thereby foregoing the need for research to determine future reliability. For example, some argue that because no software can include an exhaustive description of all possible circumstances, it is impossible for an autonomous system to behave predictably outside highly controlled circumstances. Others argue that the technology required for flexible autonomous operations will, by needs, be based on learning or self-altering algorithms, which may develop unpredictable behavior patterns invisible to the original designers. Some experts, however, believe that an autonomous decision-making system may plausibly reach a level of reliability and predictability comparable to a human soldier. The proponents of the technology, at least in theory, tend to argue that requiring absolute or logically certain predictability from LAWS holds it to a higher standard than that applied to humans and risks failing to use a potentially more reliable system because it is not perfectly reliable. The question of decision-making performance is, however, inextricably linked to a large number of disputes regarding the legality of LAWS. The nature and performance of the autonomous system in making critical decisions about the propriety of the use of lethal force are the central issues of the next section. The areas of legal contention regarding autonomous weapon systems are 1) the weapon system's ability to comply with U.S. obligations under international humanitarian law (IHL) and 2) rules of engagement. This is essentially an operational concern: "Will the functioning of the weapon systems comply with the appropriate requirements?" The second concern is less focused on function and more focused on accountability. This concern centers on whether the use of LAWS will make it more difficult to hold parties responsible for misconduct in the course of armed conflict. Various authors have pointed to three primary areas of operational law that may affect consideration of LAWS. First, there is the set of legal norms covered by the concept of jus ad bellum , which is the law governing the appropriate justification for the initiation of armed conflict. Second, there is the body of law classifying weapons as lawful or unlawful. Finally, all parties discuss the laws governing conduct during war, or jus in bello . Jus ad bellum is addressed in the section on " Likelihood of War/ Jus Ad Bellum " section above, because the relevant debate with respect to autonomous weapons has more to do with the perceived risk of moral hazard than legal justification for the use of force. A fundamental tenet of the international law of armed conflict is that "the right of the parties to an armed conflict to choose methods or means of warfare is not unlimited." Specifically, it is prohibited to use weapons or projectiles in such a manner as to cause superfluous injury or unnecessary suffering, or to use means or methods of warfare that are "intended to or may be expected to cause widespread, long-term, and severe damage to the natural environment." Under Article 36 of Additional Protocol I to the Geneva Conventions, states parties are also obligated to undertake legal reviews of new weapons systems under study, development, or acquisition, "to determine whether [their] employment would, in some or all circumstances, be prohibited by this Protocol or by any other rule of international law applicable to the High Contracting Party." While the United States is not a party to Additional Protocol I, it is one of the few states to have adopted a formal program to review weapons and weapon systems for compliance with international legal obligations. A weapons evaluation for compliance with the laws of armed conflict considers first whether a weapon is prohibited per se , or prohibited under all circumstances, under the law of war. This status adheres to weapons that are banned pursuant to treaty as well as to weapons that cannot comply with legal requirements under any circumstance or method of use. The two principal legal requirements are, first, that the weapon does not cause suffering or injury beyond that required for a military purpose. For example, the use of glass ammunition is prohibited, without further evaluating the specific circumstances of use, because its use is considered to inflict unnecessary suffering. Second, weapons must be capable of being employed in a fashion to distinguish between military and civilian targets (which might be impossible because of an incapacity to target accurately or control effects). For example, a cyber-weapon that, when deployed, could not be prevented from doing uncontrollable collateral damage to civilian infrastructure would likely be illegal per se. Weapons are evaluated considering their normal or expected use rather than any conceivable use (or misuse). Although some proponents of a ban on LAWS argue that such systems are per se illegal on the basis that they can never adequately distinguish between lawful and unlawful targets, opponents argue that this assertion ignores many lawful use scenarios. They point out that even "dumb" bombs are not per se illegal, since they can be used under circumstances in which civilians are not present; for example, to target a group of tanks in a desert area. Likewise, even autonomous weapons without any capability to distinguish between combatants and civilians might be used under limited circumstances in combat zones without noncombatants. The resolution of this disagreement seems to turn on the likelihood of any scenario in which LAWS can perform at least equal to a human, with opponents of a ban pointing to the uncontroversial current use of "over-the-horizon," or sensor-based, targeting as an analogy, and proponents of a ban arguing that these scenarios are extremely limited or unlikely. The second aspect of a weapon evaluation is based on the specific proposed uses of the weapon. In this case, each of the proposed uses of the weapon must be evaluated for the weapon system's compliance—under those sets of circumstances—with the law of war. This contextual evaluation primarily relies on the weapon system's ability to comply with the principles of distinction and proportionality during actual operational use. Although a variety of "principles" form the basis of the law of armed conflict (the DOD identifies five), most authors considering autonomous weapon systems have centered their consideration on the foundational principle of distinction and its related principle of proportionality . The requirement to take feasible precautions is also frequently mentioned, but this issues seems to have generated little meaningful debate. Distinction is the requirement that warring parties distinguish between military and civilian objects and personnel during the course of conflict, and is considered customary international law. As Article 48 of Additional Protocol I to the Geneva Conventions puts it, "[i]n order to ensure response for and protection of the civilian population and civilian objects, the Parties to the conflict shall at all times distinguish between the civilian population and combatants and between civilian objects and military objectives and accordingly shall direct their operations only against military objectives." The primary concern, as discussed in the " Judgment Errors/Accuracy " section above, is that LAWS will simply be unable to distinguish between combatants and civilians. This inability is considered, by all sides of the debate, to be a particularly acute concern in the context of irregular warfare. In these conflicts, combatants may be embedded within the larger civilian environment, which creates extremely complex decision-making scenarios. As an example one author offers the case of an autonomous robot that performs a house-to-house search for combatants and encounters an individual running toward the robot, screaming, holding something metallic in his hand. One can certainly imagine circumstances in which entry into a civilian home would result in an agitated reaction from residents, and there are many objects that even humans are unable to quickly and effectively distinguish from weapons. In addition, because LAWS lack empathy or human emotion, some authors argue that LAWS are now and will be in the future unable to effectively determine the intentions of individuals on the battlefield. As a result, LAWS will be unable to effectively distinguish between combatants and noncombatants, particularly, it is argued, in complex situations involving non-civilian noncombatants, such as surrendering, wounded, or otherwise incapacitated fighters. Defenders of the technology, at least in terms of its potential, point out that future autonomous weapon systems may be more capable of distinguishing between combatants and civilians than human soldiers. LAWS' capabilities are not degraded by the same stress and emotional intensity that may affect the judgment of soldiers in combat. Moreover, because LAWS have no need for self-defense, they can respond more tolerantly to ambiguous circumstances than similarly situated soldiers, for example by delaying their response to "threatening" actions until the initiation of active hostility. In addition, governments interested in improving the accuracy of distinctions made by such systems could employ shared standards of testing, as well as leveraging the benefit of evaluation by ethicists of complex or difficult distinction decisions. Others argue that LAWS will still be useful in high intensity conflicts, even if they never perform to a level permitting operation in combat zones that contain a significant number of noncombatants. For example, in a combat zone without noncombatants, a rule of engagement might allow any vehicle identified moving in an area of enemy encampment to be struck by a barrage of indirect fire from ship-based guns or "dumb" bombs dropped from the air. LAWS activity to target vehicles within this zone would have relatively low requirements to match human decision-making in similar circumstances. As long as LAWS are limited to these circumstances, their ability to perform extremely nuanced judgment tasks seems less relevant. Opponents counter that LAWS will inevitably be used outside these circumstances once available for operations because of the military advantages they provide. Whether or not this is true for U.S. military activities may turn on the criticality of the interest that the U.S. military force is protecting. It is clear that U.S. political and military leaders are willing to impose restrictions on military operations in many cases (e.g., Syria, Afghanistan); however, they may be less likely to maintain such restrictions if they believed the U.S. faced an existential threat. Analysts on both sides find the inappropriate use of LAWS by near-peer or non-state actors to be likely. Proportionality is the requirement that military action not cause excessive damage to civilian lives or property in relation to the military advantage to be gained from the action. Articles 51 and 57 of Additional Protocol I to the Geneva Conventions prohibit attacks that "may be expected to cause incidental loss of civilian life, injury to civilians, damage to civilian objects, or a combination thereof, which would be excessive in relation to the concrete and direct military advantage anticipated." Many argue that the proportionality judgment required by this rule is fundamentally beyond the capabilities of an autonomous system. "Military advantage" is perceived to be an inherently complex and flexible value, not susceptible to simulation by an autonomous system. When considering the allowable collateral impact of a single action (e.g., the dropping of a bomb), proportionality requires an understanding and integration of the surrounding circumstances of the immediate battlefield, as well as overall strategic understanding of the goals of the military action in question. The balance required in determining whether the collateral impact is "excessive" is argued to embed an inherently human judgment, as it relies upon the "reasonableness" of the determination. This "reasonableness" test, which forms so much of the basis for judging the legal propriety of human behavior, is a sort of rough-and-ready appeal to the human faculty of common sense and shared human values argued to be fundamentally inaccessible to LAWS. Others who oppose a ban envision an autonomous weapon system in which the commander who set the LAWS in motion would make an initial judgment about whether accomplishing the mission goals programmed into the LAWS system was worth the expected collateral impact as a result of activation of the system. This judgment would include the established likelihood of unexpected action by the LAWS system. Once activated, LAWS operational evaluation of military advantage or allowable collateral impact levels could be determined in advance, requiring only a sensor judgment at the time of the assault to attempt to determine the amount of collateral impact, rather than setting the reasonable cut-off for aborting the action. While some critics have pointed out that such judgments are time-sensitive, and cannot simply be preprogrammed, others have responded that ensuring the reliability of these judgments simply requires setting time limitations as part of the mission framework for LAWS employment—so as to avoid the "aging" of the military advantage evaluation. Opponents of a ban on LAWS have also pointed out that collateral damage estimates are regularly made using objective data and scientific algorithms with current weapon systems. It is also argued that many circumstances in modern warfare involve individuals executing the action (e.g., dropping the bomb, firing the missile) with little or no capability to assess the specific conditions of the target immediately prior to its destruction for an instantaneous proportionality assessment. As noted above, the commander who sets the LAWS in motion plays a critical role in the legal responsibility for its resulting action. However, questions have been raised about whether that commander, or any other individual, could be held appropriately accountable for "war crimes" committed by such a weapon system. These concerns are further discussed below. Proponents of a ban on LAWS have raised a number of legal objections relating to the chain of accountability for the actions of these systems. Because machines are not ethical actors, proponents of a ban argue LAWS cannot meaningfully be "held responsible" for decision-making. As a result, if an autonomous system decided to carry out an action illegal under the laws of war (a "war crime"), holding someone responsible for that decision would be difficult or impossible. Opponents of a ban counter that there is a long tradition of command responsibility for the actions taken by subordinates. They also point out that if the LAWS were intentionally designed or manufactured with the purpose of being used to commit war crimes, or with reasonable knowledge that they would be so employed, then the designers or manufacturers would have criminal liability. Likewise, if LAWS were used by a commander with the intention to commit a war crime, then the commander could likely be held responsible for that crime. Proponents of the ban argue that war crimes are most likely to occur as a result of an unintended action by the autonomous system, not as an element of deliberate design. Although commanders are responsible for reasonably foreseeable actions of subordinates, these authors argue that commanders, designers, and manufacturers will be excused from such responsibility because of the fundamentally complex and unpredictable nature of autonomous decision-making. In this view, victims of war crimes committed by LAWS will lack redress, creating a fundamental lack of justice and responsibility associated with the weapons. For this reason alone, some argue, LAWS should be banned. Opponents of the ban note that soldiers ordered to perform an otherwise lawful mission could commit war crimes as well. Ban proponents note that this still leaves someone criminally responsible for the misconduct, but opponents counter that this analysis places an excessive focus on individual criminal liability. They point out that the law has effectively managed responsibility for a variety of circumstances involving not fully predictable outcomes, such as the law regarding pet behavior or negligence. Moreover, the law of state responsibility would seem to allocate legal responsibility and an obligation to provide appropriate redress on the belligerent state employing the LAWS, arguably making the establishment of individual culpability less urgent. The question of whether noncombatant victims of LAWS-related violence—whether collateral or accidental—can receive justice leads to a larger question about the moral propriety of LAWS. The potential for autonomous weapon systems to make decisions about whether to take human life has generated discussion of risks and benefits, as well as legal concerns, but it has also raised more fundamental questions. Some, including Christopher Heyns (the United Nations, Human Rights Council Special Rapporteur on extrajudicial, summary, or arbitrary executions), have indicated that the very notion of machines making the decision to take a human life is morally problematic. As some describe, human dignity is at the core of the international law of human rights. They assert that allowing a machine to make an independent judgment to take a life negates that dignity. Others argue that allowing machines to make the decision to kill treats human being as objects, and denies their fundamental moral status. Opponents of a ban argue that this moral intuition is based on excessive anthropomorphism of the autonomous weapon system, an analogy to human reasoning very unlikely to accurately reflect military technology within the foreseeable future. In their opinion, even a non-deterministic LAWS (e.g., using a flexible learning algorithm) is not making a "decision" in an ethically meaningful sense any more than is an air-to-air missile or patriot battery. Under this notion, the relevant decision to kill is made by the commander who assigns the LAWS mission, sets limits in time and space, describes Rules of Engagement, and sets the LAWS into motion. As discussed above, still other authors accept the LAWS as decision-maker in a morally relevant sense but argue that, when deployed, it will make better ethical decisions than a human soldier. From HRW & IHRC, Shaking the Foundations, p. 1, "Fully autonomous weapons ... would identify and fire on targets without meaningful human intervention." From Wallach and Allen, "Framing Robot Arms Control," p. 126, "Autonomous action by a robot includes any unsupervised activity." From Anthony and Holland, "Governance of Autonomous Weapons," p. 424, "Contention issues centre on the weapon's adaptive capacity to make contingent discretionary decision and – in relation to those decisions – if, and at what point, a weapon is under human supervision." From Heyns, Report of the Special Rapporteur, paragraph 38, "... robotic weapon systems that, once activated, can select and engage targets without further intervention by a human operator. The important element is that the robot has an autonomous 'choice' regarding selection of a target and the use of lethal force." From Scharre and Horowitz, An Introduction to Autonomy in Weapon Systems, pp. 5-5, "What makes understanding autonomy so difficult is that autonomy can refer to at least three completely different concepts: * The human-machine command-and-control relationship * The complexity of the machine * The type of decision being automated." From ICRC, Report of the ICRC Expert Meeting, p. 1, "There is no internationally agreed definition of autonomous weapon systems. For the purposes of this meeting, 'autonomous weapon systems' were defined as weapons that can independently select and attack targets, i.e. with autonomy in the 'critical functions' of acquiring, tracking, selecting and attacking targets." From DODD 3000.09, Autonomy in Weapon Systems, p. 13, "A weapon system that, once activated, can select and engage targets without further intervention by a human operator. This includes human-supervised autonomous weapon systems that are designed to allow human operators to override operation of the weapon system, but can select and engage targets without further human input after activation." | The current research and future deployment of lethal autonomous weapon systems (LAWS) is actively under discussion throughout the military, nongovernmental, and international communities. This discussion is focused, to various degrees, on the military advantage to be gained from current and future systems, the risks and potential benefits inherent in the research and deployment of autonomous weapon systems, and the ethics of their use. Restrictions, if any, in treaty and domestic law, as well as the specific rules governing procurement and use of LAWS by the military, will all rely to varying degrees on congressional action, and likely face future legislative debate. Although autonomous weapons have historically been an artifact of fiction, recent commercial and military developments are driving widespread consideration of autonomous weapon systems. Military experience and success with semi-autonomous systems make fully autonomous weapon systems increasingly conceivable for military professionals. Moreover, the commercial development of robotics and expert systems (software that models relatively nuanced decision-making by humans during performance of specific skills) potentially applicable to military purposes makes lethal autonomy more attainable. The Department of Defense (DOD) "third offset" strategy (a plan for incorporating advanced technology into U.S. warfighting), with its focus on technological innovation and "outside the box" solutions to manpower and monetary limitations, includes these systems among other elements. Finally, the development of LAWS is perceived as occurring or likely to occur among many potential peer and asymmetric adversaries. Congress is, or may be, involved in the development of LAWS in many ways. First, because no statute currently governs research, development, or deployment of LAWS, the DOD regulation issued on the subject has become the de facto national policy on military autonomous weapons. Congressional action could clarify DOD priorities in these weapon systems' development. Also, congressional involvement in LAWS may include specific budgetary decisions, as well as overall appropriations. Key nongovernmental organizations (NGOs) such as Human Rights Watch, among others, are urging international action, and—partially in response—the United Nations has been considering lethal autonomous weapons for a number of years as part of its responsibility to consider new protocols under the Convention on Certain Conventional Weapons, the treaty that serves to restrict or ban internationally the use of certain weapons that are indiscriminant or that cause unnecessary suffering. This report seeks to familiarize congressional readers with some existing semi-autonomous weapon systems and outline the current debate and discussion involving the research, development, and use of fully autonomous systems. |
American voters elect the President and Vice President of the United States under a complex arrangement of constitutional provisions, federal and state laws, and political party practices known as the electoral college system. Despite occasional close elections, this system has selected the candidate with the most popular votes in 47 of the past 51 elections since the 12 th Amendment was ratified in 1804. These other elections have been negatively characterized by some commentators as electoral college "misfires." In three instances (1876, 1888 and 2000), the electoral college awarded the presidency to candidates who won a majority of electoral votes, but gained fewer popular votes than their principal opponents. In a fourth case (1824), the House of Representatives decided the contest by contingent election because no candidate had an electoral vote majority. These controversial elections occurred because the system requires a majority of electoral, not popular, votes to win the presidency, and this feature, which is original to U.S. Constitution, has been the object of persistent criticism and numerous reform plans. The most recent instance in which the popular vote runner up received a majority in the electoral college occurred in 2000, when George W. Bush and Richard B. Cheney were elected over Al Gore, Jr. and Joseph I. Lieberman, despite having won fewer popular votes. The 2000 election outcome hinged on the State of Florida, where popular vote totals were extremely close but uncertain after the polls closed. This was due in part to confusing ballots and poorly maintained machinery in some Florida counties, which contributed to uncertainties over which candidate had won the popular vote. Various attempts to conduct recounts or ascertain individual voters' intentions led to a bitter and protracted struggle that continued for over a month following election day. A Supreme Court decision ended further recounts, leading to certification of Bush-Cheney electors in Florida, and the Republicans' subsequent election. Following the 2000 presidential election, both the electoral college system and the shortcomings of election administration procedures and voting machinery (the latter two historically a responsibility of state and local governments) were criticized. While a number of constitutional amendments were proposed, the 107 th Congress addressed the latter element of this issue with the enactment of the Help America Vote Act, "HAVA" ( P.L. 107 - 252 , 116 Stat. 1666), in 2002. This act, passed with broad bipartisan support, established national standards for voting systems and certain election procedures, and included a program of grants to assist state and local governments in meeting the act's goals. The successful passage of HAVA contrasted with the lack of legislative activity in recent Congresses on proposed constitutional amendments that would eliminate or reform the electoral college system. The contrast serves to highlight the comparative difficulties faced by would-be electoral college reformers. The fundamentals of the electoral college system were established by the Constitution, and can only be altered by a constitutional amendment, a much more difficult process than the passage of legislation. Moreover, HAVA's prospects for enactment were boosted by the fact that, while few would defend the sometimes embarrassing failures in voting technology that contributed to passage of the act, efforts to eliminate the electoral college would arguably be vigorously opposed in Congress and the public forum by its various advocates and defenders. Not all approaches to electoral college reform necessarily involve action at the federal level, however. In 2004, for instance, Colorado voters rejected a proposed amendment to the state constitution that would have established the proportional system, one variant of electoral college reform (discussed in the Appendix ) in that state. More recently, the National Popular Vote (NPV) movement is currently coordinating a campaign that would rely on a multi-state compact, in the form of binding state legislation, to guarantee that the popular vote winners in every election would also win the electoral vote. This report examines and analyzes alternative proposals for change, presents pro and con arguments, and identifies and analyzes 110 th Congress proposals and contemporary alternative reform developments. A wide range of constitutional proposals to reform presidential election procedures have been introduced over time. In recent decades, they have fallen into two categories: (1) those that seek to eliminate the electoral college system entirely and replace it with direct popular election; and (2) those that seek to repair perceived defects while preserving the existing system. The direct election alternative would abolish the electoral college, substituting a single nationwide count of popular votes. The candidates winning a plurality of votes would be elected President and Vice President. Most direct election proposals would constitutionally mandate today's familiar joint tickets of presidential/vice presidential candidates, a feature that is already incorporated in state law. Some would require simply that the candidates winning the most popular votes be elected. Others, however, would set a minimum threshold of votes necessary to win election—generally 40% of votes cast; in some proposals a majority would be required. According to these proposals, if no presidential ticket were to attain the 40% or majority threshold, then the two tickets with the highest popular vote total would compete in a subsequent runoff election. Alternatively, some versions would provide for Congress, meeting in joint session, to elect the President and Vice President if no ticket received 40% of the vote. Proponents of direct popular election cite a number of factors in support of their proposal. At the core of their arguments, they assert that the process would be simple, national, and democratic. They assert that direct popular election would provide for a single, democratic choice, allowing all the nation's voters to choose directly the two highest-ranking executive branch officials in the United States government, the President and Vice President. Further, the candidates who won the most popular votes would always win the election. Under some direct election proposals, if no presidential ticket received at least 40% of the vote, the voters would then choose between the two tickets that gained the most votes in a runoff election. Other direct election proposals would substitute election by a joint session of Congress for a runoff if no ticket received at least 40% of the vote. Every vote would carry the same weight in the election, no matter where in the nation it was cast. No state would be advantaged, nor would any be disadvantaged. Direct election would eliminate the potential complications that could arise under the current system in the event of a presidential candidate's death between election day and the date on which electoral vote results are declared, since the winning candidates would become President-elect and Vice President-elect as soon as the popular returns were certified. All the various and complex mechanisms of the existing system, such as provisions in law for certifying the electoral vote in the states and the contingent election process, would be supplanted by these comparatively simple requirements. Electoral college defenders oppose these arguments, pointing to what they assert are flaws in direct election. Direct election proponents claim their plan is more democratic, and provides for "majority rule," yet most direct election proposals require that victorious candidates gain as little as 40% of the vote (less than a majority) in order to be elected. Others, moreover, include no minimum vote threshold at all. These critics ask, how could plurality Presidents be reconciled with the requirement for strict " majority rule " demanded by direct election's proponents? Opponents maintain that direct popular election, without the filtering device of the electoral college, might result in political fragmentation, as various elements of the political spectrum form competing parties, and regionalism, as candidates claiming to champion the particular interests of various parts of the country entered presidential election contests. Further, they assert that direct election would foster acrimonious and protracted post-election struggles, rather than eliminate them. For instance, as the presidential election of 2000 demonstrated, close results in a single state in a close election are likely to be bitterly contested. Under direct election, those favoring the electoral college argue, every close election might resemble the post-election contests in 2000, not just in one state, but nationwide, as both parties seek to gain every possible vote. Such rancorous disputes could have profound negative effects on political comity in the nation, and, in the worst case, might undermine the stability and legitimacy of the federal government. To those who suggest that the struggle over Florida's popular vote returns in 2000 was unique, they could cite the example of Ohio in 2004, where multiple legal actions were pursued even though the popular vote margin for the winning candidates exceeded 118,000. Reform measures that would retain the electoral college in some form have included several variants; most versions of these plans would eliminate the office of elector, would award electoral votes directly to the candidates, and would retain the requirement that a majority of electoral votes is necessary to win the presidency. In common with direct election, most would also require joint tickets of presidential-vice presidential candidates, a practice currently provided by state law. The three most popular reform proposals include (1) the automatic plan, which would award electoral votes automatically and on the current winner-take-all basis in each state; (2) the district plan, as currently adopted in Maine and Nebraska, which would award one electoral vote to the winning ticket in each congressional district in each state, and each state's two additional electoral votes awarded to the statewide popular vote winners; and (3) the proportional plan, which would award each state's electoral votes in proportion to the percentage of the popular vote gained by each ticket. More detailed explanations of these alternatives are included in the Appendix to this report. Defenders of the electoral college, either as presently structured, or reformed, offer various arguments in its defense. They reject the suggestion that it is undemocratic. Electors are chosen by the voters in free elections, and have been in nearly all instances since the first half of the 19 th century. The electoral college system prescribes a federal election of the President by which votes are tallied in each state. The United States is a federal republic, in which the states have a legitimate role in many areas of governance, not the least of which is presidential elections. The Founders intended that choosing the President would be an action American voters take both as citizens of the United States, and as members of their state communities. While electoral vote allocation does provide the "constant two," or "senatorial" electors for each state, regardless of population, defenders believe this is another federal element in our constitutional system, and is no less justifiable than equal representation for all states in the Senate. Moreover, the same formula also assigns additional electors equal in number to each state's delegation in the House of Representatives. Further, defenders reject the suggestion that less populous states like Alaska, Delaware, Montana, North Dakota, South Dakota, Vermont and Wyoming, as well as the District of Columbia, each of which casts only three electoral votes, are somehow "advantaged" when compared with California (currently 55 electoral votes). These 55 votes alone, they note, constitute more than 20% of the electoral votes needed to win the presidency, thus conferring on California voters, and those of other populous states, a "voting power" advantage that far outweighs the minimal arithmetical edge conferred on the smaller states. The electoral college system promotes political stability, they argue. Parties and candidates must conduct ideologically broad-based campaigns throughout the nation in hopes of assembling a majority of electoral votes. The consequent need to forge national coalitions having a wide appeal has been a contributing factor in the moderation and stability of the two-party system. They find the "faithless elector" phenomenon to be a specious argument. Only nine such electoral votes have been cast against instructions since 1820, and none has ever influenced the outcome of an election. Moreover, nearly all electoral college reform plans would remove even this slim possibility for mischief by eliminating the office of elector. Supporters of direct election and critics of the electoral college counter that the existing system is cumbersome, potentially anti-democratic, and beyond saving. The following asserted failings are frequently cited. The electoral college, direct election supporters assert, is the antithesis of their simple and democratic proposal. It is, they contend, philosophically obsolete: indirect election of the President is an 18 th century anachronism that dates from a time when communications were poor, the literacy rate was much lower, and the nation had yet to develop the durable, sophisticated, and inclusive political system it now enjoys. They find the 12 th Amendment provisions that govern cases in which no candidate attains an electoral college majority (contingent election) to be even less democratic than the primary provisions of Article II, Section 1. By providing a fixed number of electoral votes per state that is adjusted only after each census, they maintain, the electoral college does not accurately reflect state population changes in intervening elections. They assert that the two "constant" or "senatorial" electors assigned to each state regardless of population give some of the nation's least populous jurisdictions a disproportionate advantage over more populous states, from this viewpoint. The office of presidential elector itself, they note, and the resultant "faithless elector" phenomenon (see footnote 10 ), provide opportunities for political mischief and deliberate distortion of the voters' choice. They argue that by awarding all electoral votes in each state to the candidates who win the most popular votes in that state, the winner-take-all system effectively disenfranchises everyone who voted for other candidates. Moreover, this same arrangement is the centerpiece of one category of electoral college reform proposal, the automatic plan. For more on the proportional plan, see the Appendix to this report. Critics further note that, although all states currently provide for choice of electors by popular vote, state legislatures still retain the constitutional option of taking this decision out of the voters' hands, and selecting electors by some other, less democratic means. This option was, in fact, discussed in Florida in 2000 during the post-election recounts, when some members of the legislature proposed to convene in special session and award the state's electoral votes, regardless of who won the popular contest in the state. The survival of this option demonstrates that even one of the more "democratic" features of the electoral college system is not guaranteed, and could be changed arbitrarily by politically motivated state legislators. Finally, the electoral college system has the potential to elect presidential and vice presidential candidates who obtain an electoral vote majority, but fewer popular votes than their opponents, as happened in 2000, 1888, and 1876. While a system that allows such a perceived miscarriage of the popular will might have been acceptable in the 19 th century, opponents maintain that it has no place in the 21 st . Three constitutional amendments concerning the electoral college system were introduced in the 110 th Congress, H.J.Res. 4 , and H.J.Res. 36 in the House of Representatives, and S.J.Res. 39 in the Senate. This measure, the Every Vote Counts Amendment, was introduced by Representative Gene Green of Texas on January 4, 2007. Representatives Brian Baird and William D. Delahunt joined as cosponsors on January 9. On February 2, it was referred to the Subcommittee on the Constitution, Civil Rights, and Civil Liberties of the House Committee on the Judiciary. No further action was taken during the balance of the 110 th Congress. Sections 1, 3, 4, and 5 of the proposed amendment dealt with the election process. Section 1 specified election by "the people of the several States and the district constituting the seat of government." This provision recapitulated existing requirements of state residence (or residence in the District of Columbia), and implicitly excluded Puerto Rico and U.S. territories. Section 3 set a plurality, rather than a majority requirement for election. Section 4 established in the Constitution the joint candidacies currently provided in state law. Section 5 empowered Congress to provide by law for: (1) the death of candidates prior to election day; and (2) any tie vote in a presidential election. The Section 5 language appeared to give Congress broad authority in these situations, arguably extending to various options in the event of the death of a candidate or candidates and including such options as rescheduling elections and/or the date for casting electoral votes. In the event of a tie, the amendment arguably sought to empower Congress to provide for a second round election to the break the deadlock, or authorize Congress itself to break a tie. It is less clear whether the amendment would have made an implicit grant of authority to Congress to intervene in the process of replacing party candidates under such circumstances, an eventuality that has historically been addressed by the parties through internal procedures. If so, this would have constituted a departure from current practice and political tradition by empowering Congress to intervene in the internal workings of the political parties. Section 2 of the proposed amendment contained three elements relating to voter qualifications. First, it specified that voters for President and Vice President "shall have the qualifications requisite for electors of Senators and Representatives.... " This sentence built on, and explicitly extended to the presidential electorate, existing constitutional voter qualifications stated in Article I, Section 2 (for the House), and the 17 th Amendment (for the Senate), and as further defined and guaranteed by the 14 th , 15 th , 19 th , 24 th , and 26 th Amendments. Next, if adopted, it would have empowered the states to set "less restrictive qualifications with respect to residence.... " In contemporary practice, most states have reduced voting residence requirements to an average of 30 days. Since the states already possess the power to reduce or eliminate these periods, this section might be regarded as redundant, or perhaps as providing encouragement, admonishment, or a constitutional imprimatur, to efforts to adopt shorter residency requirements for voters, or to eliminate them altogether. Finally, Section 2 proposed to empower Congress to "establish uniform residence and age requirements." Here again, this provision arguably constituted a mandate for potential expansion of federal control over elections. Voting residence requirements, as noted previously, have been traditionally a state responsibility, but the amendment sought to vest in Congress authority to preempt state laws in this area, at least for presidential elections. Similarly, Congress would have been empowered by the amendment to establish a lower (or higher) voting age for presidential elections than is currently provided in the 24 th Amendment. Criticisms of both uniform residence and age requirements might expect to be countered by the argument that federal elections are a nationwide expression of the public will, for which national voting requirements are fully justified. Section 6 of the proposed amendment set the time when it would come into force if ratified: that is, for the first presidential election that occurred one year or longer after the date on which the amendment had been declared to be ratified. For instance, if the amendment had been successfully proposed by Congress, in 2008, and ratified by the states in 2009, it would have been effective with the presidential election of 2012. This measure was introduced by Representative Jesse Jackson Jr., on February 13, 2007. On March 1, the resolution was referred to the Subcommittee on the Constitution, Civil Rights and Civil Liberties of the House Committee on the Judiciary, however, no further action was taken on the proposal. Section 1 of this measure proposed direct popular election of the President and Vice President by the citizens of the United States citizens, "without regard to whether the citizens are residents of a State." Although now moot, the meaning of this language is open to differing interpretations. For instance, it would likely be interpreted as empowering citizens registered in U.S. territories to vote for President. It might, however, also be considered to require state and local authorities to permit any citizen to vote in a presidential election, without regard to existing residence or voter registration arrangements. If so, this might have led to complications in vote counting and registry and increased costs for local authorities. They might have believed it necessary to institute one ballot for the presidential vote, and a separate one for "down ballot" elections in order to ensure that only voters who are registered in the jurisdiction cast votes for state and local office. Here again, however, the argument may be made that election of the President and Vice President is of such profound national importance, it must transcend the convenience of state and local governments. Section 2 of H.J.Res. 36 declared that "the persons having the greatest number of votes ... shall be elected, so long as such persons have a majority of the votes cast." This provision of the proposed amendment differed from most direct election proposals, which more commonly establish a 40% plurality or a simple plurality to elect. More problematic, however, was the fact that while it established a majority requirement, H.J.Res. 36 did not incorporate any procedures for elections in which no candidate wins a majority. Since popular vote plurality elections occur with some regularity, this omission could have been remedied in committee by such procedures as a runoff election or election by Congress under such circumstances. An additional option could have empowered Congress to provide by legislation for such events, leaving selection of the vehicle to the judgment of the legislature. This measure was introduced by Senator Bill Nelson of Florida on June 6, 2008. It was referred to the Senate Committee on the Judiciary the same day, but no further action was taken on it. Section 1 of this proposed amendment to the Constitution sought to establish direct election of the President and Vice President. Unlike some other direct election proposals, it did not require a majority or plurality threshold of popular votes to elect, but the attainment of some level of plurality in order to win the presidency is a common sense inference. A major change proposed by the measure was that Section 1 also proposed to extend participation in presidential elections beyond the states and the District of Columbia to the territories of the United States. This expansion could arguably have been justified on the grounds that inhabitants of most U.S. territories are citizens, and therefore deserve the right to vote. Supporters might suggest this to be the further and logical extension of the right to vote for President, in the same tradition as the 23 rd Amendment, which granted this right to residents of the District of Columbia. Prior to the amendment's ratification in 1961, inhabitants of Washington, D. C. had much in common with the current status of residents of the territories, since they were also U.S. citizens who did not reside in a state, and could not vote for President and Vice President. Opponents might have argued that, while the territories are U.S. possessions, and that many of their inhabitants are citizens, they are not states, and, as a group, are unlikely to be admitted to the Union at the near future. This amendment, they might have argued, would violate the principles of federalism and devalue the institution of statehood. Nor, they might have added, is the situation analogous to that of the District of Columbia, which was part of the nation since independence. By comparison, the territories and other U.S. dependencies were largely acquired in the late 19 th and early 20 th centuries, generally by treaty or purchase. Moreover, they might have added, in the case of American Samoa, its inhabitants are not U.S. citizens, but rather, American nationals. Additional questions might have been raised as to the precise status of certain entities under U.S. jurisdiction whose political status remains arguably indefinite and anomalous. Section 2 of the proposed amendment sought to expand congressional authority over the presidential election process in several respects. First, it proposed to empower Congress to determine the "time, place, and manner of holding the election." This would have extended the existing grant of authority over congressional elections provided in Article I, Section 4, clause 1 of the Constitution. This section would also have authorized Congress to determine "entitlement to inclusion on the ballot." This language potentially superseded existing arrangements on ballot placement and status, which have traditionally been a state responsibility. Section 2 concluded by proposing further extension of congressional authority to "the manner in which the results of the election shall be ascertained and declared." Supporters of these elements of Section 2 might have argued that they were necessary to ensure that presidential elections are administered fairly and equitably. With respect to ballot access, they might have asserted that existing state requirements are excessive and deliberately stringent, that they simultaneously guarantee ballot placement for the two major parties and impede access by new parties and independent candidates. Similarly, they might have suggested that congressional power over vote counting and election ascertainment would guarantee uniform and efficient national standards for election administration, eliminating a patchwork of existing state requirements, and providing stronger deterrence to potential vote fraud. Opponents might have asserted that these grants of authority, if embodied in legislation, would be a usurpation of functions long performed at the state level. Such legislation would, they might have asserted, constitute a further infringement on state authority, and could lead to duplicative and needlessly complex election administration systems as state authorities tried to reconcile competing and possibly conflicting state and federal procedures. They might have further noted that legislation stemming from the provisions of Section 2 would impose heavy costs on the states as they seek to meet federal requirements. It could be noted, however that precedent exists for federal assistance in this area. Congress has provided financial assistance to the states to help them meet new voting systems standards mandated in the Help America Vote Act, "HAVA" ( P.L. 107 - 252 , 116 Stat. 1666). Opponents might have noted in rebuttal that HAVA grants are expected to be a temporary expedient. They might also have questioned the willingness of Congress and the federal government to assume a permanent responsibility for, and the increased expenses associated with, greater control over these aspects of the presidential election administration process. While only a constitutional amendment could alter the fundamental arrangements of the electoral college, some elements of the system could be changed by measures adopted in the states. As noted previously, the Constitution gives the states plenary power in the ways they choose to pick presidential electors. The language in Article II, Section 1, clause 2 is notably broad and general: "Each State shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators to which the State may be entitled in Congress.... " This breadth of authority was intended by the founders, who sought to provide considerable discretion to the several states as to how they would choose and allocate presidential electors. In other words, the states are free to experiment with systems of elector selection and electoral vote and allocation, up to a point. Indeed, it may be argued that with such experiments the states fulfill their traditional role as "laboratories" in which potential national policy initiatives can be developed and tested. This report has previously identified several areas in which the states have exercised their prerogative in the past. First, all 50 states and the District of Columbia (DC) currently provide for joint tickets, in which the public casts a single vote for electors pledged to a single pair of candidates. Next, the states and DC provide for popular election of presidential electors. Finally, in all but two jurisdictions, Maine and Nebraska, the electors are chosen en bloc under the general ticket or winner-take-all system; that is, the group or ticket electors pledged to the candidates who win a plurality of popular votes in the state are elected as a group. Three recent efforts to effect change by using the power accorded to states in Article II, Section 1, clause 2 are discussed below. The proportional plan of awarding electoral votes has been proposed as an alternative to the winner-take-all or general ticket method dominant today. Although the plan is examined in greater detail in the Appendix , briefly, it would require electors (and electoral votes) to be allocated in each state according to the percentage of popular votes won by the competing candidates. For example, assume State X is allocated 10 electoral votes. Next, assume in the election, Candidate A receives 60% of the popular vote, Candidate B receives 30%, and Candidate C, representing a third party or independent candidacy, receives 10%. Under the general ticket or winner-take-all plan, Candidate A would win all 10 electoral votes. Under the proportional plan, Candidate A would win six electoral votes, Candidate B would receive three, and Candidate C would receive one vote. On November 2, 2004, Colorado voters considered a proposed state constitutional amendment that would have established just such a proportional system in that state. If the amendment had passed and survived legal challenges, it would have provided proportional allocation of Colorado's presidential electors for 2004 and all future presidential elections. This was possible through citizen action because Colorado is one of the 18 states that provide for the proposal and approval of amendments to their state constitutions by popular vote. The amendment sought to allocate electoral votes and electors based on the proportional share of the total statewide popular vote cast for each presidential ticket. The percentage of the vote each ticket received would have been multiplied by Colorado's total of nine electoral votes. These figures would then have been rounded up or down to the nearest whole number of electors and electoral votes, but any ticket that did not receive at least one electoral vote under this method would have been eliminated from the total. If the sum of whole electoral votes derived from this computation were to be greater than nine, then the ticket receiving at least one whole electoral vote, but fewest popular votes, would have had its electoral vote total reduced by one. This process would have continued until the computed allocation of votes reached nine. Conversely, if the sum of whole electoral votes awarded after rounding the percentages of popular votes were less than nine, then such additional electoral votes as necessary to bring the number up to nine would have been allocated to the ticket receiving the most popular votes, until all nine electoral votes were so allocated. In the event of a popular and electoral vote allocation tie (i.e., Candidates A and B each receiving 4.5 electoral votes), then the Colorado Secretary of State would have determined by lot who would receive the evenly split electoral vote. At the time, questions were raised as to whether this effort to change the allocation formula for Colorado's electoral votes by initiative was constitutional. Specifically, the U.S. Constitution (in Article II, Section 1, clause 2) provides that, "Each state shall appoint, in such Manner as the Legislature thereof may direct, a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress.... " Since the early years of government under the Constitution, the state legislatures have generally exercised this grant of power by authorizing the voters to choose electors, and they have usually specified the winner-take-all or general ticket system as the means by which the voters' decision is used to allocate electors and electoral votes. The fact that Colorado's proposed Amendment 36 would have altered the formula for awarding electoral votes by a vote of the people , not the legislature, was the salient issue in contention. The Colorado legislature's right under Article II to establish a proportional system was not in dispute; the question rather, was, did the Colorado legislature have authority to subdelegate to the voters at large its Article II powers to determine and change the existing method of appointing electors to a popular vote? Could the voters of Colorado have acted in place of, or as the state legislature? The Colorado Constitution specifically empowers the people of the state to "to propose laws and amendments to the constitution and to enact or reject the same at the polls independent of the general assembly.... " Proponents of Amendment 36 argued that this was sufficient authority to change the allocation of electoral votes by popular vote. Further, it could have been argued that the U.S. Constitution's failure to expressly prohibit this procedure, or others like it, provides an implicit endorsement of such actions. On the other hand, opponents could have counter-argued that the U.S. Constitution clearly delegates this power to the state legislatures, and only the state legislatures. Moreover, a commentary on the Colorado process of amendment by initiative noted that, "An amendment is not valid just because the people voted for it. The initiative gives the people of a state no power to adopt a constitutional amendment which violates the federal constitution." On August 13, 2004, Colorado's Secretary of State announced that the proposed amendment had gained sufficient voter signatures to qualify for inclusion on the ballot at the November 2 general election. After a spirited campaign that stirred some national interest, Amendment 36 was ultimately defeated by a vote of 1,307,000 to 697,000. For the record, if the amendment had been in effect for the 2004 election, the Bush-Cheney ticket would have received five electoral votes, while Kerry-Edwards would have received four. Under the winner-take-all system, the Republican ticket received all nine Colorado electoral votes. The district system for awarding electoral votes is unusual among reform proposals in that two states, Maine and Nebraska, currently have it on the books. Briefly, under the district plan, popular votes are tallied twice: first, district by district, and again on a statewide basis. The presidential ticket (actually elector) who won the most votes in each district would receive one vote (actually one elector) from that district. The ticket winning the statewide count would be awarded two additional electors, representing the two additional "senatorial" electors each state receives. For more detailed information on the district plan, see the Appendix . In July, 2007, a group styled "Californians for Equal Representation" filed a legislative ballot measure with the California Attorney General; the proposed statute, the Presidential Election Reform Act, incorporated a standard district system for choosing presidential electors, and hence, awarding electoral votes. The organizers sought sufficient voter petitions to place the item on statewide ballot at the June 3, 2008, California congressional, state, and local primary. Supporters of the proposal asserted that the winner-take-all/general ticket system discounted and disenfranchised millions of California voters in the presidential election. For instance, in 2004, the Democratic Kerry-Edwards ticket received 54.3% of the popular vote, and all 55 electoral votes, while the Republican Bush-Cheney ticket, which received 44.4% of the popular vote, gained none. If, on the other hand, the district system had been in place in California in 2004, Kerry-Edwards would have received 33 electoral votes, and Bush-Cheney, 22. Opponents claimed that Californians for Equal Representation was a Republican-dominated group whose goal was to obtain Republican electors in a state that has voted Democratic in presidential contests since 1992, noting in support of this argument that most of the group's funds had been contributed by Republican-connected donors. California Counts, the advocacy group coordinating support for the measure, denied the allegation and countered by releasing lists of Democratic and Independent voters who contributed to the effort. The proposed measure was also criticized on constitutional grounds. Vik Amar, a legal commentator, argued that the California Presidential Election Reform Act was a legislative initiative that would likely be found unconstitutional if challenged. He based his assertion on the argument, noted previously in discussions of Colorado Amendment 36, that the constitutional grant of power to the states to appoint electors "in such manner as the Legislature thereof may direct.... " ought to be narrowly construed. By this reasoning, a legislative act passed by initiative would not meet the constitutional standard, because the Constitution requires action by the state legislature, and only the legislature, to change the process. The proposed California Presidential Election Reform Act thus became an object of political and constitutional controversy almost from the start. In addition, proponents faced the obstacle of collecting supporting petitions from a number of registered voters sufficient to meet the California state initiative threshold, which required signatures of a number of voters equal to 5% of votes cast in the most recent gubernatorial election. Computed from the 2006 gubernatorial results, this figure in 2007 would have amounted to 433,971 valid signatures of registered voters. Organizers first abandoned their effort to place the initiative on the June 3, 2008 primary ballot, opting instead for the November 4 general election ballot, but this goal also appeared to be beyond the means of the measure's supporters. On February 5, 2008, press reports indicated that no petitions had been filed with the Elections Division of the Office of the California Secretary of State, and that the California Presidential Reform Act would not be on either ballot in 2008. The National Popular Vote (NPV) campaign has been advanced by an interest group that draws support from members of both national parties. The NPV plan would eliminate existing electoral college arrangements and substitute de facto direct popular election by means of an interstate agreement or compact. Under the compact's provisions, legislatures of the 50 states and the District of Columbia would exercise their constitutional authority to appoint presidential electors themselves. The key provision of NPV is, however, that the states would then use their power to chose electors committed to the presidential/vice presidential ticket that gained the most votes nationwide . This would deliver a unanimous electoral college decision for the candidates winning a plurality of the popular vote. The idea for NPV is generally credited to a 2001 article by constitutional scholars Akhil and Vikram Amar. The authors suggested that a compact by a group of states would be able to achieve the goal of direct popular election without the need to meet the constitutional requirements necessary for a constitutional amendment. This proposal, which became the National Popular Vote plan, relies on the Constitution's broad grant of power to each state to "appoint, in such Manner as the Legislature thereof may direct [emphasis added], a Number of Electors, equal to the whole Number of Senators and Representatives to which the State may be entitled in the Congress.... " Specifically, the plan calls for an agreement or compact in which the legislatures in each of the participating states would agree to appoint electors (and hence, electoral votes) pledged to the candidates who won the nationwide popular vote . The appropriate authority in each state would tally and certify the "national popular vote total" within the state; the state figures would be aggregated and certified nationwide, and in each state the slate of electors pledged to the "national popular vote winner" would be appointed. Barring unforeseen circumstances, the NPV would result in a unanimous electoral college vote: 538 electors for the winning candidates for President and Vice President. In order to address state concerns about premature commitment to the NPV plan, the process would come into effect only after approval of the compact by a number of states whose total electoral votes equal or exceed 270, the current majority required to elect under the Constitution. In the event the national popular vote were tied, the states would be released from their commitment under the compact, and would choose electors who represented the presidential ticket that gained the most votes in each particular state. States would retain the right to withdraw from the compact, but if a state chose to withdraw within six months of the end of a presidential term, the withdrawal would not be effective until after the succeeding President and Vice President had been elected. One novel provision would enable the presidential candidate who won the national popular vote to fill any vacancies in the electoral college with electors of his or her own choice, presumably provided the electors meet constitutional qualifications for that office. The NPV advocacy effort is managed by National Popular Vote, Inc., a "501(c)(4)" non profit corporation, established in California in 2006 by Barry Fadem, an attorney specializing in initiative and referendum law, and Stanford University professor John R. Koza. As a 501(c)(4) entity, it is permitted to engage in political activity in furtherance of its goal, so long as this is not its primary activity. The organization's board members include former Senators and Representatives of both major political parties, which suggests a degree of bipartisan support on the national level. As of December 26, 2008, NPV claimed the support of 1,246 state legislators, over one sixth of the 7,382 total, and endorsement by the New York Times , Los Angeles Times , Chicago Sun-Times , Minneapolis Star Tribune , Boston Globe , and other newspapers. The vehicle for NPV, as noted earlier in this report, is the interstate agreement or compact, "Agreement Among the States to Elect the President by Popular Vote." By the end of 2008, the compact had been introduced in 45 states, of which four, possessing a total of 50 electoral votes, had adopted it. They were: Hawaii (four electoral votes), enacted over governor's veto, May 1, 2008; Illinois (21 electoral votes), approved April 7, 2008; Maryland (10 electoral votes), approved March 10, 2008; and New Jersey (15 electoral votes), approved January 13, 2008. The NPV interstate compact was been introduced in 21 states in their 2008 legislative sessions, but has passed one or both chambers in only seven. They were: California (55 electoral votes), passed in both the Senate and Assembly, but was vetoed by the governor; Maine (four electoral votes), passed the Senate, but was indefinitely postponed in the House; Massachusetts (12 electoral votes), passed the House of Representatives, and the Senate, but the Senate did not vote to send the bill to the governor for signature; North Carolina (14 electoral votes), where it passed the Senate, but the House took no action; Rhode Island (four electoral votes), where it passed the Senate and the House, but was vetoed by the governor; Vermont , (three electoral votes) where it was passed by both houses of the legislature, but was vetoed by the governor; Washington , (11 electoral votes) where it also passed the Senate, but died in committee in the House of Representatives. In a "best case" scenario for 2008, in which California, Maine, North Carolina, Rhode Island and Washington approved NPV, they would have added 88 additional electoral votes, for a total of 138, slightly more than 50% of the 270 which would be required for the NPV compact to be honored by participating states. Although NPV did not reach this optimistic goal the proposal, it was approved in four states. At year's end, it remained to be seen whether state approvals earlier in 2008 indicated the beginning of a trend toward approval, or a "high water mark" for the effort. Arguments in support of and opposition to the National Popular Vote proposal embrace points generally similar to the pros and cons for direct popular election examined earlier in this report. In most plans to establish direct election of the president, the central issue is a question of "one big thing" versus "many things"—that is, the simplicity, logic, and democratic attractiveness of the direct election idea as compared to the more complex array of related but arguably less compelling factors cited by supporters of the existing system. The National Popular Vote movement advocates the NPV compact on the grounds of fairness and respect for the freely expressed voice of the voters which is the cornerstone of all direct popular election plans. In particular, it advocates a national vote that, de facto , eliminates the role of states by binding them to support the nationwide vote winners, notwithstanding the results in their own jurisdictions. According to its own website, the central argument in its favor is that the compact "would guarantee the Presidency to the candidate who receives the most popular votes in all 50 states (and the District of Columbia)." It would guarantee at least a plurality President and Vice President, thus eliminating any possibility of Presidents who won fewer votes than their opponent, one of the most widely criticized aspects of the electoral college system. It would also reduce the likelihood of other problem areas under the existing system, including the faithless elector, "disenfranchisement" under the winner-take-all system, arithmetical advantage derived by less populous states, and the potential for contingent election under the 12 th Amendment. It is difficult to underestimate the appeal of this simple yet arguably compelling proposal: the candidates who win the most votes should win the presidency (and vice presidency). Opponents, by comparison, have cited many of the assertions examined in the pro-con section of this report. These may be categorized as philosophical and political criticisms of the NPV plan. Generally, they do not deny the appeal of the argument favoring direct popular election and the NPV plan. They suggest, however that the various benefits conferred by the electoral college system, the "many things," are of such cumulative value that they outweigh the "one big thing" attractiveness of NPV. Among these are assertions that: the current arrangement is a fundamental component of federalism; it confers "voting power" not on less populous states, but on residents of more populous states, and in particular, minority voters in these states; it promotes a moderate and geographically inclusive two-party system; and it deters post-election strife and controversy by magnifying the winners' electoral vote margin in most elections. A further philosophical criticism rests on the grounds of the "concurrent majorities" tradition. This concept holds that, in order for any policy proposal to be able to claim legitimacy in a continent-spanning federal republic such as the United States, it needs to gain broad acceptance by a majority of citizens, representing a wide range of geographic regions, within a limited period of time. This concept has never been written into law or the Constitution, but Congress has historically honored the concurrent majorities idea by requiring that most constitutional amendments be approved by the states within a seven-year period following an amendment's proposal by Congress. Where, critics may ask, is a similar time limit governing the National Popular Vote proposal? What is the date certain after which an effort to adopt NPV would expire, or return to "square one?" If the NPV approaches its own benchmark of 270 electoral votes on or before July 20 of a presidential election year (the trigger date set by the proposed compact), what sort of disruptive effect would this have on the presidential nominating campaign, or, for that matter, on the measured deliberations of the legislatures of states that have rejected, the NPV compact, or those in which pro-NPV legislation was never introduced. NPV supporters have also suggested a practical benefit to nearly all "non-battleground" states from the compact. They maintain that presidential nominees and their organizations would spread their presence and resources more evenly as they campaigned for every vote nationwide, rather than concentrate on winning key states: "candidates have no reason to poll, visit, advertise, organize, campaign, or worry about the concerns of voters of states that they cannot possibly win or lose. This means that voters in two thirds of the states are effectively disenfranchised in presidential elections because candidates concentrate their attention on a small handful of "battleground" states. In 2004, candidates concentrated over two-thirds of their money and campaign visits in just five states; over 80% in nine states; and over 99% of their money in just 16 states." For instance, according to this argument, Californians seldom see the presidential or vice presidential nominees or benefit from campaign spending because even though it controls the largest number of electoral votes, the Golden State has been regarded in recent elections as being reliably Democratic in its presidential sympathies. Similar arguments would apply to Texas, a state that has voted for Republican presidential nominees since 1980. Opponents might argue that spreading campaign spending resources in states that aren't "battlegrounds" is a questionable goal with which to justify such a profound change in the presidential election process. Campaign appearances, spending by campaign organizations, and collateral spending generated by the attendant media, they might continue, were never intended to be a local economic stimulus package, nor are the amounts in question sufficient to make much of a difference in any state, with the possible exception of sparsely-populated New Hampshire during its quadrennial primary campaign. Moreover, they might continue, it is equally dubious to assert that nominees will slight the concerns of citizens of the states from which they draw their greatest support, or that concentrated campaigning in the "battleground" states somehow "disenfranchises" voters in others. Writing in the Wall Street Journal , former Delaware Governor Pete duPont maintained that, contrary to assertions that NPV would stimulate more frequent candidate appearances in less populous states, "... direct election of presidents would lead to geographically narrower campaigns, for election efforts would be largely urban.... Rural states like Maine, with its 740,00 votes in 2004, wouldn't matter much compared with New York's 7.4 million or California's 12.4 million votes." Some observers have raised questions as to the constitutionality of the National Popular Vote plan. Derek T. Muller, writing in Election Law Journal , asserts, first, that NPV is an interstate compact within the meaning of the Constitution, and as such, it must be approved by Congress before it could take effect. The author reviews the history of interstate compacts and their interpretation over the past two centuries, noting that, as currently construed, certain types of interstate agreements or compacts do not require the explicit consent of Congress; these "may be entered without the consent of Congress, because they do not affect national sovereignty or concern the core meaning of the Compact Clause." They are, in effect, not compacts in the constitutional sense. He goes on to assert that the National Popular Vote agreement is, however, an interstate compact that would require explicit congressional approval, because of the ways it binds the states to a particular course of action, places time limits on their ability to withdraw from NPV, and more generally meets or exceeds conditions historically found to define "interstate compacts" by the Supreme and other U.S. Courts. Muller goes on, moreover, to maintain that the NPV concept is inherently unconstitutional unless specifically approved by Congress. Reviewing the record of federal court decisions concerning interstate compacts, the author asserts that the NPV compact would enhance the political power of participating states, but reduce that of those that did not join the compact: States have an interest in appointing their electors as they see fit, and the Presidential Electors Clause of the Constitution grants this exclusive authority to the states. Technically, the non-compacting sister states can still appoint electors, but the Interstate Compact makes such an appointment meaningless. The outcome of the Electoral College would be determined by an arranged collective agreement among compacting states, regardless of what non-compacting states do about it.... This evisceration of political effectiveness is a sufficient interest to invoke the constitutional safeguard of congressional consent. The National Popular Vote movement agrees with Mr. Muller's thesis as to whether NPV is an interstate compact: in Every Vote Equal , the movement's major written source, concludes: The subject matter of the proposed "Agreement Among the States to Elect the President by National Popular Vote" concerns the manner of appointment of a state's presidential electors. The U.S. Constitution gives each state the power to select the manner of appointing its presidential electors.... Thus the subject matter of the proposed interstate compact is a state power and an appropriate subject for an interstate compact. Contrary to Mr. Muller, however, Every Vote Equal maintains that the Constitution implicitly permits valid interstate agreements without the need for congressional approval on any subject that falls within the states' constitutional authority. The authors further note that since the NPV compact would concern the manner of appointment of a state's electors, a power that resides exclusively with the states, the agreement would therefore be an appropriate subject for an interstate compact. They go on to assert that the Supreme Court has twice rejected the argument that an interstate compact was unconstitutional because "it impaired the sovereign rights of non-member states or enhanced the political power of the member states at the expense of other states," as has been asserted by NPV opponents. Other questions have been raised concerning whether the National Popular Vote compact might violate the Voting Rights Act. Writing in Columbia Law Review , David Gringer maintains that NPV may be at variance with several provisions of the act. Specifically, he argues that the plan conflicts with Section 2 of the act because moving from "a state-based to a national popular vote dilutes the voting strength of a given state's minority population by reducing its ability to influence the outcome of presidential elections." Gringer also asserts that the NPV compact may violate Section 5 of the act, which restrains "covered" jurisdictions from implementing changes to "any voting qualification or prerequisite to voting, or standard, practice, or procedure with respect to voting," until the law has been reviewed for potential discriminatory intent or effect by the U.S. Attorney General or a three-judge panel from the U.S. District Court for the District of Columbia. This process is known as preclearance. He argues that the NPV compact would qualify as a covered practice under Section 5, and that the legislatures of all the affected states would be required to obtain preclearance before implementing the compact. The National Popular Vote organization has yet to respond to Gringer's assertions in Columbia L aw Review . It is beyond the scope of this report to speculate on the outcome of challenges that might be raised to the National Popular Vote compact on any of the legal or constitutional questions cited previously. The fact that these issues have been raised, however, suggests the possibility NPV might be subject to legal challenges before it could become operational should it meet the 270 electoral vote threshold. Congressional interest in constitutional amendments to reform or eliminate the electoral college has declined in recent decades. Despite a brief uptick following the problematic 2000 presidential election, the trend has continued: only two relevant amendments were introduced in the 110 th Congress. This arguable lack of congressional interest, and demonstrable lack of legislative activity, contrasted strongly with the period between 1950 and 1979, when electoral college reform measures were regularly considered in the Senate and House Judiciary committees, and proposed amendments were debated in the full Senate on five occasions, and in the House twice. From those proposals that have been offered in recent years, two trends are noticeable to the long term observer. First, the volume of proposed amendments that would reform the electoral college, as opposed to those that would eliminate the electoral college and substitute direct popular election, has declined almost to zero. Second, the scope of proposed direct popular election amendments is arguably evolving in complexity and detail. It is unclear whether the first development reflects a decline in support for the electoral college (either as it exists or reformed), a lack of organized interest in these reform proposals, or simply the absence of a sense of urgency on the part of Members who might be inclined to support or defend the current system in some form. It is likely, that if a direct election amendment gained broad congressional support and began moving toward congressional approval and proposal to the states, Members who support the current system in some form would coalesce to defend the electoral college. Alternatively, they might be spurred by the prospect of action to propose reform measures that would address problem areas of the current system. This was the case the last time a direct election amendment came to the floor (in the Senate), during the 95 th Congress (1979-1980). Another apparent trend is that recent reform proposals go beyond the concept of simply substituting direct election for the electoral college. In recent Congresses, these amendments have been more likely to include provisions that would enhance and extend the power of the federal government to legislate in such areas as residence standards, definition of citizenship, national voter registration, inclusion of U.S. territories and associated areas in the presidential election process, establishment of an election day holiday, ballot access standards for parties and candidates, etc. This trend, it may be posited, reflects frustration on the part of many voters and their elected representatives over the uncertainties and inconsistencies in local election administration procedures that were revealed in the 2000 and 2004 presidential elections. If the amendments in which such provisions have been incorporated were to be proposed and ratified, they could be used to set broad national election standards (provided Congress chose to exercise the new authority granted in these proposals) which would supersede many current state practices and requirements. This eventuality raises two possible issues. The first is the question of whether such federal involvement in traditionally state and local practices would impose additional costs on state and local governments, and thus be regarded as an "unfunded mandate." Indeed, bills that had the effect of imposing costs on state and local election authorities might be subject to points of order on the floor of both the House and Senate. One response by the state and local governments might be to call for federal funding to meet the increased expenses imposed on them by federal requirements. Precedent for this exists in the grant program incorporated in the Help American Vote Act (HAVA) . A second issue is related to the consequences of such an amendment, and centers on perceptions as to whether it might be regarded as constitutionally dubious federal intrusion into state and local responsibilities. For instance, a more far-reaching scenario might include the gradual assumption of the entire election administration structure by the federal government. In this hypothetical case, questions could be raised as to: (1) the costs involved; (2) whether a national election administration system could efficiently manage all the varying nuances of state and local conditions; and (3) what would be the long term implications for federalism? Conversely, it could be asserted that a national election administration structure is appropriate for national elections, and that state or local concerns are counterbalanced by the urgent requirement that every citizen be enabled and encouraged to vote, and that every vote should be accurately counted. Some observers assumed that action of the electoral college in 2000, in which George W. Bush was elected with a small majority of electoral votes, but fewer popular votes than Al Gore, Jr., would lead to serious consideration of constitutional amendment proposals that would have reformed or eliminated the electoral college. Notwithstanding these circumstances, none of the amendments introduced in either the 107 th through 110 th Congresses received more than routine committee referral. In the 107 th Congress, attention focused, instead, on proposals for election administration reform, resulting in passage of the Help America Vote Act (HAVA) in 2002. As noted previously, this legislation substantially expanded the role of the federal government in the field of voting systems and election technology through the establishment of national standards in these areas and the provision of federal assistance to the states to improve their registration and voting procedures and systems. The congressional response to the 2000 election controversy was incremental, rather than fundamental. Other factors may also contribute to the endurance of the electoral college system. Perhaps foremost is the fact that the U.S. Constitution is not easily amended. Stringent requirements for proposed amendments, including passage by a two-thirds vote in each chamber of Congress, and approval by three-fourths of the states, generally within a seven-year time frame, have meant that successful amendments are usually the products of broad national consensus, a sense that a certain reform is urgently required, or active long-term support by congressional leadership. In many cases, all three aforementioned factors contributed to the success of an amendment. Further, while the electoral college has always had critics, its supporters can note that it has selected "the people's choice" in 48 of 52 presidential elections held since ratification of the 12 th Amendment, a rate of 92.3%. In the final analysis, given the high hurdles—both constitutional and political—faced by any proposed amendment, it seems unlikely that the electoral college system will be replaced or reformed by constitutional amendment unless or until its alleged failings become so compelling that large concurrent majorities in Congress, the states, and among the public, are disposed to undertake its reform or abolition. Another factor influencing the potential for a successful amendment is, arguably, public perceptions of how well the electoral college has functioned. The system worked almost perfectly, at least according to contemporary expectations, in the presidential election of 2008. Democratic nominee Senator Barack Obama was able to translate a modest popular vote majority of 52.9% (69,457,000) to 45.7% (59,935,00) for his Republican opponent, Senator John McCain, into an overwhelming electoral vote margin of 365 to 173. Given this outcome, it is arguable that there will likely be little congressional interest in devoting the high levels of time and energy demanded to consideration of an electoral college-related amendment, although Members will almost certainly introduce one or more in the 111 th Congress. If however, the 2008 results had been close in either popular or electoral votes, or had resulted in a bitterly contested post-election struggle, or the election of a President who received fewer votes than his major opponent, the outlook for the 111 th Congress might have been different. For at least a century, American tradition has enshrined the role of the states as "laboratories of reform," in which innovative policy experiments could be tested on a limited scale, and, if successful, ultimately adopted at the federal level. In the question of electoral college reform, at least some of the states appear to have assumed their classic role by implementing policy alternatives. Maine and Nebraska, for instance, have followed the district system for decades, and for the first time in 2008, one of the two states, Nebraska, split its electoral vote. Senator Obama took one electoral vote, having won the 2 nd Congressional District, while Senator McCain took three, having won the 1 st Congressional District and the statewide tally. Arguably, the most compelling recent developments in the field of electoral college reform have emerged at the state level. Two of these, Colorado Amendment 36 in 2004 and "California Counts" in 2006-2007, were unsuccessful, but both aroused interest and support and criticism for their attempts to reform the electoral college, within the two respective states. Perhaps more noteworthy, or at least better publicized, has been the National Popular Vote campaign, an organized nationwide initiative that has drawn bipartisan support from a wide range of state and local office holders. Moreover, its advisory board includes seven former U.S. Senators and Representatives representing both parties. As noted earlier in this report, the legislatures of four states disposing a total of 50 electoral votes had approved the NPV compact by the end of 2008. It is difficult to foresee the ultimate course of the NPV movement at the time of this writing. The clear-cut electoral college victory of Senator Obama in the 2008 presidential election could arguably lead to a loss of momentum by the National Popular Vote scheme. Without a compelling reason to proceed, the effort might stall. The 2009 state legislative sessions may well provide an indication of the status of NPV's momentum. John F. Kennedy, while serving in the Senate, was a leading defender of the electoral college against proposals to establish a district plan variant in place of the current (then and now) general ticket or winner-take-all system of allocating electoral votes. In the course of Senate floor debate on this question in 1956, he paraphrased a comment by Viscount Falkland, a 17 th century English statesman, declaring of the electoral college, "It seems to me that Falkland's definition of conservatism is quite appropriate [in this instance]—'When it is not necessary to change, it is necessary not to change.... '" This aphorism may offer a key to the future prospects of the electoral college. To date, policymakers have generally concluded that it has not been necessary to change the existing system, or perhaps more accurately, there has been no compelling call for change. The first and only major constitutional overhaul of the electoral college system to date, the 12 th Amendment, was a direct response to turmoil accompanying the presidential election of 1800. This was a fundamental "crisis of regime" that, once surmounted, motivated Congress to propose a major reform in very short time. As long as the electoral college system functions well enough to avoid provoking a national crisis of similar scale, it may remain unchanged, if not unchallenged. This Appendix presents more detailed descriptions of the three most frequently proposed plans to reform the electoral college. One criticism leveled at each of the electoral college reform plans reviewed below is that the decennial reassignment of electoral votes provides for no adjustment in electoral votes to would reflect variations in population growth among states between censuses. For instance, the allocation of electoral votes following the 2010 census will remain in effect for the 2012, 2016 and 2020 presidential election. This reform proposal would award all electoral votes in each state directly to the winning candidates who obtained the most votes statewide. In almost all versions, a plurality would be sufficient in individual states to win the state's electoral votes; most versions provide for some form of contingent election in Congress in the event no candidate wins a nationwide majority of electoral votes. This alternative would constitutionally mandate the "general ticket" or "winner-take-all system" currently used to award electoral votes in 48 states and the District of Columbia. Proponents of the automatic plan argue that it would maintain the present electoral college system's balance between federal and state power, and between large and small states. Proponents note that the automatic plan would eliminate the possibility of "faithless electors" Further, the automatic plan would help preserve the present two-party system, under a state-by-state, winner-take-all method of allocating electoral votes. This, they assert, is a strength of the existing arrangement, because it tends to reward parties that incorporate a broad range of viewpoints and embrace large areas of the nation. Opponents, on the other hand, note presidential elections are still indirect under the automatic system. They further assert that "minority" Presidents could still be elected under the automatic system, and it still provides no electoral vote recognition of the views and opinions of voters who choose the losing candidates. This reform proposal would continue the current allocation of electoral votes by state, and, in common with most reform plans, would eliminate the office of presidential elector. It would award one electoral vote to the winning candidates in each congressional district (or other, ad hoc, presidential election district) of each state. Two electoral votes, reflecting the two additional "constant" or "senatorial" electoral votes assigned to each state by the Constitution, would be awarded to the statewide vote winners. This alternative would constitutionally mandate the system currently used to award electoral votes in Maine and Nebraska. Proponents of the district plan argue that it would more accurately reflect the popular vote results for presidential and vice presidential candidates than the winner- take-all method, or the automatic plan, because, by allocating electoral votes according to popular vote results in congressional districts, it would take into account political differences within states. They also suggest that in states dominated by one party, the district plan might provide an incentive for greater voter involvement and party vitality, because it would be possible for the less dominant party to win electoral votes in districts where it enjoys a higher level of support, e.g. "Upstate" New York versus the New York City metropolitan area, or northern California vs. the Los Angeles and San Francisco metropolitan areas. Opponents would note that the district plan retains indirect election of the nation's chief executive, that the potential for "minority" Presidents would continue, and that it might actually weaken the two-party system by encouraging parties that promote narrow geographical or ideological interests and that may be concentrated in certain areas. In fact, they might suggest that adoption of the district plan would encourage gerrymandering, as the parties maneuvered for advantage in presidential elections. Nebraska split its district votes presidential election for the first time in the 2008, awarding four electors to Republican candidate Senator John McCain, who won two congressional districts and the statewide vote, and one to the Democratic nominee, Senator Barack Obama, who received the most popular votes in state's second congressional district. Maine has yet to split its electoral votes under the district plan. This reform proposal would award electoral votes in each state in proportion to the percentage of the popular vote gained by each ticket. Some versions, known as "strict" proportional plans, would award electoral votes in proportions as small as thousandths of one vote, that is, to the third decimal point, while others, known as "rounded" proportional plans, would use various methods of rounding to award only whole numbers of electoral votes to competing candidates. As noted in the main body of this report, voters in Colorado rejected a proposed state constitutional amendment (Amendment 36) at the November 2, 2004, general election that would have established a rounded proportional system in that state. For further information on this proposal, please consult CRS Report RL32611, The Electoral College: How It Works in Contemporary Presidential Elections , by [author name scrubbed]. Proponents of the proportional plan argue that it comes closer than other reform plans to electing the President and Vice President by popular vote, while still preserving the state role in presidential elections. They also assert that the proportional plan reduces the likelihood of "minority" presidents—those who win with a majority of electoral votes, but fewer popular votes than their chief opponent. They also suggest that this option would more fairly account for public preferences, by allocating electoral votes within the states to reflect the actual support attained by various candidates, particularly in the strict, as opposed to rounded, version of the proportional plan, while still retaining the role of the states. Opponents again suggest that it retains indirect election of the President, which they assert is inherently less democratic than direct popular election. They also note that the proportional plan could still result in "minority" Presidents and Vice Presidents, and by eliminating the magnifier effect of the automatic and district plans, might actually result in more frequent electoral college deadlocks, situations in which no candidate receives the requisite majority of electoral votes. | American voters elect the President and Vice President indirectly, through presidential electors. Established by Article II, Section 1, clause 2 of the U.S. Constitution, this electoral college system has evolved continuously since the first presidential elections. Despite a number of close contests, the electoral college system has selected the candidate with the most popular votes in 47 of 51 presidential elections since the current voting system was established by the 12th Amendment in 1804. In three cases, however, candidates were elected who won fewer popular votes than their opponents, and in a fourth, four candidates split the popular and electoral vote, leading to selection of the President by the House of Representatives. These controversial elections occur because the system requires a majority of electoral, not popular, votes to win the presidency. This feature, which is original to the U.S. Constitution, has been the object of persistent criticism and numerous reform plans. In the contemporary context, proposed constitutional amendments generally fall into two basic categories: those that would eliminate the electoral college and substitute direct popular election of the President and Vice President, and those that would retain the existing system in some form, while correcting its perceived defects. Reform or abolition of the electoral college as an institution would require a constitutional amendment, so these proposals take the form of House or Senate joint resolutions. Three relevant amendments were introduced in the 110th Congress. H.J.Res. 36, (Representative Jesse Jackson, Jr.) sought to provide for direct popular election, requiring a majority of votes for election. H.J.Res. 4, the Every Vote Counts Amendment, (Representative Gene Green et al.) also sought to establish direct popular election, but with a popular vote plurality, rather than a majority, for election. It would proposed additional powers to regulate presidential elections for the states and the federal government. The third, S.J.Res. 39 (Senator Bill Nelson of Florida), proposed establishment of direct popular election, as well as authorizing congressional, and thus federal, authority over certain aspects of election administration. Supporters of direct election advanced another option in 2006, the National Popular Vote (NPV) plan. This would bypass the electoral college system through a multi-state compact enacted by the states. Relying on the states' constitutional authority to appoint electors, NPV would commit participating states to choose electors committed to the candidates who received the most popular votes nationwide, notwithstanding results within the state. NPV would become effective when adopted by states that together possess a majority of electoral votes (270). At the present time, four states with a combined total of 50 electoral votes (Hawaii, 4; Illinois, 21; Maryland, 10; and New Jersey, 15) have approved the compact. For additional information on contemporary operation of the system, please consult CRS Report RL32611, The Electoral College: How It Works in Contemporary Presidential Elections, by [author name scrubbed]. This report will not be updated. |
Technology using electrical energy to power automobiles has been in existence for over a century. However, for a number of reasons, including the energy density of petroleum fuels, the internal combustion engine has been the power source of choice for automobiles and most other vehicles. However, with the oil shocks of the past few decades, as well as an increasing awareness of the emissions of air pollutants and greenhouse gases from cars and trucks, interest in the use of electrical power train systems has grown. While there are other potential replacements for the internal combustion engine, such as compressed air, these other technologies have not been the subject of much interest scientifically or politically. Much of the federal advanced vehicle research has come through the Partnership for a New Generation of Vehicles (PNGV) and the FreedomCAR program, consortia of the federal government and the "Big Three" American automobile manufacturers. PNGV focused on near-term goals and the development of hybrid electric vehicles, while FreedomCAR, which replaced PNGV in 2002, focuses on long-term research on fuel cells and hydrogen fuel. The United States is not alone in pursuing these new technologies. Japanese manufacturers were the first to introduce high-efficiency gasoline-electric hybrid vehicles in the U.S. market. The development of these vehicles is a response to global pressures to lower emissions and improve fuel economy. In that context, it is worth noting that in most developed countries, gasoline and diesel fuel prices are considerably higher than they are in the United States. Four advanced propulsion technologies of key interest are electric vehicles, hybrid vehicles, plug-in hybrids, and fuel cell vehicles. In an electric vehicle, the vehicle runs exclusively on electricity that is supplied from an electric utility provider, eliminating combustion on-board the vehicle. A hybrid vehicle integrates an electrical system with an internal combustion engine to utilize the benefits of each system. A plug-in hybrid system allows a vehicle to be charged in the same manner as a pure electric vehicle, allowing an all-electric range. The additional hybrid system allows for the vehicle to use a combustion engine when the batteries are depleted. In a fuel cell vehicle, instead of combustion, a chemical conversion process is used, leading to higher levels of efficiency. In addition to altering the propulsion system, many other efficiency-related technologies, such as improved aerodynamics and low-resistance tires can be incorporated into both new and conventional vehicles. While these various technologies are promising, they must overcome certain obstacles before they will be competitive in the marketplace. There are three main barriers to their widespread use: cost, infrastructure, and performance. Cost is a factor since without subsidies, consumers are unlikely to purchase new vehicles in large numbers if the new vehicles are not cost-competitive with conventional vehicles. Also, convenient infrastructure must exist for both fueling and maintenance of these vehicles. Finally, the performance of the new vehicles must be comparable to that of conventional vehicles. An electric vehicle (EV) is powered by an electric motor, as opposed to a gasoline or diesel engine. Power is supplied to the motor by batteries, which are charged through a central charging station (which can be installed in the owner's garage) or through a portable charger on board the vehicle, which is plugged into an electrical outlet. Because no fuel is consumed in EVs, and the vehicles therefore do not produce emissions, they are considered to be zero emission vehicles (ZEVs) in certain air quality control regions. Although there are emissions attributable to the production of electricity to charge the vehicles, the overall fuel-cycle of EVs tends to lead to lower levels of toxic and ozone-forming emissions—as well as greenhouse gases—than those of conventional vehicles. Also, since pollution attributable to electric vehicles occurs at power plants, it is generally emitted in areas with relatively low population density. Another potential public policy benefit of electric vehicles is that they can reduce U.S. dependence on foreign oil, since only about 3% of electricity in the United States is generated from petroleum. Furthermore, transportation dependence on all forms of fossil fuels can be reduced, since approximately 30 to 35% of electricity in the U.S. is generated from non-fossil fuels. However, high electricity costs in recent years have led to questions about the long-term viability of EVs. Commercially, these vehicles have not been well-received by consumers. By 1998, only about 4,200 EVs were on the road, mainly in California. By 2005, this number had increased to roughly 51,000. However, only a few car companies currently produce electric vehicles, and most of those are only available for lease by large fleets. EVs for personal use have declined as automakers have taken most personal EVs off the market. While the number of EVs has increased, the amount of fuel used per vehicle has decreased, as have, presumably, miles traveled per vehicle. Between 1998 and 2005, while the number of EVs increased more than 10-fold, electricity for vehicle fuel increased only about five-fold. One of the most significant barriers to wide acceptance of electric vehicles is their higher purchase cost. For example, the manufacturer's suggested retail price for a 1999 General Motors EV1 was approximately $33,995, which was considerably higher than a comparable 1999 Chevrolet Cavalier at $13,670. However, fuel costs tend to be much lower for EVs than for conventional vehicles. In 2002, a small conventional vehicle could achieve a fuel cost of approximately $690 per year. An electric vehicle, however, could achieve a considerably lower cost of $390 to $480 per year. This difference, while significant, fails to make up for the additional purchase or lease cost for an electric vehicle. With increased petroleum prices, the cost savings for EVs may make them more attractive. However, its is unlikely that even a very large increase in petroleum prices would be sufficient to make the current generation of electric vehicles cost-competitive. In terms of maintenance costs, electric vehicles have fewer moving parts, which reduces wear. However certain parts, such as replacement batteries, tend to be expensive. Through 2006, there was a federal tax credit for the purchase of an electric vehicle. The federal credit was worth 10% of the purchase price of the vehicle, up to $2,000. This credit was part of the Energy Policy Act of 1992. In some areas, EVs are also exempted from high occupancy vehicle (HOV) lane restrictions, parking restrictions, and/or vehicle registration fees, which may provide an additional incentive for their use. Another key obstacle to more widespread use of electric vehicles is the lack of fueling (charging) and maintenance infrastructure. For example, there were approximately 700 public charging stations in 2004, mostly in California and Arizona. Currently, that number is only 440. This represents less than 1% of the roughly 125,000 gasoline stations nationwide. The lack of recharging infrastructure is not only inconvenient, but also limits long-distance travel, since Arizona and California account for the vast majority of all recharging sites currently in operation. Adding to the problem of fueling infrastructure, is the lack of maintenance infrastructure. Few mechanics have experience servicing EVs, and most work must be done at a certified dealer. For this reason, most EV leases include free dealer maintenance over the period of the contract. On the other hand, one advantage of electric vehicles is that they have fewer moving parts and thus may be more durable, and require less frequent maintenance. Another major concern with electric vehicles is their performance. The batteries used to power the vehicles tend to be quite heavy, limiting the range of these vehicles. While a conventional passenger car can travel 300 to 400 miles before refueling, until recently, electric cars generally could only travel about 100 to 150 miles before needing to be recharged. With new developments in battery technology, EV range has increased. However, even new EVs are unlikely to have the range of a conventional vehicle. Furthermore, while refilling the tank of a conventional vehicle requires only a few minutes, a full residential recharge for an electric vehicle can take five to eight hours, although new chargers may shorten this time significantly. For fleet vehicles, or for short-distance commuting, these performance characteristics might not greatly affect their marketability, but the feasibility of EVs for long-distance, intercity travel is unlikely with current technology, even if the fueling infrastructure is greatly expanded. A lesser concern with electric vehicles is an unconventional driving style. To provide maximum efficiency and range, the driver must accelerate and brake very smoothly, or range is significantly diminished. Because of this, some drivers may not be comfortable or proficient operating an electric vehicle. The greatest performance benefit from an EV is that, as was stated above, there are no emissions from the vehicle itself. Furthermore, the overall toxic and ozone-forming emissions tend to be much lower than with conventional vehicles since it can be easier to control emissions at a power plant than it is to control combustion vehicle emissions. An added benefit is a reduction in noise pollution since EVs are significantly quieter than conventional vehicles. Greenhouse gas emissions caused by EVs tend to be lower than those from conventional vehicles, depending on the local fuel mix used in power generation and the efficiency of the power distribution grid. But if electricity transmission and distribution losses are high, total energy consumption attributable to electric vehicles may exceed conventional vehicles. A major issue for vehicle manufacturers, and a motivation for increased research and development on electric vehicles, is California's zero-emissions mandate. This mandate would require manufacturers to sell ZEVs and other super-low-emission vehicles. However, many technical and market barriers have hindered the implementation of the program. Most recently, the California Air Resources Board amended the program, allowing manufacturers two methods to certify compliance. First, manufacturers were able to generate credits for future use by introducing a limited number of fuel cell vehicles (see discussion below on fuel cells) by 2005. Second, the manufacturers must produce a mix of vehicles, with 2% of sales coming from ZEVs, 2% from other advanced-technology vehicles, and 6% from conventional super-low-emission vehicles (SULEVs). Environmentalists have criticized the most recent amendments to the program for not requiring more extensive mandates. The original legislation required 2% of MY 1998 vehicle sales to be ZEVs and SULEVs, and 5% of MY 2001 sales, but these initial requirements were removed in 1996 to encourage market-based introduction of ZEVs. Other states have adopted the California program, including New York, Maine, Massachusetts, New Jersey, and Maryland. A type of vehicle that can address some of the problems associated with electric vehicles is a hybrid electric vehicle (HEV). HEVs combine an electric motor and battery pack with an internal combustion engine to improve efficiency. In current HEVs, the batteries are recharged during operation, eliminating the need for an external charger. In development are plug-in hybrids (PHEVs) that combine some of the benefits of HEVs and pure EVs (see the next section). Either way, range and performance can be significantly improved over electric vehicles. The combustion and electric systems of HEVs are combined in various configurations. In one configuration (series hybrid), the electric motor supplies power to move the wheels, while the combustion engine is connected to a generator that powers the motor and recharges the batteries. In another configuration (parallel hybrid), the combustion engine provides primary power, while the electric motor adds extra power for acceleration and climbing, or the electric motor is the primary power source, with extra power provided by the engine. In some parallel hybrid systems, the engine and electric motor work in tandem, with either system providing primary or secondary power depending on driving conditions. The hybrid drive train allows the combustion engine to operate at or near peak efficiency most of the time. This can lead to significantly higher levels of overall vehicle system efficiency. The higher efficiency of these vehicles allows them to achieve very high fuel economy and lower emissions. For example, the hybrid Honda Civic is rated at 40 miles per gallon (mpg) in the city, and 45 mpg on the highway. A gasoline-fueled Honda Civic sedan, by comparison, achieves a rating of 25 mpg city and 36 mpg highway. Fuel economy improvements can help cut demand for foreign petroleum, and the higher efficiency enables hybrid vehicles to attain, and even surpass, the range of conventional vehicles, even with a smaller fuel tank. Furthermore, since these vehicles utilize conventional fuel, the fueling infrastructure problems associated with electric vehicles can be eliminated. HEV sales have increased significantly over the past several years. From the introduction of the Honda Insight in the United States in 1999 through the end of 2006, approximately 650,000 HEVs were sold in the United States. Several hybrid vehicles are currently available in the U.S. market, and most major manufacturers have introduced hybrid models or plan to do so over the next few years. Currently, purchasers of an HEV may qualify for a tax credit. The credit, established in the Energy Policy Act of 2005, is based on the fuel economy and projected fuel savings compared to a baseline conventional vehicle. The value of the tax credit is up to $3,400, depending on those factors. The number of vehicles produced by a single manufacturer eligible for the tax credit is limited. Once an automaker produces 60,000 vehicles, the credit begins to phase out. Toyota reached the limit in 2006, and tax credits for Toyota hybrids were completely phased out October 1, 2007. One of the key selling points for hybrids is that while they are more expensive than conventional vehicles, they are much less expensive than pure electric vehicles. However, these vehicles are still relatively expensive. All of the current hybrids are priced several thousand dollars above comparable conventional vehicles. Further, it has been claimed that current hybrid prices are subsidized by the manufacturers. The higher purchase price of these vehicles is offset, to some degree, by lower fuel costs. Due to the higher fuel efficiency of hybrids, fuel can be significantly lower with hybrids than with conventional vehicles (see Table 1 ). These savings, along with proposed tax credits for the purchase of hybrids, could cover the incremental cost of purchasing a hybrid as opposed to a conventional vehicle. Furthermore, some consumers may be willing to pay a premium for a more "environmentally friendly" car. Another key advantage of hybrid vehicles over pure electrics is that no new fueling infrastructure must be installed, since the vehicles are fueled by gasoline or diesel. This allows hybrid owners to purchase and operate these vehicles anywhere in the country, and long-distance travel will not be limited by the fueling infrastructure. Furthermore, maintenance of the combustion components in the vehicle can rely on the existing service infrastructure. However, as with pure electric vehicles, maintenance of the electric components in hybrid vehicles generally must happen at licensed dealers, who will have more access to the technology. This may limit the acceptability for rural customers who may live a good distance from the dealership, but is less likely to harm acceptance of urban and suburban customers. The most notable features of hybrid vehicles are higher fuel economy and extended range. The efficiency of the hybrid drive system allows a significant increase in fuel economy compared to conventional vehicles, cutting fuel costs. Also, the improved fuel economy means that vehicle range is greatly extended with hybrids, even if a slightly smaller fuel tank is used. This higher efficiency also leads to lower emissions of greenhouse gases, as well as lower emissions of toxic and ozone-forming pollutants. Further, depending on design, the hybrid system can also be used to boost horsepower and acceleration. A recent development in advanced vehicle technologies is the expected introduction in the next few years of plug-in hybrid electric vehicles (PHEVs). A PHEV uses a much higher-capacity battery pack than a typical hybrid, and adds the ability to charge the vehicle on grid power. With the larger batteries, an all-electric range of 20 to 40 miles (or more) could be achieved. In this way, most commuters might be able to travel to and from work solely on electrical grid power. Only when traveling long distances might the combustion engine be necessary. Potential advantages include the ability to use electric power, which tends to be less expensive per mile than gasoline. Thus, some of the increased purchase cost of a PHEV over a conventional vehicle could be made up in future fuel savings. In addition, PHEVs could provide some of the environmental benefits of pure electric vehicles, including lower fuel-cycle pollutant and greenhouse gas emissions, without some of the performance drawbacks. It is expected that because of the higher-capacity batteries necessary for PHEVs compared to hybrids, costs could be several thousand dollars more than a hybrid, and thus significantly more expensive than a conventional vehicle. Some or all of this additional cost could be made up through energy cost savings over the life of the vehicle. Electricity tends to be less expensive than gasoline per mile, and it is expected that most consumers would be able to run most of the time on electricity. One key concern is that the duty cycle of PHEV batteries is far more rigorous than that of "conventional" hybrids, and thus the batteries may need to be replaced more often, increasing life-cycle costs. A key question on the infrastructure for PHEVs is whether they will be able to be plugged into a standard household outlet, or whether an additional charging station would be necessary. If no additional charging station is required, then presumably consumers could recharge their vehicles overnight at their homes. Beyond those requirements, concerns have been raised over the additional electric power needed if a large number of PHEVs are plugged into the grid. A key benefit of a PHEV is that it can run on electric power, but without the range limitations of a pure EV. A PHEV's all-electric range would likely be limited to commuting distances, with the combustion engine engaging on longer trips. Another key benefit to PHEVs is that by relying mainly on electric power, total fuel cycle pollutant and greenhouse gas emissions will likely be lower than those of conventional vehicles, although the degree of reduction will depend on the source of the electric power (coal, natural gas, nuclear, or renewable), and the amount of electric vs. gasoline fuel used by the vehicle. An advanced vehicle further from commercialization is a fuel cell vehicle (FCV). A fuel cell can be likened to a "chemical battery." Unlike a battery, however, a fuel cell can run continuously, as long as the fuel supply is not exhausted. In a fuel cell, hydrogen reacts with oxygen to generate an electric current. Hydrogen is supplied to the fuel cell as either pure hydrogen or a through hydrogen-rich fuel (such as methanol, natural gas, or gasoline) that is processed (reformed) on-board the vehicle. There is a physical limit to the voltage that one fuel cell can provide, so fuel cells are arranged in "stacks" to generate a high voltage that is used to power an electric motor. This chemical process eliminates the need for charging a battery, which is necessary with electric vehicles, while producing much lower emissions than combustion vehicles. In fact, if pure hydrogen fuel is used, the only product from the reaction will be water. With hydrogen fuel, an FCV would qualify as a zero emission vehicle. Using other fuels, while the vehicle is no longer a ZEV, emissions would still be drastically cut as compared to conventional vehicles. Furthermore, because potential fuel supplies for FCVs include natural gas, methanol, or pure hydrogen—the latter two produced from natural gas —another potential benefit from fuel cells will be their ability to reduce the transportation demand for foreign petroleum. While currently available only to a few consumers (on a demonstration basis), fuel cells have been touted as likely to be one of the most important technologies in the history of the automobile. They are currently very expensive, and thus there has been a great deal of interest in research and development to improve their marketability. Because of their potential to revolutionize the automotive industry, all major manufacturers are working to develop fuel cell vehicles, and some manufacturers have introduced a limited number of vehicles for lease; others intend to introduce vehicles for limited leases in the near future. Demonstration projects are ongoing with fuel cell passenger cars, sport utility vehicles, and transit buses. Many of these demonstrations are in conjunction with the California Fuel Cell Partnership, a consortium of auto manufacturers, fuel providers, fuel cell developers, and state and federal agencies. Arguably, the largest barrier to the production of FCVs is cost. It currently costs approximately $2,000 to $3,000 to produce a gasoline engine for a conventional passenger car. In the early 2000s, a comparable fuel cell stack cost around $35,000, according to industry estimates, but a leading producer of fuel cells estimates that costs could be cut to $3,500 in the future. Since there are fewer moving parts in a fuel cell vehicle, maintenance costs would likely be lower, so the added cost of the fuel cell system may be offset by lower maintenance costs. Further research and development would be necessary to achieve these benefits. Another key cost issue will be fuel costs. Fuel costs are a concern because there is no hydrogen fueling infrastructure currently, and the use of methanol and natural gas as transportation fuels is currently limited. Consumers might have to pay a premium for these fuels, in order to support a growing infrastructure. However, since hydrogen fuel and methanol would likely be produced from natural gas, price fluctuations caused by changing supply in petroleum markets could be dampened, although natural gas price fluctuations would certainly have an effect. Another major barrier to the use of FCVs is that there is no infrastructure for the distribution of hydrogen fuel, and little methanol or natural gas infrastructure for transportation. As of December 2007, there were only about 750 natural gas refueling sites in the United States, and few, if any, methanol sites. The feedstock for methanol, and the likely feedstock (in the near future) for hydrogen fuel is natural gas, although other feedstocks, such as biomass or coal, could be used. Hydrogen derived from renewable energy could also be possible in the future, but that technology is far from commercialization. Until the distribution infrastructure for hydrogen, methanol, or natural gas is developed, it is possible that gasoline will be the fuel of choice for fuel cell passenger vehicles. As with electric vehicles, no maintenance infrastructure exists for servicing these vehicles. The technology is radically different from conventional vehicles, and most maintenance would likely have to occur at certified dealers. One limit on the performance of fuel cell vehicles has been their weight. Fuel cells have been demonstrated on larger vehicles, such as buses. However, because of size and weight, until recently, passenger and cargo space has been sacrificed in prototypes of smaller fuel cell vehicles. However, many of these issues have been addressed in more recent prototypes. Another potential concern is that on-board reformers for converting gasoline or other fuels to hydrogen are very heavy. Therefore, much research has focused not only on cutting the cost of fuel cell systems, but decreasing their weight, as well. Another performance concern is one of fuel storage. Since hydrogen is not very dense, the fuel must be highly concentrated, and must be compressed (requiring a high-pressure tank), liquified (requiring a cooling system for the storage tank), chemically bonded with a storage material (such as a chemical or metal hydride), or stored in a tank with a complicated geometry (e.g., nanotubules). Each of these storage systems has problems, such as added weight, safety risks, or expensive raw materials that limit their acceptability. Therefore, research is ongoing to improve both the storage capacity and safety of hydrogen fuel. On the environmental side, the emissions from fuel cell vehicles are extremely low. Using hydrogen, there are no emissions of toxic or ozone-forming pollutants. Using other fuels, the reformer limits the efficiency of the fuel cell system, but emissions are still much lower than with conventional engines. Depending on the emissions attributable to the production and distribution of the fuel, fuel cell vehicles may perform better environmentally than any other technology for all types of emissions, including greenhouse gases. However, this is not a guarantee, especially if coal is used to generate hydrogen and no technology is developed to recapture carbon dioxide from the production process. Currently, the main issue for fuel cells is research and development (R&D). All major automobile manufacturers are spending considerable amounts of money on fuel cell R&D. In January 2002, the Bush Administration announced the FreedomCAR program, which focuses federal vehicle research on fuel cell vehicles. To complement this program, in January 2003, the Administration announced the Hydrogen Fuel Initiative, which focuses research on hydrogen fuel and infrastructure, as well as research on fuel cells for other applications (e.g., backup power). Another way to improve the fuel economy and emissions characteristics of vehicles is to use advanced components that reduce friction, decrease vehicle weight, or improve system efficiency. Many high-technology vehicles that are available to the public utilize these technologies, but some of these technologies could also be incorporated into the design of conventional vehicles. An effective way to improve efficiency is to reduce the weight of the vehicle. However, simply reducing weight while using the same materials and structural design can compromise passenger safety. Therefore, newer vehicles are making extensive use of advanced materials such as composite or plastic body panels, and high-strength, lightweight aluminum structural components. The use of some of these materials may even make a vehicle more recyclable. Furthermore, conventional materials can improve safety while reducing weight, if more sophisticated structural designs are used. Another way to improve efficiency is to decrease resistance, both from drag and from friction between the wheels and the road. Wind resistance can be decreased through redesigning the body to a more aerodynamic shape. In addition, the use of "slippery" body panels can further decrease drag, as can decreasing the profile of parts such as side-view mirrors, tires, and the radio antenna. Rolling friction can be limited through the use of low-resistance tires. A key component in the efficiency of electric vehicles (including hybrids and fuel cell vehicles) is a regenerative braking system. This system allows some of the vehicle's kinetic energy to be recaptured as electricity when the brakes are applied. In braking, the motor acts as a generator, taking kinetic energy from the wheels and converting it to electrical energy, which is fed back to the batteries. This technology is already available on consumer EVs and HEVs. Computers can be used to electronically adjust valve timing to optimize engine efficiency. This improved efficiency can be used to lower fuel consumption and/or increase power output. Variable valve timing is currently available on many passenger vehicles. Some new fuel-saving technologies will require more power than is provided by standard 14-volt electrical systems. A 42-volt system would provide the power to these new systems. Further, increasing power requirements from existing and future conveniences such as climate control, power accessories, and audio/video devices will soon require greater power than a 14-volt system can provide. An integrated starter-generator can be used in conventional vehicles to reduce fuel consumption and improve acceleration. As with a hybrid vehicle, using the high-torque device allows the engine to shut off when the vehicle is stopped. When power is applied, the engine can restart in less than one second. It is believed that the integrated starter-generator could improve fuel economy of conventional vehicles by as much as 20%. However, because the integrated starter-generator requires a considerable amount of electrical power, it is being developed concurrently with 42-volt electrical systems. Fuel consumption can also be reduced through cylinder deactivation. When less power is needed, one or more engine cylinders can be deactivated. These cylinders can then be reactivated if power needs increase. This technology could be particularly useful in applications where a six-, eight-, or ten-cylinder engine may be needed to boost acceleration, haul a trailer, or carry a large payload, but is not needed when loads are lighter. Cylinder deactivation is currently available in several vehicles, including certain models of the Chrysler 300 sedan, the GMC Envoy SUV, and the Honda Odyssey minivan. The use of advanced vehicle technologies can help curb consumption of fossil fuels, especially petroleum, and reduce emissions of toxic and ozone-forming pollutants, as well as greenhouse gases. In general, the most promising current technologies incorporate electric motors and batteries in their design, while all take advantage of new design techniques and advanced materials to reduce resistance, cut vehicle weight, and better conserve energy. However, most of these technologies are still in various stages of development and have not yet proven marketable to most consumers. The three key issues for the marketability of advanced technology vehicles are cost, infrastructure, and performance. Consumers must be willing and able to purchase the vehicles, so purchase cost and overall life-cycle cost of these vehicles must be competitive. In addition, consumers must be able to expect that refueling and servicing these vehicles will be relatively convenient. Finally, the overall performance of the vehicles—in terms of fuel economy, range, driveability, safety, and emissions—must be acceptable. While most advanced vehicles meet some of these requirements, no new vehicle has yet met all of them. Therefore, research and development has been a key issue in the discussion of these vehicles, as have efforts to make the vehicles more affordable and the infrastructure more accessible. These vehicles may help the federal government in its role of promoting energy security and environmental protection if research and development can bring them to a point where they can be successfully marketed to American consumers. | Research and development of cleaner and more efficient vehicle technologies has been ongoing for the past few decades. Much of this research started in response to the oil shocks of the 1970s, which triggered concerns about rising fuel costs and growing dependence on imported fuel. The urgency of those concerns was lost as fuel prices declined in the 1980s and 1990s. At the same time, however, rising concerns about vehicle contributions to air pollution and global climate change added a new dimension to the issue. Recently, instability in world oil prices and political concerns have reawakened the energy dependence concerns of the 1970s. Meanwhile, research on new technologies continues, with a particular focus on commercialization. Despite widespread agreement in principle on the benefits of decreased dependence on petroleum and the internal combustion engine, the practical challenges posed by a transition to advanced vehicle technologies are formidable. Nonetheless, significant research and development progress has been made since the 1970s. These new technologies have sparked more interest as some major auto manufacturers have introduced high-efficiency production vehicles to the American market, and others have plans to introduce similar vehicles in the future. Furthermore, interest has grown recently as a result of higher petroleum prices, and the announcement of new emission regulations for passenger vehicles. In January 2002, the Bush Administration announced the FreedomCAR initiative, which focuses federal research on fuel cell vehicles. In conjunction with FreedomCAR, in January 2003, President Bush announced the Hydrogen Fuel Initiative, which focuses federal research on hydrogen fuel and fuel cells for stationary applications. The goal of these initiatives is to improve the competitiveness of hydrogen fuel cell vehicle technologies. However, fuel cell vehicles share many components with hybrid and pure electric vehicles. Thus, this research will likely promote advanced vehicle technologies in general. This report discusses four major vehicle technologies—electric vehicles, hybrid electric vehicles, plug-in hybrids, and fuel cell vehicles—as well as advanced component technologies. Each technology is discussed in terms of cost, fueling and maintenance infrastructure, and performance. |
This is an overview of federal forfeiture law. It sketches the origins and general attributes of forfeiture, describes the distribution of the hundreds of millions of dollars it generates, and identifies some of the constitutional issues it raises. Congress and state legislatures have authorized the use of forfeiture for over 200 years. Forfeiture law has always been somewhat unique. Its increased use has highlighted its eccentricities and attendant policy concerns. Present forfeiture law has its roots in early English law. It is reminiscent of three early English procedures: deodands, forfeiture of estate or common law forfeiture, and statutory or commercial forfeiture. At early common law, the object that caused the death of a human being—the ox that gored, the knife that stabbed, or the cart that crushed—was confiscated as a deodand. Coroners' inquests and grand juries, bound with the duty to determine the cause of death, were obligated to identify the offending object and determine its value. The Crown distributed the proceeds realized from the confiscation of the animal or deadly object for religious and charitable purposes in the name of the deceased. Although deodands were not unknown in the American colonies, they appear to have fallen into disuse or been abolished by the time of the American Revolution or shortly thereafter. In spite of their limited use in this country, deodands and the practice of treating the offending animal or object as the defendant have frequently been cited to illustrate the characteristics of modern civil forfeiture. Forfeiture of estate or common law forfeiture, unlike deodands, focused solely on a human offender. At common law, anyone, convicted and attained for treason or a felony, forfeited all his lands and personal property. Attainder, the judicial declaration of civil death, occurred as a consequence of the pronouncement of final sentence for treason or felony. In colonial America, common law forfeitures were rare. After the Revolution, the Constitution restricted the use of common law forfeiture in cases of treason, and Congress restricted its use, by statute, in the case of other crimes. The third antecedent of modern forfeiture, statutory or commercial forfeiture, figured prominently in cases in admiralty and on the revenue side of the Exchequer in pre-colonial England. It was used fairly extensively against smuggling and other revenue evasion schemes in the American colonies and has been used ever since. In most instances, the statutes called for in rem confiscation proceedings in which, as with deodands, the offending object was the defendant; occasionally, they established in personam procedures where confiscation occurred as the result of the conviction of the owner of the property. Although contemporary American forfeiture law owes much to the law of deodands and the law of forfeiture of estate, it is clearly a descendant of English statutory or commercial forfeiture. Modern forfeiture is a creature of statute. While there are some common themes and general patterns concerning the crimes that trigger forfeiture, the property subject to confiscation, and the procedures associated with forfeiture, federal forfeiture statutes are matters of legislative choice and can vary greatly. Virtually every kind of property, real or personal, tangible or intangible, may be subject to confiscation under the appropriate circumstances. The laws that call for the confiscation of contraband per se, property whose very possession has been outlawed, were at one time the most prevalent and can still be found. Property—particularly vehicles—used to facilitate the commission of a crime and without which violation would be less likely, has long been the target of confiscatory statutes as well. In some instances, Congress has focused upon the profits of crime and authorized the confiscation of the direct and indirect proceeds of illegal activities. And under some circumstances, it has authorized the forfeiture of substitute assets, when the tainted property subject to confiscation under a particular statute has become unavailable. Traditionally, the crimes which triggered forfeiture were (1) those that threatened the government's revenue interest, for example, smuggling, tax evasion, hunting or fishing without a license, or (2) those crimes that because of their perceived threat to public health or morals might have been considered public nuisances subject to abatement, for example, gambling, or dealing in obscene material, or illicit drug use. Beginning with the racketeering statutes, a number of jurisdictions have created another category of forfeiture warranting offenses—crimes that involve substantial economic gain for the defendant even if not at the expense of government revenues, but which may greatly enhance government revenues, for example, racketeering and money laundering. A prime example of this approach is the Civil Asset Forfeiture Reform Act (CAFRA), which makes forfeitable, among other things, the proceeds from any of the crimes upon which a money laundering or RICO prosecution might be based. Following the terrorist attacks on September 11, 2001, Congress authorized the confiscation of another type of crime-related property—property owned by certain terrorists regardless of whether the property is traceable, used to facilitate, or connected in any other way to any practical crime. Federal confiscation ordinarily begins with a federal crime. Federal law, however, permits the confiscation of property located in the United States, derived from or used to facilitate various crimes committed in violation of foreign law overseas. The qualifying felonies include public corruption, crimes of violence, drug trafficking, gun running, bank fraud, and child prostitution. Forfeiture follows one of two procedural routes: criminal or civil. Although crime triggers all forfeitures, they are classified as civil forfeitures or criminal forfeitures according to the nature of the judicial procedure which ends in confiscation. Criminal forfeitures are part of the criminal proceedings against the property owner, and confiscation is possible only upon the conviction of the owner of the property and only to the extent of defendant's interest in the property. Civil forfeitures are accomplished using civil procedure. Civil forfeiture is ordinarily the product of a civil, in rem proceeding in which the property is treated as the offender. Within the confines of due process and the language of the applicable statutes, the guilt or innocence of the property owner is irrelevant; it is enough that the property was involved in a crime to which forfeiture attaches in the manner in which statute demands. Some civil forfeitures are accomplished administratively; some are not. Administrative forfeitures are, in oversimplified terms, uncontested civil forfeitures. Historically, most forfeiture statutes called for civil forfeiture. The procedure for forfeiture varies according to the statute which authorizes confiscation. Although each usually contains a few procedural features, the drug, money laundering, and several other civil forfeiture statutes fill in their procedural gaps by cross-reference to the regime established under the customs laws. CAFRA contains generally applicable procedures and thus reduces the extent to which civil forfeiture procedural matters are resolved by reference solely to the customs laws. As a general rule, since the proceedings are in rem, actual or constructive possession of the property by the court is a necessary first step in any confiscation proceeding. The arrest of the property may be accomplished either by warrant under the Federal Rules of Criminal Procedure; or, if judicial proceedings have been filed, by a warrant under the Supplemental Rules of Certain Admiralty and Maritime Claims; or without warrant, if there is probable cause and other grounds under which the Fourth Amendment permits a warrantless arrest; or pursuant to equivalent authority under state law. Because realty cannot ordinarily be seized until after the property owner has been given an opportunity for a hearing, the procedure differs slightly in the case of real property. Where the seizure of the property causes an undue hardship, CAFRA affords an owner the opportunity to petition the court for release of the property pending the completion of forfeiture proceedings. Conversely, the government may be entitled to a restraining or protective order to preserve the property pending the completion of forfeiture proceedings. In the interests of expediency and judicial economy, Congress has sometimes authorized the use of administrative forfeiture as the first step after seizure in "uncontested" cases. It may be somewhat misleading to characterize administrative forfeitures as uncontested forfeitures, given the procedural obstacles that the government and claimants must overcome before the government is put to its burden in a judicial proceeding. For the government the procedure begins with seizure of the property. It must notify anyone with an interest in the property and provide an opportunity to request judicial forfeiture proceedings. Notice of the seizure alone, but without notice of the government's intent to seek confiscation, is not in itself sufficient. Anyone with an interest in the property may contest confiscation with a verified claim under the Supplemental Rules. Property owners have 30 days after the government's filing to submit a claim, and 20 days thereafter to tender their answer. The period within which a claimant must register his or her intent to contest can be a fairly narrow window. Moreover, the courts may consider time of the essence, as long as the government has made reasonable efforts to notify interested parties. Even if the government sustains no appreciable damage, a claim not promptly filed may be a claim lost. The government may petition the court to dismiss a claim for want of statutory standing, which in turn may require the claimant to establish that he lawfully obtained the targeted property. If there are no viable claims, the property is summarily declared forfeited. If the government has failed to provide adequate notice or failed to honor some other due process obligation, the declaration of administrative forfeiture may be set aside. When an administrative forfeiture is set aside for want of notice, section 983(e) gives the government 60 days to initiate judicial forfeiture proceedings notwithstanding the expiration of an otherwise applicable statute of limitations. CAFRA establishes a timetable for administrative forfeitures under which the government must notify those with a property interest of its intent to confiscate within 60 days of seizure. Thereafter, the property owner has at least 35 days within which to file a claim and request a judicial hearing. The government has 90 days within which to initiate judicial proceedings after the receipt of a claim. In customs or tax cases or cases that predate the passage of CAFRA, due process dictates the speed with which the government must act to initiate forfeiture proceedings following seizure of the property. When administrative forfeiture is unavailable, or when a claimant has successfully sought judicial proceedings, or when the government has elected not to proceed administratively, the government may begin civil judicial proceedings by filing either a complaint or a libel against the property. In money laundering and other civil forfeitures governed by CAFRA, the government must establish that the property is subject to confiscation by a preponderance of the evidence. In cases such as those arising under the customs laws and cases filed before the effective date of CAFRA amendments, the government must establish probable cause to believe that the property is subject to forfeiture. If the government overcomes the initial obstacle, a claimant may successfully challenge confiscation on several grounds. He or she may be able to show that the predicate criminal offense did not occur or that his or her property lacks the statutorily required nexus to the crime. For example, when the government claims that property is forfeitable because it was used to commit or to facilitate the commission of a crime, it must "establish that there was a substantial connection between the property and the offense." A claimant's innocence or even acquittal only bars civil forfeiture to the extent that a statute permits or due process requires. For most civil forfeitures, other than those arising under the tax or customs laws, CAFRA establishes two "innocent owner" defenses—one for claimants with an interest in the property at the time the forfeiture-triggering offense occurred and the other for claimants with an interest acquired after the forfeiture-triggering offense occurred. The first is available to claimants either who were unaware that their property was being criminally used or who did all that could be reasonably expected of them to prevent criminal use of their property. The second is for good faith purchasers who did not know of the taint on the property at the time they acquired their interest. Even when the government establishes that property is subject to civil forfeiture, CAFRA affords a claimant the right to a judicial reduction of the amount of the confiscation, if the court determines the extent of the forfeiture is excessive in view of the gravity of the offense and claimant's culpability. When the court determines that the property is not subject to forfeiture, it must be released to its owner, assuming the property can be lawfully possessed by its owner. Regardless of the statutory procedure initially invoked, prevailing claimants may be entitled to compensation for damages to the property incurred while in federal custody, attorneys' fees, post-judgment interest, and in some instances pre-judgment interest. Once less frequently invoked than civil forfeiture, criminal forfeiture appears to have become the procedure of choice when judicial proceedings are required. CAFRA added to the federal crimes punishable by criminal forfeiture, various offenses involving unlawful money transmission, counterfeiting, identify fraud, credit card fraud, computer fraud, theft related to motor vehicles, health care fraud, telemarketing fraud, bank fraud, and immigration-related offenses. Perhaps more significantly, a bridge statute, 28 U.S.C. 2461(c), exists which permits confiscation using criminal forfeiture procedures whenever civil forfeiture is authorized elsewhere. Like civil forfeiture, criminal forfeiture is a creature of statute. Unlike civil forfeiture, criminal forfeiture follows as a consequence of conviction. It is punishment, even though it may also serve remedial purposes very effectively. While civil forfeiture treats the property as the defendant, confiscating the interests of the innocent and guilty alike, criminal forfeiture traditionally consumes only the property interests of the convicted defendant, and only with respect to the crime for which he is convicted. When the property subject to confiscation is unavailable following the defendant's conviction, however, the court may order the confiscation of other property belonging to the defendant in its stead (substitute assets). The indictment or information upon which the conviction is based must list the property which the government asserts is subject to confiscation. When the trial is conducted before a jury, either party may insist upon a jury determination of the forfeiture issue. Since the court's jurisdiction does not depend upon initial control of the res, it need not be seized before forfeiture is declared. Although the courts are authorized to issue pretrial restraining orders to prevent depletion or transfer of property which the government contends is subject to confiscation, many are hesitant to issue pre-trial restraining orders covering substitute property. And there may be some lingering uncertainty as to whether such orders can be issued when the government has opted to use the good offices of the bridge statute to accomplish what would otherwise be a civil forfeiture in conjunction with the criminal prosecution of the property owner. Originally, section 2461(c) permitted criminal forfeiture under statutes that authorized civil forfeiture but that made no provision for criminal forfeiture. In such cases, it declared that "upon conviction, the court shall order the forfeiture of the property in accordance with the procedures set forth in section 413 of the Controlled Substances Act (21 U.S.C. 853), other than subsection (d) of that section." The current version of section 2461(c) appeared, unexplained, in the conference report on the bill subsequently enacted as the USA PATRIOT Improvement and Reauthorization Act. The new language permits criminal forfeiture under the procedures of section 2461(c) whenever a civil forfeiture is authorized, regardless of whether the statute that authorizes the civil forfeiture also authorizes criminal forfeiture under different procedures. It allows the government to elect to use section 2461(c)'s criminal forfeiture procedures even where alternative criminal forfeiture procedures were already available, hence perhaps its "uniform procedures" caption in the act. In any event, the defense to criminal forfeiture differs somewhat from the defense to civil forfeiture. For example, since conviction is a prerequisite to confiscation, an overturned conviction or an acquittal will ordinarily preclude forfeiture. Third party interests are less likely to be cut off by virtue of the property's proximity to criminal conduct simply because only the defendant's interest in the property is subject to confiscation and because bona fide purchaser exceptions are more common. Bona fide purchaser exceptions protect a good faith purchaser who acquired the property after commission of the offense—at which time title to the property vested in the United States—but before the declaration of forfeiture. After conviction of the defendant and after it has met its burden of establishing forfeitability by a preponderance of the evidence, the government may elect to seek either confiscation of forfeitable property or a money judgment in the amount of its value. If the government seeks confiscation, the court must determine whether the statutory nexus between the property and the crime of conviction exists. If the government instead seeks a money judgment, the court must determine the amount the defendant must pay. At that point, the court issues a preliminary forfeiture order or order for a money judgment against the defendant in favor of the government. Upon the issuance of a preliminary forfeiture order, the government must proclaim its intent to dispose of the property and notify any third parties known to have an interest in the property. Third parties with a legal interest in the forfeited property, other than the defendant, are then entitled to a judicial hearing, provided they file a timely petition asserting their claims. The court may amend its forfeiture order at any time, even a number of years after its initial entry. Third party claims may be grounded either in an assertion that they possessed a superior interest in the property at the time confiscation-trigger misconduct occurred or that they are good faith purchasers. The courts will not recognize the unsecured claims of general creditors to the property, but will look to state law to determine whether a third party has the requisite superior interest in the property. Regardless of whether third parties assert a superior interest or the status of a good faith purchaser, they bear the burden of establishing their claim by a preponderance of the evidence. When the government is awarded a money judgment, it is not limited to the forfeitable assets the defendant has on hand at the time but may enforce the judgment against future assets as well. In such cases, the courts are divided over the question of whether the government may enforce the judgment like any other judgment creditor or instead is limited to substitute assets and then only if the tainted assets are unavailable. Disposal of forfeited property is ordinarily a matter of statute. The pertinent statute may require that the proceeds of a confiscation be devoted to a single purpose, such as the support of education or deposit in the general fund. The statute may call for the destruction of property that cannot be lawfully possessed; or authorize rewards, the settlement of claims against the property; or remission or mitigation. It may permit distribution of the proceeds or a portion thereof as victim restitution. Intergovernmental transfers and the use of special funds, however, are the hallmarks of the more prominent federal forfeiture statutes. The Attorney General and the Secretary of the Treasury enjoy wide latitude to transfer confiscated property to federal, state, local, and foreign law enforcement agencies to the extent of their participation in the case. Nevertheless, both must be assured that the transfers will encourage law enforcement cooperation. At one time, this "equitable sharing" transfer authority could not be used unless the Attorney General was convinced that confiscated property "[was] not so transferred to circumvent any requirement of State law that prohibits forfeiture or limits use or disposition of property forfeited to State or local agencies." The restriction addressed sometimes controversial adoptive forfeitures. Adoptive forfeiture occurs when property is forfeitable under federal law because of its relation to conduct, such as drug trafficking, which violates both federal and state law. The Department of Justice "adopts," for processing under federal law, a forfeiture case brought to it by state or local law enforcement officials and in which the United States is not otherwise involved. Federal adoption is sometimes attractive because of the speed afforded by federal administrative forfeiture. It may also be attractive because forfeiture would be impossible or more difficult under state law or because law enforcement agencies would not share as extensively in the bounty of a successful forfeiture under state law. The circumvention restriction is no longer in effect, but the Treasury and Justice Departments insist that state and local law enforcement agencies indicate the law enforcement purposes to which the transferred property is to be devoted and that the transfer will increase and not supplant law enforcement resources. Moreover, the Attorney General has prohibited adoption subject to narrow exceptions. The direct lion's share of confiscated cash or the proceeds from the sale of confiscated property, however, is now deposited in either the Department of Justice Asset Forfeiture Fund, or the Department of the Treasury Forfeiture Fund. The Comprehensive Crime Control Act of 1984 changed the way in which the federal government deals with revenues realized from the collection of fines and forfeitures. Prior to the Crime Control legislation, virtually all of the money realized from fines and forfeitures, like most federal revenues, was deposited in the general fund of the United States Treasury. Through the enactment of annual appropriation bills, Congress permitted the money in the general fund to be spent to finance the activities it had authorized by statute. The Crime Control legislation created three new funds to receive revenues collected as part of the federal criminal law enforcement process, and Congress added a fourth a few years later. The Customs Forfeiture Fund, which became the Department of the Treasury Forfeiture Fund, and the Department of Justice Asset Forfeiture Fund collect confiscated cash and the proceeds from other forfeitures which are available for federal and state law enforcement purposes. The Treasury and Justice Department Funds together receive over $2 billion per year. Congress created the Department of Justice Asset Forfeiture Fund as part of the Comprehensive Crime Control Act of 1984. The Department of Justice administers the Fund, which receives confiscated cash and the proceeds from forfeitures conducted under the laws enforced or administered by the Department of Justice and the Department of Justice's equitable share of forfeitures conducted by other state, federal, or foreign law enforcement agencies. Before confiscated cash or the proceeds from the sale of other confiscated property is paid into the Fund, the Attorney General may often authorize it to be transferred to or shared with other federal, state, local, or foreign law enforcement agencies who have participated in the investigation or proceedings that resulted in confiscation. After money has been paid into the Fund, the Attorney General may use it to pay: forfeiture related expenses, rewards to informants in illicit drug cases, rewards to informants in forfeiture cases, liens and mortgages against forfeited property, remission and mitigation in forfeiture cases, to equip cars, boats and planes for law enforcement purposes, to purchase evidence of money laundering or of federal drug crimes, to pay state and local real estate taxes on forfeited property, to pay overtime, travel, training and the like for assisting state and local law enforcement personnel, federal correctional construction costs, the Special Forfeiture Fund, and to pay for joint state, local and federal cooperative law enforcement operations. In the past, Congress has occasionally directed that the Fund be made available during a particular year and for a specific law enforcement purpose in anticipation of a surplus in the Fund after the statutory purposes had been served. More recently, however, it has authorized the Attorney General to tap this "super surplus" for any law enforcement or Justice Department purpose. Although once money has been appropriated it may be spent in any fiscal year, access to the Fund is subject to annual appropriation for purposes of awarding rewards, purchasing evidence, and refitting of law enforcement vehicles. For other purposes, Congress has enacted a permanent appropriation. Record-keeping functions are performed under contract paid out of the Fund. Originally, the Department of Justice did not use the Fund to pay the salaries and expenses of the United States Marshals Service personnel responsible for management of the seized assets and the Fund. Except in the case of equitable sharing where they were covered by the administrative fee, those costs were generally handled through the overall salaries and expenses appropriation for the Marshals Service. More recently, however, the Department has used the Fund to pay the salaries and other administrative costs of forfeiture-related personnel in the Marshals Service, the Department's Management Division's Asset Forfeiture Management Staff, and its Criminal Division's Asset Forfeiture and Money Laundering Section. The Department of the Treasury Forfeiture Fund began as the Customs Forfeiture Fund. It is administered by the Secretary of the Treasury and receives deposits of currency and proceeds from forfeitures under laws enforced or administered by the Department of the Treasury or the Coast Guard, amounts received by the Department of the Treasury or the Coast Guard as an equitable share of a forfeiture conducted by other authorities, or income realized from investments on behalf of the Fund. Earlier plans to merge the Justice and Treasury Department Funds have never been acted upon. Before confiscated cash or the proceeds from the sale of other confiscated property are paid into the Fund, the Secretary of the Treasury may also authorize transfer of the property to other federal, state, local, or foreign law enforcement agencies who assisted in its forfeiture. After money has been paid into the Fund, the Secretary of the Treasury makes one portion available to the Coast Guard in an amount reflecting its contributions. The moneys available for the Coast Guard may be used to equip cars, boats and planes for law enforcement purposes, to pay overtime and similar expenses for state and local law enforcement officers in a joint operation, and to satisfy environmental requirements before sinking hazards to navigation. The Fund is otherwise available to the Secretary of the Treasury for a number of purposes, including paying: expenses associated with the forfeiture, claims against the property, liens and mortgages against forfeited property, remission and mitigation, rewards for information concerning violations of the customs laws, rewards for information or assistance resulting in a Department of Treasury forfeiture, to equip cars, boats and planes for law enforcement purposes, to purchase evidence of various crimes traditionally within the jurisdiction of the Department, to reimburse the expenses of private individuals associated with Department law enforcement activities, for equitable sharing, if not accomplished prior to deposit in the Fund, for "overtime salaries, travel, fuel, training, equipment, and other similar costs of State and local law enforcement officers that are incurred in joint law enforcement operations," and to train foreign law enforcement personnel in Department forfeiture related matters. Congress has established a permanent appropriation to pay for forfeiture-related expenses, for the settlement of claims, liens, and mortgages, for remission and mitigation, rewards under the customs laws, and equitable sharing. The Special Forfeiture Fund originally financed the Office of National Drug Control Policy (the "drug czar"), and fed off the Department of Justice Asset Forfeiture Fund. The Special Forfeiture Fund has since been abolished. The Justice Department's Office for Victims of Crime in the Office of Justice Programs administers the Crime Victims Fund created by the Crime Control Act. The Fund receives revenues collected as fines for violations of federal criminal law, as special assessments against misdemeanor offenders, as a consequence of jumping bail, and from the operation of the espionage provisions, and the "Son of Sam" forfeiture provisions. The Fund is available for grants to the States for crime victim compensation and assistance programs, for HHS child-abuse prevention and treatment grants, and to reimburse the courts for administrative costs. At one time, it could safely be said that the Constitution afforded state and federal governments extraordinary latitude to enact and enforce forfeiture statutes; forfeiture often seemed unusual, sometimes severe, and occasionally unfair, yet with rare exceptions it was not unconstitutional. In 1993, the Court handed down a series of decisions that seemed to signal its uneasiness with the trends in forfeiture law. Yet thereafter, it seems to deny any inclination to totally repudiate the government's broad forfeiture authority, although it incrementally began to define the constitutional borders of that authority. The Eighth Amendment states in its entirety that "[e]xcessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted." The lower courts had on several occasions held that criminal forfeitures are subject to Eighth Amendment analysis, but Eighth Amendment concerns were generally considered irrelevant in civil forfeiture cases because the Amendment was thought to be limited to criminal punishments while civil forfeitures were remedial and thus neither criminal nor punishments. This changed in 1993 when the Supreme Court announced that the Eighth Amendment's excessive fines clause applies not only to criminal forfeitures but to some civil forfeitures as well. The full impact of those decisions remained uncertain initially, because the Court declined to articulate a test by which to measure particular forfeitures against the clause's proscriptions. Then in Bajakajian it selected the standard used as the measure under the parallel cruel and unusual punishment clause of the Eighth Amendment: "a punitive forfeiture violates the Excessive Fines Clause if it is grossly disproportionate to the gravity of a defendant's offense." Later federal appellate courts tend to measure the facts before them against those in Bajakajian . Several circuits begin with a standard distilled from the factors there; others simply point to the stark factual differences between Bajakajian and the cases before them. In either case, a punitive forfeiture ordinarily will not be considered an excessive fine, if it is distinguishable on one or more of the grounds Bajakajian mentioned as indicative of gross disproportionality, for example, a single crime, unrelated to any other criminality, causing relatively little harm, but resulting in a forfeiture greatly disproportionate to the authorized fine. Historically, the procedure used to accomplish forfeiture made a difference for purposes of the Fifth Amendment's double jeopardy clause. Where confiscation was accomplished through civil, in rem proceedings against the property, a prior trial of the property owner resulting in either acquittal or conviction was no bar to subsequent forfeiture proceedings. Where conviction was a prerequisite to forfeiture, if double jeopardy precluded further trial and conviction, it likewise precluded forfeiture. The Supreme Court's conclusion in Austin that certain civil forfeitures might be considered punitive for purposes of the Eighth Amendment's excessive fines clause seemed to have obvious double jeopardy implications. In fact, the Court went so far as to note that its past decisions declining to apply the double jeopardy clause to civil forfeitures arose "only in cases where the forfeiture could properly be characterized as remedial." Yet, the Court in United States v. Ursery reaffirmed its faith in the traditional tests. Forfeitures that Congress has designated as remedial civil sanctions do not implicate double jeopardy concerns unless "the statutory scheme [is] so punitive either in purpose or effect as to negate Congress' intention to establish a civil remedial mechanism." The Sixth Amendment assures the accused in criminal proceedings the right to a jury trial, to the assistance of counsel, and to confrontation of accusers. The Supreme Court long ago held that the right to confrontation does not apply in civil forfeiture cases and has not revisited the issue. The right to the assistance of counsel in criminal cases does not prevent the government from confiscating tainted fees paid to counsel; or, upon a probable cause showing, from obtaining a restraining order to freeze assets preventing the payment of attorneys' fees; or entitle an otherwise indigent property owner to the appointment of counsel for substitute asset forfeiture proceedings. The Amendment is by its terms only applicable "in all criminal prosecutions," and consequently there is no constitutionally required right to assistance of counsel in civil forfeiture cases. The Court's opinion in Libretti, to the effect that there is no right to a jury trial on disputed factual issues in criminal forfeiture, rests on a somewhat battered foundation. At the time, it was thought that "there [was] no Sixth Amendment right to jury sentencing, even where the sentence turns on specific finding of fact." Thereafter, the Court explained that McMillan impermissibly slighted the right to have certain sentencing factors decided by the jury. "Any fact that increases the penalty for a crime beyond the prescribed statutory maximum," the Court declared in Apprendi v. New Jersey , 530 U.S. 466, 490 (2000), "must be submitted to a jury, and proved beyond a reasonable doubt." The erosion of McMillan notwithstanding, the fact that criminal forfeiture is a penalty within "the prescribed statutory maximum" and that Rule 32.2 of the Federal Rules of Criminal Procedure affords an expanded jury determination right would seem to shield federal criminal forfeiture procedures from Apprendi -based attacks. Although Apprendi 's implications for the preponderance standard might appear slightly more ominous, particularly after the Court found that the Apprendi rule applies to fines as well as terms of imprisonment, the federal appellate courts have either explicitly or implicitly declined to apply Apprendi to criminal forfeitures. Due process objections can come in such a multitude of variations that general statements are hazardous. That said, the courts have acknowledged that due process demands that those with an interest in the property which the government seeks to confiscate be given notice and opportunity for a hearing to contest. Actual notice is not required but the government's efforts must be "reasonably calculated, under all the circumstances, to apprise" of the opportunity to contest. In some instances, due process permits the initiation of forfeiture proceedings by seizing the personal property in question without first giving the property owner either notice or the prior opportunity of a hearing to contest the seizure and confiscation. But absent exigent circumstances, the owner is entitled to the opportunity for a pre-seizure hearing in the case of real property where there is no real danger that the property will be spirited away in order to frustrate efforts to secure in rem jurisdiction over it. Due process also requires a probable cause determination of the forfeitability of property made subject to a post-seizure, pretrial restraining order designed to prevent dissipation. Due process does not require an adversarial determination of the existence of probable cause; a grand jury indictment will do. While due process clearly limits at some point the circumstances under which the property of an innocent owner may be confiscated, the Court has declined the opportunity to broadly assert that due process uniformly precludes confiscation of the property of an innocent owner, Bennis v. Michigan . Bennis , however, is a 5-4 decision in which Justice Ginsburg joined the majority but filed a concurring opinion in which she emphasized the importance of the case's somewhat individualistic facts. Any delay between seizure and hearing offends due process only when it fails to meet the test applied in speedy trial cases: Is the delay unreasonable given the length of delay, the reasons for the delay, the claimant's assertion of his or her rights, and prejudice to the claimant? In other challenges, the lower federal courts have found that due process permits: the procedure of shifting the burden of proof to a forfeiture claimant after the government has shown probable cause and allows use of a probable cause standard in civil forfeitures; postponement of the determination of third-party interests in criminal forfeiture cases until after trial in the main; an 11-year delay between issuance of a criminal forfeiture order and amendment of the original order to reach overseas assets; and fugitive disentitlement under 28 U.S.C. 2466. On the other hand, a court may not order the criminal forfeiture of defendant's property if it has totally failed to honor the procedural requirements of Rule 32.2(b) of the Federal Rules of Criminal Procedure. Whether in cases occasioned by delay, failure of notice, or want of predeprivational hearing for real property, the lower courts became somewhat ensnarled in the consequences that flow from a finding that the government has violated due process demands in a civil forfeiture context. Some concluded that the lack of due process voided the purported administrative or judicial forfeiture even if an intervening statute of limitations barred relitigation of confiscation proceedings; others determined that the forfeiture need not be vacated although they sometimes held that the property owner might be entitled to disgorgement or interest. CAFRA resolved the conflict by establishing a timetable within which the government must restart forfeiture proceedings following a claimant's successful motion setting aside an earlier confiscation declaration. Finally, counsel in Monsanto and Caplin & Drysdale , challenged on both Sixth Amendment right to counsel and Fifth Amendment due process grounds the confiscation of property paid for, and destined to pay for, the services of defense counsel. The Supreme Court rejected both assertions. The Court left open, however, the question of whether due process requires notice and the opportunity for a hearing before a restraining order may be issued. At least two circuits have concluded that absent extraordinary circumstances due process requires notice and an opportunity to be heard prior to the issuance of a restraining order. In the presence of extraordinary circumstances, notice and hearing may be postponed until soon after issuance of the order as long as the opportunity is afforded before trial. Section 3 of Article III of the United States Constitution does not appear to threaten most contemporary forfeiture statutes. It provides in part that "no attainder of treason shall work corruption of blood, or forfeiture except during the life of the person attainted." The section on its face seems to restrict forfeiture only in treason cases, but at least one court has suggested a broader scope. Even if Article III when read in conjunction with the due process clause reaches not only treason but all crimes, its prohibitions run only to forfeiture of estate. They do not address statutory forfeitures of the type currently found in state and federal law. The critical distinction between forfeiture of estate and statutory forfeiture is that in the first all of the defendant's property, related or unrelated to the offense and acquired before, during, or after the crime, is confiscated. In the second, confiscation is possible only if the property is related to the criminal conduct in the manner defined by the statute. Some have suggested that Congress intended to revive forfeiture of estate when it crafted the RICO criminal forfeiture provisions. The courts have nevertheless upheld the RICO provisions in the face of Article III challenges. Article III also declares that the judicial power of the United States extends to certain cases and controversies. If a litigant has no judicially recognized interest in the outcome of such a case or controversy, he is said to lack standing and the court lacks jurisdiction to proceed. In some instances, a statute or rule imposes additional, more demanding standing requirements. So it is with civil forfeiture. As a threshold matter, however, a claimant must satisfy Article III standing requirements. In order to meet the case-or-controversy requirement of Article III, a plaintiff (including a civil forfeiture claimant) must establish the three elements of standing, namely, that the plaintiff suffered an injury in fact, that there is a causal connection between the injury and conduct complained of, and that it is likely the injury will be redressed by a favorable decision. Claimants in civil forfeiture actions can satisfy this test by showing that they have a colorable interest in the property, which includes an ownership interest or a possessory interest. Article III's standing requirement is thereby satisfied because the owner or possessor of property that has been seized necessarily suffers an injury that can be redressed at least in part by the return of the seized property. The Fourth Amendment condemns unreasonable search and seizures. The hallmark of a seizure which is not unreasonable is the presence of warrant issued upon probable cause. Nevertheless, warrantless seizures or those grounded in less than probable cause are not unreasonable under all circumstances. For example, authorities may seize property without a warrant based on exceptions recognized for searches incident to arrest or for the search of vehicles. Moreover, several of the older civil forfeiture statutes, particularly those arising in a customs or maritime context, reflected the traditional view that contraband and other forfeitable property may be seized without observing the normal demands of the Amendment's requirements. Some question may persist over whether warrantless seizures or seizures with less than probable cause are generally permissible in forfeiture cases, regardless of the want of any customs or maritime connection. In any event, unlawfully seized evidence may not be used in the forfeiture proceedings, but unlawful seizure of the res does not doom the proceedings as long as there is sufficient untainted evidence to support the confiscation. Neither the states nor the federal government may enact ex post facto laws. The prohibition applies both to laws which make criminal conduct which was innocent when committed and laws which increase the penalties for a crime over those which attached when a crime was committed. The ex post facto bar, however, poses no impediment to the application of a new sanction such as forfeiture to a continuing crime which straddles the date of enactment. When confiscation involves material entitled to First Amendment protection, more demanding standards must be met. In Fort Wayne Books, Inc. v. Indiana , the Court held that while a single book or film might be seized upon an ex parte probable cause showing, books or films could not be taken completely out of circulation until after an adversary hearing on their obscenity. On the other hand, the First Amendment stands as no bar to the use of criminal forfeiture to punish those convicted of engaging in the commercial exploitation of obscenity, nor to the use of civil forfeiture to confiscate equipment used by an unlicensed radio station. (a)(1) The following property is subject to forfeiture to the United States: (A) Any property, real or personal, involved in a transaction or attempted transaction in violation of section 1956, 1957 or 1960 of this title, or any property traceable to such property. (B) Any property, real or personal, within the jurisdiction of the United States, constituting, derived from, or traceable to, any proceeds obtained directly or indirectly from an offense against a foreign nation, or any property used to facilitate such an offense, if the offense— (i) involves trafficking in nuclear, chemical, biological, or radiological weapons technology or material, or the manufacture, importation, sale, or distribution of a controlled substance (as that term is defined for purposes of the Controlled Substances Act), or any other conduct described in section 1956(c)(7)(B); (ii) would be punishable within the jurisdiction of the foreign nation by death or imprisonment for a term exceeding 1 year; and (iii) would be punishable under the laws of the United States by imprisonment for a term exceeding 1 year, if the act or activity constituting the offense had occurred within the jurisdiction of the United States. (C) Any property, real or personal, which constitutes or is derived from proceeds traceable to a violation of section 215, 471, 472, 473, 474, 476, 477, 478, 479, 480, 481, 485, 486, 487, 488, 501, 502, 510, 542, 545, 555, 656, 657, 670, 842, 844, 1005, 1006, 1007, 1014, 1028, 1029, 1030, 1032, or 1344 of this title or any offense constituting "specified unlawful activity" (as defined in section 1956(c)(7) of this title), or a conspiracy to commit such offense. (D) Any property, real or personal, which represents or is traceable to the gross receipts obtained, directly or indirectly, from a violation of— (i) section 666(a)(1) (relating to Federal program fraud); (ii) section 1001 (relating to fraud and false statements); (iii) section 1031 (relating to major fraud against the United States); (iv) section 1032 (relating to concealment of assets from conservator or receiver of insured financial institution); (v) section 1341 (relating to mail fraud); or (vi) section 1343 (relating to wire fraud), if such violation relates to the sale of assets acquired or held by the Federal Deposit Insurance Corporation, as conservator or receiver for a financial institution, or any other conservator for a financial institution appointed by the Office of the Comptroller of the Currency or the National Credit Union Administration, as conservator or liquidating agent for a financial institution. (E) With respect to an offense listed in subsection (a)(1)(D) committed for the purpose of executing or attempting to execute any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent statements, pretenses, representations or promises, the gross receipts of such an offense shall include all property, real or personal, tangible or intangible, which thereby is obtained, directly or indirectly. (F) Any property, real or personal, which represents or is traceable to the gross proceeds obtained, directly or indirectly, from a violation of— (i) section 511 (altering or removing motor vehicle identification numbers); (ii) section 553 (importing or exporting stolen motor vehicles); (iii) section 2119 (armed robbery of automobiles); (iv) section 2312 (transporting stolen motor vehicles in interstate commerce); or (v) section 2313 (possessing or selling a stolen motor vehicle that has moved in interstate commerce). (G) All assets, foreign or domestic— (i) of any individual, entity, or organization engaged in planning or perpetrating any Federal crime of terrorism (as defined in section 2332b(g)(5)) against the United States, citizens or residents of the United States, or their property, and all assets, foreign or domestic, affording any person a source of influence over any such entity or organization; (ii) acquired or maintained by any person with the intent and for the purpose of supporting, planning, conducting, or concealing Federal crime of terrorism (as defined in section 2332b(g)(5)) against the United States, citizens or residents of the United States, or their property; or (iii) derived from, involved in, or used or intended to be used to commit any Federal crime of terrorism (as defined in section 2332b(g)(5)) against the United States, citizens or residents of the United States, or their property. (iv) of any individual, entity, or organization engaged in planning or perpetrating any act of international terrorism (as defined in section 2331) against an international organization (as defined in section 209 of the State Department Basic Authorities Act of 1956 (22 U.S.C. 4309(b)) or against any foreign Government. Where the property sought for forfeiture is located beyond the territorial boundaries of the United States, an act in furtherance of such planning or perpetration must have occurred within the jurisdiction of the United States. (H) Any property, real or personal, involved in a violation or attempted violation, or which constitutes or is derived from proceeds traceable to a violation, of section 2339C of this title. (2) For purposes of paragraph (1), the term "proceeds" is defined as follows: (A) In cases involving illegal goods, illegal services, unlawful activities, and telemarketing and health care fraud schemes, the term "proceeds" means property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to forfeiture, and any property traceable thereto, and is not limited to the net gain or profit realized from the offense. (B) In cases involving lawful goods or lawful services that are sold or provided in an illegal manner, the term "proceeds" means the amount of money acquired through the illegal transactions resulting in the forfeiture, less the direct costs incurred in providing the goods or services. The claimant shall have the burden of proof with respect to the issue of direct costs. The direct costs shall not include any part of the overhead expenses of the entity providing the goods or services, or any part of the income taxes paid by the entity. (C) In cases involving fraud in the process of obtaining a loan or extension of credit, the court shall allow the claimant a deduction from the forfeiture to the extent that the loan was repaid, or the debt was satisfied, without any financial loss to the victim. (b)(1) Except as provided in section 985, any property subject to forfeiture to the United States under subsection (a) may be seized by the Attorney General and, in the case of property involved in a violation investigated by the Secretary of the Treasury or the United States Postal Service, the property may also be seized by the Secretary of the Treasury or the Postal Service, respectively. (2) Seizures pursuant to this section shall be made pursuant to a warrant obtained in the same manner as provided for a search warrant under the Federal Rules of Criminal Procedure, except that a seizure may be made without a warrant if— (A) a complaint for forfeiture has been filed in the United States district court and the court issued an arrest warrant in rem pursuant to the Supplemental Rules for Certain Admiralty and Maritime Claims; (B) there is probable cause to believe that the property is subject to forfeiture and— (i) the seizure is made pursuant to a lawful arrest or search; or (ii) another exception to the Fourth Amendment warrant requirement would apply; or (C) the property was lawfully seized by a State or local law enforcement agency and transferred to a Federal agency. (3) Notwithstanding the provisions of rule 41(a) of the Federal Rules of Criminal Procedure, a seizure warrant may be issued pursuant to this subsection by a judicial officer in any district in which a forfeiture action against the property may be filed under section 1355(b) of title 28, and may be executed in any district in which the property is found, or transmitted to the central authority of any foreign state for service in accordance with any treaty or other international agreement. Any motion for the return of property seized under this section shall be filed in the district court in which the seizure warrant was issued or in the district court for the district in which the property was seized. (4)(A) If any person is arrested or charged in a foreign country in connection with an offense that would give rise to the forfeiture of property in the United States under this section or under the Controlled Substances Act, the Attorney General may apply to any Federal judge or magistrate judge in the district in which the property is located for an ex parte order restraining the property subject to forfeiture for not more than 30 days, except that the time may be extended for good cause shown at a hearing conducted in the manner provided in rule 43(e) of the Federal Rules of Civil Procedure. (B) The application for the restraining order shall set forth the nature and circumstances of the foreign charges and the basis for belief that the person arrested or charged has property in the United States that would be subject to forfeiture, and shall contain a statement that the restraining order is needed to preserve the availability of property for such time as is necessary to receive evidence from the foreign country or elsewhere in support of probable cause for the seizure of the property under this subsection. (c) Property taken or detained under this section shall not be repleviable, but shall be deemed to be in the custody of the Attorney General, the Secretary of the Treasury, or the Postal Service, as the case may be, subject only to the orders and decrees of the court or the official having jurisdiction thereof. Whenever property is seized under this subsection, the Attorney General, the Secretary of the Treasury, or the Postal Service, as the case may be, may— (1) place the property under seal; (2) remove the property to a place designated by him; or (3) require that the General Services Administration take custody of the property and remove it, if practicable, to an appropriate location for disposition in accordance with law. (d) For purposes of this section, the provisions of the customs laws relating to the seizure, summary and judicial forfeiture, condemnation of property for violation of the customs laws, the disposition of such property or the proceeds from the sale of such property under this section, the remission or mitigation of such forfeitures, and the compromise of claims (19 U.S.C. 1602 et seq.), insofar as they are applicable and not inconsistent with the provisions of this section, shall apply to seizures and forfeitures incurred, or alleged to have been incurred, under this section, except that such duties as are imposed upon the customs officer or any other person with respect to the seizure and forfeiture of property under the customs laws shall be performed with respect to seizures and forfeitures of property under this section by such officers, agents, or other persons as may be authorized or designated for that purpose by the Attorney General, the Secretary of the Treasury, or the Postal Service, as the case may be. The Attorney General shall have sole responsibility for disposing of petitions for remission or mitigation with respect to property involved in a judicial forfeiture proceeding. (e) Notwithstanding any other provision of the law, except section 3 of the Anti Drug Abuse Act of 1986, the Attorney General, the Secretary of the Treasury, or the Postal Service, as the case may be, is authorized to retain property forfeited pursuant to this section, or to transfer such property on such terms and conditions as he may determine— (1) to any other Federal agency; (2) to any State or local law enforcement agency which participated directly in any of the acts which led to the seizure or forfeiture of the property; (3) in the case of property referred to in subsection (a)(1)(C), to any Federal financial institution regulatory agency— (A) to reimburse the agency for payments to claimants or creditors of the institution; and (B) to reimburse the insurance fund of the agency for losses suffered by the fund as a result of the receivership or liquidation; (4) in the case of property referred to in subsection (a)(1)(C), upon the order of the appropriate Federal financial institution regulatory agency, to the financial institution as restitution, with the value of the property so transferred to be set off against any amount later recovered by the financial institution as compensatory damages in any State or Federal proceeding; (5) in the case of property referred to in subsection (a)(1)(C), to any Federal financial institution regulatory agency, to the extent of the agency's contribution of resources to, or expenses involved in, the seizure and forfeiture, and the investigation leading directly to the seizure and forfeiture, of such property; (6) as restoration to any victim of the offense giving rise to the forfeiture, including, in the case of a money laundering offense, any offense constituting the underlying specified unlawful activity; or (7) In the case of property referred to in subsection (a)(1)(D), to the Resolution Trust Corporation, the Federal Deposit Insurance Corporation, or any other Federal financial institution regulatory agency (as defined in section 8(e)(7)(D) of the Federal Deposit Insurance Act). The Attorney General, the Secretary of the Treasury, or the Postal Service, as the case may be, shall ensure the equitable transfer pursuant to paragraph (2) of any forfeited property to the appropriate State or local law enforcement agency so as to reflect generally the contribution of any such agency participating directly in any of the acts which led to the seizure or forfeiture of such property. A decision by the Attorney General, the Secretary of the Treasury, or the Postal Service pursuant to paragraph (2) shall not be subject to review. The United States shall not be liable in any action arising out of the use of any property the custody of which was transferred pursuant to this section to any non-Federal agency. The Attorney General, the Secretary of the Treasury, or the Postal Service may order the discontinuance of any forfeiture proceedings under this section in favor of the institution of forfeiture proceedings by State or local authorities under an appropriate State or local statute. After the filing of a complaint for forfeiture under this section, the Attorney General may seek dismissal of the complaint in favor of forfeiture proceedings under State or local law. Whenever forfeiture proceedings are discontinued by the United States in favor of State or local proceedings, the United States may transfer custody and possession of the seized property to the appropriate State or local official immediately upon the initiation of the proper actions by such officials. Whenever forfeiture proceedings are discontinued by the United States in favor of State or local proceedings, notice shall be sent to all known interested parties advising them of the discontinuance or dismissal. The United States shall not be liable in any action arising out of the seizure, detention, and transfer of seized property to State or local officials. The United States shall not be liable in any action arising out of a transfer under paragraph (3), (4), or (5) of this subsection. (f) All right, title, and interest in property described in subsection (a) of this section shall vest in the United States upon commission of the act giving rise to forfeiture under this section. (g)(1) Upon the motion of the United States, the court shall stay the civil forfeiture proceeding if the court determines that civil discovery will adversely affect the ability of the Government to conduct a related criminal investigation or the prosecution of a related criminal case. (2) Upon the motion of a claimant, the court shall stay the civil forfeiture proceeding with respect to that claimant if the court determines that— (A) the claimant is the subject of a related criminal investigation or case; (B) the claimant has standing to assert a claim in the civil forfeiture proceeding; and (C) continuation of the forfeiture proceeding will burden the right of the claimant against self-incrimination in the related investigation or case. (3) With respect to the impact of civil discovery described in paragraphs (1) and (2), the court may determine that a stay is unnecessary if a protective order limiting discovery would protect the interest of one party without unfairly limiting the ability of the opposing party to pursue the civil case. In no case, however, shall the court impose a protective order as an alternative to a stay if the effect of such protective order would be to allow one party to pursue discovery while the other party is substantially unable to do so. (4) In this subsection, the terms "related criminal case" and "related criminal investigation" mean an actual prosecution or investigation in progress at the time at which the request for the stay, or any subsequent motion to lift the stay is made. In determining whether a criminal case or investigation is "related" to a civil forfeiture proceeding, the court shall consider the degree of similarity between the parties, witnesses, facts, and circumstances involved in the two proceedings, without requiring an identity with respect to any one or more factors. (5) In requesting a stay under paragraph (1), the Government may, in appropriate cases, submit evidence ex parte in order to avoid disclosing any matter that may adversely affect an ongoing criminal investigation or pending criminal trial. (6) Whenever a civil forfeiture proceeding is stayed pursuant to this subsection, the court shall enter any order necessary to preserve the value of the property or to protect the rights of lienholders or other persons with an interest in the property while the stay is in effect. (7) A determination by the court that the claimant has standing to request a stay pursuant to paragraph (2) shall apply only to this subsection and shall not preclude the Government from objecting to the standing of the claimant by dispositive motion or at the time of trial. (h) In addition to the venue provided for in section 1395 of title 28 or any other provision of law, in the case of property of a defendant charged with a violation that is the basis for forfeiture of the property under this section, a proceeding for forfeiture under this section may be brought in the judicial district in which the defendant owning such property is found or in the judicial district in which the criminal prosecution is brought. ( i )(1) Whenever property is civilly or criminally forfeited under this chapter, the Attorney General or the Secretary of the Treasury, as the case may be, may transfer the forfeited personal property or the proceeds of the sale of any forfeited personal or real property to any foreign country which participated directly or indirectly in the seizure or forfeiture of the property, if such a transfer— (A) has been agreed to by the Secretary of State; (B) is authorized in an international agreement between the United States and the foreign country; and (C) is made to a country which, if applicable, has been certified under section 481(h) of the Foreign Assistance Act of 1961. A decision by the Attorney General or the Secretary of the Treasury pursuant to this paragraph shall not be subject to review. The foreign country shall, in the event of a transfer of property or proceeds of sale of property under this subsection, bear all expenses incurred by the United States in the seizure, maintenance, inventory, storage, forfeiture, and disposition of the property, and all transfer costs. The payment of all such expenses, and the transfer of assets pursuant to this paragraph, shall be upon such terms and conditions as the Attorney General or the Secretary of the Treasury may, in his discretion, set. (2) The provisions of this section shall not be construed as limiting or superseding any other authority of the United States to provide assistance to a foreign country in obtaining property related to a crime committed in the foreign country, including property which is sought as evidence of a crime committed in the foreign country. (3) A certified order or judgment of forfeiture by a court of competent jurisdiction of a foreign country concerning property which is the subject of forfeiture under this section and was determined by such court to be the type of property described in subsection (a)(1)(B) of this section, and any certified recordings or transcripts of testimony taken in a foreign judicial proceeding concerning such order or judgment of forfeiture, shall be admissible in evidence in a proceeding brought pursuant to this section. Such certified order or judgment of forfeiture, when admitted into evidence, shall constitute probable cause that the property forfeited by such order or judgment of forfeiture is subject to forfeiture under this section and creates a rebuttable presumption of the forfeitability of such property under this section. (4) A certified order or judgment of conviction by a court of competent jurisdiction of a foreign country concerning an unlawful drug activity which gives rise to forfeiture under this section and any certified recordings or transcripts of testimony taken in a foreign judicial proceeding concerning such order or judgment of conviction shall be admissible in evidence in a proceeding brought pursuant to this section. Such certified order or judgment of conviction, when admitted into evidence, creates a rebuttable presumption that the unlawful drug activity giving rise to forfeiture under this section has occurred. (5) The provisions of paragraphs (3) and (4) of this subsection shall not be construed as limiting the admissibility of any evidence otherwise admissible, nor shall they limit the ability of the United States to establish probable cause that property is subject to forfeiture by any evidence otherwise admissible. (j) For purposes of this section— (1) the term "Attorney General" means the Attorney General or his delegate; and (2) the term "Secretary of the Treasury" means the Secretary of the Treasury or his delegate. (k) Interbank accounts.— (1) In general.— (A) In general.—For the purpose of a forfeiture under this section or under the Controlled Substances Act (21 U.S.C. 801 et seq.), if funds are deposited into an account at a foreign bank, and that foreign bank has an interbank account in the United States with a covered financial institution (as defined in section 5318(j)(1) of title 31), the funds shall be deemed to have been deposited into the interbank account in the United States, and any restraining order, seizure warrant, or arrest warrant in rem regarding the funds may be served on the covered financial institution, and funds in the interbank account, up to the value of the funds deposited into the account at the foreign bank, may be restrained, seized, or arrested. (B) Authority to suspend.—The Attorney General, in consultation with the Secretary of the Treasury, may suspend or terminate a forfeiture under this section if the Attorney General determines that a conflict of law exists between the laws of the jurisdiction in which the foreign bank is located and the laws of the United States with respect to liabilities arising from the restraint, seizure, or arrest of such funds, and that such suspension or termination would be in the interest of justice and would not harm the national interests of the United States. (2) No requirement for Government to trace funds.—If a forfeiture action is brought against funds that are restrained, seized, or arrested under paragraph (1), it shall not be necessary for the Government to establish that the funds are directly traceable to the funds that were deposited into the foreign bank, nor shall it be necessary for the Government to rely on the application of section 984. (3) Claims brought by owner of the funds.—If a forfeiture action is instituted against funds restrained, seized, or arrested under paragraph (1), the owner of the funds deposited into the account at the foreign bank may contest the forfeiture by filing a claim under section 983. (4) Definitions.—For purposes of this subsection, the following definitions shall apply: (A) Interbank account.—The term "interbank account" has the same meaning as in section 984(c)(2)(B). (B) Owner.— (i) In general.—Except as provided in clause (ii), the term "owner"— (I) means the person who was the owner, as that term is defined in section 983(d)(6), of the funds that were deposited into the foreign bank at the time such funds were deposited; and (II) does not include either the foreign bank or any financial institution acting as an intermediary in the transfer of the funds into the interbank account. (ii) Exception.—The foreign bank may be considered the "owner" of the funds (and no other person shall qualify as the owner of such funds) only if— (I) the basis for the forfeiture action is wrongdoing committed by the foreign bank; or (II) the foreign bank establishes, by a preponderance of the evidence, that prior to the restraint, seizure, or arrest of the funds, the foreign bank had discharged all or part of its obligation to the prior owner of the funds, in which case the foreign bank shall be deemed the owner of the funds to the extent of such discharged obligation. (a)(1) The court, in imposing sentence on a person convicted of an offense in violation of section 1956, 1957, or 1960 of this title, shall order that the person forfeit to the United States any property, real or personal, involved in such offense, or any property traceable to such property. (2) The court, in imposing sentence on a person convicted of a violation of, or a conspiracy to violate— (A) section 215, 656, 657, 1005, 1006, 1007, 1014, 1341, 1343, or 1344 of this title, affecting a financial institution, or (B) section 471, 472, 473, 474, 476, 477, 478, 479, 480, 481, 485, 486, 487, 488, 501, 502, 510, 542, 545, 555, 842, 844, 1028, 1029, or 1030 of this title, shall order that the person forfeit to the United States any property constituting, or derived from, proceeds the person obtained directly or indirectly, as the result of such violation. (3) The court, in imposing a sentence on a person convicted of an offense under— (A) section 666(a)(1) (relating to Federal program fraud); (B) section 1001 (relating to fraud and false statements); (C) section 1031 (relating to major fraud against the United States); (D) section 1032 (relating to concealment of assets from conservator, receiver, or liquidating agent of insured financial institution); (E) section 1341 (relating to mail fraud); or (F) section 1343 (relating to wire fraud), involving the sale of assets acquired or held by the Federal Deposit Insurance Corporation, as conservator or receiver for a financial institution or any other conservator for a financial institution appointed by the Office of the Comptroller of the Currency or the National Credit Union Administration, as conservator or liquidating agent for a financial institution, shall order that the person forfeit to the United States any property, real or personal, which represents or is traceable to the gross receipts obtained, directly or indirectly, as a result of such violation. (4) With respect to an offense listed in subsection (a)(3) committed for the purpose of executing or attempting to execute any scheme or artifice to defraud, or for obtaining money or property by means of false or fraudulent statements, pretenses, representations, or promises, the gross receipts of such an offense shall include any property, real or personal, tangible or intangible, which is obtained, directly or indirectly, as a result of such offense. (5) The court, in imposing sentence on a person convicted of a violation or conspiracy to violate— (A) section 511 (altering or removing motor vehicle identification numbers); (B) section 553 (importing or exporting stolen motor vehicles); (C) section 2119 (armed robbery of automobiles); (D) section 2312 (transporting stolen motor vehicles in interstate commerce); or (E) section 2313 (possessing or selling a stolen motor vehicle that has moved in interstate commerce); shall order that the person forfeit to the United States any property, real or personal, which represents or is traceable to the gross proceeds obtained, directly or indirectly, as a result of such violation. (6)(A) The court, in imposing sentence on a person convicted of a violation of, or conspiracy to violate, section 274(a), 274A(a)(1), or 274A(a)(2) of the Immigration and Nationality Act or section 554, 1425, 1426, 1427, 1541, 1542, 1543, 1544, or 1546 of this title, or a violation of, or conspiracy to violate, section 1028 of this title if committed in connection with passport or visa issuance or use, shall order that the person forfeit to the United States, regardless of any provision of State law— (i) any conveyance, including any vessel, vehicle, or aircraft used in the commission of the offense of which the person is convicted; and (ii) any property real or personal— (I) that constitutes, or is derived from or is traceable to the proceeds obtained directly or indirectly from the commission of the offense of which the person is convicted; or (II) that is used to facilitate, or is intended to be used to facilitate, the commission of the offense of which the person is convicted. (B) The court, in imposing sentence on a person described in subparagraph (A), shall order that the person forfeit to the United States all property described in that subparagraph. (7) The court, in imposing sentence on a person convicted of a Federal health care offense, shall order the person to forfeit property, real or personal, that constitutes or is derived, directly or indirectly, from gross proceeds traceable to the commission of the offense. (8) The court, in sentencing a defendant convicted of an offense under section 1028, 1029, 1341, 1342, 1343, or 1344, or of a conspiracy to commit such an offense, if the offense involves telemarketing (as that term is defined in section 2325), shall order that the defendant forfeit to the United States any real or personal property— (A) used or intended to be used to commit, to facilitate, or to promote the commission of such offense; and (B) constituting, derived from, or traceable to the gross proceeds that the defendant obtained directly or indirectly as a result of the offense. (b)(1) The forfeiture of property under this section, including any seizure and disposition of the property and any related judicial or administrative proceeding, shall be governed by the provisions of section 413 (other than subsection (d) of that section) of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 853). (2) The substitution of assets provisions of subsection 413(p) shall not be used to order a defendant to forfeit assets in place of the actual property laundered where such defendant acted merely as an intermediary who handled but did not retain the property in the course of the money laundering offense unless the defendant, in committing the offense or offenses giving rise to the forfeiture, conducted three or more separate transactions involving a total of $100,000 or more in any twelve month period. (a) Notice; claim; complaint. — (1)(A)(i) Except as provided in clauses (ii) through (v), in any nonjudicial civil forfeiture proceeding under a civil forfeiture statute, with respect to which the Government is required to send written notice to interested parties, such notice shall be sent in a manner to achieve proper notice as soon as practicable, and in no case more than 60 days after the date of the seizure. (ii) No notice is required if, before the 60-day period expires, the Government files a civil judicial forfeiture action against the property and provides notice of that action as required by law. (iii) If, before the 60-day period expires, the Government does not file a civil judicial forfeiture action, but does obtain a criminal indictment containing an allegation that the property is subject to forfeiture, the Government shall either— (I) send notice within the 60 days and continue the nonjudicial civil forfeiture proceeding under this section; or (II) terminate the nonjudicial civil forfeiture proceeding, and take the steps necessary to preserve its right to maintain custody of the property as provided in the applicable criminal forfeiture statute. (iv) In a case in which the property is seized by a State or local law enforcement agency and turned over to a Federal law enforcement agency for the purpose of forfeiture under Federal law, notice shall be sent not more than 90 days after the date of seizure by the State or local law enforcement agency. (v) If the identity or interest of a party is not determined until after the seizure or turnover but is determined before a declaration of forfeiture is entered, notice shall be sent to such interested party not later than 60 days after the determination by the Government of the identity of the party or the party's interest. (B) A supervisory official in the headquarters office of the seizing agency may extend the period for sending notice under subparagraph (A) for a period not to exceed 30 days (which period may not be further extended except by a court), if the official determines that the conditions in subparagraph (D) are present. (C) Upon motion by the Government, a court may extend the period for sending notice under subparagraph (A) for a period not to exceed 60 days, which period may be further extended by the court for 60-day periods, as necessary, if the court determines, based on a written certification of a supervisory official in the headquarters office of the seizing agency, that the conditions in subparagraph (D) are present. (D) The period for sending notice under this paragraph may be extended only if there is reason to believe that notice may have an adverse result, including— (i) endangering the life or physical safety of an individual; (ii) flight from prosecution; (iii) destruction of or tampering with evidence; (iv) intimidation of potential witnesses; or (v) otherwise seriously jeopardizing an investigation or unduly delaying a trial. (E) Each of the Federal seizing agencies conducting nonjudicial forfeitures under this section shall report periodically to the Committees on the Judiciary of the House of Representatives and the Senate the number of occasions when an extension of time is granted under subparagraph (B). (F) If the Government does not send notice of a seizure of property in accordance with subparagraph (A) to the person from whom the property was seized, and no extension of time is granted, the Government shall return the property to that person without prejudice to the right of the Government to commence a forfeiture proceeding at a later time. The Government shall not be required to return contraband or other property that the person from whom the property was seized may not legally possess. (2)(A) Any person claiming property seized in a nonjudicial civil forfeiture proceeding under a civil forfeiture statute may file a claim with the appropriate official after the seizure. (B) A claim under subparagraph (A) may be filed not later than the deadline set forth in a personal notice letter (which deadline may be not earlier than 35 days after the date the letter is mailed), except that if that letter is not received, then a claim may be filed not later than 30 days after the date of final publication of notice of seizure. (C) A claim shall— (i) identify the specific property being claimed; (ii) state the claimant's interest in such property; and (iii) be made under oath, subject to penalty of perjury. (D) A claim need not be made in any particular form. Each Federal agency conducting nonjudicial forfeitures under this section shall make claim forms generally available on request, which forms shall be written in easily understandable language. (E) Any person may make a claim under subparagraph (A) without posting bond with respect to the property which is the subject of the claim. (3)(A) Not later than 90 days after a claim has been filed, the Government shall file a complaint for forfeiture in the manner set forth in the Supplemental Rules for Certain Admiralty and Maritime Claims or return the property pending the filing of a complaint, except that a court in the district in which the complaint will be filed may extend the period for filing a complaint for good cause shown or upon agreement of the parties. (B) If the Government does not— (i) file a complaint for forfeiture or return the property, in accordance with subparagraph (A); or (ii) before the time for filing a complaint has expired— (I) obtain a criminal indictment containing an allegation that the property is subject to forfeiture; and (II) take the steps necessary to preserve its right to maintain custody of the property as provided in the applicable criminal forfeiture statute, the Government shall promptly release the property pursuant to regulations promulgated by the Attorney General, and may not take any further action to effect the civil forfeiture of such property in connection with the underlying offense. (C) In lieu of, or in addition to, filing a civil forfeiture complaint, the Government may include a forfeiture allegation in a criminal indictment. If criminal forfeiture is the only forfeiture proceeding commenced by the Government, the Government's right to continued possession of the property shall be governed by the applicable criminal forfeiture statute. (D) No complaint may be dismissed on the ground that the Government did not have adequate evidence at the time the complaint was filed to establish the forfeitability of the property. (4)(A) In any case in which the Government files in the appropriate United States district court a complaint for forfeiture of property, any person claiming an interest in the seized property may file a claim asserting such person's interest in the property in the manner set forth in the Supplemental Rules for Certain Admiralty and Maritime Claims, except that such claim may be filed not later than 30 days after the date of service of the Government's complaint or, as applicable, not later than 30 days after the date of final publication of notice of the filing of the complaint. (B) A person asserting an interest in seized property, in accordance with subparagraph (A), shall file an answer to the Government's complaint for forfeiture not later than 20 days after the date of the filing of the claim. (b) Representation. — (1)(A) If a person with standing to contest the forfeiture of property in a judicial civil forfeiture proceeding under a civil forfeiture statute is financially unable to obtain representation by counsel, and the person is represented by counsel appointed under section 3006A of this title in connection with a related criminal case, the court may authorize counsel to represent that person with respect to the claim. (B) In determining whether to authorize counsel to represent a person under subparagraph (A), the court shall take into account such factors as— (i) the person's standing to contest the forfeiture; and (ii) whether the claim appears to be made in good faith. (2)(A) If a person with standing to contest the forfeiture of property in a judicial civil forfeiture proceeding under a civil forfeiture statute is financially unable to obtain representation by counsel, and the property subject to forfeiture is real property that is being used by the person as a primary residence, the court, at the request of the person, shall insure that the person is represented by an attorney for the Legal Services Corporation with respect to the claim. (B)(i) At appropriate times during a representation under subparagraph (A), the Legal Services Corporation shall submit a statement of reasonable attorney fees and costs to the court. (ii) The court shall enter a judgment in favor of the Legal Services Corporation for reasonable attorney fees and costs submitted pursuant to clause (i) and treat such judgment as payable under section 2465 of title 28, United States Code, regardless of the outcome of the case. (3) The court shall set the compensation for representation under this subsection, which shall be equivalent to that provided for court-appointed representation under section 3006A of this title. (c) Burden of proof. —In a suit or action brought under any civil forfeiture statute for the civil forfeiture of any property— (1) the burden of proof is on the Government to establish, by a preponderance of the evidence, that the property is subject to forfeiture; (2) the Government may use evidence gathered after the filing of a complaint for forfeiture to establish, by a preponderance of the evidence, that property is subject to forfeiture; and (3) if the Government's theory of forfeiture is that the property was used to commit or facilitate the commission of a criminal offense, or was involved in the commission of a criminal offense, the Government shall establish that there was a substantial connection between the property and the offense. (d) Innocent owner defense. — (1) An innocent owner's interest in property shall not be forfeited under any civil forfeiture statute. The claimant shall have the burden of proving that the claimant is an innocent owner by a preponderance of the evidence. (2)(A) With respect to a property interest in existence at the time the illegal conduct giving rise to forfeiture took place, the term "innocent owner" means an owner who— (i) did not know of the conduct giving rise to forfeiture; or (ii) upon learning of the conduct giving rise to the forfeiture, did all that reasonably could be expected under the circumstances to terminate such use of the property. (B)(i) For the purposes of this paragraph, ways in which a person may show that such person did all that reasonably could be expected may include demonstrating that such person, to the extent permitted by law— (I) gave timely notice to an appropriate law enforcement agency of information that led the person to know the conduct giving rise to a forfeiture would occur or has occurred; and (II) in a timely fashion revoked or made a good faith attempt to revoke permission for those engaging in such conduct to use the property or took reasonable actions in consultation with a law enforcement agency to discourage or prevent the illegal use of the property. (ii) A person is not required by this subparagraph to take steps that the person reasonably believes would be likely to subject any person (other than the person whose conduct gave rise to the forfeiture) to physical danger. (3)(A) With respect to a property interest acquired after the conduct giving rise to the forfeiture has taken place, the term "innocent owner" means a person who, at the time that person acquired the interest in the property— (i) was a bona fide purchaser or seller for value (including a purchaser or seller of goods or services for value); and (ii) did not know and was reasonably without cause to believe that the property was subject to forfeiture. (B) An otherwise valid claim under subparagraph (A) shall not be denied on the ground that the claimant gave nothing of value in exchange for the property if— (i) the property is the primary residence of the claimant; (ii) depriving the claimant of the property would deprive the claimant of the means to maintain reasonable shelter in the community for the claimant and all dependents residing with the claimant; (iii) the property is not, and is not traceable to, the proceeds of any criminal offense; and (iv) the claimant acquired his or her interest in the property through marriage, divorce, or legal separation, or the claimant was the spouse or legal dependent of a person whose death resulted in the transfer of the property to the claimant through inheritance or probate, except that the court shall limit the value of any real property interest for which innocent ownership is recognized under this subparagraph to the value necessary to maintain reasonable shelter in the community for such claimant and all dependents residing with the claimant. (4) Notwithstanding any provision of this subsection, no person may assert an ownership interest under this subsection in contraband or other property that it is illegal to possess. (5) If the court determines, in accordance with this section, that an innocent owner has a partial interest in property otherwise subject to forfeiture, or a joint tenancy or tenancy by the entirety in such property, the court may enter an appropriate order— (A) severing the property; (B) transferring the property to the Government with a provision that the Government compensate the innocent owner to the extent of his or her ownership interest once a final order of forfeiture has been entered and the property has been reduced to liquid assets; or (C) permitting the innocent owner to retain the property subject to a lien in favor of the Government to the extent of the forfeitable interest in the property. (6) In this subsection, the term "owner"— (A) means a person with an ownership interest in the specific property sought to be forfeited, including a leasehold, lien, mortgage, recorded security interest, or valid assignment of an ownership interest; and (B) does not include— (i) a person with only a general unsecured interest in, or claim against, the property or estate of another; (ii) a bailee unless the bailor is identified and the bailee shows a colorable legitimate interest in the property seized; or (iii) a nominee who exercises no dominion or control over the property. (e) Motion to set aside forfeiture .— (1) Any person entitled to written notice in any nonjudicial civil forfeiture proceeding under a civil forfeiture statute who does not receive such notice may file a motion to set aside a declaration of forfeiture with respect to that person's interest in the property, which motion shall be granted if— (A) the Government knew, or reasonably should have known, of the moving party's interest and failed to take reasonable steps to provide such party with notice; and (B) the moving party did not know or have reason to know of the seizure within sufficient time to file a timely claim. (2)(A) Notwithstanding the expiration of any applicable statute of limitations, if the court grants a motion under paragraph (1), the court shall set aside the declaration of forfeiture as to the interest of the moving party without prejudice to the right of the Government to commence a subsequent forfeiture proceeding as to the interest of the moving party. (B) Any proceeding described in subparagraph (A) shall be commenced— (i) if nonjudicial, within 60 days of the entry of the order granting the motion; or (ii) if judicial, within 6 months of the entry of the order granting the motion. (3) A motion under paragraph (1) may be filed not later than 5 years after the date of final publication of notice of seizure of the property. (4) If, at the time a motion made under paragraph (1) is granted, the forfeited property has been disposed of by the Government in accordance with law, the Government may institute proceedings against a substitute sum of money equal to the value of the moving party's interest in the property at the time the property was disposed of. (5) A motion filed under this subsection shall be the exclusive remedy for seeking to set aside a declaration of forfeiture under a civil forfeiture statute. (f) Release of seized property .— (1) A claimant under subsection (a) is entitled to immediate release of seized property if— (A) the claimant has a possessory interest in the property; (B) the claimant has sufficient ties to the community to provide assurance that the property will be available at the time of the trial; (C) the continued possession by the Government pending the final disposition of forfeiture proceedings will cause substantial hardship to the claimant, such as preventing the functioning of a business, preventing an individual from working, or leaving an individual homeless; (D) the claimant's likely hardship from the continued possession by the Government of the seized property outweighs the risk that the property will be destroyed, damaged, lost, concealed, or transferred if it is returned to the claimant during the pendency of the proceeding; and (E) none of the conditions set forth in paragraph (8) applies. (2) A claimant seeking release of property under this subsection must request possession of the property from the appropriate official, and the request must set forth the basis on which the requirements of paragraph (1) are met. (3)(A) If not later than 15 days after the date of a request under paragraph (2) the property has not been released, the claimant may file a petition in the district court in which the complaint has been filed or, if no complaint has been filed, in the district court in which the seizure warrant was issued or in the district court for the district in which the property was seized. (B) The petition described in subparagraph (A) shall set forth— (i) the basis on which the requirements of paragraph (1) are met; and (ii) the steps the claimant has taken to secure release of the property from the appropriate official. (4) If the Government establishes that the claimant's claim is frivolous, the court shall deny the petition. In responding to a petition under this subsection on other grounds, the Government may in appropriate cases submit evidence ex parte in order to avoid disclosing any matter that may adversely affect an ongoing criminal investigation or pending criminal trial. (5) The court shall render a decision on a petition filed under paragraph (3) not later than 30 days after the date of the filing, unless such 30-day limitation is extended by consent of the parties or by the court for good cause shown. (6) If— (A) a petition is filed under paragraph (3); and (B) the claimant demonstrates that the requirements of paragraph (1) have been met, the district court shall order that the property be returned to the claimant, pending completion of proceedings by the Government to obtain forfeiture of the property. (7) If the court grants a petition under paragraph (3)— (A) the court may enter any order necessary to ensure that the value of the property is maintained while the forfeiture action is pending, including (i) permitting the inspection, photographing, and inventory of the property; (ii) fixing a bond in accordance with rule E(5) of the Supplemental Rules for Certain Admiralty and Maritime Claims; and (iii) requiring the claimant to obtain or maintain insurance on the subject property; and (B) the Government may place a lien against the property or file a lis pendens to ensure that the property is not transferred to another person. (8) This subsection shall not apply if the seized property— (A) is contraband, currency, or other monetary instrument, or electronic funds unless such currency or other monetary instrument or electronic funds constitutes the assets of a legitimate business which has been seized; (B) is to be used as evidence of a violation of the law; (C) by reason of design or other characteristic, is particularly suited for use in illegal activities; or (D) is likely to be used to commit additional criminal acts if returned to the claimant. (g) Proportionality .— (1) The claimant under subsection (a)(4) may petition the court to determine whether the forfeiture was constitutionally excessive. (2) In making this determination, the court shall compare the forfeiture to the gravity of the offense giving rise to the forfeiture. (3) The claimant shall have the burden of establishing that the forfeiture is grossly disproportional by a preponderance of the evidence at a hearing conducted by the court without a jury. (4) If the court finds that the forfeiture is grossly disproportional to the offense it shall reduce or eliminate the forfeiture as necessary to avoid a violation of the Excessive Fines Clause of the Eighth Amendment of the Constitution. (h) Civil fine .— (1) In any civil forfeiture proceeding under a civil forfeiture statute in which the Government prevails, if the court finds that the claimant's assertion of an interest in the property was frivolous, the court may impose a civil fine on the claimant of an amount equal to 10 percent of the value of the forfeited property, but in no event shall the fine be less than $250 or greater than $5,000. (2) Any civil fine imposed under this subsection shall not preclude the court from imposing sanctions under rule 11 of the Federal Rules of Civil Procedure. (3) In addition to the limitations of section 1915 of title 28, United States Code, in no event shall a prisoner file a claim under a civil forfeiture statute or appeal a judgment in a civil action or proceeding based on a civil forfeiture statute if the prisoner has, on three or more prior occasions, while incarcerated or detained in any facility, brought an action or appeal in a court of the United States that was dismissed on the grounds that it is frivolous or malicious, unless the prisoner shows extraordinary and exceptional circumstances. (i) Civil forfeiture statute defined .—In this section, the term "civil forfeiture statute"— (1) means any provision of Federal law providing for the forfeiture of property other than as a sentence imposed upon conviction of a criminal offense; and (2) does not include— (A) the Tariff Act of 1930 or any other provision of law codified in title 19; (B) the Internal Revenue Code of 1986; (C) the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 301 et seq.); (D) the Trading with the Enemy Act (50 U.S.C. App. 1 et seq.) or the International Emergency Economic Powers Act (IEEPA) (50 U.S.C. 1701 et seq.); or (E) section 1 of title VI of the Act of June 15, 1917 (40 Stat. 233; 22 U.S.C. 401). (j) Restraining orders; protective orders .— (1) Upon application of the United States, the court may enter a restraining order or injunction, require the execution of satisfactory performance bonds, create receiverships, appoint conservators, custodians, appraisers, accountants, or trustees, or take any other action to seize, secure, maintain, or preserve the availability of property subject to civil forfeiture— (A) upon the filing of a civil forfeiture complaint alleging that the property with respect to which the order is sought is subject to civil forfeiture; or (B) prior to the filing of such a complaint, if, after notice to persons appearing to have an interest in the property and opportunity for a hearing, the court determines that— (i) there is a substantial probability that the United States will prevail on the issue of forfeiture and that failure to enter the order will result in the property being destroyed, removed from the jurisdiction of the court, or otherwise made unavailable for forfeiture; and (ii) the need to preserve the availability of the property through the entry of the requested order outweighs the hardship on any party against whom the order is to be entered. (2) An order entered pursuant to paragraph (1)(B) shall be effective for not more than 90 days, unless extended by the court for good cause shown, or unless a complaint described in paragraph (1)(A) has been filed. (3) A temporary restraining order under this subsection may be entered upon application of the United States without notice or opportunity for a hearing when a complaint has not yet been filed with respect to the property, if the United States demonstrates that there is probable cause to believe that the property with respect to which the order is sought is subject to civil forfeiture and that provision of notice will jeopardize the availability of the property for forfeiture. Such a temporary order shall expire not more than 14 days after the date on which it is entered, unless extended for good cause shown or unless the party against whom it is entered consents to an extension for a longer period. A hearing requested concerning an order entered under this paragraph shall be held at the earliest possible time and prior to the expiration of the temporary order. (4) The court may receive and consider, at a hearing held pursuant to this subsection, evidence and information that would be inadmissible under the Federal Rules of Evidence. (1) Scope. This rule governs a forfeiture action in rem arising from a federal statute. To the extent that this rule does not address an issue, Supplemental Rules C and E and the Federal Rules of Civil Procedure also apply. (2) Complaint. The complaint must: (a) be verified; (b) state the grounds for subject-matter jurisdiction, in rem jurisdiction over the defendant property, and venue; (c) describe the property with reasonable particularity; (d) if the property is tangible, state its location when any seizure occurred and—if different—its location when the action is filed; (e) identify the statute under which the forfeiture action is brought; and (f) state sufficiently detailed facts to support a reasonable belief that the government will be able to meet its burden of proof at trial. (3) Judicial Authorization and Process. (a) Real Property . If the defendant is real property, the government must proceed under 18 U.S.C. §985. (b) Other Property; Arrest Warrant . If the defendant is not real property: (i) the clerk must issue a warrant to arrest the property if it is in the government's possession, custody, or control; (ii) the court—on finding probable cause—must issue a warrant to arrest the property if it is not in the government's possession, custody, or control and is not subject to a judicial restraining order; and (iii) a warrant is not necessary if the property is subject to a judicial restraining order. (c) Execution of Process. (i) The warrant and any supplemental process must be delivered to a person or organization authorized to execute it, who may be: (A) a marshal or any other United States officer or employee; (B) someone under contract with the United States; or (C) someone specially appointed by the court for that purpose. (ii) The authorized person or organization must execute the warrant and any supplemental process on property in the United States as soon as practicable unless: (A) the property is in the government's possession, custody, or control; or (B) the court orders a different time when the complaint is under seal, the action is stayed before the warrant and supplemental process are executed, or the court finds other good cause. (iii) The warrant and any supplemental process may be executed within the district or, when authorized by statute, outside the district. (iv) If executing a warrant on property outside the United States is required, the warrant may be transmitted to an appropriate authority for serving process where the property is located. (4) Notice. (a) Notice by Publication. (i) When Publication Is Required . A judgment of forfeiture may be entered only if the government has published notice of the action within a reasonable time after filing the complaint or at a time the court orders. But notice need not be published if: (A) the defendant property is worth less than $1,000 and direct notice is sent under Rule G(4)(b) to every person the government can reasonably identify as a potential claimant; or (B) the court finds that the cost of publication exceeds the property's value and that other means of notice would satisfy due process. (ii) Content of the Notice . Unless the court orders otherwise, the notice must: (A) describe the property with reasonable particularity; (B) state the times under Rule G(5) to file a claim and to answer; and (C) name the government attorney to be served with the claim and answer. (iii) Frequency of Publication . Published notice must appear: (A) once a week for three consecutive weeks; or (B) only once if, before the action was filed, notice of nonjudicial forfeiture of the same property was published on an official internet government forfeiture site for at least 30 consecutive days, or in a newspaper of general circulation for three consecutive weeks in a district where publication is authorized under Rule G(4)(a)(iv). (iv) Means of Publication . The government should select from the following options a means of publication reasonably calculated to notify potential claimants of the action: (A) if the property is in the United States, publication in a newspaper generally circulated in the district where the action is filed, where the property was seized, or where property that was not seized is located; (B) if the property is outside the United States, publication in a newspaper generally circulated in a district where the action is filed, in a newspaper generally circulated in the country where the property is located, or in legal notices published and generally circulated in the country where the property is located; or (C) instead of (A) or (B), posting a notice on an official internet government forfeiture site for at least 30 consecutive days. (b) Notice to Known Potential Claimants. (i) Direct Notice Required . The government must send notice of the action and a copy of the complaint to any person who reasonably appears to be a potential claimant on the facts known to the government before the end of the time for filing a claim under Rule G(5)(a)(ii)(B). (ii) Content of the Notice . The notice must state: (A) the date when the notice is sent; (B) a deadline for filing a claim, at least 35 days after the notice is sent; (C) that an answer or a motion under Rule 12 must be filed no later than 21 days after filing the claim; and (D) the name of the government attorney to be served with the claim and answer. (iii) Sending Notice. (A) The notice must be sent by means reasonably calculated to reach the potential claimant. (B) Notice may be sent to the potential claimant or to the attorney representing the potential claimant with respect to the seizure of the property or in a related investigation, administrative forfeiture proceeding, or criminal case. (C) Notice sent to a potential claimant who is incarcerated must be sent to the place of incarceration. (D) Notice to a person arrested in connection with an offense giving rise to the forfeiture who is not incarcerated when notice is sent may be sent to the address that person last gave to the agency that arrested or released the person. (E) Notice to a person from whom the property was seized who is not incarcerated when notice is sent may be sent to the last address that person gave to the agency that seized the property. (iv) When Notice Is Sent . Notice by the following means is sent on the date when it is placed in the mail, delivered to a commercial carrier, or sent by electronic mail. (v) Actual Notice . A potential claimant who had actual notice of a forfeiture action may not oppose or seek relief from forfeiture because of the government's failure to send the required notice. (5) Responsive Pleadings. (a) Filing a Claim. (i) A person who asserts an interest in the defendant property may contest the forfeiture by filing a claim in the court where the action is pending. The claim must: (A) identify the specific property claimed; (B) identify the claimant and state the claimant's interest in the property; (C) be signed by the claimant under penalty of perjury; and (D) be served on the government attorney designated under Rule G(4)(a)(ii)(C) or (b)(ii)(D). (ii) Unless the court for good cause sets a different time, the claim must be filed: (A) by the time stated in a direct notice sent under Rule G(4)(b); (B) if notice was published but direct notice was not sent to the claimant or the claimant's attorney, no later than 30 days after final publication of newspaper notice or legal notice under Rule G(4)(a) or no later than 60 days after the first day of publication on an official internet government forfeiture site; or (C) if notice was not published and direct notice was not sent to the claimant or the claimant's attorney: (1) if the property was in the government's possession, custody, or control when the complaint was filed, no later than 60 days after the filing, not counting any time when the complaint was under seal or when the action was stayed before execution of a warrant issued under Rule G(3)(b); or (2) if the property was not in the government's possession, custody, or control when the complaint was filed, no later than 60 days after the government complied with 18 U.S.C. §985(c) as to real property, or 60 days after process was executed on the property under Rule G(3). (iii) A claim filed by a person asserting an interest as a bailee must identify the bailor, and if filed on the bailor's behalf must state the authority to do so. (b) Answer . A claimant must serve and file an answer to the complaint or a motion under Rule 12 within 21 days after filing the claim. A claimant waives an objection to in rem jurisdiction or to venue if the objection is not made by motion or stated in the answer. (6) Special Interrogatories. (a) Time and Scope . The government may serve special interrogatories limited to the claimant's identity and relationship to the defendant property without the court's leave at any time after the claim is filed and before discovery is closed. But if the claimant serves a motion to dismiss the action, the government must serve the interrogatories within 21 days after the motion is served. (b) Answers or Objections . Answers or objections to these interrogatories must be served within 21 days after the interrogatories are served. (c) Government 's Response Deferred . The government need not respond to a claimant's motion to dismiss the action under Rule G(8)(b) until 21 days after the claimant has answered these interrogatories. (7) Preserving, Preventing Criminal Use, and Disposing of Property; Sales. (a) Preserving and Preventing Criminal Use of Property . When the government does not have actual possession of the defendant property the court, on motion or on its own, may enter any order necessary to preserve the property, to prevent its removal or encumbrance, or to prevent its use in a criminal offense. (b) Interlocutory Sale or Delivery. (i) Order to Sell . On motion by a party or a person having custody of the property, the court may order all or part of the property sold if: (A) the property is perishable or at risk of deterioration, decay, or injury by being detained in custody pending the action; (B) the expense of keeping the property is excessive or is disproportionate to its fair market value; (C) the property is subject to a mortgage or to taxes on which the owner is in default; or (D) the court finds other good cause. (ii) Who Makes the Sale . A sale must be made by a United States agency that has authority to sell the property, by the agency's contractor, or by any person the court designates. (iii) Sale Procedures . The sale is governed by 28 U.S.C. §§2001, 2002, and 2004, unless all parties, with the court's approval, agree to the sale, aspects of the sale, or different procedures. (iv) Sale Proceeds . Sale proceeds are a substitute res subject to forfeiture in place of the property that was sold. The proceeds must be held in an interest-bearing account maintained by the United States pending the conclusion of the forfeiture action. (v) Delivery on a Claimant 's Motion . The court may order that the property be delivered to the claimant pending the conclusion of the action if the claimant shows circumstances that would permit sale under Rule G(7)(b)(i) and gives security under these rules. (c) Disposing of Forfeited Property . Upon entry of a forfeiture judgment, the property or proceeds from selling the property must be disposed of as provided by law. (8) Motions. (a) Motion To Suppress Use of the Property as Evidence . If the defendant property was seized, a party with standing to contest the lawfulness of the seizure may move to suppress use of the property as evidence. Suppression does not affect forfeiture of the property based on independently derived evidence. (b) Motion To Dismiss the Action. (i) A claimant who establishes standing to contest forfeiture may move to dismiss the action under Rule 12(b). (ii) In an action governed by 18 U.S.C. §983(a)(3)(D) the complaint may not be dismissed on the ground that the government did not have adequate evidence at the time the complaint was filed to establish the forfeitability of the property. The sufficiency of the complaint is governed by Rule G(2). (c) Motion To Strike a Claim or Answer. (i) At any time before trial, the government may move to strike a claim or answer: (A) for failing to comply with Rule G(5) or (6), or (B) because the claimant lacks standing. (ii) The motion: (A) must be decided before any motion by the claimant to dismiss the action; and (B) may be presented as a motion for judgment on the pleadings or as a motion to determine after a hearing or by summary judgment whether the claimant can carry the burden of establishing standing by a preponderance of the evidence. (d) Petition To Release Property. (i) If a United States agency or an agency's contractor holds property for judicial or nonjudicial forfeiture under a statute governed by 18 U.S.C. §983(f), a person who has filed a claim to the property may petition for its release under §983(f). (ii) If a petition for release is filed before a judicial forfeiture action is filed against the property, the petition may be filed either in the district where the property was seized or in the district where a warrant to seize the property issued. If a judicial forfeiture action against the property is later filed in another district-or if the government shows that the action will be filed in another district-the petition may be transferred to that district under 28 U.S.C. §1404. (e) Excessive Fines . A claimant may seek to mitigate a forfeiture under the Excessive Fines Clause of the Eighth Amendment by motion for summary judgment or by motion made after entry of a forfeiture judgment if: (i) the claimant has pleaded the defense under Rule 8; and (ii) the parties have had the opportunity to conduct civil discovery on the defense. (9) Trial. Trial is to the court unless any party demands trial by jury under Rule 38. (a)(1) In any forfeiture action in rem in which the subject property is cash, monetary instruments in bearer form, funds deposited in an account in a financial institution (as defined in section 20 of this title), or precious metals— (A) it shall not be necessary for the Government to identify the specific property involved in the offense that is the basis for the forfeiture; and (B) it shall not be a defense that the property involved in such an offense has been removed and replaced by identical property. (2) Except as provided in subsection (b), any identical property found in the same place or account as the property involved in the offense that is the basis for the forfeiture shall be subject to forfeiture under this section. (b) No action pursuant to this section to forfeit property not traceable directly to the offense that is the basis for the forfeiture may be commenced more than 1 year from the date of the offense. (c)(1) Subsection (a) does not apply to an action against funds held by a financial institution in an interbank account unless the account holder knowingly engaged in the offense that is the basis for the forfeiture. (2) In this subsection— (A) the term "financial institution" includes a foreign bank (as defined in section 1(b)(7) of the International Banking Act of 1978 (12 U.S.C. 3101(b)(7))); and (B) the term "interbank account" means an account held by one financial institution at another financial institution primarily for the purpose of facilitating customer transactions. (d) Nothing in this section may be construed to limit the ability of the Government to forfeit property under any provision of law if the property involved in the offense giving rise to the forfeiture or property traceable thereto is available for forfeiture. (a) Notwithstanding any other provision of law, all civil forfeitures of real property and interests in real property shall proceed as judicial forfeitures. (b)(1) Except as provided in this section— (A) real property that is the subject of a civil forfeiture action shall not be seized before entry of an order of forfeiture; and (B) the owners or occupants of the real property shall not be evicted from, or otherwise deprived of the use and enjoyment of, real property that is the subject of a pending forfeiture action. (2) The filing of a lis pendens and the execution of a writ of entry for the purpose of conducting an inspection and inventory of the property shall not be considered a seizure under this subsection. (c)(1) The Government shall initiate a civil forfeiture action against real property by— (A) filing a complaint for forfeiture; (B) posting a notice of the complaint on the property; and (C) serving notice on the property owner, along with a copy of the complaint. (2) If the property owner cannot be served with the notice under paragraph (1) because the owner— (A) is a fugitive; (B) resides outside the United States and efforts at service pursuant to rule 4 of the Federal Rules of Civil Procedure are unavailing; or (C) cannot be located despite the exercise of due diligence, constructive service may be made in accordance with the laws of the State in which the property is located. (3) If real property has been posted in accordance with this subsection, it shall not be necessary for the court to issue an arrest warrant in rem, or to take any other action to establish in rem jurisdiction over the property. (d)(1) Real property may be seized prior to the entry of an order of forfeiture if— (A) the Government notifies the court that it intends to seize the property before trial; and (B) the court— (i) issues a notice of application for warrant, causes the notice to be served on the property owner and posted on the property, and conducts a hearing in which the property owner has a meaningful opportunity to be heard; or (ii) makes an ex parte determination that there is probable cause for the forfeiture and that there are exigent circumstances that permit the Government to seize the property without prior notice and an opportunity for the property owner to be heard. (2) For purposes of paragraph (1)(B)(ii), to establish exigent circumstances, the Government shall show that less restrictive measures such as a lis pendens, restraining order, or bond would not suffice to protect the Government's interests in preventing the sale, destruction, or continued unlawful use of the real property. (e) If the court authorizes a seizure of real property under subsection (d)(1)(B)(ii), it shall conduct a prompt post-seizure hearing during which the property owner shall have an opportunity to contest the basis for the seizure. (f) This section— (1) applies only to civil forfeitures of real property and interests in real property; (2) does not apply to forfeitures of the proceeds of the sale of such property or interests, or of money or other assets intended to be used to acquire such property or interests; and (3) shall not affect the authority of the court to enter a restraining order relating to real property. (a) Right to contest.—An owner of property that is confiscated under any provision of law relating to the confiscation of assets of suspected international terrorists, may contest that confiscation by filing a claim in the manner set forth in the Federal Rules of Civil Procedure (Supplemental Rules for Certain Admiralty and Maritime Claims), and asserting as an affirmative defense that— (1) the property is not subject to confiscation under such provision of law; or (2) the innocent owner provisions of section 983(d) of title 18, United States Code, apply to the case. (b) Evidence.—In considering a claim filed under this section, a court may admit evidence that is otherwise inadmissible under the Federal Rules of Evidence, if the court determines that the evidence is reliable, and that compliance with the Federal Rules of Evidence may jeopardize the national security interests of the United States. (c) Clarifications.— (1) Protection of rights.—The exclusion of certain provisions of Federal law from the definition of the term "civil forfeiture statute" in section 983(i) of title 18, United States Code, shall not be construed to deny an owner of property the right to contest the confiscation of assets of suspected international terrorists under— (A) subsection (a) of this section; (B) the Constitution; or (C) subchapter II of chapter 5 of title 5, United States Code (commonly known as the "Administrative Procedure Act"). (2) Savings clause.—Nothing in this section shall limit or otherwise affect any other remedies that may be available to an owner of property under section 983 of title 18, United States Code, or any other provision of law. (a) Subject property The following shall be subject to forfeiture to the United States and no property right shall exist in them: (1) All controlled substances which have been manufactured, distributed, dispensed, or acquired in violation of this subchapter. (2) All raw materials, products, and equipment of any kind which are used, or intended for use, in manufacturing, compounding, processing, delivering, importing, or exporting any controlled substance or listed chemical in violation of this subchapter. (3) All property which is used, or intended for use, as a container for property described in paragraph (1), (2), or (9). (4) All conveyances, including aircraft, vehicles, or vessels, which are used, or are intended for use, to transport, or in any manner to facilitate the transportation, sale, receipt, possession, or concealment of property described in paragraph (1), (2), or (9). (5) All books, records, and research, including formulas, microfilm, tapes, and data which are used, or intended for use, in violation of this subchapter. (6) All moneys, negotiable instruments, securities, or other things of value furnished or intended to be furnished by any person in exchange for a controlled substance or listed chemical in violation of this subchapter, all proceeds traceable to such an exchange, and all moneys, negotiable instruments, and securities used or intended to be used to facilitate any violation of this subchapter. (7) All real property, including any right, title, and interest (including any leasehold interest) in the whole of any lot or tract of land and any appurtenances or improvements, which is used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, a violation of this subchapter punishable by more than one year's imprisonment. (8) All controlled substances which have been possessed in violation of this subchapter. (9) All listed chemicals, all drug manufacturing equipment, all tableting machines, all encapsulating machines, and all gelatin capsules, which have been imported, exported, manufactured, possessed, distributed, dispensed, acquired, or intended to be distributed, dispensed, acquired, imported, or exported, in violation of this subchapter or subchapter II of this chapter. (10) Any drug paraphernalia (as defined in section 863 of this title). (11) Any firearm (as defined in section 921 of Title 18) used or intended to be used to facilitate the transportation, sale, receipt, possession, or concealment of property described in paragraph (1) or (2) and any proceeds traceable to such property. (b) Seizure procedures Any property subject to forfeiture to the United States under this section may be seized by the Attorney General in the manner set forth in section 981(b) of Title 18. (c) Custody of Attorney General Property taken or detained under this section shall not be repleviable, but shall be deemed to be in the custody of the Attorney General, subject only to the orders and decrees of the court or the official having jurisdiction thereof. Whenever property is seized under any of the provisions of this subchapter, the Attorney General may— (1) place the property under seal; (2) remove the property to a place designated by him; or (3) require that the General Services Administration take custody of the property and remove it, if practicable, to an appropriate location for disposition in accordance with law. (d) Other laws and proceedings applicable The provisions of law relating to the seizure, summary and judicial forfeiture, and condemnation of property for violation of the customs laws; the disposition of such property or the proceeds from the sale thereof; the remission or mitigation of such forfeitures; and the compromise of claims shall apply to seizures and forfeitures incurred, or alleged to have been incurred, under any of the provisions of this subchapter, insofar as applicable and not inconsistent with the provisions hereof; except that such duties as are imposed upon the customs officer or any other person with respect to the seizure and forfeiture of property under the customs laws shall be performed with respect to seizures and forfeitures of property under this subchapter by such officers, agents, or other persons as may be authorized or designated for that purpose by the Attorney General, except to the extent that such duties arise from seizures and forfeitures effected by any customs officer. (e) Disposition of forfeited property (1) Whenever property is civilly or criminally forfeited under this subchapter the Attorney General may— (A) retain the property for official use or, in the manner provided with respect to transfers under section 1616a of Title 19, transfer the property to any Federal agency or to any State or local law enforcement agency which participated directly in the seizure or forfeiture of the property; (B) except as provided in paragraph (4), sell, by public sale or any other commercially feasible means, any forfeited property which is not required to be destroyed by law and which is not harmful to the public; (C) require that the General Services Administration take custody of the property and dispose of it in accordance with law; (D) forward it to the Drug Enforcement Administration for disposition (including delivery for medical or scientific use to any Federal or State agency under regulations of the Attorney General); or (E) transfer the forfeited personal property or the proceeds of the sale of any forfeited personal or real property to any foreign country which participated directly or indirectly in the seizure or forfeiture of the property, if such a transfer— (i) has been agreed to by the Secretary of State; (ii) is authorized in an international agreement between the United States and the foreign country; and (iii) is made to a country which, if applicable, has been certified under section 2291j(b) of Title 22. (2)(A) The proceeds from any sale under subparagraph (B) of paragraph (1) and any moneys forfeited under this title shall be used to pay— (i) all property expenses of the proceedings for forfeiture and sale including expenses of seizure, maintenance of custody, advertising, and court costs; and (ii) awards of up to $100,000 to any individual who provides original information which leads to the arrest and conviction of a person who kills or kidnaps a Federal drug law enforcement agent. Any award paid for information concerning the killing or kidnaping of a Federal drug law enforcement agent, as provided in clause (ii), shall be paid at the discretion of the Attorney General. (B) The Attorney General shall forward to the Treasurer of the United States for deposit in accordance with section 524(c) of Title 28, any amounts of such moneys and proceeds remaining after payment of the expenses provided in subparagraph (A), except that, with respect to forfeitures conducted by the Postal Service, the Postal Service shall deposit in the Postal Service Fund, under section 2003(b)(7) of Title 39, such moneys and proceeds. (3) The Attorney General shall assure that any property transferred to a State or local law enforcement agency under paragraph (1)(A)— (A) has a value that bears a reasonable relationship to the degree of direct participation of the State or local agency in the law enforcement effort resulting in the forfeiture, taking into account the total value of all property forfeited and the total law enforcement effort with respect to the violation of law on which the forfeiture is based; and (B) will serve to encourage further cooperation between the recipient State or local agency and Federal law enforcement agencies. (4)(A) With respect to real property described in subparagraph (B), if the chief executive officer of the State involved submits to the Attorney General a request for purposes of such subparagraph, the authority established in such subparagraph is in lieu of the authority established in paragraph (1)(B). (B) In the case of property described in paragraph (1)(B) that is civilly or criminally forfeited under this subchapter, if the property is real property that is appropriate for use as a public area reserved for recreational or historic purposes or for the preservation of natural conditions, the Attorney General, upon the request of the chief executive officer of the State in which the property is located, may transfer title to the property to the State, either without charge or for a nominal charge, through a legal instrument providing that— (i) such use will be the principal use of the property; and (ii) title to the property reverts to the United States in the event that the property is used otherwise. (f) Forfeiture and destruction of schedule I and II substances (1) All controlled substances in schedule I or II that are possessed, transferred, sold, or offered for sale in violation of the provisions of this subchapter; all dangerous, toxic, or hazardous raw materials or products subject to forfeiture under subsection (a)(2) of this section; and any equipment or container subject to forfeiture under subsection (a)(2) or (3) of this section which cannot be separated safely from such raw materials or products shall be deemed contraband and seized and summarily forfeited to the United States. Similarly, all substances in schedule I or II, which are seized or come into the possession of the United States, the owners of which are unknown, shall be deemed contraband and summarily forfeited to the United States. (2) The Attorney General may direct the destruction of all controlled substances in schedule I or II seized for violation of this subchapter; all dangerous, toxic, or hazardous raw materials or products subject to forfeiture under subsection (a)(2) of this section; and any equipment or container subject to forfeiture under subsection (a)(2) or (3) of this section which cannot be separated safely from such raw materials or products under such circumstances as the Attorney General may deem necessary. (g) Plants (1) All species of plants from which controlled substances in schedules I and II may be derived which have been planted or cultivated in violation of this subchapter, or of which the owners or cultivators are unknown, or which are wild growths, may be seized and summarily forfeited to the United States. (2) The failure, upon demand by the Attorney General or his duly authorized agent, of the person in occupancy or in control of land or premises upon which such species of plants are growing or being stored, to produce an appropriate registration, or proof that he is the holder thereof, shall constitute authority for the seizure and forfeiture. (3) The Attorney General, or his duly authorized agent, shall have authority to enter upon any lands, or into any dwelling pursuant to a search warrant, to cut, harvest, carry off, or destroy such plants. (h) Vesting of title in United States All right, title, and interest in property described in subsection (a) of this section shall vest in the United States upon commission of the act giving rise to forfeiture under this section. (i) Stay of civil forfeiture proceedings; applicability The provisions of section 981(g) of title 18, United States Code, regarding the stay of a civil forfeiture proceeding shall apply to forfeitures under this section. (j) Venue In addition to the venue provided for in section 1395 of Title 28 or any other provision of law, in the case of property of a defendant charged with a violation that is the basis for forfeiture of the property under this section, a proceeding for forfeiture under this section may be brought in the judicial district in which the defendant owning such property is found or in the judicial district in which the criminal prosecution is brought. (l) Agreement between Attorney General and Postal Service for performance of functions The functions of the Attorney General under this section shall be carried out by the Postal Service pursuant to such agreement as may be entered into between the Attorney General and the Postal Service. (a) Property subject to criminal forfeiture Any person convicted of a violation of this subchapter or subchapter II of this chapter punishable by imprisonment for more than one year shall forfeit to the United States, irrespective of any provision of State law— (1) any property constituting, or derived from, any proceeds the person obtained, directly or indirectly, as the result of such violation; (2) any of the person's property used, or intended to be used, in any manner or part, to commit, or to facilitate the commission of, such violation; and (3) in the case of a person convicted of engaging in a continuing criminal enterprise in violation of section 848 of this title, the person shall forfeit, in addition to any property described in paragraph (1) or (2), any of his interest in, claims against, and property or contractual rights affording a source of control over, the continuing criminal enterprise. The court, in imposing sentence on such person, shall order, in addition to any other sentence imposed pursuant to this subchapter or subchapter II of this chapter, that the person forfeit to the United States all property described in this subsection. In lieu of a fine otherwise authorized by this part, a defendant who derives profits or other proceeds from an offense may be fined not more than twice the gross profits or other proceeds. (b) Meaning of term "property" Property subject to criminal forfeiture under this section includes— (1) real property, including things growing on, affixed to, and found in land; and (2) tangible and intangible personal property, including rights, privileges, interests, claims, and securities. (c) Third party transfers All right, title, and interest in property described in subsection (a) of this section vests in the United States upon the commission of the act giving rise to forfeiture under this section. Any such property that is subsequently transferred to a person other than the defendant may be the subject of a special verdict of forfeiture and thereafter shall be ordered forfeited to the United States, unless the transferee establishes in a hearing pursuant to subsection (n) of this section that he is a bona fide purchaser for value of such property who at the time of purchase was reasonably without cause to believe that the property was subject to forfeiture under this section. (d) Rebuttable presumption There is a rebuttable presumption at trial that any property of a person convicted of a felony under this subchapter or subchapter II of this chapter is subject to forfeiture under this section if the United States establishes by a preponderance of the evidence that— (1) such property was acquired by such person during the period of the violation of this subchapter or subchapter II of this chapter or within a reasonable time after such period; and (2) there was no likely source for such property other than the violation of this subchapter or subchapter II of this chapter. (e) Protective orders (1) Upon application of the United States, the court may enter a restraining order or injunction, require the execution of a satisfactory performance bond, or take any other action to preserve the availability of property described in subsection (a) of this section for forfeiture under this section— (A) upon the filing of an indictment or information charging a violation of this subchapter or subchapter II of this chapter for which criminal forfeiture may be ordered under this section and alleging that the property with respect to which the order is sought would, in the event of conviction, be subject to forfeiture under this section; or (B) prior to the filing of such an indictment or information, if, after notice to persons appearing to have an interest in the property and opportunity for a hearing, the court determines that— (i) there is a substantial probability that the United States will prevail on the issue of forfeiture and that failure to enter the order will result in the property being destroyed, removed from the jurisdiction of the court, or otherwise made unavailable for forfeiture; and (ii) the need to preserve the availability of the property through the entry of the requested order outweighs the hardship on any party against whom the order is to be entered: Provided, however , That an order entered pursuant to subparagraph (B) shall be effective for not more than ninety days, unless extended by the court for good cause shown or unless an indictment or information described in subparagraph (A) has been filed. (2) A temporary restraining order under this subsection may be entered upon application of the United States without notice or opportunity for a hearing when an information or indictment has not yet been filed with respect to the property, if the United States demonstrates that there is probable cause to believe that the property with respect to which the order is sought would, in the event of conviction, be subject to forfeiture under this section and that provision of notice will jeopardize the availability of the property for forfeiture. Such a temporary order shall expire not more than fourteen days after the date on which it is entered, unless extended for good cause shown or unless the party against whom it is entered consents to an extension for a longer period. A hearing requested concerning an order entered under this paragraph shall be held at the earliest possible time and prior to the expiration of the temporary order. (3) The court may receive and consider, at a hearing held pursuant to this subsection, evidence and information that would be inadmissible under the Federal Rules of Evidence. (f) Warrant of seizure The Government may request the issuance of a warrant authorizing the seizure of property subject to forfeiture under this section in the same manner as provided for a search warrant. If the court determines that there is probable cause to believe that the property to be seized would, in the event of conviction, be subject to forfeiture and that an order under subsection (e) of this section may not be sufficient to assure the availability of the property for forfeiture, the court shall issue a warrant authorizing the seizure of such property. (g) Execution Upon entry of an order of forfeiture under this section, the court shall authorize the Attorney General to seize all property ordered forfeited upon such terms and conditions as the court shall deem proper. Following entry of an order declaring the property forfeited, the court may, upon application of the United States, enter such appropriate restraining orders or injunctions, require the execution of satisfactory performance bonds, appoint receivers, conservators, appraisers, accountants, or trustees, or take any other action to protect the interest of the United States in the property ordered forfeited. Any income accruing to or derived from property ordered forfeited under this section may be used to offset ordinary and necessary expenses to the property which are required by law, or which are necessary to protect the interests of the United States or third parties. (h) Disposition of property Following the seizure of property ordered forfeited under this section, the Attorney General shall direct the disposition of the property by sale or any other commercially feasible means, making due provision for the rights of any innocent persons. Any property right or interest not exercisable by, or transferable for value to, the United States shall expire and shall not revert to the defendant, nor shall the defendant or any person acting in concert with him or on his behalf be eligible to purchase forfeited property at any sale held by the United States. Upon application of a person, other than the defendant or a person acting in concert with him or on his behalf, the court may restrain or stay the sale or disposition of the property pending the conclusion of any appeal of the criminal case giving rise to the forfeiture, if the applicant demonstrates that proceeding with the sale or disposition of the property will result in irreparable injury, harm, or loss to him. (i) Authority of the Attorney General With respect to property ordered forfeited under this section, the Attorney General is authorized to— (1) grant petitions for mitigation or remission of forfeiture, restore forfeited property to victims of a violation of this subchapter, or take any other action to protect the rights of innocent persons which is in the interest of justice and which is not inconsistent with the provisions of this section; (2) compromise claims arising under this section; (3) award compensation to persons providing information resulting in a forfeiture under this section; (4) direct the disposition by the United States, in accordance with the provisions of section 881(e) of this title, of all property ordered forfeited under this section by public sale or any other commercially feasible means, making due provision for the rights of innocent persons; and (5) take appropriate measures necessary to safeguard and maintain property ordered forfeited under this section pending its disposition. (j) Applicability of civil forfeiture provisions Except to the extent that they are inconsistent with the provisions of this section, the provisions of section 881(d) of this title shall apply to a criminal forfeiture under this section. (k) Bar on intervention Except as provided in subsection (n) of this section, no party claiming an interest in property subject to forfeiture under this section may— (1) intervene in a trial or appeal of a criminal case involving the forfeiture of such property under this section; or (2) commence an action at law or equity against the United States concerning the validity of his alleged interest in the property subsequent to the filing of an indictment or information alleging that the property is subject to forfeiture under this section. (l) Jurisdiction to enter orders The district courts of the United States shall have jurisdiction to enter orders as provided in this section without regard to the location of any property which may be subject to forfeiture under this section or which has been ordered forfeited under this section. (m) Depositions In order to facilitate the identification and location of property declared forfeited and to facilitate the disposition of petitions for remission or mitigation of forfeiture, after the entry of an order declaring property forfeited to the United States, the court may, upon application of the United States, order that the testimony of any witness relating to the property forfeited be taken by deposition and that any designated book, paper, document, record, recording, or other material not privileged be produced at the same time and place, in the same manner as provided for the taking of depositions under Rule 15 of the Federal Rules of Criminal Procedure. (n) Third party interests (1) Following the entry of an order of forfeiture under this section, the United States shall publish notice of the order and of its intent to dispose of the property in such manner as the Attorney General may direct. The Government may also, to the extent practicable, provide direct written notice to any person known to have alleged an interest in the property that is the subject of the order of forfeiture as a substitute for published notice as to those persons so notified. (2) Any person, other than the defendant, asserting a legal interest in property which has been ordered forfeited to the United States pursuant to this section may, within thirty days of the final publication of notice or his receipt of notice under paragraph (1), whichever is earlier, petition the court for a hearing to adjudicate the validity of his alleged interest in the property. The hearing shall be held before the court alone, without a jury. (3) The petition shall be signed by the petitioner under penalty of perjury and shall set forth the nature and extent of the petitioner's right, title, or interest in the property, the time and circumstances of the petitioner's acquisition of the right, title, or interest in the property, any additional facts supporting the petitioner's claim, and the relief sought. (4) The hearing on the petition shall, to the extent practicable and consistent with the interests of justice, be held within thirty days of the filing of the petition. The court may consolidate the hearing on the petition with a hearing on any other petition filed by a person other than the defendant under this subsection. (5) At the hearing, the petitioner may testify and present evidence and witnesses on his own behalf, and cross-examine witnesses who appear at the hearing. The United States may present evidence and witnesses in rebuttal and in defense of its claim to the property and cross-examine witnesses who appear at the hearing. In addition to testimony and evidence presented at the hearing, the court shall consider the relevant portions of the record of the criminal case which resulted in the order of forfeiture. (6) If, after the hearing, the court determines that the petitioner has established by a preponderance of the evidence that— (A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or (B) the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture under this section; the court shall amend the order of forfeiture in accordance with its determination. (7) Following the court's disposition of all petitions filed under this subsection, or if no such petitions are filed following the expiration of the period provided in paragraph (2) for the filing of such petitions, the United States shall have clear title to property that is the subject of the order of forfeiture and may warrant good title to any subsequent purchaser or transferee. (o) Construction The provisions of this section shall be liberally construed to effectuate its remedial purposes. (p) Forfeiture of substitute property (1) In general Paragraph (2) of this subsection shall apply, if any property described in subsection (a), as a result of any act or omission of the defendant— (A) cannot be located upon the exercise of due diligence; (B) has been transferred or sold to, or deposited with, a third party; (C) has been placed beyond the jurisdiction of the court; (D) has been substantially diminished in value; or (E) has been commingled with other property which cannot be divided without difficulty. (2) Substitute property In any case described in any of subparagraphs (A) through (E) of paragraph (1), the court shall order the forfeiture of any other property of the defendant, up to the value of any property described in subparagraphs (A) through (E) of paragraph (1), as applicable. (3) Return of property to jurisdiction In the case of property described in paragraph (1)(C), the court may, in addition to any other action authorized by this subsection, order the defendant to return the property to the jurisdiction of the court so that the property may be seized and forfeited. (q) Restitution for cleanup of clandestine laboratory sites The court, when sentencing a defendant convicted of an offense under this subchapter or subchapter II of this chapter involving the manufacture, possession, or the possession with intent to distribute, of amphetamine or methamphetamine, shall— (1) order restitution as provided in sections 3612 and 3664 of Title 18; (2) order the defendant to reimburse the United States, the State or local government concerned, or both the United States and the State or local government concerned for the costs incurred by the United States or the State or local government concerned, as the case may be, for the cleanup associated with the manufacture of amphetamine or methamphetamine by the defendant, or on premises or in property that the defendant owns, resides, or does business in; and (3) order restitution to any person injured as a result of the offense as provided in section 3663A of Title 18. (a) Whoever violates any provision of section 1962 of this chapter shall be fined under this title or imprisoned not more than 20 years (or for life if the violation is based on a racketeering activity for which the maximum penalty includes life imprisonment), or both, and shall forfeit to the United States, irrespective of any provision of State law— (1) any interest the person has acquired or maintained in violation of section 1962; (2) any— (A) interest in; (B) security of; (C) claim against; or (D) property or contractual right of any kind affording a source of influence over; any enterprise which the person has established, operated, controlled, conducted, or participated in the conduct of, in violation of section 1962; and (3) any property constituting, or derived from, any proceeds which the person obtained, directly or indirectly, from racketeering activity or unlawful debt collection in violation of section 1962. The court, in imposing sentence on such person shall order, in addition to any other sentence imposed pursuant to this section, that the person forfeit to the United States all property described in this subsection. In lieu of a fine otherwise authorized by this section, a defendant who derives profits or other proceeds from an offense may be fined not more than twice the gross profits or other proceeds. (b) Property subject to criminal forfeiture under this section includes— (1) real property, including things growing on, affixed to, and found in land; and (2) tangible and intangible personal property, including rights, privileges, interests, claims, and securities. (c) All right, title, and interest in property described in subsection (a) vests in the United States upon the commission of the act giving rise to forfeiture under this section. Any such property that is subsequently transferred to a person other than the defendant may be the subject of a special verdict of forfeiture and thereafter shall be ordered forfeited to the United States, unless the transferee establishes in a hearing pursuant to subsection (l) that he is a bona fide purchaser for value of such property who at the time of purchase was reasonably without cause to believe that the property was subject to forfeiture under this section. (d)(1) Upon application of the United States, the court may enter a restraining order or injunction, require the execution of a satisfactory performance bond, or take any other action to preserve the availability of property described in subsection (a) for forfeiture under this section— (A) upon the filing of an indictment or information charging a violation of section 1962 of this chapter and alleging that the property with respect to which the order is sought would, in the event of conviction, be subject to forfeiture under this section; or (B) prior to the filing of such an indictment or information, if, after notice to persons appearing to have an interest in the property and opportunity for a hearing, the court determines that— (i) there is a substantial probability that the United States will prevail on the issue of forfeiture and that failure to enter the order will result in the property being destroyed, removed from the jurisdiction of the court, or otherwise made unavailable for forfeiture; and (ii) the need to preserve the availability of the property through the entry of the requested order outweighs the hardship on any party against whom the order is to be entered: Provided, however , That an order entered pursuant to subparagraph (B) shall be effective for not more than ninety days, unless extended by the court for good cause shown or unless an indictment or information described in subparagraph (A) has been filed. (2) A temporary restraining order under this subsection may be entered upon application of the United States without notice or opportunity for a hearing when an information or indictment has not yet been filed with respect to the property, if the United States demonstrates that there is probable cause to believe that the property with respect to which the order is sought would, in the event of conviction, be subject to forfeiture under this section and that provision of notice will jeopardize the availability of the property for forfeiture. Such a temporary order shall expire not more than fourteen days after the date on which it is entered, unless extended for good cause shown or unless the party against whom it is entered consents to an extension for a longer period. A hearing requested concerning an order entered under this paragraph shall be held at the earliest possible time, and prior to the expiration of the temporary order. (3) The court may receive and consider, at a hearing held pursuant to this subsection, evidence and information that would be inadmissible under the Federal Rules of Evidence. (e) Upon conviction of a person under this section, the court shall enter a judgment of forfeiture of the property to the United States and shall also authorize the Attorney General to seize all property ordered forfeited upon such terms and conditions as the court shall deem proper. Following the entry of an order declaring the property forfeited, the court may, upon application of the United States, enter such appropriate restraining orders or injunctions, require the execution of satisfactory performance bonds, appoint receivers, conservators, appraisers, accountants, or trustees, or take any other action to protect the interest of the United States in the property ordered forfeited. Any income accruing to, or derived from, an enterprise or an interest in an enterprise which has been ordered forfeited under this section may be used to offset ordinary and necessary expenses to the enterprise which are required by law, or which are necessary to protect the interests of the United States or third parties. (f) Following the seizure of property ordered forfeited under this section, the Attorney General shall direct the disposition of the property by sale or any other commercially feasible means, making due provision for the rights of any innocent persons. Any property right or interest not exercisable by, or transferable for value to, the United States shall expire and shall not revert to the defendant, nor shall the defendant or any person acting in concert with or on behalf of the defendant be eligible to purchase forfeited property at any sale held by the United States. Upon application of a person, other than the defendant or a person acting in concert with or on behalf of the defendant, the court may restrain or stay the sale or disposition of the property pending the conclusion of any appeal of the criminal case giving rise to the forfeiture, if the applicant demonstrates that proceeding with the sale or disposition of the property will result in irreparable injury, harm or loss to him. Notwithstanding 31 U.S.C. 3302(b), the proceeds of any sale or other disposition of property forfeited under this section and any moneys forfeited shall be used to pay all proper expenses for the forfeiture and the sale, including expenses of seizure, maintenance and custody of the property pending its disposition, advertising and court costs. The Attorney General shall deposit in the Treasury any amounts of such proceeds or moneys remaining after the payment of such expenses. (g) With respect to property ordered forfeited under this section, the Attorney General is authorized to— (1) grant petitions for mitigation or remission of forfeiture, restore forfeited property to victims of a violation of this chapter, or take any other action to protect the rights of innocent persons which is in the interest of justice and which is not inconsistent with the provisions of this chapter; (2) compromise claims arising under this section; (3) award compensation to persons providing information resulting in a forfeiture under this section; (4) direct the disposition by the United States of all property ordered forfeited under this section by public sale or any other commercially feasible means, making due provision for the rights of innocent persons; and (5) take appropriate measures necessary to safeguard and maintain property ordered forfeited under this section pending its disposition. (h) The Attorney General may promulgate regulations with respect to— (1) making reasonable efforts to provide notice to persons who may have an interest in property ordered forfeited under this section; (2) granting petitions for remission or mitigation of forfeiture; (3) the restitution of property to victims of an offense petitioning for remission or mitigation of forfeiture under this chapter; (4) the disposition by the United States of forfeited property by public sale or other commercially feasible means; (5) the maintenance and safekeeping of any property forfeited under this section pending its disposition; and (6) the compromise of claims arising under this chapter. Pending the promulgation of such regulations, all provisions of law relating to the disposition of property, or the proceeds from the sale thereof, or the remission or mitigation of forfeitures for violation of the customs laws, and the compromise of claims and the award of compensation to informers in respect of such forfeitures shall apply to forfeitures incurred, or alleged to have been incurred, under the provisions of this section, insofar as applicable and not inconsistent with the provisions hereof. Such duties as are imposed upon the Customs Service or any person with respect to the disposition of property under the customs law shall be performed under this chapter by the Attorney General. ( i ) Except as provided in subsection (l), no party claiming an interest in property subject to forfeiture under this section may— (1) intervene in a trial or appeal of a criminal case involving the forfeiture of such property under this section; or (2) commence an action at law or equity against the United States concerning the validity of his alleged interest in the property subsequent to the filing of an indictment or information alleging that the property is subject to forfeiture under this section. (j) The district courts of the United States shall have jurisdiction to enter orders as provided in this section without regard to the location of any property which may be subject to forfeiture under this section or which has been ordered forfeited under this section. (k) In order to facilitate the identification or location of property declared forfeited and to facilitate the disposition of petitions for remission or mitigation of forfeiture, after the entry of an order declaring property forfeited to the United States the court may, upon application of the United States, order that the testimony of any witness relating to the property forfeited be taken by deposition and that any designated book, paper, document, record, recording, or other material not privileged be produced at the same time and place, in the same manner as provided for the taking of depositions under Rule 15 of the Federal Rules of Criminal Procedure. ( l )(1) Following the entry of an order of forfeiture under this section, the United States shall publish notice of the order and of its intent to dispose of the property in such manner as the Attorney General may direct. The Government may also, to the extent practicable, provide direct written notice to any person known to have alleged an interest in the property that is the subject of the order of forfeiture as a substitute for published notice as to those persons so notified. (2) Any person, other than the defendant, asserting a legal interest in property which has been ordered forfeited to the United States pursuant to this section may, within thirty days of the final publication of notice or his receipt of notice under paragraph (1), whichever is earlier, petition the court for a hearing to adjudicate the validity of his alleged interest in the property. The hearing shall be held before the court alone, without a jury. (3) The petition shall be signed by the petitioner under penalty of perjury and shall set forth the nature and extent of the petitioner's right, title, or interest in the property, the time and circumstances of the petitioner's acquisition of the right, title, or interest in the property, any additional facts supporting the petitioner's claim, and the relief sought. (4) The hearing on the petition shall, to the extent practicable and consistent with the interests of justice, be held within thirty days of the filing of the petition. The court may consolidate the hearing on the petition with a hearing on any other petition filed by a person other than the defendant under this subsection. (5) At the hearing, the petitioner may testify and present evidence and witnesses on his own behalf, and cross-examine witnesses who appear at the hearing. The United States may present evidence and witnesses in rebuttal and in defense of its claim to the property and cross-examine witnesses who appear at the hearing. In addition to testimony and evidence presented at the hearing, the court shall consider the relevant portions of the record of the criminal case which resulted in the order of forfeiture. (6) If, after the hearing, the court determines that the petitioner has established by a preponderance of the evidence that— (A) the petitioner has a legal right, title, or interest in the property, and such right, title, or interest renders the order of forfeiture invalid in whole or in part because the right, title, or interest was vested in the petitioner rather than the defendant or was superior to any right, title, or interest of the defendant at the time of the commission of the acts which gave rise to the forfeiture of the property under this section; or (B) the petitioner is a bona fide purchaser for value of the right, title, or interest in the property and was at the time of purchase reasonably without cause to believe that the property was subject to forfeiture under this section; the court shall amend the order of forfeiture in accordance with its determination. (7) Following the court's disposition of all petitions filed under this subsection, or if no such petitions are filed following the expiration of the period provided in paragraph (2) for the filing of such petitions, the United States shall have clear title to property that is the subject of the order of forfeiture and may warrant good title to any subsequent purchaser or transferee. (m) If any of the property described in subsection (a), as a result of any act or omission of the defendant— (1) cannot be located upon the exercise of due diligence; (2) has been transferred or sold to, or deposited with, a third party; (3) has been placed beyond the jurisdiction of the court; (4) has been substantially diminished in value; or (5) has been commingled with other property which cannot be divided without difficulty; the court shall order the forfeiture of any other property of the defendant up to the value of any property described in paragraphs (1) through (5). (a) Notice to the Defendant . A court must not enter a judgment of forfeiture in a criminal proceeding unless the indictment or information contains notice to the defendant that the government will seek the forfeiture of property as part of any sentence in accordance with the applicable statute. The notice should not be designated as a count of the indictment or information. The indictment or information need not identify the property subject to forfeiture or specify the amount of any forfeiture money judgment that the government seeks. (b) Entering a Preliminary Order of Forfeiture . (1) Forfeiture Phase of the Trial . (A) Forfeiture Determinations. As soon as practical after a verdict or finding of guilty, or after a plea of guilty or nolo contendere is accepted, on any count in an indictment or information regarding which criminal forfeiture is sought, the court must determine what property is subject to forfeiture under the applicable statute. If the government seeks forfeiture of specific property, the court must determine whether the government has established the requisite nexus between the property and the offense. If the government seeks a personal money judgment, the court must determine the amount of money that the defendant will be ordered to pay. (B) Evidence and Hearing. The court's determination may be based on evidence already in the record, including any written plea agreement, and on any additional evidence or information submitted by the parties and accepted by the court as relevant and reliable. If the forfeiture is contested, on either party's request the court must conduct a hearing after the verdict or finding of guilty. (2) Preliminary Order . (A) Contents of a Specific Order. If the court finds that property is subject to forfeiture, it must promptly enter a preliminary order of forfeiture setting forth the amount of any money judgment, directing the forfeiture of specific property, and directing the forfeiture of any substitute property if the government has met the statutory criteria. The court must enter the order without regard to any third party's interest in the property. Determining whether a third party has such an interest must be deferred until any third party files a claim in an ancillary proceeding under Rule 32.2(c). (B) Timing. Unless doing so is impractical, the court must enter the preliminary order sufficiently in advance of sentencing to allow the parties to suggest revisions or modifications before the order becomes final as to the defendant under Rule 32.2(b)(4). (C) General Order. If, before sentencing, the court cannot identify all the specific property subject to forfeiture or calculate the total amount of the money judgment, the court may enter a forfeiture order that: (i) lists any identified property; (ii) describes other property in general terms; and (iii) states that the order will be amended under Rule 32.2(e)(1) when additional specific property is identified or the amount of the money judgment has been calculated. (3) Seizing Property . The entry of a preliminary order of forfeiture authorizes the Attorney General (or a designee) to seize the specific property subject to forfeiture; to conduct any discovery the court considers proper in identifying, locating, or disposing of the property; and to commence proceedings that comply with any statutes governing third-party rights. The court may include in the order of forfeiture conditions reasonably necessary to preserve the property's value pending any appeal. (4) Sentence and Judgment . (A) When Final. At sentencing - or at any time before sentencing if the defendant consents - the preliminary forfeiture order becomes final as to the defendant. If the order directs the defendant to forfeit specific property, it remains preliminary as to third parties until the ancillary proceeding is concluded under Rule 32.2(c). (B) Notice and Inclusion in the Judgment. The court must include the forfeiture when orally announcing the sentence or must otherwise ensure that the defendant knows of the forfeiture at sentencing. The court must also include the forfeiture order, directly or by reference, in the judgment, but the court's failure to do so may be corrected at any time under Rule 36. (C) Time to Appeal. The time for the defendant or the government to file an appeal from the forfeiture order, or from the court's failure to enter an order, begins to run when judgment is entered. If the court later amends or declines to amend a forfeiture order to include additional property under Rule 32.2(e), the defendant or the government may file an appeal regarding that property under Federal Rule of Appellate Procedure 4(b). The time for that appeal runs from the date when the order granting or denying the amendment becomes final. (5) Jury Determination . (A) Retaining the Jury. In any case tried before a jury, if the indictment or information states that the government is seeking forfeiture, the court must determine before the jury begins deliberating whether either party requests that the jury be retained to determine the forfeitability of specific property if it returns a guilty verdict. (B) Special Verdict Form. If a party timely requests to have the jury determine forfeiture, the government must submit a proposed Special Verdict Form listing each property subject to forfeiture and asking the jury to determine whether the government has established the requisite nexus between the property and the offense committed by the defendant. (6) Notice of the Forfeiture Order . (A) Publishing and Sending Notice. If the court orders the forfeiture of specific property, the government must publish notice of the order and send notice to any person who reasonably appears to be a potential claimant with standing to contest the forfeiture in the ancillary proceeding. (B) Content of the Notice. The notice must describe the forfeited property, state the times under the applicable statute when a petition contesting the forfeiture must be filed, and state the name and contact information for the government attorney to be served with the petition. (C) Means of Publication; Exceptions to Publication Requirement. Publication must take place as described in Supplemental Rule G(4)(a)(iii) of the Federal Rules of Civil Procedure, and may be by any means described in Supplemental Rule G(4)(a)(iv). Publication is unnecessary if any exception in Supplemental Rule G(4)(a)(i) applies. (D) Means of Sending the Notice. The notice may be sent in accordance with Supplemental Rules G(4)(b)(iii)-(v) of the Federal Rules of Civil Procedure. (7) Interlocutory Sale . At any time before entry of a final forfeiture order, the court, in accordance with Supplemental Rule G(7) of the Federal Rules of Civil Procedure, may order the interlocutory sale of property alleged to be forfeitable. (c) Ancillary Proceeding; Entering a Final Order of Forfeiture . (1) In General . If, as prescribed by statute, a third party files a petition asserting an interest in the property to be forfeited, the court must conduct an ancillary proceeding, but no ancillary proceeding is required to the extent that the forfeiture consists of a money judgment. (A) In the ancillary proceeding, the court may, on motion, dismiss the petition for lack of standing, for failure to state a claim, or for any other lawful reason. For purposes of the motion, the facts set forth in the petition are assumed to be true. (B) After disposing of any motion filed under Rule 32.2(c)(1)(A) and before conducting a hearing on the petition, the court may permit the parties to conduct discovery in accordance with the Federal Rules of Civil Procedure if the court determines that discovery is necessary or desirable to resolve factual issues. When discovery ends, a party may move for summary judgment under Federal Rule of Civil Procedure 56. (2) Entering a Final Order . When the ancillary proceeding ends, the court must enter a final order of forfeiture by amending the preliminary order as necessary to account for any third-party rights. If no third party files a timely petition, the preliminary order becomes the final order of forfeiture if the court finds that the defendant (or any combination of defendants convicted in the case) had an interest in the property that is forfeitable under the applicable statute. The defendant may not object to the entry of the final order on the ground that the property belongs, in whole or in part, to a codefendant or third party; nor may a third party object to the final order on the ground that the third party had an interest in the property. (3) Multiple Petitions . If multiple third-party petitions are filed in the same case, an order dismissing or granting one petition is not appealable until rulings are made on all the petitions, unless the court determines that there is no just reason for delay. (4) Ancillary Proceeding Not Part of Sentencing . An ancillary proceeding is not part of sentencing. (d) Stay Pending Appeal . If a defendant appeals from a conviction or an order of forfeiture, the court may stay the order of forfeiture on terms appropriate to ensure that the property remains available pending appellate review. A stay does not delay the ancillary proceeding or the determination of a third party's rights or interests. If the court rules in favor of any third party while an appeal is pending, the court may amend the order of forfeiture but must not transfer any property interest to a third party until the decision on appeal becomes final, unless the defendant consents in writing or on the record. (e) Subsequently Located Property; Substitute Property . (1) In General . On the government's motion, the court may at any time enter an order of forfeiture or amend an existing order of forfeiture to include property that: (A) is subject to forfeiture under an existing order of forfeiture but was located and identified after that order was entered; or (B) is substitute property that qualifies for forfeiture under an applicable statute. (2) Procedure . If the government shows that the property is subject to forfeiture under Rule 32.2(e)(1), the court must: (A) enter an order forfeiting that property, or amend an existing preliminary or final order to include it; and (B) if a third party files a petition claiming an interest in the property, conduct an ancillary proceeding under Rule 32.2(c). (3) Jury Trial Limited . There is no right to a jury trial under Rule 32.2(e). (c)(1) There is established in the United States Treasury a special fund to be known as the Department of Justice Assets Forfeiture Fund (hereafter in this subsection referred to as the "Fund") which shall be available to the Attorney General without fiscal year limitation for the following law enforcement purposes— (A) the payment, at the discretion of the Attorney General, of any expenses necessary to seize, detain, inventory, safeguard, maintain, advertise, sell, or dispose of property under seizure, detention, or forfeited pursuant to any law enforced or administered by the Department of Justice, or of any other necessary expense incident to the seizure, detention, forfeiture, or disposal of such property including— (i) payments for— (I) contract services; (II) the employment of outside contractors to operate and manage properties or provide other specialized services necessary to dispose of such properties in an effort to maximize the return from such properties; and (III) reimbursement of any Federal, State, or local agency for any expenditures made to perform the functions described in this clause; (ii) payments to reimburse any Federal agency participating in the Fund for investigative costs leading to seizures; (iii) payments for contracting for the services of experts and consultants needed by the Department of Justice to assist in carrying out duties related to asset seizure and forfeiture; and (iv) payments made pursuant to guidelines promulgated by the Attorney General if such payments are necessary and directly related to seizure and forfeiture program expenses for— (I) the purchase or lease of automatic data processing systems (not less than a majority of which use will be related to such program); (II) training; (III) printing; (IV) the storage, protection, and destruction of controlled substances; and (V) contracting for services directly related to the identification of forfeitable assets, and the processing of and accounting for forfeitures; (B) the payment of awards for information or assistance directly relating to violations of the criminal drug laws of the United States or of sections 1956 and 1957 of title 18, sections 5313 and 5324 of title 31, and section 6050I of the Internal Revenue Code of 1986; (C) at the discretion of the Attorney General, the payment of awards for information or assistance leading to a civil or criminal forfeiture involving any Federal agency participating in the Fund; (D) the compromise and payment of valid liens and mortgages against property that has been forfeited pursuant to any law enforced or administered by the Department of Justice, subject to the discretion of the Attorney General to determine the validity of any such lien or mortgage and the amount of payment to be made, and the employment of attorneys and other personnel skilled in State real estate law as necessary; (E)(i) for disbursements authorized in connection with remission or mitigation procedures relating to property forfeited under any law enforced or administered by the Department of Justice; and (ii) for payment for— (I) costs incurred by or on behalf of the Department of Justice in connection with the removal, for purposes of Federal forfeiture and disposition, of any hazardous substance or pollutant or contaminant associated with the illegal manufacture of amphetamine or methamphetamine; and (II) costs incurred by or on behalf of a State or local government in connection with such removal in any case in which such State or local government has assisted in a Federal prosecution relating to amphetamine or methamphetamine, to the extent such costs exceed equitable sharing payments made to such State or local government in such case; (F)(i) for equipping for law enforcement functions of any Government-owned or leased vessel, vehicle, or aircraft available for official use by any Federal agency participating in the Fund; (ii) for equipping any vessel, vehicle, or aircraft available for official use by a State or local law enforcement agency to enable the vessel, vehicle, or aircraft to assist law enforcement functions if the vessel, vehicle, or aircraft will be used in a joint law enforcement operation with a Federal agency participating in the Fund; and (iii) payments for other equipment directly related to seizure or forfeiture, including laboratory equipment, protective equipment, communications equipment, and the operation and maintenance costs of such equipment; (G) for purchase of evidence of any violation of the Controlled Substances Act, the Controlled Substances Import and Export Act, chapter 96 of title 18, or sections 1956 and 1957 of title 18; (H) the payment of State and local property taxes on forfeited real property that accrued between the date of the violation giving rise to the forfeiture and the date of the forfeiture order; and (I) payment of overtime salaries, travel, fuel, training, equipment, and other similar costs of State or local law enforcement officers that are incurred in a joint law enforcement operation with a Federal law enforcement agency participating in the Fund. Amounts for paying the expenses authorized by subparagraphs (B), (F), and (G) shall be specified in appropriations Acts and may be used under authorities available to the organization receiving the funds. Amounts for other authorized expenditures and payments from the Fund, including equitable sharing payments, are not required to be specified in appropriations acts. The Attorney General may exempt the procurement of contract services under subparagraph (A) under the Fund from division C (except sections 3302, 3501(b), 3509, 3906, 4710, and 4711) of subtitle I of title 41, section 6101(b) to (d) of title 41, and other provisions of law as may be necessary to maintain the security and confidentiality of related criminal investigations. (2) Any award paid from the Fund, as provided in paragraph (1)(B) or (C), shall be paid at the discretion of the Attorney General or his delegate, under existing departmental delegation policies for the payment of awards, except that the authority to pay an award of $250,000 or more shall not be delegated to any person other than the Deputy Attorney General, the Associate Attorney General, the Director of the Federal Bureau of Investigation, or the Administrator of the Drug Enforcement Administration. Any award pursuant to paragraph (1)(B) shall not exceed $500,000. Any award pursuant to paragraph (1)(C) shall not exceed the lesser of $500,000 or one-fourth of the amount realized by the United States from the property forfeited, without both the personal approval of the Attorney General and written notice within 30 days thereof to the Chairmen and ranking minority members of the Committees on Appropriations and the Judiciary of the Senate and of the House of Representatives. (3) Any amount under subparagraph (G) of paragraph (1) shall be paid at the discretion of the Attorney General or his delegate, except that the authority to pay $100,000 or more may be delegated only to the respective head of the agency involved. (4) There shall be deposited in the Fund— (A) all amounts from the forfeiture of property under any law enforced or administered by the Department of Justice, except all proceeds of forfeitures available for use by the Secretary of the Treasury or the Secretary of the Interior pursuant to section 11(d) of the Endangered Species Act (16 U.S.C. 1540(d)) or section 6(d) of the Lacey Act Amendments of 1981 (16 U.S.C. 3375(d)), or the Postmaster General of the United States pursuant to 39 U.S.C. 2003(b)(7); (B) all amounts representing the Federal equitable share from the forfeiture of property under any Federal, State, local or foreign law, for any Federal agency participating in the Fund; (C) all amounts transferred by the Secretary of the Treasury pursuant to section 9703(g)(4)(A)(ii) of title 31; and (D) all amounts collected— (i) by the United States pursuant to a reimbursement order under paragraph (2) of section 413(q) of the Controlled Substances Act (21 U.S.C. 853(q)); and (ii) pursuant to a restitution order under paragraph (1) or (3) of section 413(q) of the Controlled Substances Act [21 U.S.C. 853(q)] for injuries to the United States. (5) Amounts in the Fund, and in any holding accounts associated with the Fund, that are not currently needed for the purpose of this section shall be kept on deposit or invested in obligations of, or guaranteed by, the United States and all earnings on such investments shall be deposited in the Fund. (6)(A) The Attorney General shall transmit to Congress and make available to the public, not later than 4 months after the end of each fiscal year, detailed reports for the prior fiscal year as follows: (i) A report on total deposits to the Fund by State of deposit. (ii) A report on total expenses paid from the Fund, by category of expense and recipient agency, including equitable sharing payments. (iii) A report describing the number, value, and types of properties placed into official use by Federal agencies, by recipient agency. (iv) A report describing the number, value, and types of properties transferred to State and local law enforcement agencies, by recipient agency. (v) A report, by type of disposition, describing the number, value, and types of forfeited property disposed of during the year. (vi) A report on the year-end inventory of property under seizure, but not yet forfeited, that reflects the type of property, its estimated value, and the estimated value of liens and mortgages outstanding on the property. (vii) A report listing each property in the year-end inventory, not yet forfeited, with an outstanding equity of not less than $1,000,000. (B) The Attorney General shall transmit to Congress and make available to the public, not later than 2 months after final issuance, the audited financial statements for each fiscal year for the Fund. (C) Reports under subparagraph (A) shall include information with respect to all forfeitures under any law enforced or administered by the Department of Justice. (D) The transmittal and publication requirements in subparagraphs (A) and (B) may be satisfied by— (i) posting the reports on an Internet website maintained by the Department of Justice for a period of not less than 2 years; and (ii) notifying the Committees on the Judiciary of the House of Representatives and the Senate when the reports are available electronically. (7) The provisions of this subsection relating to deposits in the Fund shall apply to all property in the custody of the Department of Justice on or after the effective date of the Comprehensive Forfeiture Act of 1983. (8)(A) There are authorized to be appropriated such sums as necessary for the purposes described in subparagraphs (B), (F), and (G) of paragraph (1). (B) Subject to subparagraphs (C) and (D), at the end of each of fiscal years 1994, 1995, and 1996, the Attorney General shall transfer from the Fund not more than $100,000,000 to the Special Forfeiture Fund established by section 6073 of the Anti-Drug Abuse Act of 1988. (C) Transfers under subparagraph (B) may be made only from the excess unobligated balance and may not exceed one-half of the excess unobligated balance for any year. In addition, transfers under subparagraph (B) may be made only to the extent that the sum of the transfers in a fiscal year and one-half of the unobligated balance at the beginning of that fiscal year for the Special Forfeiture Fund does not exceed $100,000,000. (D) For the purpose of determining amounts available for distribution at year end for any fiscal year, "excess unobligated balance" means the unobligated balance of the Fund generated by that fiscal year's operations, less any amounts that are required to be retained in the Fund to ensure the availability of amounts in the subsequent fiscal year for purposes authorized under paragraph (1). (E) Subject to the notification procedures contained in section 605 of P.L. 103-121 , and after satisfying the transfer requirement in subparagraph (B) of this paragraph, any excess unobligated balance remaining in the Fund on September 30, 1997 and thereafter shall be available to the Attorney General, without fiscal year limitation, for any Federal law enforcement, litigative/prosecutive, and correctional activities, or any other authorized purpose of the Department of Justice. Any amounts provided pursuant to this subparagraph may be used under authorities available to the organization receiving the funds. (9)(A) Following the completion of procedures for the forfeiture of property pursuant to any law enforced or administered by the Department, the Attorney General is authorized, in her discretion, to warrant clear title to any subsequent purchaser or transferee of such property. (B) For fiscal years 2002 and 2003, the Attorney General is authorized to transfer, under such terms and conditions as the Attorney General shall specify, real or personal property of limited or marginal value, to a State or local government agency, or its designated contractor or transferee, for use to support drug abuse treatment, drug and crime prevention and education, housing, job skills, and other community-based public health and safety programs. Each such transfer shall be subject to satisfaction by the recipient involved of any outstanding lien against the property transferred, but no such transfer shall create or confer any private right of action in any person against the United States. (10) The Attorney General shall transfer from the Fund to the Secretary of the Treasury for deposit in the Department of the Treasury Forfeiture Fund amounts appropriate to reflect the degree of participation of the Department of the Treasury law enforcement organizations (described in section 9703(p) of title 31) in the law enforcement effort resulting in the forfeiture pursuant to laws enforced or administered by the Department of Justice. (11) For purposes of this subsection and notwithstanding section 9703 of title 31 or any other law, property is forfeited pursuant to a law enforced or administered by the Department of Justice if it is forfeited pursuant to— (A) a judicial forfeiture proceeding when the underlying seizure was made by an officer of a Federal law enforcement agency participating in the Department of Justice Assets Forfeiture Fund or the property was maintained by the United States Marshals Service; or (B) a civil administrative forfeiture proceeding conducted by a Department of Justice law enforcement component or pursuant to the authority of the Secretary of Commerce. [(12) Redesignated (11)] (a) Whenever a civil fine, penalty or pecuniary forfeiture is prescribed for the violation of an Act of Congress without specifying the mode of recovery or enforcement thereof, it may be recovered in a civil action. (b) Unless otherwise provided by Act of Congress, whenever a forfeiture of property is prescribed as a penalty for violation of an Act of Congress and the seizure takes place on the high seas or on navigable waters within the admiralty and maritime jurisdiction of the United States, such forfeiture may be enforced by libel in admiralty but in cases of seizures on land the forfeiture may be enforced by a proceeding by libel which shall conform as near as may be to proceedings in admiralty. (c) If a person is charged in a criminal case with a violation of an Act of Congress for which the civil or criminal forfeiture of property is authorized, the Government may include notice of the forfeiture in the indictment or information pursuant to the Federal Rules of Criminal Procedure. If the defendant is convicted of the offense giving rise to the forfeiture, the court shall order the forfeiture of the property as part of the sentence in the criminal case pursuant to the Federal Rules of Criminal Procedure and section 3554 of title 18, United States Code. The procedures in section 413 of the Controlled Substances Act (21 U.S.C. 853) apply to all stages of a criminal forfeiture proceeding, except that subsection (d) of such section applies only in cases in which the defendant is convicted of a violation of such Act. (a) Upon the entry of a judgment for the claimant in any proceeding to condemn or forfeit property seized or arrested under any provision of Federal law— (1) such property shall be returned forthwith to the claimant or his agent; and (2) if it appears that there was reasonable cause for the seizure or arrest, the court shall cause a proper certificate thereof to be entered and, in such case, neither the person who made the seizure or arrest nor the prosecutor shall be liable to suit or judgment on account of such suit or prosecution, nor shall the claimant be entitled to costs, except as provided in subsection (b). (b)(1) Except as provided in paragraph (2), in any civil proceeding to forfeit property under any provision of Federal law in which the claimant substantially prevails, the United States shall be liable for— (A) reasonable attorney fees and other litigation costs reasonably incurred by the claimant; (B) post-judgment interest, as set forth in section 1961 of this title; and (C) in cases involving currency, other negotiable instruments, or the proceeds of an interlocutory sale —(i) interest actually paid to the United States from the date of seizure or arrest of the property that resulted from the investment of the property in an interest-bearing account or instrument; and (ii) an imputed amount of interest that such currency, instruments, or proceeds would have earned at the rate applicable to the 30-day Treasury Bill, for any period during which no interest was paid (not including any period when the property reasonably was in use as evidence in an official proceeding or in conducting scientific tests for the purpose of collecting evidence), commencing 15 days after the property was seized by a Federal law enforcement agency, or was turned over to a Federal law enforcement agency by a State or local law enforcement agency. (2)(A) The United States shall not be required to disgorge the value of any intangible benefits nor make any other payments to the claimant not specifically authorized by this subsection. (B) The provisions of paragraph (1) shall not apply if the claimant is convicted of a crime for which the interest of the claimant in the property was subject to forfeiture under a Federal criminal forfeiture law. (C) If there are multiple claims to the same property, the United States shall not be liable for costs and attorneys fees associated with any such claim if the United States— (i) promptly recognizes such claim; (ii) promptly returns the interest of the claimant in the property to the claimant, if the property can be divided without difficulty and there are no competing claims to that portion of the property; (iii) does not cause the claimant to incur additional, reasonable costs or fees; and (iv) prevails in obtaining forfeiture with respect to one or more of the other claims. (D) If the court enters judgment in part for the claimant and in part for the Government, the court shall reduce the award of costs and attorney fees accordingly. (a) In general .—There is established in the Treasury of the United States a fund to be known as the "Department of the Treasury Forfeiture Fund" (referred to in this section as the "Fund"). The Fund shall be available to the Secretary, without fiscal year limitation, with respect to seizures and forfeitures made pursuant to any law (other than section 7301 or 7302 of the Internal Revenue Code of 1986) enforced or administered by the Department of the Treasury or the United States Coast Guard for the following law enforcement purposes: (1)(A) Payment of all proper expenses of seizure (including investigative costs incurred by a Department of the Treasury law enforcement organization leading to seizure) or the proceedings of forfeiture and sale, including the expenses of detention, inventory, security, maintenance, advertisement, or disposal of the property, and if condemned by a court and a bond for such costs was not given, the costs as taxed by the court. (B) Payment for— (i) contract services; (ii) the employment of outside contractors to operate and manage properties or to provide other specialized services necessary to dispose of such properties in an effort to maximize the return from such properties; and (iii) reimbursing any Federal, State, or local agency for any expenditures made to perform the functions described in this subparagraph. (C) Awards of compensation to informers under section 619 of the Tariff Act of 1930 (19 U.S.C. 1619). (D) Satisfaction of— (i) liens for freight, charges, and contributions in general average, notice of which has been filed with the appropriate Customs officer according to law; and (ii) subject to the discretion of the Secretary, other valid liens and mortgages against property that has been forfeited pursuant to any law enforced or administered by a Department of the Treasury law enforcement organization. To determine the validity of any such lien or mortgage, the amount of payment to be made, and to carry out the functions described in this subparagraph, the Secretary may employ and compensate attorneys and other personnel skilled in State real estate law. (E) Payment of amounts authorized by law with respect to remission and mitigation. (F) Payment of claims of parties in interest to property disposed of under section 612(b) of the Tariff Act of 1930 (19 U.S.C. 1612(b)), in the amounts applicable to such claims at the time of seizure. (G) Equitable sharing payments made to other Federal agencies, State and local law enforcement agencies, and foreign countries pursuant to section 616(c) of the Tariff Act of 1930 (19 U.S.C. 1616a(c)), section 981 of title 18, or subsection (h) of this section, and all costs related thereto. (H) Payment for services of experts and consultants needed by a Department of the Treasury law enforcement organization to carry out the organization's duties relating to seizure and forfeiture. (I) payment of overtime salaries, travel, fuel, training, equipment, and other similar costs of State or local law enforcement officers that are incurred in joint law enforcement operations with a Department of the Treasury law enforcement organization; (J) payment made pursuant to guidelines promulgated by the Secretary, if such payment is necessary and directly related to seizure and forfeiture program expenses for— (i) the purchase or lease of automatic data processing systems (not less than a majority of which use will be related to such program); (ii) training; (iii) printing; and (iv) contracting for services directly related to— (I) the identification of forfeitable assets; (II) the processing of and accounting for forfeitures; and (III) the storage, maintenance, protection, and destruction of controlled substances. (2) At the discretion of the Secretary— (A) payment of awards for information or assistance leading to a civil or criminal forfeiture involving any Department of the Treasury law enforcement organization participating in the Fund; (B) purchases of evidence or information by— (i) a Department of the Treasury law enforcement organization with respect to— (I) a violation of section 1956 or 1957 of title 18 (relating to money laundering); or (II) a law, the violation of which may subject property to forfeiture under section 981 or 982 of title 18; (ii) the United States Customs Service with respect to drug smuggling or a violation of section 542 or 545 of title 18 (relating to fraudulent customs invoices or smuggling); (iii) the United States Secret Service with respect to a violation of— (I) section 1028, 1029, or 1030 or title 18; (II) any law of the United States relating to coins, obligations, or securities of the United States or of a foreign government; or (III) any law of the United States which the United States Secret Service is authorized to enforce relating to fraud or other criminal or unlawful activity in or against any federally insured financial institution, the Resolution Trust Corporation, or the Federal Deposit Insurance Corporation; and (iv) the United States Customs Service or the Internal Revenue Service with respect to a violation of chapter 53 of this title (relating to the Bank Secrecy Act). (C) payment of costs for publicizing awards available under section 619 of the Tariff Act of 1930 (19 U.S.C. 1619); (D) payment for equipment for any vessel, vehicle, or aircraft available for official use by a Department of the Treasury law enforcement organization to enable the vessel, vehicle, or aircraft to assist in law enforcement functions, and for other equipment directly related to seizure or forfeiture, including laboratory equipment, protective equipment, communications equipment, and the operation and maintenance costs of such equipment; (E) the payment of claims against employees of the Customs Service settled by the Secretary under section 630 of the Tariff Act of 1930; (F) payment for equipment for any vessel, vehicle, or aircraft available for official use by a State or local law enforcement agency to enable the vessel, vehicle, or aircraft to assist in law enforcement functions if the vessel, vehicle, or aircraft will be used in joint law enforcement operations with a Department of the Treasury law enforcement organization; (G) reimbursement of private persons for expenses incurred by such persons in cooperating with a Department of the Treasury law enforcement organization in investigations and undercover law enforcement operations; (H) payment for training foreign law enforcement personnel with respect to seizure or forfeiture activities of the Department of the Treasury; and (b) Limitations (1) Any payment made under subparagraph (D) or (E) of subsection (a)(1) with respect to a seizure or a forfeiture of property shall not exceed the value of the property at the time of the seizure. (2) Any payment made under subsection (a)(1)(G) with respect to a seizure or forfeiture of property shall not exceed the value of the property at the time of disposition. (3) The Secretary may exempt the procurement of contract services under the Fund from division C (except sections 3302, 3501(b), 3509, 3906, 4710, and 4711) of subtitle I of title 41, section 6101(b) to (d) of title 41, and other provisions of law as may be necessary to maintain the security and confidentiality of related criminal investigations. (4) The Secretary shall assure that any equitable sharing payment made to a State or local law enforcement agency pursuant to subsection (a)(1)(G) and any property transferred to a State or local law enforcement agency pursuant to subsection (h)— (A) has a value that bears a reasonable relationship to the degree of participation of the State or local agency in the law enforcement effort resulting in the forfeiture, taking into account the total value of all property forfeited and the total law enforcement effort with respect to the violation of law on which the forfeiture is based; and (B) will serve to encourage further cooperation between the recipient State or local agency and Federal law enforcement agencies. (5) Amounts transferred by the Attorney General pursuant to section 524(c)(1) of title 28, or by the Postmaster General pursuant to section 2003 of title 39, and deposited into the Fund pursuant to subsection (d), shall be available for Federal law enforcement related purposes of the Department of the Treasury law enforcement organizations. (c) Funds available to United States Coast Guard (1) The Secretary shall make available to the United States Coast Guard, from funds appropriated under subsection (g)(2) in excess of $10,000,000 for a fiscal year, an amount equal to the net proceeds in the Fund derived from seizures by the Coast Guard. (2) Funds made available under this subsection may be used to— (A) pay for equipment for any vessel, vehicle, or aircraft available for official use by the United States Coast Guard to enable the vessel, vehicle, or aircraft to assist in law enforcement functions; (B) pay for equipment for any vessel, vehicle, equipment, or aircraft available for official use by a State or local law enforcement agency to enable the vessel, vehicle, or aircraft to assist in law enforcement functions if the vessel, vehicle, or aircraft will be used in joint law enforcement operations with the United States Coast Guard; (C) pay for overtime salaries, travel, fuel, training, equipment, and other similar costs of State and local law enforcement officers that are incurred in joint law enforcement operations with the United States Coast Guard; (D) pay for expenses incurred in bringing vessels into compliance with applicable environmental laws prior to disposal by sinking. (d) Deposits and credits (1) With respect to fiscal year 1993, there shall be deposited into or credited to the Fund— (A) all currency forfeited during fiscal year 1993, and all proceeds from forfeitures during fiscal year 1993, under any law enforced or administered by the United States Customs Service or the United States Coast Guard; (B) all income from investments made under subsection (e); and (C) all amounts representing the equitable share of the United States Customs Service or the United States Coast Guard from the forfeiture of property under any Federal, State, local, or foreign law. (2) With respect to fiscal years beginning after fiscal year 1993, there shall be deposited into or credited to the Fund— (A) all currency forfeited after fiscal year 1993, and all proceeds from forfeitures after fiscal year 1993, under any law (other than sections 7301 and 7302 of the Internal Revenue Code of 1986) enforced or administered by a Department of the Treasury law enforcement organization or the United States Coast Guard; (B) all income from investments made under subsection (e); and (C) all amounts representing the equitable share of a Department of the Treasury law enforcement organization or the United States Coast Guard from the forfeiture of property under any Federal, State, local, or foreign law. (e) Investments .—Amounts in the Fund, and in any holding accounts associated with the Fund, which are not currently needed for the purposes of this section may be kept on deposit or invested in obligations of, or guaranteed by, the United States and all earnings on such investments shall be deposited in the Fund. (f) Reports to Congress .—The Secretary shall transmit to the Congress, not later than February 1 of each year— (1) a report on— (A) the estimated total value of property forfeited with respect to which funds were not deposited in the Fund during the preceding fiscal year— (i) under any law enforced or administered by the United States Customs Service or the United States Coast Guard, in the case of fiscal year 1993; and (ii) under any law enforced or administered by the Department of the Treasury law enforcement organizations or the United States Coast Guard, in the case of fiscal years beginning after 1993; and (B) the estimated total value of all such property transferred to any State or local law enforcement agency; and (2) a report on— (A) the balance of the Fund at the beginning of the preceding fiscal year; (B) liens and mortgages paid and the amount of money shared with Federal, State, local, and foreign law enforcement agencies during the preceding fiscal year; (C) the net amount realized from the operations of the Fund during the preceding fiscal year, the amount of seized cash being held as evidence, and the amount of money that has been carried over into the current fiscal year; (D) any defendant's property, not forfeited at the end of the preceding fiscal year, if the equity in such property is valued at $1,000,000 or more; (E) the total dollar value of uncontested seizures of monetary instruments having a value of over $100,000 which, or the proceeds of which, have not been deposited into the Fund pursuant to subsection (d) within 120 days after seizure, as of the end of the preceding fiscal year; (F) the balance of the Fund at the end of the preceding fiscal year; (G) the net amount, if any, of the excess unobligated amounts remaining in the Fund at the end of the preceding fiscal year and available to the Secretary for Federal law enforcement related purposes; (H) a complete set of audited financial statements (including a balance sheet, income statement, and cash flow analysis) prepared in a manner consistent with the requirements of the Chief Financial Officers Act of 1990 ( P.L. 101-576 ); and (I) an analysis of income and expenses showing the revenue received or lost— (i) by property category (such as general property, vehicles, vessels, aircraft, cash, and real property); and (ii) by type of disposition (such as sale, remission, cancellation, placement into official use, sharing with State and local agencies, and destruction). The Fund shall be subject to annual financial audits as authorized in the Chief Financial Officers Act of 1990 ( P.L. 101-576 ). (g) Appropriations (1) There are hereby appropriated from the Fund such sums as may be necessary to carry out the purposes described in subsection (a)(1). (2) There are authorized to be appropriated from the Fund to carry out the purposes set forth in subsections (a)(2) and (c) not to exceed— (A) $25,000,000 for fiscal year 1993; and (B) $50,000,000 for each fiscal year after fiscal year 1993. (3)(A) Subject to subparagraphs (B) and (C), at the end of each of fiscal years 1994, 1995, 1996, and 1997, the Secretary shall transfer from the Fund not more than $100,000,000 to the Special Forfeiture Fund established by section 6073 of the Anti-Drug Abuse Act of 1988. (B) Transfers pursuant to subparagraph (A) shall be made only from excess unobligated amounts and only to the extent that, as determined by the Secretary, such transfers will not impair the future availability of amounts for the purposes described in subsection (a). Further, transfers under subparagraph (A) may not exceed one-half of the excess unobligated balance for a year. In addition, transfers under subparagraph (A) may be made only to the extent that the sum of the transfers in a fiscal year and one-half of the unobligated balance at the beginning of that fiscal year for the Special Forfeiture Fund does not exceed $100,000,000. (C) The Secretary of the Treasury shall reserve an amount not to exceed $30,000,000 from the unobligated balances remaining in the Customs Forfeiture Fund on September 30, 1992, and such amount shall be transferred to the Fund on October 1, 1992, or, if later, the date that is 15 days after the date of the enactment of this section. Such amount shall be available for any expenses or activities authorized under this section. At the end of fiscal year 1993, 1994, 1995, and 1996, the Secretary shall reserve in the Fund an amount not to exceed $50,000,000 of the unobligated balances in the Fund, or, if the Secretary determines that a greater amount is necessary for asset specific expenses, an amount equal to not more than 10 percent of the total obligations from the Fund in the preceding fiscal year. At the end of fiscal year 1997, and at the end of each fiscal year thereafter, the Secretary shall reserve any amounts that are required to be retained in the Fund to ensure the availability of amounts in the subsequent fiscal year for purposes authorized under subsection (a). Unobligated balances remaining pursuant to section 4(B) of 9703(g) shall also be carried forward. (4)(A) After reserving any amount authorized by paragraph (3)(C), any unobligated balances remaining in the Fund on September 30, 1993, shall be deposited into the general fund of the Treasury of the United States. (B) After reserving any amount authorized by paragraph (3)(C) and after transferring any amount authorized by paragraph (3)(A), any unobligated balances remaining in the Fund on September 30, 1994, and on September 30 of each fiscal year thereafter, shall be available to the Secretary, without fiscal year limitation, for transfers pursuant to subparagraph (A)(ii) and for obligation or expenditure in connection with the law enforcement activities of any Federal agency or of a Department of the Treasury law enforcement organization. (C) Any obligation or expenditure in excess of $500,000 with respect to an unobligated balance described in subparagraph (B) may not be made by the Secretary unless the Appropriations Committees of both Houses of Congress are notified at least 15 days in advance of such obligation or expenditure. (h) Retention or transfer of property .— (1) The Secretary may, with respect to any property forfeited under any law (other than section 7301 or 7302 of the Internal Revenue Code of 1986) enforced or administered by the Department of the Treasury— (A) retain any of the property for official use; or (B) transfer any of the property to— (i) any other Federal agency; or (ii) any State or local law enforcement agency that participated directly or indirectly in the seizure or forfeiture of the property. (2) The Secretary may transfer any forfeited personal property or the proceeds of the sale of any forfeited personal or real property to any foreign country which participated directly or indirectly in the seizure of forfeiture of the property, if such a transfer— (A) is one with which the Secretary of State has agreed; (B) is authorized in an international agreement between the United States and the foreign country; and (C) is made to a country which, if applicable, has been certified under section 481(h) of the Foreign Assistance Act of 1961 (22 U.S.C. 2291(h)). (3) Nothing in this section shall affect the authority of the Secretary under section 981 of title 18 or section 616 of the Tariff Act of 1930 (19 U.S.C. 1616a). (i) Regulations .—The Secretary may prescribe such rules and regulations as may be necessary to carry out this section. (j) Customs forfeiture fund .—Notwithstanding any other provision of law— (1) during any period when forfeited currency and proceeds from forfeitures under any law (other than section 7301 or 7302 of the Internal Revenue Code of 1986) enforced or administered by the Department of the Treasury or the United States Coast Guard, are required to be deposited in the Fund pursuant to this section— (A) all moneys required to be deposited in the Customs Forfeiture Fund pursuant to section 613A of the Tariff Act of 1930 (19 U.S.C. 1613b) shall instead be deposited in the Fund; and (B) no deposits or withdrawals may be made to or from the Customs Forfeiture Fund pursuant to section 613A of the Tariff Act of 1930 (19 U.S.C. 1613b); and (2) any funds in the Customs Forfeiture Fund and any obligations of the Customs Forfeiture Fund on the effective date of the Treasury Forfeiture Act of 1992, shall be transferred to the Fund and all administrative costs of such transfer shall be paid for out of the Fund. (k) Limitation of liability. —The United States shall not be liable in any action relating to property transferred under this section or under section 616 of the Tariff Act of 1930 (19 U.S.C. 1616a) if such action is based on an act or omission occurring after the transfer. (l) Authority to warrant title .—Following the completion of procedures for the forfeiture of property pursuant to any law enforced or administered by the Department of the Treasury, the Secretary is authorized, at the Secretary's discretion, to warrant clear title to any subsequent purchaser or transferee of such forfeited property. (m) Forfeited property. —For purposes of this section and notwithstanding section 524(c)(11) of title 28 or any other law— (1) during fiscal year 1993, property and currency shall be deemed to be forfeited pursuant to a law enforced or administered by the United States Customs Service if it is forfeited pursuant to— (A) a judicial forfeiture proceeding when the underlying seizure was made by an officer of the United States Customs Service or the property was maintained by the United States Customs Service; or (B) a civil administrative forfeiture proceeding conducted by the United States Customs Service; and (2) after fiscal year 1993, property and currency shall be deemed to be forfeited pursuant to a law enforced or administered by a Department of the Treasury law enforcement organization if it is forfeited pursuant to— (A) a judicial forfeiture proceeding when the underlying seizure was made by an officer of a Department of the Treasury law enforcement organization or the property was maintained by a Department of the Treasury law enforcement organization; or (B) a civil administrative forfeiture proceeding conducted by a Department of the Treasury law enforcement organization. (n) Transfers to Attorney General and Postmaster General (1) The Secretary shall transfer from the Fund to the Attorney General for deposit in the Department of Justice Assets Forfeiture Fund amounts appropriate to reflect the degree of participation of participating Federal agencies in the law enforcement effort resulting in the forfeiture pursuant to laws enforced or administered by a Department of the Treasury law enforcement organization. For purposes of the preceding sentence, a "participating Federal agency" is an agency that participates in the Department of Justice Assets Forfeiture Fund. (2) The Secretary shall transfer from the Fund to the Postmaster General for deposit in the Postal Service Fund amounts appropriate to reflect the degree of participation of the United States Postal Service in the law enforcement effort resulting in the forfeiture pursuant to laws enforced or administered by a Department of the Treasury law enforcement organization. (o) Definitions. —For purposes of this section— (1) Department of the Treasury law enforcement organization.—The term "Department of the Treasury law enforcement organization" means the United States Customs Service, the United States Secret Service, the Tax and Trade Bureau, the Internal Revenue Service, the Federal Law Enforcement Training Center, the Financial Crimes Enforcement Network, and any other law enforcement component of the Department of the Treasury so designated by the Secretary. (2) Secretary.—The term "Secretary" means the Secretary of the Treasury. (a) Establishment There is created in the Treasury a separate account to be known as the Crime Victims Fund (hereinafter in this chapter referred to as the "Fund"). (b) Fines deposited in Fund; penalties; forfeited appearance bonds Except as limited by subsection (c) of this section, there shall be deposited in the Fund— (1) all fines that are collected from persons convicted of offenses against the United States except— (A) fines available for use by the Secretary of the Treasury pursuant to— (i) section 11(d) of the Endangered Species Act (16 U.S.C. 1540(d)); and (ii) section 6(d) of the Lacey Act Amendments of 1981 (16 U.S.C. 3375(d)); and (B) fines to be paid into— (i) the railroad unemployment insurance account pursuant to the Railroad Unemployment Insurance Act (45 U.S.C. 351 et seq.); (ii) the Postal Service Fund pursuant to sections 2601(a)(2) and 2003 of Title 39 and for the purposes set forth in section 404(a)(7) of Title 39; (iii) the navigable waters revolving fund pursuant to section 311 of the Federal Water Pollution Control Act (33 U.S.C. 1321); and (iv) county public school funds pursuant to section 3613 of Title 18; (2) penalty assessments collected under section 3013 of Title 18; (3) the proceeds of forfeited appearance bonds, bail bonds, and collateral collected under section 3146 of Title 18; (4) any money ordered to be paid into the Fund under section 3671(c)(2) of Title 18; and (5) any gifts, bequests, or donations to the Fund from private entities or individuals, which the Director is hereby authorized to accept for deposit into the Fund, except that the Director is not hereby authorized to accept any such gift, bequest, or donation that— (A) attaches conditions inconsistent with applicable laws or regulations; or (B) is conditioned upon or would require the expenditure of appropriated funds that are not available to the Office for Victims of Crime. (c) Retention of sums in Fund; availability for expenditure without fiscal year limitation Sums deposited in the Fund shall remain in the Fund and be available for expenditure under this chapter for grants under this chapter without fiscal year limitation. Notwithstanding subsection (d)(5), all sums deposited in the Fund in any fiscal year that are not made available for obligation by Congress in the subsequent fiscal year shall remain in the Fund for obligation in future fiscal years, without fiscal year limitation. (d) Availability for judicial branch administrative costs; grant program percentages The Fund shall be available as follows: (1) Repealed. P.L. 105-119 , Title I, §109(a)(1), Nov. 26, 1997, 111 Stat. 2457 (2)(A) Except as provided in subparagraph (B), the first $10,000,000 deposited in the Fund shall be available for grants under section 10603a of this title. (B)(i) For any fiscal year for which the amount deposited in the Fund is greater than the amount deposited in the Fund for fiscal year 1998, the $10,000,000 referred to in subparagraph (A) plus an amount equal to 50 percent of the increase in the amount from fiscal year 1998 shall be available for grants under section 10603a of this title. (ii) Amounts available under this subparagraph for any fiscal year shall not exceed $20,000,000. (3) Of the sums remaining in the Fund in any particular fiscal year after compliance with paragraph (2), such sums as may be necessary shall be available for the United States Attorneys Offices and the Federal Bureau of Investigation to improve services for the benefit of crime victims in the Federal criminal justice system, and for a Victim Notification System. (4) Of the remaining amount to be distributed from the Fund in a particular fiscal year— (A) 47.5 percent shall be available for grants under section 10602 of this title; (B) 47.5 percent shall be available for grants under section 10603(a) of this title; and (C) 5 percent shall be available for grants under section 10603(c) of this title. (5)(A) In addition to the amounts distributed under paragraphs (2), (3), and (4), the Director may set aside up to $50,000,000 from the amounts transferred to the Fund in response to the airplane hijackings and terrorist acts that occurred on September 11, 2001, as an antiterrorism emergency reserve. The Director may replenish any amounts obligated from such reserve in subsequent fiscal years by setting aside up to 5 percent of the amounts remaining in the Fund in any fiscal year after distributing amounts under paragraphs (2), (3) and (4). Such reserve shall not exceed $50,000,000. (B) The antiterrorism emergency reserve referred to in subparagraph (A) may be used for supplemental grants under section 10603b of this title and to provide compensation to victims of international terrorism under section 10603c of this title. (C) Amounts in the antiterrorism emergency reserve established pursuant to subparagraph (A) may be carried over from fiscal year to fiscal year. Notwithstanding subsection (c) and section 619 of the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 2001 (and any similar limitation on Fund obligations in any future Act, unless the same should expressly refer to this section), any such amounts carried over shall not be subject to any limitation on obligations from amounts deposited to or available in the Fund. (e) Amounts awarded and unspent Any amount awarded as part of a grant under this chapter that remains unspent at the end of a fiscal year in which the grant is made may be expended for the purpose for which the grant is made at any time during the 3 succeeding fiscal years, at the end of which period, any remaining unobligated sums shall be available for deposit into the emergency reserve fund referred to in subsection (d)(5) at the discretion of the Director. Any remaining unobligated sums shall be returned to the Fund. (f) "Offenses against the United States" as excluding As used in this section, the term "offenses against the United States" does not include— (1) a criminal violation of the Uniform Code of Military Justice (10 U.S.C. 801 et seq.); (2) an offense against the laws of the District of Columbia; and (3) an offense triable by an Indian tribal court or Court of Indian Offenses. (g) Grants for Indian tribes; child abuse cases (1) The Attorney General shall use 15 percent of the funds available under subsection (d)(2) of this section to make grants for the purpose of assisting Native American Indian tribes in developing, establishing, and operating programs designed to improve— (A) the handling of child abuse cases, particularly cases of child sexual abuse, in a manner which limits additional trauma to the child victim; and (B) the investigation and prosecution of cases of child abuse, particularly child sexual abuse. (2) The Attorney General may use 5 percent of the funds available under subsection (d)(2) of this section (prior to distribution) for grants to Indian tribes to establish child victim assistance programs, as appropriate. (3) As used in this subsection, the term "tribe" has the meaning given that term in section 450b(b) of Title 25. 7 U.S.C. 1595 violation of the Federal Seed Act (seed) 7 U.S.C. 2024 Food Stamp Act felonies (property traceable to proceeds)* 7 U.S.C. 2024( e ) misuse of food stamp coupons or authorization cards (nonfood items, money, negotiable instruments, securities, things of value furnished in exchange of coupons) 7 U.S.C. 2024 (f) Food Stamp Act felonies (property traceable to proceeds and property used to facilitate)* 7 U.S.C. 2156 animal fighting violations (animals) 8 U.S.C. 1324 bringing in and harboring aliens for profit (property traceable to proceeds)* 8 U.S.C. 1324(b) bringing in or harboring aliens (conveyances) 8 U.S.C. 1327 aiding or assisting aliens to enter the U.S. for profit (property traceable to proceeds)* 8 U.S.C. 1328 importing aliens for immoral purpose for profit (property traceable to proceeds)* 11 U.S.C. 1 et seq . bankruptcy fraud (except 11 U.S.C. 157 cases)(property traceable to proceeds)* 15 U.S.C. 6 restraint of interstate or foreign trade (property in transit and involved in restraint) 15 U.S.C. 11 restraint of trade (property in transit) 15 U.S.C. 77 unauthorized departure of vessel detained in time of war in the interests of American neutrality (vessel) 15 U.S.C. 77q fraud in the sale of securities (property traceable to proceeds)* 15 U.S.C. 78dd-2 Foreign Corrupt Practices Act felonies (property traceable to proceeds)* 15 U.S.C. 292 falsely stamped gold or silver (gold, silver, gold goods, silver goods in transit) 15 U.S.C. 715f hot oil (illegally transported contraband oil) 15 U.S.C. 1177 illegally transporting gambling devices (gambling devices) 15 U.S.C. 1195 making, moving or dealing in materials without complying with the Flammable Fabrics Act (material) 15 U.S.C. 1265 Federal Hazardous Substances Act violations (misbranded and banned substances) 15 U.S.C. 2071(b) consumer product safety violations (prohibited products and those which fail to comply with an applicable consumer product safety rule) 15 U.S.C. 2104 political or numismatic items violations (imported products) 16 U.S.C. 26 hunting or fishing in Yellowstone National Park (guns, traps, beasts of burden, means of transportation) 16 U.S.C. 65 hunting or fishing in Sequoia or Yosemite National Parks (guns, teams, horses, means of transportation, and traps) 16 U.S.C. 99 hunting or fishing in Mt. Rainier National Park (guns, traps, beasts of burden, means of transportation) 16 U.S.C. 117d hunting or fishing in Mesa Verde National Park (guns, traps, beasts of burden, means of transportation) 16 U.S.C. 128 hunting or fishing in Crater Lake National Park (guns, traps, beasts of burden, means of transportation) 16 U.S.C. 171 hunting or fishing in Glacier National Park (guns, traps, beasts of burden, means of transportation) 16 U.S.C. 198d hunting or fishing in Rocky Mountain National Park (guns, traps, beasts of burden, means of transportation) 16 U.S.C. 204d hunting or fishing in Lassen Volcanic National Park (guns, traps, beasts of burden, means of transportation) 16 U.S.C. 256c hunting or fishing in Olympic Volcanic National Park (guns, bows, traps, nets, seines, fishing tackle, clothing, beasts of burden, machinery, logging equipment, motor vehicles, aircraft, boats or means of transportation) 16 U.S.C. 395d hunting or fishing in Hawaii National Park (guns, traps, beasts of burden, means of transportation) 16 U.S.C. 403c-4 hunting or fishing in the Shenandoah National Park (guns, traps, nets, seines, teams, horses, means of transportation) 16 U.S.C. 403h-4 hunting or fishing in Great Smoky Mountains National Park (guns, traps, nets, seines, fishing tackle, beasts of burden, means of transportation) 16 U.S.C. 404c-4 hunting or fishing in Mammoth Cave National Park (guns, traps, nets, seines, fishing tackle, beasts of burden, means of transportation) 16 U.S.C. 408l hunting or fishing in Isle Royale National Park (guns, traps, nets, seines, fishing tackle, beasts of burden, means of transportation) 16 U.S.C. 470gg(b) excavation of and dealing in archaeological resources (archaeological resources, vehicles and equipment used) 16 U.S.C. 470aaa-7 unlawfully acquired paleontological resources (paleontological resources) 16 U.S.C. 668b Bald and Golden Eagle protection violations (products, guns, traps, nets, equipment, vessels, vehicles, aircraft, means of transportation) 16 U.S.C. 668dd endangered species violations (species members) 16 U.S.C. 670j hunting or fishing on wetlands (guns, traps, nets, equipment, vessels, vehicles and other means of transportation) 16 U.S.C. 690e hunting in Bear River Migratory Bird Refuge (game) 16 U.S.C. 707 migratory bird hunting violations (guns, traps, nets, equipment, vessels, vehicles, means of transportation) 16 U.S.C. 727 hunting and fishing in Upper Mississippi River Wild Life and Fish Refuge (fish, game, guns, fishing equipment, boats, other paraphernalia) 16 U.S.C. 742j-1 hunting or harassing game from a plane (game, guns, plane, equipment) 16 U.S.C. 773h Northern Pacific Halibut Act violations (vessel, fishing gear, furniture, appurtenances, stores, cargo, fish of fishing boat) 16 U.S.C. 916f Whaling Convention violations (whales, whale products) 16 U.S.C. 957 violations of the Tuna conventions (fish) 16 U.S.C. 959 Tuna Convention violations (fish) 16 U.S.C. 971e Atlantic Tuna Convention violations (fish) 16 U.S.C. 972f Eastern Pacific Tuna Convention violations (fish) 16 U.S.C. 1171 North Pacific Fur Seal violations (vessel, gear, furniture, appurtenances, stores, cargo, furs) 16 U.S.C. 1376 marine mammal violations (vessel's unlawful cargo) 16 U.S.C. 1417 sell or transport tuna not taken in compliance with an International Dolphin Conservation program (vessel, equipment and fish) 16 U.S.C. 1437 marine sanctuary violations (vessel, equipment, stores, cargo, item used in violation, sanctuary resources) 16 U.S.C. 1540 endangered species violations (species, guns, traps, nets, equipment, vessels, vehicles, aircraft, means of transportation) 16 U.S.C. 1860 Fishery Conservation and Management Act violations (fishing vessels, their gear, furniture, appurtenances, stores, cargo, and fish) 16 U.S.C. 2409 Antarctic conservation violations (game, guns, traps, nets, equipment, vessels, vehicles, aircraft, other means of transportation) 16 U.S.C. 2439 Antarctic Marine Living Resources Convention violations (guns, traps, nets, other equipment, vessels, their gear, furniture, appurtenances, stoves, and cargo, vessels, vehicles, aircraft, and other means of transportation) 16 U.S.C. 3374 transporting fish, wildlife or plants contrary to law (fish, wildlife, plants, vessels, vehicles, aircraft, and other means of transportation) 16 U.S.C. 3606 North Atlantic salmon violations (vessels and fish) 16 U.S.C. 3637 Pacific salmon violations (fish and vessels, their gear, furniture, appurtenances, stores, and cargo) 16 U.S.C. 5010 North Pacific anadromous fish violations (fish and vessels including fishing gear, furniture, appurtenances, stores and cargo) 16 U.S.C. 5106 Atlantic coastal fisheries moratorium violations (fish, vessels, gear, equipment, appurtenances, stores and cargo) 16 U.S.C. 5305a rhinoceros and tiger conservation violations (derivative products) 16 U.S.C. 5154 violations of Atlantic striped bass moratorium (vessel, equipment, cargo, fish) 16 U.S.C. 5158 violations relating to striped bass in the exclusive economic zone (vessel, equipment, cargo, fish) 16 U.S.C. 5509 high seas fish conservation offenses (fish, vessels, gear, equipment, furniture, appurtenances, stores, and cargo) 16 U.S.C. 5606 Northwest Atlantic Fisheries Convention offenses (fishing vessels, their gear, furniture, appurtenances, stores, cargo, and fish) 17 U.S.C. 506 copyright infringement (copies, and copying implements, devices, and equipment) 17 U.S.C. 603 importation of items infringing on copyright (copies) 17 U.S.C. 1328 infringement on copyrighted original design (articles imported) 18 U.S.C. 32 destruction of aircraft (property traceable to proceeds)* 18 U.S.C. 37 violence at international airports (property traceable to proceeds)* 18 U.S.C. 38 fraud involving aircraft or spacecraft parts (proceeds and property used to facilitate offenses) 18 U.S.C. 81 arson within U.S. special maritime and territorial jurisdiction (property traceable to proceeds)* 18 U.S.C. 115 influencing, impeding, or retaliating against a Federal official by threatening or injuring a family member (property traceable to proceeds)* 18 U.S.C. 152 concealment of assets; false oaths and claims; bribery (property traceable to proceeds)* 18 U.S.C. 175 biological weapons offenses (property traceable to proceeds)* 18 U.S.C. 175b unlawful possession of biological materials (property traceable to proceeds)* 18 U.S.C. 175c unlawful possession of smallpox materials (property traceable to proceeds)* 18 U.S.C. 176 Biological Weapons Act violations (biological agent, toxin and delivery system) 18 U.S.C. 201 bribery of U.S. officials (property traceable to proceeds)* 18 U.S.C. 215 commissions or gifts for procuring loans (property traceable to proceeds)* 18 U.S.C. 224 sports bribery (property traceable to proceeds)* 18 U.S.C. 229 chemical weapons offenses (property traceable to proceeds)* 18 U.S.C. 229B Chemical Weapons Act offenses (property used in, constituting the proceeds from, or facilitating offenses) 18 U.S.C. 287 false claims involving health care benefits (property traceable to proceeds)* 18 U.S.C. 351 congressional or Cabinet officer assassination (property traceable to proceeds)* 18 U.S.C. 371 conspiracy to defraud health care programs (property traceable to proceeds)* 18 U.S.C. 471 counterfeiting obligations or securities of the United States (property traceable to proceeds)* 18 U.S.C. 472 uttering counterfeit obligations or securities (property traceable to proceeds)* 18 U.S.C. 473 dealing in counterfeit obligations or securities (property traceable to proceeds)* 18 U.S.C. 474 possession of plates or stones for counterfeit obligations or securities (property traceable to proceeds)* 18 U.S.C. 476 taking impressions of tools used for obligations or securities (property traceable to proceeds)* 18 U.S.C. 477 sale or possession of impressions of tools used for obligations or securities (property traceable to proceeds)* 18 U.S.C. 478 counterfeiting foreign obligations or securities (property traceable to proceeds)* 18 U.S.C. 479 uttering counterfeit foreign obligations or securities (property traceable to proceeds)* 18 U.S.C. 480 possessing counterfeit foreign obligations or securities (property traceable to proceeds)* 18 U.S.C. 481 possession of plates or stones for counterfeit foreign obligations or securities (property traceable to proceeds)* 18 U.S.C. 485 counterfeiting U.S. coins (property traceable to proceeds)* 18 U.S.C. 486 uttering counterfeit coins (property traceable to proceeds)* 18 U.S.C. 487 possession of counterfeit dies for U.S. coins (property traceable to proceeds)* 18 U.S.C. 488 possession of counterfeit dies for foreign coins (property traceable to proceeds)* 18 U.S.C. 492 counterfeiting U.S. or foreign government coins, obligations or securities (counterfeits, and any articles, devices, and things used to counterfeit) 18 U.S.C. 500 counterfeiting U.S. postal money orders (property traceable to proceeds)* 18 U.S.C. 501 counterfeiting U.S. postage stamps (property traceable to proceeds)* 18 U.S.C. 502 counterfeiting foreign postage stamps (property traceable to proceeds)* 18 U.S.C. 503 counterfeiting U.S. postmarking stamps (property traceable to proceeds)* 18 U.S.C. 510 forging U.S. checks, bonds or securities (property traceable to proceeds)* 18 U.S.C. 511 altering motor vehicle identification numbers (property traceable to proceeds)* 18 U.S.C. 512 removing or changing motor vehicle identifications numbers (vehicle or part with altered or removed id. number) 18 U.S.C. 513 counterfeiting securities of States and private entities (property traceable to proceeds)* 18 U.S.C. 541 entry of falsely classified goods (property traceable to proceeds)* 18 U.S.C. 542 entry of goods by means of false statements (property traceable to proceeds)* 18 U.S.C. 544 relanding goods(goods) 18 U.S.C. 545 smuggling (goods smuggled) 18 U.S.C. 545 smuggling goods into the United States (property traceable to proceeds)* 18 U.S.C. 548 removing or repacking goods stored in customs warehouses (goods) 18 U.S.C. 549 removing goods from Customs custody (property traceable to proceeds)* 18 U.S.C. 550 false claims for refund of duties (merchandise) 18 U.S.C. 553 importing/exporting stolen motor vehicles (property traceable to proceeds)* 18 U.S.C. 554 smuggling goods from the United States (property traceable to proceeds)* 18 U.S.C. 55 5 border tunnels (property traceable to proceeds)* 18 U.S.C. 641 theft of public money, property, or records (property traceable to proceeds)* 18 U.S.C. 656 theft, embezzlement, or misapplication by bank officer or employee (property traceable to proceeds)* 18 U.S.C. 657 theft from lending, credit, and insurance institutions (property traceable to proceeds)* 18 U.S.C. 658 property mortgaged or pledged to farm credit agencies (property traceable to proceeds)* 18 U.S.C. 659 felonious theft from interstate shipments (property traceable to proceeds)* 18 U.S.C. 664 pension fund embezzlement (property traceable to proceeds)* 18 U.S.C. 666 theft or bribery concerning programs receiving Federal funds (property traceable to proceeds)* 18 U.S.C. 669 health care theft or embezzlement (property traceable to proceeds)* 18 U.S.C. 6 70 theft of medical products (property traceable to proceeds)* 18 U.S.C. 793 espionage (property derived from payments from foreign sources) 18 U.S.C. 793 espionage (property traceable to proceeds)* 18 U.S.C. 794 serious espionage (property derived from or used in commission of violation) 18 U.S.C. 794 serious espionage (property traceable to proceeds)* 18 U.S.C. 798 disclosure of classified information (property derived from or used in violation)* 18 U.S.C. 798 disclosure of classified information (property traceable to proceeds)* 18 U.S.C. 831 transactions involving nuclear materials (property traceable to proceeds)* 18 U.S.C. 832 participation in foreign terrorist production of weapons of mass destruction (property traceable to proceeds)* 18 U.S.C. 842 explosives offenses (property traceable to proceeds)* 18 U.S.C. 844 explosives offenses (property traceable to proceeds)* 18 U.S.C. 844 explosives violations (explosives) 18 U.S.C. 875 threats in interstate communications (property traceable to proceeds)* 18 U.S.C. 892 loansharking (property traceable to proceeds)* 18 U.S.C. 893 financing a loansharking operation (property traceable to proceeds)* 18 U.S.C. 894 collecting extortionate loans (property traceable to proceeds)* 18 U.S.C. 922(l) unlawfully importing firearms (property traceable to proceeds)* 18 U.S.C. 924 (d) firearms violations (guns and ammunition) 18 U.S.C. 924(n) gun running (property traceable to proceeds)* 18 U.S.C. 930(c) armed violence at federal facility (property traceable to proceeds)* 18 U.S.C. 956 conspiracy to kill, kidnap, maim, or injure certain property in a foreign country (property traceable to proceeds)* 18 U.S.C. 962 arming vessel against friendly nation (vessel, its tackle, apparel, furniture, arms, materials, ammunition and stores) 18 U.S.C. 963 departure of detained vessel in violation of neutrality (vessel, its tackle, apparel, furniture, equipment and cargo) 18 U.S.C. 964 delivery of armed vessel to belligerent (vessel, its tackle, apparel, furniture, equipment and cargo) 18 U.S.C. 965 departure without filing verification statements (vessel, its tackle, apparel, furniture, equipment and cargo) 18 U.S.C. 966 departure after filing falsified statements (vessel, its tackle, apparel, furniture, equipment and cargo) 18 U.S.C. 967 departure without clearance (vessel, its tackle, apparel, furniture, equipment and cargo) 18 U.S.C. 981 money laundering, civil forfeiture (all property, real or personal, constituting, derived from, or traceable to a violation) 18 U.S.C. 982 money laundering, criminal forfeiture (all property, real or personal involved in or traceable to a violation) 18 U.S.C. 984 fungible property involved in money laundering (fungible property) 18 U.S.C. 1001 false statements in a matter with the jurisdiction of a federal agency with respect to health care benefits (property traceable to proceeds)* 18 U.S.C. 1005 fraudulent bank entries (property traceable to proceeds)* 18 U.S.C. 1006 fraudulent Federal credit institution entries (property traceable to proceeds)* 18 U.S.C. 1007 fraudulent Federal Deposit Insurance transactions) (property traceable to proceeds)* 18 U.S.C. 1014 fraudulent loan or credit applications (property traceable to proceeds)* 18 U.S.C. 1027 ERISA fraud involving health care benefits (property traceable to proceeds)* 18 U.S.C. 1028 identification fraud (property traceable to proceeds)* 18 U.S.C. 1028 fraud with respect to identification documents (property used) 18 U.S.C. 1029 access device fraud (property traceable to proceeds)* 18 U.S.C. 1029 fraud with respect to access devices (property used) 18 U.S.C. 1030 computer fraud and abuse (property traceable to proceeds)* 18 U.S.C. 1031 major fraud against the U.S. involving the assets of a financial institution (property traceable to proceeds)* 18 U.S.C. 1032 concealment of assets from conservator, receiver, or liquidating agent of financial institution) (property traceable to proceeds)* 18 U.S.C. 1035 false statements in health care matters (property traceable to proceeds)* 18 U.S.C. 1037 fraud relating to electronic mail (property traceable to or used to facilitate the offense) 18 U.S.C. 1082 gambling ships (vessel, its tackle, apparel, and furniture) 18 U.S.C. 1084 interstate transmission of gambling information (property traceable to proceeds)* 18 U.S.C. 1111 murder in the special maritime and territorial jurisdiction of the United States (property traceable to proceeds)* 18 U.S.C. 1114 federal officers or employees (property traceable to proceeds)* 18 U.S.C. 1116 murder of foreign officials, official guests, or internationally protected persons (property traceable to proceeds)* 18 U.S.C. 1165 hunting, trapping or fishing on Indian land (game, pelts, and fish) 18 U.S.C. 1201 kidnaping (property traceable to proceeds)* 18 U.S.C. 1203 hostage taking (property traceable to proceeds)* 18 U.S.C. 1341 mail fraud (property traceable to proceeds)* 18 U.S.C. 1343 wire fraud (property traceable to proceeds)* 18 U.S.C. 1344 bank fraud (property traceable to proceeds)* 18 U.S.C. 1347 health care fraud (property traceable to proceeds)* 18 U.S.C. 13 5 1 fraud in foreign labor contracts (property traceable to proceeds)* 18 U.S.C. 1361 willful injury of Government property (property traceable to proceeds)* 18 U.S.C. 1362 destruction of communications facilities (property traceable to proceeds)* 18 U.S.C. 1363 destruction of property within U.S. special maritime and territorial jurisdiction (property traceable to proceeds)* 18 U.S.C. 13 6 6 destruction of energy facilities (property traceable to proceeds)* 18 U.S.C. 1425 procuring citizenship unlawfully (property traceable to proceeds)* 18 U.S.C. 1426 reproducing of citizenship papers (property traceable to proceeds)* 18 U.S.C. 1427 sale of citizenship papers (property traceable to proceeds)* 18 U.S.C. 1461 mailing obscene material (property traceable to proceeds)* 18 U.S.C. 1462 importing/exporting obscene material (property traceable to proceeds)* 18 U.S.C. 1463 mailing indecent material (property traceable to proceeds)* 18 U.S.C. 1464 broadcasting obscene language (property traceable to proceeds)* 18 U.S.C. 1465 transporting obscene material for sale (property traceable to proceeds)* 18 U.S.C. 1467 obscene material (material, real and personal property derived from, traceable to, or used to commit a violation) 18 U.S.C. 1503 obstruction of justice (property traceable to proceeds)* 18 U.S.C. 1510 obstructing criminal investigations (property traceable to proceeds)* 18 U.S.C. 1511 obstructing state law enforcement (property traceable to proceeds)* 18 U.S.C. 1512 tampering with federal witnesses (property traceable to proceeds)* 18 U.S.C. 1513 retaliating against federal witnesses (property traceable to proceeds)* 18 U.S.C. 1518 obstruction of health care crime investigations (property traceable to proceeds)* 18 U.S.C. 1542 false statement in a passport application (property traceable to proceeds)* 18 U.S.C. 1543 passport forgery (property traceable to proceeds)* 18 U.S.C. 1544 passport misuse (property traceable to proceeds)* 18 U.S.C. 1546 visa fraud (property traceable to proceeds)* 18 U.S.C. 1581 peonage (property traceable to proceeds)* 18 U.S.C. 1582 vessels in the slave trade (property traceable to proceeds)* 18 U.S.C. 1583 enticing another into slavery (property traceable to proceeds)* 18 U.S.C. 1584 selling another into slavery (property traceable to proceeds)* 18 U.S.C. 1585 slave trading (property traceable to proceeds)* 18 U.S.C. 1586 service on a slave ship (property traceable to proceeds)* 18 U.S.C. 1587 possession of slaves aboard ship (property traceable to proceeds)* 18 U.S.C. 1588 transportation of slaves to the United States (property traceable to proceeds)* 18 U.S.C. 1589 forced labor (property traceable to proceeds)* 18 U.S.C. 1590 trafficking relating to peonage, slavery, involuntary servitude or forced labor (property traceable to proceeds)* 18 U.S.C. 1591 sex trafficking in children (property traceable to proceeds)* 18 U.S.C. 1592 false statements relating to peonage (property traceable to proceeds)* 18 U.S.C. 1594 peonage, slavery, and forced labor violations (property derived from or used to facilitate the offense) 18 U.S.C. 1708 theft from the mail (property traceable to proceeds)* 18 U.S.C. 1751 Presidential assassination (property traceable to proceeds)* 18 U.S.C. 1762 illicit transportation of prisoner-made goods (goods) 18 U.S.C. 1834 trade secret offenses (proceeds and property used to facilitate offenses) 18 U.S.C. 1951 robbery or violence affecting interstate commerce (Hobbs Act) (property traceable to proceeds)* 18 U.S.C. 1952 use of interstate commerce to facilitate unlawful activity (Travel Act) (property traceable to proceeds)* 18 U.S.C. 1953 interstate transportation of wagering paraphernalia (property traceable to proceeds)* 18 U.S.C. 1954 corruption of employee benefit plans (property traceable to proceeds)* 18 U.S.C. 1955 illegal gambling business (property traceable to proceeds)* 18 U.S.C. 1955 illegal gambling business (any property including money used in violation) 18 U.S.C. 1956 money laundering (property traceable to proceeds)* 18 U.S.C. 1957 unlawful monetary transactions (property traceable to proceeds)* 18 U.S.C. 1958 interstate murder for hire (property traceable to proceeds)* 18 U.S.C. 1960 unlawful money transmission business (property involved or traceable to proceeds)* 18 U.S.C. 1963 Racketeer Influenced and Corrupt Organizations (RICO) (property derived from and interest acquired and maintained in violation) 18 U.S.C. 1992 terrorist attacks on mass transit (property traceable to proceeds)* 18 U.S.C. 2113 bank robbery (property traceable to proceeds)* 18 U.S.C. 2114 postal robbery and theft (property traceable to proceeds)* 18 U.S.C. 2119 carjacking (property traceable to proceeds)* 18 U.S.C. 2155 destruction of national defense material (property traceable to proceeds)* 18 U.S.C. 2156 product of defective national defense material (property traceable to proceeds)* 18 U.S.C. 2241 (c), 2253, 2254 aggravated sexual abuse (property traceable to proceeds or used to commit or promote) 18 U.S.C. 2242 , 2253, 2254 sexual abuse (property traceable to proceeds or used to commit or promote) 18 U.S.C. 2243 , 2253, 2254 sexual abuse of a minor or ward (property traceable to proceeds or used to commit or promote) 18 U.S.C. 224 4, 2253, 2254 abusive sexual contact (property traceable to proceeds or used to commit or promote) 18 U.S.C. 22 51, 2253, 2254 sexual exploitation of children (property traceable to proceeds or used to commit or promote) 18 U.S.C. 2251 sexual exploitation of children (property traceable to proceeds)* 18 U.S.C. 22 51A, 2253, 2254 selling children (property traceable to proceeds or used to commit or promote) 18 U.S.C. 2251A selling children (property traceable to proceeds)* 18 U.S.C. 22 52, 2253, 2254 material involving sexual exploitation of children (property traceable to proceeds or used to commit or promote) 18 U.S.C. 2252 material involving sexual exploitation of children (property traceable to proceeds)* 18 U.S.C. 2252A , 2253, 2254 activities relating to child pornography (property traceable to proceeds or used to commit or promote) 18 U.S.C. 2252B , 2253, 2254 misleading Internet domain names (property traceable to proceeds or used to commit or promote) 18 U.S.C. 22 60, 2253, 2254 production of sexual exploitative material for importation (property traceable to proceeds or used to commit or promote) 18 U.S.C. 2260 production of sexual exploitative material for importation (property traceable to proceeds)* 18 U.S.C. 2274 destruction or misuse of vessel by owner (vessel, its tackle, apparel, furniture and equipment) 18 U.S.C. 2280 violence against maritime navigation (property traceable to proceeds)* 18 U.S.C. 2281 violence against maritime fixed platforms (property traceable to proceeds)* 18 U.S.C. 2312 interstate transportation of stolen motor vehicles (property traceable to proceeds)* 18 U.S.C. 2313 receipt of a stolen motor vehicle transported interstate (property traceable to proceeds)* 1 8 U.S.C. 2314 interstate transportation of stolen property (property traceable to proceeds)* 18 U.S.C. 2315 receipt of a stolen property transported interstate (property traceable to proceeds)* 18 U.S.C. 2318 trafficking in counterfeit labels affixed or to be affixed to phonograph records, motion pictures or other audiovisual works (counterfeit labels and articles to which they are affixed) 18 U.S.C. 2318 same (property traceable to proceeds)* 18 U.S.C. 2319 copyright infringement (property traceable to proceeds)* 18 U.S.C. 2319A unauthorized commercial exploitation of sound recordings (property traceable to proceeds)* 18 U.S.C. 2319A same (recordings and phonorecords) 18 U.S.C. 2320 trafficking in counterfeit goods and services (property traceable to proceeds)* 18 U.S.C. 2321 chop shop offenses (property traceable to proceeds)* 18 U.S.C. 2332 terrorist acts abroad against United States nationals (property traceable to proceeds)* 18 U.S.C. 2332a weapons of mass destruction (property traceable to proceeds)* 18 U.S.C. 2332b international terrorist acts transcending national boundaries (property traceable to proceeds)* 18 U.S.C. 2332f bombing public places and facilities (property traceable to proceeds)* 18 U.S.C. 2332g anti-aircraft missile offenses (property traceable to proceeds)* 18 U.S.C. 2332h radiological dispersal device offenses (property traceable to proceeds)* 18 U.S.C. 2339 harboring terrorists (property traceable to proceeds)* 18 U.S.C. 2339A providing material support to terrorists (property traceable to proceeds)* 18 U.S.C. 2339B providing material support to terrorist organizations (property traceable to proceeds)* 18 U.S.C. 2339C financing terrorism (property traceable to proceeds)* 18 U.S.C. 2339D receipt of military training from a foreign terrorist organization (property traceable to proceeds)* 18 U.S.C. 2340A torture (property traceable to proceeds)* 18 U.S.C. 2342 trafficking in untaxed cigarettes (property traceable to proceeds)* 18 U.S.C. 2344 same (cigarettes) 18 U.S.C. 2421 interstate transportation for sexual purposes (property traceable to proceeds)* 18 U.S.C. 2422 coercing or enticing another to travel interstate for sexual purposes (property traceable to proceeds)* 18 U.S.C. 2423 interstate transportation of minors for sexual purposes (property traceable to proceeds)* 18 U.S.C. 2424 keeping a house of alien prostitution without registering with immigration officials (property traceable to proceeds)* 18 U.S.C. 2513 interception of wire, oral or electronic communications (wiretapping and bugging devices) 18 U.S.C. 3113 liquor violations in Indian country (unlawful liquor and the conveyances and packages in which it is found) 18 U.S.C. 3665 interstate transportation of a stolen vehicle or commission of a violent federal crime while armed with a firearm (firearms and ammunition) 18 U.S.C. 3667 liquors involved in violations of 18 U.S.C. 1261-1265 relating to tax and transportation of liquor (liquor and conveyances) 18 U.S.C. 3669 using conveyances to unlawful transport liquor into Indian country (conveyances) 18 U.S.C. 4012 prison contraband (contraband) 19 U.S.C. 467 unstamped imported distilled spirits (spirits) 19 U.S.C. 469 dealing in empty stamped imported liquor containers (containers) 19 U.S.C. 1305 importation of immoral materials (contents of packages in which immoral materials are found) 19 U.S.C. 1322 rescue and relief equipment imported contrary to regulations for admission pursuant to treaty with Mexico (equipment) 19 U.S.C. 1338 foreign discrimination against American commerce (articles imported in violation) 19 U.S.C. 1436 failure to comply with Customs entry requirements (goods) 19 U.S.C. 1453 unloading without meeting Customs requirements (goods and, if their value exceeds $500, the importing vessel) 19 U.S.C. 1462 refusal to allow customs inspection of container or vehicle (container or vehicle and its contents) 19 U.S.C. 1464 failure to comply with Customs requirements for sealed conveyances (conveyances and contents) 19 U.S.C. 1466 avoiding duty on repairs made overseas (vessel) 19 U.S.C. 1497 failure to declare goods upon entry (goods) 19 U.S.C. 1526 import of foreign made goods with American labels (goods) 19 U.S.C. 1527 import of animals and birds contrary to foreign law (animals and birds) 19 U.S.C. 1584 failure to describe goods in a manifest (goods and importing vessels of less than 500 tons) 19 U.S.C. 1586 unlawful unloading or shipment (vessel and cargo) 19 U.S.C. 1587 smuggled goods discovered on inspection (vessel and cargo) 19 U.S.C. 1588 transportation of goods between U.S. ports via foreign ports (goods) 19 U.S.C. 1590 aviation smuggling (plane or vessel) 19 U.S.C. 1590 same (property traceable to proceeds)* 19 U.S.C. 1592 false or incomplete statements to customs (goods) 19 U.S.C. 1594 smuggling (conveyances) 19 U.S.C. 1595a use of conveyances for smuggling (conveyances and merchandise) 19 U.S.C. 1627a importing or exporting stolen conveyances (conveyances) 19 U.S.C. 1703 smuggling (vessel and cargo) 19 U.S.C. 1706 importation in unlicensed planes and small boats (planes, small boats and goods) 19 U.S.C. 2093 unlawfully imported pre-Columbian art (art) 19 U.S.C. 2609 theft or unlawfully importing archaeological or ethnological material or articles (material or articles) 21 U.S.C. 334 misbranded or adulterated foods, drugs and cosmetics (products, counterfeit drugs, their containers, manufacturing equipment) 21 U.S.C. 467b processing, transporting or distributing diseased poultry and poultry products (poultry and poultry products) 21 U.S.C. 673 processing, transporting or distributing diseased meat (meat) 21 U.S.C. 841 controlled substance trafficking (property traceable to proceeds)* 21 U.S.C. 842 controlled substance regulatory offenses (property traceable to proceeds)* 21 U.S.C. 843 unlawful conduct relating to controlled substance (property traceable to proceeds)* 21 U.S.C. 846 attempt or conspiracy to a commit controlled substance offense (property traceable to proceeds)* 21 U.S.C. 848 drug kingpin offenses (property traceable to proceeds)* 21 U.S.C. 853 controlled substance violations, criminal forfeiture (property derived from, traceable to, used to facilitate violation) 21 U.S.C. 854 investment of controlled substance offense proceeds (property traceable to proceeds)* 21 U.S.C. 856 maintaining drug-involved premises (property traceable to proceeds)* 21 U.S.C. 858 endangerment in the illicit production of controlled substances (property traceable to proceeds)* 21 U.S.C. 859 drug trafficking to minors (property traceable to proceeds)* 21 U.S.C. 860 drug trafficking near schools and similar facilities (property traceable to proceeds)* 21 U.S.C. 861 drug trafficking using minors (property traceable to proceeds)* 21 U.S.C. 863 transportation of drug paraphernalia (property traceable to proceeds)* 21 U.S.C. 863 same (property traceable to proceeds)* 21 U.S.C. 881 controlled substance violations, civil forfeiture (substance, raw materials, precursor chemicals, records, containers, conveyances, property including real property traceable to, derived from or used to facilitate violations) 21 U.S.C. 952 unlawfully importing controlled substances (property traceable to proceeds)* 21 U.S.C. 953 unlawfully exporting controlled substances (property traceable to proceeds)* 21 U.S.C. 957 unlicensed exporting or importing controlled substances (property traceable to proceeds)* 21 U.S.C. 959 overseas controlled substance offenses (property traceable to proceeds)* 21 U.S.C. 960 violations of 21 U.S.C. 952, 953, 957, 959 (property traceable to proceeds)* 21 U.S.C. 960A narcoterrorism (property traceable to proceeds)* 21 U.S.C. 961 regulatory import/export offenses (property traceable to proceeds)* 21 U.S.C. 963 attempt or conspiracy to commit controlled substance import/export offenses (property traceable to proceeds)* 21 U.S.C. 970 controlled substance importing and exporting violations (property derived from, traceable to, used to facilitate violation) 21 U.S.C. 1049 processing, transporting or distributing contaminated eggs (eggs) 22 U.S.C. 401 illegal exportation of war materials (arms, munitions of war and other articles, vessels, vehicles, and aircraft) 22 U.S.C. 611 et seq. felonious violations of the Foreign Agents Registration Act (property traceable to proceeds)* 22 U.S.C. 1978 importing fish and wildlife from countries threatening endangered species (fish and wildlife) 22 U.S.C. 2778 Arms Export Control Act offenses (property traceable to proceeds)* 22 U.S.C. 6744 disclosure trade secrets acquired through Chemical Weapons Convention implementation (property used in, constituting the proceeds from, or facilitating offenses) 25 U.S.C. 264 trading in Indian country without a license (merchandise) 26 U.S.C. 5607 unlawful use, recovery or concealment of denatured distilled spirits (all personal property used, buildings and grounds constituting business premises on which violations occurred) 26 U.S.C. 5608 smuggling liquor (liquor, vessels, vehicles and planes) 26 U.S.C. 5612 mingling taxed and untaxed liquor in distilling plants (liquor) 26 U.S.C. 5613 improperly marked liquor (liquor) 26 U.S.C. 5615 bootlegging (unregistered stills, distilling apparatus, products, land used or facilitating, personal property proximate) 26 U.S.C. 5661 wine tax evasion (property used) 26 U.S.C. 5671 beer tax evasion (beer, vessels, utensils, and apparatus) 26 U.S.C. 5673 evading beer tax (lands and buildings holding brewery) 26 U.S.C. 5681 transporting liquor or raw materials to plants or warehouses with insufficient signs (vehicles, planes, and vessels used) 26 U.S.C. 5683 transporting liquor under improper brands (liquor) 26 U.S.C. 5685 possession of illegal firearms (firearms) 26 U.S.C. 5763 tobacco tax violations (all property, real and personal, used in violation, property of illicit operators used to defraud, tobacco and tobacco products) 26 U.S.C. 5872 firearms tax violations (firearms) 26 U.S.C. 7301 tax avoidance (property subject to taxation, and associated raw material, equipment, containers, conveyances) 26 U.S.C. 7302 possession of property to be used to violate the tax laws (property intended to such use) 26 U.S.C. 7303 use of counterfeit tax stamps and documents (counterfeit stamps, falsely stamped containers and their contents, fraudulent permits and like documents) 27 U.S.C. 206 violation of bulk intoxicating liquor sales regulations (liquor) 29 U.S.C. 186 restrictions on payments and loans to labor organizations (property traceable to proceeds)* 29 U.S.C. 501(c) embezzlement from union funds (property traceable to proceeds)* 30 U.S.C. 1466 Deep Seabed Hard Mineral Resource Act violations (minerals, vessel and its gear, furniture, appurtenances, stores and cargo) 31 U.S.C. 5111 U.S. coins exported, melted or treated contrary to regulation (coins) 31 U.S.C. 5 3 17 crossing a U.S. border with more than $10,000 in unreported cash (cash) 31 U.S.C. 5311 et seq . currency and foreign transaction reporting violations (property traceable to proceeds)* 33 U.S.C. 384 piracy (vessels) 33 U.S.C. 1251 et seq. Federal Water Pollution Control Act felonies (property traceable to proceeds)* 33 U.S.C. 1401 et seq. Ocean Dumping Act felonies (property traceable to proceeds)* 33 U.S.C. 1415 ocean dumping (proceeds of, property used in, property facilitate violation) 33 U.S.C. 1901 et seq. Act to Prevent Pollution from Ships felonies (property traceable to proceeds)* 33 U.S.C. 2236 failure pay harbor dues (cargo) 33 U.S.C. 2716 oil tankers failure to maintain evidence of financial responsibility (vessel) 42 U.S.C. 300f et seq. Safe Drinking Water Act felonies (property traceable to proceeds)* 42 U.S.C. 1490s equity skimming (property traceable to proceeds)* 42 U.S.C. 2122 atom weapons offenses (property traceable to proceeds)* 42 U.S.C. 2284 sabotage of nuclear facilities (property traceable to proceeds)* 42 U.S.C. 6901 et seq. Resources Conservation and Recovery Act felonies (property traceable to proceeds)* 46 U.S.C. 12118 unlawful foreign shipping in domestic commerce (vessel and merchandise) 46 U.S.C. 12151 failure to report foreign rebuilding (vessel, tackle, apparel, equipment and furniture) 46 U.S.C. 12507 vessel identification offenses (vessel and its equipment) 46 U.S.C. 31330 violation of restrictions on sale of mortgaged vessels (vessel) 46 U.S.C. 55109 use of unlicensed foreign built dredges (dredge) 46 U.S.C. 55118 unlawful salvage operations by foreign vessels (vessel) 46 U.S.C. 56101 improper transfer of a U.S. registered vessel to foreign registry (vessel) 46 U.S.C. 56102 violation of restrictions on transfer of shipping facilities (vessel, shipyard, drydock, ship building or repairing facilities, or interest therein) 46 U.S.C. 60505 retaliatory suspension of commercial privileges to foreign vessels (vessel and goods) 46 U.S.C. 70507 manufacture, distribution or possession of controlled substances in violation of the Maritime Drug Enforcement Act (controlled substances and other property used or intended for use in violation of Act) 46 U.S.C. 80103 carrying property from ship wrecks to foreign ports (vessel, its tackle, apparel and furniture) 47 U.S.C. 510 broadcasting without a license (radio equipment) 49 U.S.C. 46306 aircraft registration violations (plane) 49 U.S.C. 46502 chemical trafficking offenses (property traceable to proceeds)* 49 U.S.C. 46504 assault of aircraft flight crew with a dangerous weapons (property traceable to proceeds)* 49 U.S.C. 46505 placing explosives aboard an aircraft (property traceable to proceeds)* 49 U.S.C. 46506 homicide or attempted homicide aboard an aircraft (property traceable to proceeds)* 49 U.S.C. 80303 contraband in the Guam and the North Marianas (conveyances) 49 U.S.C. 60123 destruction of interstate gas pipeline facilities (property traceable to proceeds)* 50 U.S.C. 192 failure to comply with regulations during a national emergency (vessel, tackle, apparel, furniture and equipment) 50 U.S.C. 205 suspension of commercial intercourse with State in insurrection (goods, vessels or vehicles entering or departing after suspension) 50 U.S.C. 212 property employed in aid of insurrection (property used) 50 U.S.C. 216 transportation of goods in aid of insurrection (goods) 50 U.S.C. 221 entering ports of entry closed due to insurrection (vessel and its tackle, apparel, furniture and cargo) 50 U.S.C. 223 states in insurrection (vessels) 50 U.S.C. 224 unauthorized departure during time of insurrection (vessel and its tackle, apparel, furniture and cargo) 50 U.S.C. 783 unlawful communication of classified information (proceeds from, property used, or property facilitating offense) 50 U.S.C. 1705 International Emergency Economic Powers Act offenses (property traceable to proceeds)* 50 U.S.C. App. 16 Trading With the Enemy Act violations (property and vessels that is the subject of a violation) 50 U.S.C. App. 16 Trading With the Enemy Act offenses (property traceable to proceeds)* 50 U.S.C. App. 2410 export regulation violations (resulting property interests and proceeds) | Forfeiture has long been an effective law enforcement tool. Congress and state legislatures have authorized its use for over 200 years. Every year, it redirects property worth billions of dollars from criminal to lawful uses. Forfeiture law has always been somewhat unique. By the close of the 20th century, however, legislative bodies, commentators, and the courts had begun to examine its eccentricities in greater detail because under some circumstances it could be not only harsh but unfair. The Civil Asset Forfeiture Reform Act (CAFRA), P.L. 106-185, 114 Stat. 202 (2000), was a product of that reexamination. Modern forfeiture follows one of two procedural routes. Although crime triggers all forfeitures, they are classified as civil forfeitures or criminal forfeitures according to the nature of the procedure which ends in confiscation. Civil forfeiture is an in rem proceeding. The property is the defendant in the case. Unless the statute provides otherwise, the innocence of the owner is irrelevant—it is enough that the property was involved in a violation to which forfeiture attaches. As a matter of expedience and judicial economy, Congress often allows administrative forfeiture in uncontested civil confiscation cases. Criminal forfeiture is an in personam proceeding, and confiscation is possible only upon the conviction of the owner of the property. The Supreme Court has held that authorities may seize moveable property without prior notice or an opportunity for a hearing but that real property owners are entitled as a matter of due process to preseizure notice and a hearing. As a matter of due process, innocence may be irrelevant in the case of an individual who entrusts his or her property to someone who uses the property for criminal purposes. Although some civil forfeitures may be considered punitive for purposes of the Eighth Amendment's excessive fines clause, civil forfeitures do not implicate the Fifth Amendment's double jeopardy clause unless they are so utterly punitive as to belie remedial classification. The statutes governing the disposal of forfeited property may authorize its destruction, its transfer for governmental purposes, or deposit of the property or of the proceeds from its sale in a special fund. Intra- and intergovernmental transfers and the use of special funds are hallmarks of federal forfeiture. Every year, federal agencies share among themselves the proceeds of jointly conducted forfeitures. They also transfer hundreds of millions of dollars and property to state, local, and foreign law enforcement officials as compensation for their contribution to joint enforcement efforts. This report is available in an abridged form, without citations, footnotes, or appendices, as CRS Report RS22005, Crime and Forfeiture: In Short, by [author name scrubbed]. For a discussion of selected proposed reforms, see CRS Report R43890, Asset Forfeiture: Selected Legal Issues and Reforms, by [author name scrubbed]. |
In early December the 111 th Congress passed a consolidated budget bill ( H.R. 3288 ) containing six appropriations, including Division F, The Department of State, Foreign Operations and Related Programs Appropriations Act, 2010. The President signed the budget measure into law ( P.L. 111-117 ) on December 16, 2009. Funding for the Department of State, International Broadcasting, and related agencies totals $16.1 billion; for Foreign Operations, the FY2010 total is $32.8 billion. The foreign affairs grand total for FY2010 is $48.9 billion. Tables in Appendix C and Appendix D of this report contain updated funding, by account. Congress provided a total of $48.9 billion for State Department, Foreign Operations, and Related Agencies for FY2010, $3.3 billion (6%) below the President's request of $52.2 billion. Of the total, $16.1 billion is for the Department of State, related agencies, and International Broadcasting. The enacted FY2010 level for foreign operations is $32.8 billion. The conferees dropped language that would have repealed the Mexico City Policy that bans U.S. aid to organizations that perform or promote abortion services, even if done with their own funds. FY2010 funding for the State Department and related programs was $15,789.3 million, which was a 0.2% below the FY2009 appropriations and 3.8% below the $16,388.7 million request. The Diplomatic and Consular Programs account (D&CP), the main operating account for the State Department was funded at $8,227.0 million or close to 9% below request. The Human Resources Initiative (HRI), however, which is a multi-year initiative to increase the number of Foreign and Civil Service employees at the Department by 25 % above the FY2008 number by FY2014, received $158.8 million (or close to 26% above request). The request proposed to increase FY2010 hiring by 565 people under the HRI. Earlier, in FY2009, and additional 520 positions were filled under HRI. Several studies found that both the Foreign Service and the Civil Service were seriously understaffed with vacancies maintained at posts and missions around the world, and in staff positions in Washington in order to fully staff the embassies in Iraq and Afghanistan. Currently there are about 12,000 Foreign Service Generalist and Specialists Officers serving in Washington and in 269 posts and mission worldwide. The FY2010 appropriations also addressed serious concerns regarding the standing and image worldwide of the United States. Many studies indicated that the United States was becoming mistrusted and disliked among many around the world, which had implications on U.S. interests from its ability to achieve diplomatic and military objectives to negatively impacting U.S. trade and economic interests. Many analysts believed that traditional diplomacy needed to be enhanced with new methods of supporting U.S. relations including public diplomacy (PD), which reached beyond governments to talk with the populations and opinion leaders of other countries. Again, shortages were found in the number of PD Foreign Service Officers and public diplomacy programs. The FY2010 appropriations of $138.0 million more than doubled the funding request for PD specialists personnel which was part of the $519.9 million appropriations for public diplomacy in staffing and programs (2.6% above request). Among other selected accounts, funding for the construction and maintenance of secure U.S. embassies and consulates around the world was below the request by 5.3%, with funding at $1,724.2 million. While providing funding for the operations and staffing of the Active and Standby portions of the Civilian Response Initiative, FY2010 appropriations did not provide the $50 million requested to fund the largest portion, the Civilian Response Corps. The Civilian Response Initiative is an effort to establish a deployable civilian corps to work in reconstruction and stabilization efforts around the world. Currently, many of these programs are being carried on by the U.S. military. Funding for treaty established-U.S. assessments to International Organizations was at $3.8 billion or 6.6% below request. U.S. contributions to International Organizations was $1.7 billion or 6.8% below request, and funding for U.S. contributions to U.N. sponsored international peacekeeping forces was $2.1 billion or 6.4% below request. Funding for U.S. non-military international broadcasting, such as Voice of America, was near the request at $746.4 million. The total foreign operations FY2010 funding level of $32.8 billion is $2.0 billion (nearly 6%) below the President's request of $34.8 billion. For Global Health and Child Survival programs, Congress provided a total of $7.8 billion, $184.0 million more than requested. Other accounts receiving more than requested include Migration and Refugee Assistance, Peace Corps, International Organizations and Programs, and Peacekeeping Operations. Selected accounts receiving less funding than requested include the Millennium Challenge Corporation (receiving $1.1 billion, $320 million below the request), the Development Assistance Account (receiving $2.5 billion, $214 million below the request), International Narcotics Control and Law Enforcement (receiving $1.6 billion, $351 million below the request), and the Foreign Military Financing account (receiving $4.2 billion, $1.1 billion below the request). Within the Foreign Operations FY2010 budget, $2.6 billion is for assistance to Afghanistan, $1.5 billion is for Pakistan aid, and $467 million is for aid to Iraq. Congress also provides a total of $1.3 billion for climate change programs within P.L. 111-117 . On June 9, the House Appropriations Committee reported on the 302(b) allocations, including $48.8 billion for discretionary funding within the FY2010 State-Foreign Operations bill. On June 17, the House State-Foreign Operations Appropriations Subcommittee marked up FY2010 funding legislation and reported it to the full committee without amendment. The House Appropriations Committee approved H.R. 3081 ( H.Rept. 111-187 ), which recommended $49.0 billion in State-Foreign Operations appropriations on June 23. The legislation was approved by the House on July 9 by a vote of 318-106. The House approved the following amendments to H.R. 3081 before final passage on July 9: An amendment proposed by State-Foreign Operations Subcommittee Chairwoman Lowey would increase funding for sanitation, democracy programs, maternal health, oversight and implementation of the U.S.-Brazil Joint Action Plan to Eliminate Racial and Ethnic Discrimination, with offsets coming from the State and USAID Capital Investment Funds. The amendment would also restrict FMF funds to Sri Lanka and first class travel by employees of agencies funded by the bill. An amendment proposed by Representative Anthony Weiner would strike presidential waiver authority in regard to blocking aid to Saudi Arabia. An amendment proposed by Representative Mark Kirk would prohibit the use of funds for negotiating an agreement that conflicts with requirements imposed by Congress relating to U.S. participation in the International Monetary Fund and World Bank. The House rejected amendments to reduce funding for the Peace Corps, diplomatic and consular programs, USAID, global health activities, multilateral assistance and exchange programs, as well as a proposal to increase funds for the National Endowment for Democracy. On June 22, the Senate Appropriations Committee reported its FY2010 302(b) allocations, including that of $48.7 billion for discretionary spending within the State-Foreign Operations appropriation. On July 9, the committee approved S. 1434 , the Department of State, Foreign Operations, and Related Agency Appropriations Act, 2010. The Senate bill, which totals $48.8 billion, provides $104.6 million more than the House for the Department of State Operations, but $264.8 million less than the House bill for Foreign Operations. The Senate bill includes $25 million more than the House for each of the Capital Investment Fund and the Civilian Stabilization Initiative, $35 million more than the House for Educational and Cultural Exchanges, and $251.9 million more for multilateral assistance. On the other hand, it provides $245 million less than the House version for bilateral economic assistance and $276.1 million less than the House bill for military aid. The Senate's FY2010 State, Foreign Operations appropriations bill, however, was never taken up by the full Senate except in the context of the consolidated appropriations legislation. The State-Foreign Operations appropriations bill funds most programs and activities within the international affairs budget, also known as Function 150, including foreign economic and military assistance, food assistance, contributions to international organizations and multilateral financial institutions, State Department and U.S. Agency for International Development (USAID) operations, public diplomacy, and international broadcasting programs. Nevertheless, the State-Foreign Operations bill does not align perfectly with the international affairs budget. Food aid, which is appropriated by the Agriculture Appropriations Subcommittees, and the International Trade Commission and Foreign Claims Settlement Commission, both funded through the Commerce-Science-Justice bills, are international affairs programs not funded through the State-Foreign Operations appropriations bill. Furthermore, a number of international commissions that are not part of the International Affairs 150 Function are funded through the State-Foreign Operations bill. A chart illustrating the organizational structure of the State-Foreign Operations appropriations bill is provided in Appendix A . This report focuses only on accounts funded through the State-Foreign Operations appropriations bill, though provides appropriations figures for the entire international affairs (function 150) budget. Table 2 and Figure 1 show State-Foreign Operations appropriations for the past decade in both current and constant dollars. The rationale for foreign affairs programs has transitioned from a largely anti-communist orientation for more than 40 years following World War II to a more recent focus on national security and anti-terrorism in the post September 11, 2001, environment. During the Cold War, foreign aid and diplomatic programs also pursued a number of other U.S. policy interests, such as promoting economic development, advancing U.S. trade, expanding access to basic education and health care, promoting human rights, and protecting the environment. In the 1990s, other objectives included stopping nuclear weapons proliferation, establishing nuclear arms control regimes, curbing the production and trafficking of illegal drugs, expanding peace efforts in the Middle East, achieving regional stability, protecting religious freedom, and countering trafficking in persons. A defining change in focus came following the September 11, 2001, terrorist attacks in the United States. Since then, U.S. foreign aid and diplomatic programs have taken on a more strategic sense of importance and have been frequently cast in terms of contributing to the war on terrorism. In 2002, President Bush released a National Security Strategy that for the first time established global development as the third pillar of U.S. national security, along with defense and diplomacy. Development was again underscored in the Administration's re-statement of the National Security Strategy released on March 16, 2006. Also in 2002, foreign assistance budget justifications began to highlight the war on terrorism as the top foreign aid priority, emphasizing amounts of U.S. assistance to 28 "front-line" states—countries that cooperate with the United States in the war on terrorism or face terrorist threats themselves. During the Bush years, the Administration implemented several new aid initiatives. Large reconstruction programs in Afghanistan and Iraq exemplified the emphasis on using foreign aid to combat terrorism. State Department efforts focused extensively on diplomatic security and finding new and more effective ways of presenting American views and culture through public diplomacy. It appears that the Obama Administration will carry some Bush foreign aid initiatives forward. A transformational diplomacy initiative, announced in 2006, repositioned diplomats to global trouble spots, created regional public diplomacy centers, established small posts outside of foreign capitals, and trained diplomats in new skills. (See CRS Report RL34141, Diplomacy for the 21 st Century: Transformational Diplomacy , by [author name scrubbed] and [author name scrubbed], for background information.) At the same time, a new position was created at the State Department, a Deputy Secretary of State-level Director of Foreign Assistance (DFA), which was filled during the Bush Administration by the USAID Administrator. To date, the Obama Administration has not nominated a USAID Administrator and separate individuals are acting as DFA and USAID Administrator. The DFA created a new Strategic Framework for Foreign Assistance with the ultimate goal of promoting democracy and providing more coordination, coherence, transparency, and accountability for aid programs. The Obama Administration's first international affairs budget proposal continues to use this framework. Other Bush initiatives that the Obama Administration request continues address development and global health concerns. The Millennium Challenge Corporation (MCC) is an aid delivery concept, proposed by President Bush in 2002, authorized by Congress (Title VI, Division D of P.L. 108-199 ) and established in early 2004. It is intended to concentrate significantly higher amounts of U.S. resources in a few low- and low-middle income countries that have demonstrated a strong commitment to political, economic, and social reforms. President Bush initially promised $5 billion annually by FY2006, although funds requested and appropriated have never reached this level. The Obama Administration requested $1.43 billion for MCC in FY2010, which is 64% above estimated FY2009 appropriations, but the smallest request for MCC since its first year. (For more information, see CRS Report RL32427, Millennium Challenge Corporation , by [author name scrubbed].) Building on large Bush Administration investments in global health, particularly programs to combat HIV/AIDS, the Obama Administration announced in May 2009 plans to dedicate $63 billion to global health programs through FY2014, but the Administration's FY2010 budget proposal includes only slight increases to global HIV/AIDS and other international health programs. Beyond these recently emerging foreign policy goals relating to terrorism and global health concerns, the Obama Administration's FY2010 request calls for even greater emphasis on food security, as well as new resources to address issues related to climate change. The House-passed FY2010 State-Foreign Operations bill expressed support for these priorities as well. On May 7, 2009, the Obama Administration sent its FY2010 international affairs (Function 150 account) budget request to Congress. Of that request, a total of $52.20 billion, or 97%, was for the Department of State, foreign operations, and related programs. This represents a 3% increase from estimated FY2009 funding, including supplemental funds, and 4.6% of the total discretionary budget authority proposed by the Administration for FY2010. Figure 2 provides a percentage breakout by assistance type of the FY2010 budget request for State and foreign operations. Further details of the international affairs account are provided in Appendix E . Supplemental resources for State and Foreign Operations programs, which in FY2004 exceeded regular State and Foreign Operations funding, became a significant source of funds for U.S. international activities during the Bush Administration, especially for programs related to reconstruction efforts in Iraq and Afghanistan and strategic assistance to the Near East and South Central Asia. Before the Bush Administration, supplemental appropriations bills were typically used to provide additional funding to respond to unanticipated emergencies or natural disasters. Some have criticized the Bush Administration for relying too heavily on supplemental funds for predictable expenses, keeping funds off-budget and making year-to-year comparisons or future-year planning difficult. The Obama Administration has pledged to discontinue the practice of requesting supplemental appropriations to fund ongoing activities, starting with the FY2010 request, and claims that all anticipated funding for FY2010 has been included in the request. As a result, the FY2010 request for State-Foreign Operations is 36% higher than the FY2009 request of $38.34 billion, and 42% higher than the FY2009 base appropriations (excluding all supplementals), but only 3% higher than the total appropriated for State-Foreign Operations in FY2009 when supplemental appropriations are included. If funding for the 2009 stimulus bill is excluded from the FY2009 total, which some observers feel it should be because it presumably represents a one-time expense, the FY2010 request is 4% higher. Figure 3 presents these various ways of comparing the FY2010 State-Foreign Operations budget request with FY2009 State-Foreign Operations appropriations. The Administration's FY2010 budget request for the Department of State, international broadcasting, and related agencies is $17.36 billion, representing a 6% increase over the FY2009 estimate of $16.36 billion, including supplementals and the mandatory Foreign Service Retirement Fund. Related agencies funded in the State portion of the bill include the Broadcasting Board of Governors (BBG), U.S. assessed contributions to the United Nations (U.N.), U.S. contributions to International Organizations (CIO), and U.N. Peacekeeping (CIPA), and funding for several International Commissions. Also included are funding for The Asia Foundation, the National Endowment for Democracy, and several other independent, non-profit educational and exchange organizations, as well as resources for international commissions, and the U.S. Institute of Peace. (For a description of all the accounts within the State Department segment of the bill, see CRS Report R40482, State, Foreign Operations Appropriations: A Guide to Component Accounts , by [author name scrubbed] and [author name scrubbed].) The House passed H.R. 3081 , which includes $16.05 billion for the Department of State and related agencies, on July 9, 7% less than the Administration request. However, many account recommendations that fall short of the request reflect significant FY2009 supplemental funding that many consider a down payment on FY2010 priorities shared by Congress and the Administration. Also on July 9, the Senate Full Appropriations Committee reported its bill with $16.15 billion for State operations. Table 3 and Figure 4 show appropriations for the State Department and related agencies over the past decade in both current and constant dollars. The State Department's mission is to advance and protect the worldwide interests of the United States and its citizens through the staffing of overseas missions, the conduct of U.S. foreign policy, the issuance of passports and visas, and other responsibilities. Currently, the State Department coordinates with the activities of more than 40 U.S. government agencies at over 260 diplomatic posts in over 180 countries around the world. The State Department employs approximately 30,000 people, about 60% of whom work abroad. The Administration of Foreign Affairs includes funds for salaries and expenses, educational and cultural exchanges, and embassy construction and security. For FY2010, the Administration is seeking $12.23 billion, an increase of more than $1.12 billion (+10%) over the enacted FY2009 level, with supplementals. The House bill sets funding at $11.16 billion. The Senate committee-recommended level is $11.23 billion. Highlights follow. The D&CP account funds most salaries and benefits; overseas operations (e.g., motor vehicles, local guards, telecommunications, medical); activities associated with conducting foreign policy; passport and visa applications; regional and functional bureaus and their programs; public diplomacy programs; Offices of the Secretary of State, the Deputy Secretaries, and Under Secretaries; and post assignment travel. Beginning in FY2000, the State Department's Diplomatic and Consular Program account included State's salaries and expenses, as well as the technology and information functions of the former U.S. Information Agency (USIA) and the functions of the former Arms Control and Disarmament Agency (ACDA). The Administration is requesting $8.96 billion for D&CP's FY2010 budget, $1.81 billion more than the FY2009 enacted total of $7.15 billion, including supplementals. The D&CP account includes an increase in personnel of 1,181 positions above attrition with about 750 of these new positions reserved for the Foreign Service. The increase reflects the Obama Administration's intention to significantly expand U.S. diplomatic capacity. Within the FY2010 D&CP request, public diplomacy would receive $506.3 million and $1.65 billion is designated for worldwide security protection (for increased security personnel, maintenance, and ongoing salaries). These amounts represent 23.4% and 25% increases, respectively, above the FY2009 estimates of $410.4 million and of $1.31 billion. The House-passed bill provides $8.23 billion for D&CP, including $1.58 billion for worldwide security protection, $520 million for public diplomacy, and $542 million to support 1,030 new positions for diplomatic and development personnel. The House report identifies the rebuilding of diplomatic and development capacity as one of four committee priorities for FY2010. The Senate committee reported a similar D&CP level of $8.23 billion. This account supports the maintenance, rehabilitation, and replacement of facilities to provide appropriate, safe, secure and functional facilities for U.S. diplomatic missions abroad. Average annual funding for this account has increased significantly since the embassy bombings in Africa in August 1998, after which Congress establishing a new subaccount referred to as Worldwide Security Upgrades. This subaccount funds the bricks and mortar type of security needs overseas. For FY2010, the Administration seeks $876.9 million for ongoing ESCM operations and $938.2 million for worldwide security upgrades, the later of which is planned to support new facilities in Kabul, Afghanistan; Peshawar and Islamabad, Pakistan; Sanaa, Yemen; and Dakar, Senegal. The total request for the ESCM account is $1.82 billion, representing a 32% decrease over the FY2009 estimated level of $2.7 billion. This change reflects anticipated completion of Embassy Baghdad in FY2009. Both the House-passed bill and the Senate-reported bill provide $1.724 billion for ESCM, noting that the $91 million difference between their recommendation and the President's is made up for in FY2009 supplemental funds provided to accelerate completion of secure housing for diplomatic and development personnel in Pakistan. The Civilian Stabilization Initiative was established in 2004 to improve the ability of U.S. civilian agencies to promote stability in post-conflict situations internationally. An Office of the Coordinator of Reconstruction and Stabilization was created at the State Department (S/CRS) to monitor, plan for, and coordinate interagency responses to such situations, and to develop mechanisms and capabilities necessary to carry out such operations. As part of its mandate, S/CRS is charged with establishing a Civilian Response Corps (CRC) of trained federal civilian employees, as well as non-governmental civilian personnel with expertise in various sectors, who can be rapidly deployed to post-conflict environments when a "surge" of personnel is warranted. Congress provided $65 million for S/CRS and related USAID activities, including the establishment and implementation of civilian response capabilities, in the Supplemental Appropriations Act, 2008 ( P.L. 110-252 ). Congress provided another $75 million in FY2009 appropriations in the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ), with $30 million of that amount appropriated for USAID and $45 million for the Department of State. The CRC was formally launched in July 2008. The Obama Administration's FY2010 request includes $323 million for the Civilian Stabilization Initiative, representing a 331% increase over the $75 million appropriated for this account in FY2009. All of the funding requested for CSI was within the State Department Administration of Foreign Affairs section of the request. The Administration says that the increased funding will support the recruitment, development, and training of both the active and standby components of the CRC, as well as operating expenses and 10 new staff positions for S/CRS. H.R. 3081 provides $125 million for CSI under the State Department, and an additional $30 million under USAID. S. 1434 as reported out of committee provides $150 million for CSI. This account funds programs authorized by the Mutual Educational and Cultural Exchange Act of 1961, such as the Fulbright Academic Exchange Program, as well as leadership programs for foreign leaders and professionals. Government exchange programs came under close scrutiny in past years for being excessive in number and duplicative. After the September 11 attacks, the Department of State began to emphasize public diplomacy activities in Arab and Muslim populations. The Obama Administration is requesting $633 million for exchanges in FY2010. This represents an 18% increase over the FY2009 estimate. The additional funds would expand English language and alumni programs and support 29 new staff positions to improve management of expanding programs. The House-passed bill includes $600 million for educational and cultural exchanges. The Senate Appropriations Committee recommends $635.2 million for exchanges. 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 FY2010 budget request includes $160 million for CIF, which is 56% lower than the FY2009 estimate of $361 million, including Recovery Act funding of $290.0 million. The House bill provides $134.7 million for this account, while the Senate Appropriations Committee reported out a bill that includes $160 million. In recent years, U.S. contributions to the United Nations and its affiliated agencies (Contributions to International Organizations—CIO) and peacekeeping activities (Contributions to International Peacekeeping Account—CIPA) have been affected by a number of issues. These have included the withholding of funds related to international family planning policies; issues related to implementation of the Iraq Oil for Food Program, and the findings and recommendations of the Volcker Committee Inquiry into that program; alleged and actual findings of sexual exploitation and abuse by personnel in U.N. peacekeeping operations in the field and other misconduct by U.N. officials at U.N. headquarters in New York and at other U.N. headquarters venues; and efforts to develop, agree to, and bring about meaningful and comprehensive reform of the United Nations organization, in most of its aspects. CIO provides funds to pay the assessed U.S. membership dues (as distinguished from the voluntary contributions to international organizations made through the Foreign Operations account) in numerous international organizations and for multilateral foreign policy activities. Maintaining a membership in international organizations, the Administration argues, benefits the United States by advancing U.S. interests and principles while sharing the costs with other countries. Payments to the United Nations and its affiliated agencies, the Inter-American Organization, as well as other regional and international organizations, are included in this account to meet assessed contribution levels. The President's FY2010 request totals $1.80 billion for this account, representing a 12% increase over the estimated FY2009 level of $1.60 million, including supplementals. Within the request is $175 million in "synchronization" payments to get the United States up to date on payments to international organizations, and $50 million for the U.N. Population Fund, for which no funding was requested during the previous administration. Both H.R. 3081 and S. 1434 provide $1.7 billion for CIO, with $100 million less than the Administration requested for synchronization payments. 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 FY2010 request of $2.26 billion is intended to pay the full U.S. assessed share of U.N. peacekeeping mission expenses. The request represents an 5% decline from the FY2009 estimate of $2.39 billion, which includes more than $870 million in supplemental appropriations. Both House and Senate bills contain $2.13 billion for CIPA, or 6% less than the Administration request. The International Commissions account (in the State Department budget, but not a part of the 150 account) includes the U.S.-Mexico Boundary and Water Commission, U.S. and Mexico, the American Sections Commission, and the International Fisheries Commission. The President requested $132.5 million for these. The House and Senate bills provide $137.5 million and $137.9 million, respectively, for these commissions. Other commissions include the Commission for the Preservation of America's Heritage Abroad, the Commission on International Religious Freedom, the Commission on Security & Cooperation in Europe, the Congressional-Executive Commission on the People's Republic of China, and the United States-China Economic Security and Review Commission. The FY2010 request of $13.0 million represents a slight decline of under 2% as compared with the FY2009 total of $13.2 million. Both the House and Senate bills fund these at $13.0 million. Several private, non-profit organizations receive U.S. funding through State Department appropriations. The FY2010 request for The Asia Foundation, which supports efforts to strengthen democratic processes and open markets in Asia, is $16.23 million, a 1% increase over the FY2009 estimate. The International Center for Middle Eastern-Western Dialogue Trust Fund, established in FY2004 by P.L. 108-199 , would be authorized in FY2010 to disburse $875,000 (compared with $876,000 in FY2009) of interest and earnings from the Trust Fund to be used for programming activities and conferences. The National Endowment for Democracy would receive a 13% budget cut, from $115 million in FY2009 to $100 million requested for FY2010, to carry out programs to strengthen democratic institutions throughout the world. The East-West Center, established in 1960 by Congress to promote understanding and cooperation among the governments and peoples of the Asia/Pacific region and the United States, would receive $11.7 million under the Administration's budget, a decrease of 44% from the FY2009 funding estimate of $21 million. Additionally, the Administration is requesting $49.2 million for the U.S. Institute of Peace, established in 1984 by P.L. 98-525 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. This request represents a $18.2 million (59%) increase from the FY2009 estimate of $31.0 million. The House and Senate bills match the Administration request with two exceptions: the House includes no funding for the East-West Center, while the Senate bill provides $24.0 million for it, and both bills recommend $19 million ($2.77 million more than requested) for The Asia Foundation. The Administration's FY2010 funding request for the BBG, which broadcasts to the world through radio, television, the Internet, and other media in 60 languages, is $745.5 million, or $30.0 million (4%) above the FY2009 level of $715.5 million. The BBG budget is composed of two elements: the International Broadcasting Operations and Broadcasting Capital Improvements. The FY2010 request for the International Broadcasting Operations portion, which provides funding for the Voice of America, Radio Free Asia, and the Middle East Broadcasting network, among other broadcast services, is $732.2 million. This is $28 million above the FY2009 estimate of $704.2 million, or an increase of about 4%. The FY2010 request for Broadcasting Capital Improvements, at $13.3 million, is 17% higher than the FY2009 estimate of $11.3 million. In prior years, the BBG has separated out funding for broadcasts to Cuba. The Administration's FY2010 proposal does not include a separate line item for Cuba, but includes $32.5 million in funding for the Office of Cuba Broadcasting within the International Broadcasting Operations account. The House bill virtually matches the Administration's request, while the Senate reported bill sets the broadcasting funding level $16.1 million below request. The Foreign Operations budget comprises the majority of U.S. foreign assistance programs, both bilateral and multilateral. (See Appendix D for Foreign Operations accounts and funding levels.) The annual State-Foreign Operations Appropriations bill funds all U.S. bilateral development assistance programs, with the exception of food assistance appropriated through the Agriculture Appropriations bill (for which $2.42 billion was appropriated in FY2009 and $1.89 billion is requested for FY2010). These funds are managed primarily by USAID and the State Department, together with several smaller independent foreign aid agencies such as the Millennium Challenge Corporation, the Peace Corps, and the Inter-American and African Development Foundations. The legislation also supports U.S. contributions to major multilateral financial institutions, such as the World Bank and United Nations entities, and includes funds for the Export-Import Bank, whose activities are regarded more as trade promotion than foreign aid. On occasion, the bill replenishes U.S. financial commitments to international financial institutions, such as the World Bank and the International Monetary Fund. (For a description of all the accounts within the Foreign Operations section of the bill, see CRS Report R40482, State, Foreign Operations Appropriations: A Guide to Component Accounts , by [author name scrubbed] and [author name scrubbed].) The foreign operations budget request for FY2010 totals $34.85 billion in foreign assistance programs, representing a 1% increase from the estimated FY2009 level of $34.42 billion. Table 4 and Figure 5 provide funding levels, including supplemental appropriations and rescissions, for foreign operations since FY2000 in both current and constant dollars. Between FY2000 and FY2009, foreign aid funding increased 112% in current dollars, and by 66% in constant dollars. H.R. 3081 provides $32.96 billion for Foreign Operations for FY2010, which is 5% less than the Administration's request. The Senate committee-reported bill provides $32.69 billion. Prior to the wars in Iraq and Afghanistan, Israel and Egypt typically received the largest amounts of U.S. foreign aid every year since the Camp David Peace Accords in 1978. The reconstruction efforts in Iraq and Afghanistan moved those countries into the top five, though assistance to Iraq has declined sharply in the past couple of years, with the FY2010 request of $500 million falling just outside of the top 10. West Bank & Gaza funding also fell just outside of the top 10 in the FY2010 request, with the recommended $503 million representing a 45% reduction from the FY2009 estimate of $910 million. South Africa, a recipient of significant HIV/AIDS assistance, and Colombia, a recipient of significant counter-narcotics assistance, emerge among the top 10 recipients in the FY2010 request, though the requested funding does not represent a significant increase. The $548 million requested for South Africa is just over the $541 million estimated for FY2009, and the $513 million requested for Colombia is lower than the FY2009 estimate of $542 million. See Table 5 for top U.S. aid recipients in FY2009 and the FY2010 request. When the Obama Administration submitted its FY2010 foreign operations budget proposal in May 2009, it calculated that the request was nearly a 9% increase over FY2009 funding, including the supplemental request of $4.5 billion then pending before Congress for foreign operations accounts. However, the supplemental bill ( H.R. 2346 / H.Rept. 111-151 ) that was signed by the President on June 24, 2009 ( P.L. 111-32 ) included $7.04 billion for foreign operations, reducing the increase between enacted FY2009 appropriations and the FY2010 request for foreign operations to 1%. Because Congress approved FY2009 base and supplemental appropriations after the Obama administration took office in January 2009, and a significant portion was enacted after the FY2010 budget proposal was released, it may be difficult to detect shifting policies and priorities by comparing the FY2009 appropriations to the FY2010 request. The FY2010 Congressional Budget Justification highlights a proposed increase in economic assistance to thwart a resurgence of the Taliban in Afghanistan and Pakistan by promoting economic development and enhancing counternarcotics activities. However, so much supplemental funding has been appropriated for Afghanistan and Pakistan in FY2009 that the FY2010 economic assistance (excluding military aid) request for these countries, at $2.78 billion and $1.28 billion, respectively, represents only a 4% and 15% increase, respectively. Compared with FY2008 appropriations, however, the FY2010 request is a 32% increase for Afghanistan and a 189% increase for Pakistan. The House bill provides $2.54 billion for Afghanistan and $1.46 billion for Pakistan under the ESF, INCLE, and FMF accounts, but does not specify a portion of NADR, GHCS, or other funds for either country, which the Administration's request includes. The Administration also proposes in its FY2010 budget request to meet financial commitments to multilateral development banks, the United Nations, and other international multilateral organizations with a request for $2.70 billion, a 46% increase over the total FY2009-enacted level. The Administration's stated goal for this funding is to enhance the United State's leadership role within these forums and address food insecurity through a $12 million (67%) increase in funding to the International Fund for Agricultural Development. A new request for $600 million for international clean technology and strategic climate funds at the World Bank is, according to the Administration, intended to demonstrate a U.S. commitment to addressing problems related to climate change. The House recommendation of $2.35 billion for multilateral assistance largely follows the request, though it included less than half the funds requested ($225 million) for the clean technology and strategic climate funds, and an additional $38.5 million for international organizations and programs. Among these, the House recommended increases for the UN Children's Fund, the UN Development Program, the UN Population Fund, the UN High Commissioner on Human Rights, the UN Women's Fund, and the UNIFEM Trust Fund, while recommending less than the request for the UN Democracy Fund. The Senate Appropriations Committee-reported bill provides $257.9 million more for multilateral assistance than the House-passed bill, including $400 million for the International Clean technology Fund. Other foreign operations accounts that would see significant changes from the total FY2009 levels in the FY2010 budget proposal or House recommendation include the following: USAID operating expense and capita l investment accounts , which would fund the Administration's proposal to create an additional 350 Foreign Service Officer positions at USAID, would increase by 36% and 74%, respectively, under the request. A floor amendment reduced the Capitol Investment Fund from $213 million to $185 million. H.R. 3081 , as passed, provides $1.39 billion, a 31% increase for operating expenses over the FY2009 total. Development Assistance , from which additional funding would support the Administration's agricultural development and food security priorities, would increase by 37% over the FY2009 funding level under the Administration request, by 25% under the House-passed bill, and by 28% in the Senate-reported bill. Emergency Refugee & Migration Assistance would increase by 88% under the Administration request, as well as the House and Senate plans, in order to reduce reliance on supplemental appropriations. International Disaster Assistance would receive a 7% increase over the FY2009 funding level under the Administration request to address emergency food security and certain new responsibilities taken over from the Federal Emergency Management Agency. The House bill provides a 1% increase and the Senate bill provides a 4% increase. The Millenn ium Challenge Corporation would receive an increase of more than 60% over FY2009 levels under both the Administration request and the House-passed bill. The Senate bill, however, provides a 9% increase. Treasury Department's Debt Restructuring Activities would get an 84% increase over the FY2009 funding level under the Administration request, to meet U.S. commitments related to the enhanced Heavily Indebted Poor Countries (HIPC) initiative. The House and Senate bills both provide $60 million, the same as the FY2009 level. International Military Education and Training would increase 19% under both the Administration and House proposals. The Senate bill provides $5 million less than requested, but still more than the FY2009 funding level for this account. Non-P roliferation, Anti-Terrorism and Demining would increase by 21% under the Administration request and the Senate bill, to fund a portion of the new Shared Security Partnership Initiative (discussed below under "New Initiatives"), while the House bill provides a 14% increase. International Narcotics Control and Law Enforcement would grow by 25% under the Administration request, to incorporate activities previously funded through the Andean Counterdrug Initiative account, combat opium production and trafficking in Afghanistan, fund Merida Initiative programs in Mexico and Central America, and expand civilian law enforcement support to Pakistan. The House bill is 16% below the request, but 4% above the FY2009 total, and the Senate-reported bill is 22% below the request and 2% below FY2009 funding level. The Transition Initiatives (TI) account would receive a 152% increase over the FY2009 estimated appropriation under the Administration request. However, the request is 22% above actual FY2009 funding for TI, which, since FY2003, has routinely received at least half its funds through transfers from other accounts. The House bill provides a 100% increase over the FY2009 level, while the Senate Committee recommends a 30% increase. Only a few accounts would receive less than their estimated FY2009 appropriation under the Administration's FY2010 request. The Economic Support Fund , assistance to countries of strategic importance to the United States, as requested by the Administration, would decrease by 9% from the FY2009 total, largely because of FY2009 supplemental funds for this account. Both the House and Senate bills provide $6.37 billion for this account, $134 million less than the Administration requested. Assistance for Europe, Eurasia and Central Asia would decline by 17% under the Administration request and 22% under the House level, due to the large FY2009 supplemental funding for Georgia. The Senate committee recommends a 19% decline for this account. While Emergency Refugee and Migration Assistance would increase by 88%, regular Migration and R efugee Assistance funds would be cut by 11% under both the Administration and House proposals. The Senate bill recommends nearly $7 million more than the FY2009 level. International Peacekeeping contributions would be reduced by 44% under the request, and 37% under the House and Senate plans, due largely to FY2009 levels inflated by large supplemental allocations for Somalia and the Democratic Republic of Congo. Foreign Military Financing would decrease by 15% under the request, reflecting large FY2009 supplemental FMF appropriations for Mexico, Egypt and Jordan. The House-passed a 32% cut from FY2009 (almost $2 billion), noting that Congress "forward funded" a portion of the FMF request for Egypt, Israel and Jordan in the FY2009 supplemental. The Senate Committee recommends cutting $2.2 billion from this account in FY2010. Democracy Fund and Fund for Ireland would receive increases (3% and 20%, respectively) in the House bill over FY2009 levels, while neither account was included in the Administration request. The Senate Appropriations Committee contains 3% for the Democracy Fund and no funding for the Fund for Ireland. Export-Import Bank assistance was limited by a managers amendment to the House bill, first proposed by Representative Mark Kirk, which would restrict funds to countries having detonated a nuclear device in violation of the Treaty on the Non-Proliferation of Nuclear Weapons. The provision addresses concerns that current law does not prevent the Export-Import Bank from providing credit, insurance, or guarantees assistance to companies that contribute significantly to Iran's petroleum industry. Figure 6 shows proposed changes to the largest bilateral assistance accounts.(See for FY2008 totals, FY2009 estimates, and the FY2010 request by account.) The Administration's budget request calls for a new Shared Security Partnership , funded through the INCLE, NADR, PKO, and FMF accounts, to develop strategic partnerships aimed at confronting common threats. The House bill expresses support for this initiative, which would expand on the Trans-Sahara Counterterrorism Partnership and the East Africa Regional Strategic initiative program to develop and support Regional Strategic Initiatives designed to improve coordination and cooperation on global terrorism and crime issues. Shortly before the May 7, 2009, release of the Administration's FY2010 budget request, President Obama announced a six-year, $63 billion Global Health Initiati ve . Of this amount, $51 billion would support ongoing HIV/AIDS, tuberculosis, and malaria programs, and $12 billion would address other health needs, including post-natal and child health. Administration officials have stated that the intention of the initiative is to move beyond the HIV-specific focus of the Bush Administration's PEPFAR initiative and towards a more comprehensive and integrated approach to global health. This strategy has been applauded by many global health advocates, but others have expressed concern that the funding request does not match the rhetoric. The budget request does not show dramatic changes in total global health funding for FY2010 (the FY2010 request for Global Health and Child Survival is a 3% increase over the FY2009 total, including supplementals), prompting some critics to claim that global health programs will be asked to take on broader responsibilities without additional resources. However, the request does include sizable budget increases for relatively small programs to address neglected tropical diseases, avian influenza, and infectious disease surveillance. The House funding for the Global Health and Child Survival account is $7.78 billion, or 2% more than the Administration's request. Emergency Crises Fund, established as a new account by the Senate bill ( S. 1434 ), would enable the Secretary of State, in consultation with the USAID Administrator, to respond to certain unforeseen crises. The committee notes that the department of State is establishing crisis prevention and response capabilities to assume much of the functions currently funded under Department of Defense's (DOD) Section 1207, P.L. 109-163 . The Senate committee recommends $100 million for FY2010. As shown in Figure 7 , under the FY2010 proposal, Africa would be the region receiving the most U.S. foreign assistance, with a 1% increase over the FY2009 total, including supplementals, of $6.67 billion bringing the request to $6.74 billion. Funding for Africa would continue to be heavily focused on HIV/AIDS and other health programs, while expanding activities related to agriculture, governance, education, and economic growth. South and Central Asia would continue to see high aid levels, though the FY2010 proposal of $4.87 billion is a 6% decrease from the total FY2009 estimate of $5.20 billion. The FY2009 figure was bolstered by $1.30 billion appropriated by Congress ($678 million beyond the Administration's request) in supplemental funds for counterinsurgency support to Pakistan. The Western Hemisphere would remain fairly steady, with the $2.41 billion FY2009 total, including $420 million is supplemental FMF and INCLE funds for Mexico, 2% higher than the $2.37 billion request for FY2010. East Asia & Pacific would receive a 17% increase over the FY2009 estimate of $690 million, which did not include funds requested by the Administration for North Korea, with priority given to ongoing support for Indonesia, increasing assistance to Burma, and funds available for negotiating the dismantlement of North Korea's nuclear program. The Near East would also receive a 17% reduction from the FY2009 total of $7.96 billion, in part because of large increases to Israel, Egypt, and Jordan included in the FY2009 supplemental. Under the FY2010 proposal, most funds would go to Iraq, West Bank and Gaza, and for the Trans Sahara Counter-Terrorism Partnership. Cuts to Europe and Eurasia would also be substantial, at -14%, reflecting more pressing needs elsewhere. Including both base budgets and supplemental appropriations, the share of U.S. bilateral foreign assistance going to Iraq and Afghanistan has increased sharply since FY2002. Foreign aid to Afghanistan has increased significantly, though inconsistently, since the U.S. invasion of Afghanistan in 2001, and the FY2010 request for Afghanistan—$2.78 billion—would provide the highest funding to date for that country. For Iraq, assistance consisted of small sums to support Iraqi opposition groups in the early 2000s, but picked up precipitously in FY2004 to more than $17 billion, before dropping sharply back in recent years. The FY2010 request for Iraq is $500 million, down 15% from the FY2009 estimate. The portion of the foreign operations budget allocated to Iraq and Afghanistan has hovered just under 10% in the past few years after reaching 50% in FY2004, the peak of Iraq reconstruction and rehabilitation appropriations. It is important to note, however, that both countries receive significant assistance through the Defense appropriations bill, which is not covered in this report. Table 6 tracks funding to both countries from FY2002 through FY2009, including the FY2010 request. The FY2010 requested funding for Iraq and Afghanistan represents 9% of total funding requested for foreign operations. Over the years, Congress has expressed interest in various discrete aid sectors, such as education, trade, maternal and child health, and biodiversity, that are either subcategories of the "Program Area" level depicted in the budget funding tables or are budgeted across multiple program elements or areas. Table 7 compares the FY2009 and FY2010 budget requests for key interest areas identified by the Administration—obligated and actual FY2009 funding levels for these sectors are not available. The 487% increase in the request for Clean Energy and 672% increase requested for Global Climate Change, compared with the FY2009 requests, seems to demonstrate the Obama Administration's heightened interest in global environmental issues. Particularly large increases were also proposed for Avian Influenza (+145%), to strengthen national capacities to prepare for and respond to the emergence of pandemic-capable viruses, such as H1N1 ("swine flu"), and for Other Public Health Threats (+103%) to address neglected tropical diseases, containment of anti-microbial resistance, and infectious disease surveillance. Appendix A. Structure of State-Foreign Operations Appropriations Appendix B. Abbreviations Appendix C. State Department and Related Agencies Appropriations Appendix D. Foreign Operations Appropriations Appendix E. International Affairs (150) Budget Account | The annual State, Foreign Operations and Related Agencies appropriations bill is the primary legislative vehicle through which Congress reviews the U.S. international affairs budget and influences executive branch foreign policy making in general, as these activities have not been considered regularly by Congress through the authorization process since 2003. Funding for Foreign Operations and State Department/Broadcasting programs has been steadily rising since FY2002, after a period of decline in the 1980s and 1990s. Amounts approved for FY2004 in regular and supplemental bills reached an unprecedented level compared with the previous 40 years, largely due to Iraq reconstruction funding. Ongoing assistance to Iraq and Afghanistan, as well as large new global health programs, has kept the international affairs budget at historically high levels in recent years. The Obama Administration's FY2010 budget proposal indicated that this trend would continue. On May 7, 2009, President Obama submitted a budget proposal for FY2010 that requests $53.9 billion for the international affairs budget, a 2% increase over the enacted FY2009 funding level, including supplementals. Within that amount, $52.2 billion is for programs and activities funded through the State-Foreign Operations appropriations bill. The Administration requested significant increases to support additional foreign service officers at USAID and the Department of State, the Millennium Challenge Corporation, food security and agricultural development, counter-terrorism and law enforcement activities, and meeting U.S. commitments to international organizations. Among programs and regions for which the Administration recommended reduced funding, compared with estimated FY2009 levels, are economic assistance to Iraq; aid to Europe, Eurasia, and Central Asia; international peacekeeping; and foreign military financing. These comparisons, however, are in relation to unusually high FY2009 total funding levels in some accounts, and do not necessarily reflect shifts in policy or priorities. Key policy issues addressed in the Administration's request include enhancing the capacity of civilian diplomatic and development agencies, promoting U.S. leadership in multilateral development banks, and improving fiscal transparency by funding ongoing programs through the regular appropriations process rather than through supplemental appropriations. The proposal also seeks funding for at least two activities that have been rejected by Congress in the past—multilateral clean investment funds managed by the World Bank and the U.N. Population Fund (UNFPA). This report analyzes the FY2010 request, recent-year funding trends, and congressional action for FY2010, which includes the July 9 House approval of H.R. 3081, the State-Foreign Operations Appropriations bill for FY2010, July 9 Senate Appropriations Committee passage of its bill (S. 1434), and passage of H.R. 3288, the Consolidated Appropriations Act, 2010, signed into law Dec. 16, 2009 (P.L. 111-117). |
Prior to 1993, homosexuality was banned in the military under Department of Defense (DOD) regulations. The then-existing policy had been in place since the Carter Administration. During his campaign for the presidency, Bill Clinton promised that, if elected, he would "lift the ban." In response, Congress began considering legislation on the issue. Following his election, President Clinton implemented an interim policy seemingly suspending the existing policy until Congress could finish its work. Following a lengthy public consideration of the issue, Congress passed P.L. 103-160 , codified in 10 United States Code Section 654. This language codified the grounds for discharge from the military as follows: (1) the member has engaged in, attempted to engage in, or solicited another to engage in a homosexual act or acts; (2) the member states that he or she is a homosexual or bisexual; or (3) the member has married or attempted to marry someone of the same sex. In implementing the law, the Clinton Administration added language in regulations that went beyond the law and prohibited questioning military members and recruits about their sexuality. This policy became known as "Don't ask, Don't tell" or DADT. On January 27, 2010, during his State of the Union speech, President Obama stated his desire to work with Congress "to finally repeal the law that denies gay Americans the right to serve the country they love because of who they are." Shortly thereafter, on March 2, 2010, the Secretary of Defense appointed the Honorable Jeh Charles Johnson (General Counsel) and General Carter F. Ham to co-chair a working group to "undertake a comprehensive review of the impacts of repeal, should it occur, of Section 654 of Title 10 of the United States Code." The unidentified group formed to conduct this study became known as the Comprehensive Review Working Group or CRWG. The CRWG report was issued on November 30, 2010, although certain "findings" were leaked to the media before that date. Legislation was introduced ( H.R. 2965 ), modified, and after congressional passage, signed into law by President Obama as P.L. 111-321 on December 20, 2010, setting in motion the process for repealing Section 654, Title 10 United States Code and the "Don't Ask, Don't Tell" policy that was promulgated as a result of this law. According to P.L. 111-321 , repeal would take effect 60 days after the President, Secretary of Defense, and Chairman of the Joint Chiefs of Staff certify that they have "considered the recommendations contained in the CRWG report and the report's proposed plan of action," "the Department of Defense has prepared the necessary policies and regulations to exercise [the repeal of section 654, title 10 USC]," and; the policies and regulations pursuant to such a repeal are "consistent with the standards of military readiness, military effectiveness, unit cohesion, and recruiting and retention of the Armed Forces." The then-Secretary of Defense, Robert M. Gates, released a memorandum calling on DOD military and civilian leaders to deliver a plan for carrying out the repeal by February 4, 2011. This memorandum called for the creation of a Repeal Implementation Team (RIT) to develop plans for the repeal, update policies for publication following the repeal, train and prepare members of the force, and provide bi-weekly progress reports. (It is also noteworthy that the Pentagon would not keep statistics on gay service members.) The certification occurred on July 22, 2011. As a result, Section 654 and the DADT policy were repealed on September 20, 2011, 60 days after certification. According to reports, the Department of Defense decided on a three-tiered approach to implementing the repeal of DADT that focused on training and education of its personnel. Under this plan, tier one focused on those in senior leadership positions having to deal with the overall repeal process; this group includes military lawyers and chaplains. Tier two was for senior leadership who will oversee the education and training of troops in their commands. Finally, tier three was for the rank and file active duty, reserve component, and civilian defense employees. The enactment of P.L. 111-321 and subsequent DOD actions on DADT raise questions, including the following: What is the role of Congress in the oversight of the repeal process? Does DADT repeal apply to state National Guardsmen when not in federal service? What benefits are available to gay service members and their partners/dependents? Does the federal statute prohibiting the recognition of gay marriages create equal treatment issues? How will language in the Uniform Code of Military Justice, particularly the article prohibiting sodomy, be affected? Will a lack of federal language on the topic possibly allow administrative regulations prohibiting certain behaviors to be reinstated? This report will examine these issues. Under the Constitution, Congress has the authority "To make Rules for the Government and Regulation of the land and naval Forces." Congress, via its Members and committees, maintains oversight of the Armed Forces. It is the duty of the President to execute the laws and to draft the means of implementing these laws. In the case of the repeal of Section 654, Congress is removing the statutory language prohibiting open homosexuality and allowing the Administration to implement the rules and regulations, subject to this oversight. (Congress did not add new language to federal statutes.) Prior to the adoption of Section 654 (and the DADT policy), there were no federal statutes banning gay individuals from serving openly in the military. Instead, the ban was contained in various military regulations. Repeal of Section 654 returns to a situation in which there are no federal statutes regarding open service by gays. In this environment, it could theoretically be possible for this or any future Administration to draft regulations that resemble the pre-1993 ban or any number of similar restrictions. Some have suggested that it is necessary for Congress to go beyond repealing Section 654 and put into place statutory language that prevents a return to restrictions on service based on sexuality. Others dismiss the possible return to a gay ban as unlikely, particularly given such a change would be vulnerable to legal challenges, and therefore claim that the need for such legislation is unnecessary. Still others have noted that, lacking any prohibitions in law, it is possible for state governors to establish such rules for state National Guard members. Advocates for repeal of Section 654 suggested that Congress could go further in considering language that would prevent a governor from taking such actions. Concerns have also been expressed that such actions could potentially challenge or usurp a governor's authority when the National Guard is under state control. Congress may also respond to the repeal by exercising its oversight duties. For example, it could hold hearings, as well as propose legislative changes to laws/policies affected by the repeal of Section 654. To date, Congress has taken a number of actions: The House Armed Services Committee included the following proposed language in its version of the 2012 National Defense Authorization Act ( H.R. 1540 ): Section 533—Additional Condition on Repeal of Don't Ask, Don't Tell This section would amend the Don't Ask, Don't Tell Repeal Act of 2010 ( P.L. 111-321 ) to require the Chief of Staff of the Army, the Chief Naval Operations, the Commandant of the Marine Corps, and the Chief of Staff of the Air Force to submit to the congressional defense committees their written certification that repeal of the Don't Ask, Don't Tell law specified in section 654 of title 10, United States Code, will not degrade the readiness, effectiveness, cohesion, and morale of combat arms units and personnel of their respective armed force that are engaged in combat, deployed to a combat theater, or preparing for deployment to a combat theater. However, the final version of the National Defense Authorization Act did not contain this language. Other steps Members of Congress have taken include the following: During this repeal process, Representative Joe Wilson, chairman of the House Armed Services Committee's Military Personnel Subcommittee, stated that he planned to hold hearings on the repeal declaring it "'irresponsible' for Congress to repeal the ban on openly gay service without giving the House of Representatives time to hold hearings." To date, no hearings have been scheduled specifically on the topic of the repeal. On January 19, 2011, Representative Duncan Hunter introduced H.R. 337 , a bill that would amend P.L. 111-321 to expand the list of those needed to certify the repeal to include other members of the Joint Chief of Staff (JCS): the Chief of Staff of the Army, the Chief of Staff of the Air Force, the Chief of Naval Operations, and the Commandant of the Marine Corps. Supporters of H.R. 337 contend that it was important to have all military leaders in agreement and they have criticized relying on the certification of only three individuals who stated their support for repeal before the CRWG's work was underway. Opponents of H.R. 337 , and the earlier attempts to add similar language requiring the consent of the entire JCS viewed it as a "poison pill" given the hesitancy expressed by some JCS members during Senate Armed Services Committee hearings on DADT in December 2010. This bill was referred to the Committee on Armed Services without further action. According to a recent report, the chairman of the House Armed Services Committee, Representative Buck McKeon, "is seeking copies of the written assessments performed by each service about the impact of the policy change on recruiting, retention and readiness, which he believes could provide ammunition for an attempt to block the scheduled Sept. 20 date when the ban would lift once and for all." Again, it appears that this request has been overtaken by events with the repeal. With repeal of Section 654, Congress retains its oversight authority and may take other actions such as requesting reports or holding hearings with regard to the effects of repeal on military cohesion and effectiveness, disciplinary issues (such as any problems resulting from harassment or assault), and any regulatory changes that arise as a result of repeal, for example. A panoply of pay, benefits, and privileges are available to military personnel. Military dependents are also eligible to receive certain benefits and privileges as a result of their relationship with the military member. In certain cases, the description of the qualifying relationship exists in law. In other cases, a military member may be able to name a beneficiary or beneficiaries. Benefits based upon marriage could prove contentious with the repeal of Section 654. On September 21, 1996, the Defense of Marriage Act (DOMA) became law. Under this law, marriage is defined as the union between one man and one woman. The federal government, therefore, does not recognize same-sex marriages for the purpose of extending benefits and privileges, although several states do. Certain DOD benefits, such as Servicemembers Group Life Insurance (SGLI), require the service member to designate a recipient in the event of his or her death. In other cases, such as the Death Gratuity, the service member may designate a beneficiary. If the service member does not designate a beneficiary, then the law stipulates the beneficiary from a list, beginning with the spouse. The services may use this list to pay the first eligible beneficiary. In the case of a same-sex marriage, the spouse would not be recognized as an eligible beneficiary under this method because federal law does not recognize such marriages. Nevertheless, the military same-sex partner could opt to designate a beneficiary under the Death Gratuity. Other benefits, such as military health care, travel, survivor benefits, and military housing, explicitly designate, in law, who is an eligible beneficiary. In addition, policies on compassionate re-assignment and former spouse protection laws, for example, would not apply to same-sex couples. As a result of the DOMA and the explicit definitions of eligible beneficiaries in service statutes, a member of the military who is in a same-sex marriage will not be afforded the full benefits available to heterosexual couples. Other questions arise. For example, if a military same-sex couple adopts a child, arguably, the child would be eligible to attend DOD Dependent Schools. But the same-sex marriage would not be recognized in considerations for assignments, command-sponsored or otherwise. To go further, if the member dies in such a hypothetical case, the adopted child would be awarded the Death Gratuity ($100,000) unless the service member had explicitly designated the same-sex spouse as the beneficiary. Arguably, such varying treatment creates inequalities among service members that Congress or the courts may be asked to consider. In an effort to contend with the issue of variations in military benefits that may occur as the result of certain states recognizing same-sex marriages, it has been suggested that the most direct way to address the issue is to repeal DOMA. Over the years, various efforts have been made to repeal the law. Recent executive and legislative branch actions related to DOMA follow. In February 2011, Attorney General Eric Holder informed Congress that he considered DOMA to be "unconstitutional." He noted that Members of Congress could, if they wish, defend the law. Shortly after, language was introduced in the House and Senate supporting DOMA, and the Speaker of the House of Representatives, Representative John Boehner, announced that former Solicitor General Paul Clement would represent the House in its defense of DOMA. In February 2012, Attorney General Holder wrote in a letter to House Speaker John A. Boehner, "that the Justice Department shared the view of plaintiffs in a lawsuit in Massachusetts that such laws—including a part of the Defense of Marriage Act, and statutes governing veterans' benefits are unconstitutional." On April 13, 2011, Navy Chief of Chaplains Rear Admiral M. L. Tidd announced a change in policy allowing same-sex marriages to be performed in Navy Chapels. Following criticism by certain Members of Congress, on May 11, 2011, this policy change was "suspended." The House Armed Services Committee has included the following proposed language in its version of the 2012 National Defense Authorization Act ( H.R. 1540 ): Section 534—Military Regulations Regarding Marriage This section would affirm the policy of Section 3 of the Defense of Marriage Act (1 U.S.C. 7) that the word 'marriage' included in any ruling, regulation, or interpretation of the Department of Defense applicable to a service member or civilian employee of the Department of Defense shall mean only a legal union between one man and one woman. Section 535—Use of Military Installations as Site for Marriage Ceremonies and Participation of Chaplains and Other Military and Civilian Personnel in their Official Capacity This section would establish that marriages performed on DOD installations or marriages involving the participation of DOD military or civilian personnel in an official capacity, to include chaplains, must comply with the Defense of Marriage Act (1 U.S.C. 7), which defines marriage as only the legal union between one man and one woman. These sections were not included in the final version of the bill as passed. And lastly, the House Appropriations Committee included language in H.R. 2219 , its proposed FY2012 DOD Appropriations Act, stating, "No funds under the act may be used for activities in contravention of Section 7 of title 1, United States Code (the Defense of Marriage Act)." Section 7 of Title 1, U.S.C., defines marriage as the union of one man and one woman, and states that the term spouse refers to someone of the opposite sex. This language was not enacted. Senate versions of these bills did not contain similar language. The Senate version included the sentence, "A military chaplain who, as a matter of conscience or moral principle, does not wish to perform a marriage may not be required to do so." This language was enacted into law. Section 533 of the National Defense Authorization Act for Fiscal Year 2013 contains language protecting members of the military and chaplains from adverse personnel actions based on their conscience, moral principles, or religious beliefs. Under such language, chaplains cannot be compelled to perform same-sex marriages if such duties are not within their moral or religious beliefs. However, this raises the question as to whether chaplains can perform same-sex marriages in accordance with their beliefs at military facilities, without adverse personnel actions, if such unions are not recognized under DOMA? The issues of privacy and cohabitation were addressed by the CRWG, which recommended against segregated housing for gay and lesbian service members: Accordingly, we recommend that the Department of Defense expressly prohibit berthing or billeting assignments based on sexual orientation, except that commanders should retain the authority to alter berthing or billeting assignments on an individualized case-by-case basis, in the interest of maintaining morale, good order, and discipline, and consistent with performance of mission. In the report, the CRWG received comments from service members regarding privacy and cohabitation. Although the CRWG recommended commanders make such berthing and billeting decisions based on military interests, the recommendation allows for "case-by-case" considerations. The CRWG was concerned that separate facilities would lead to stigmatizing gays and lesbians, citing the "separate, but equal" treatment of blacks. However, privacy and cohabitation issues remain. For example, a same-sex couple could receive billeting or berthing assignments that would allow them to remain together, whereas such arrangements would not be considered for opposite-sex couples who are not married. Congressional treatment of sodomy in the military context has varied over time. In 1917, the Articles of War of 1916 were implemented prohibiting "assault with the intent to commit any felony, or assault with the intent to do bodily harm." In 1919, following revelations of "inappropriate behavior" among naval personnel in Newport, RI, then Assistant Secretary of the Navy Franklin D. Roosevelt organized a group of enlisted men to submit to "immoral acts" as part of the investigation. However, because the men submitted, charges involving "assault" did not apply as specified under the Articles of War. In 1920, Congress prohibited the act of sodomy itself. Later, Congress created the Uniformed Code of Military Justice (UCMJ) and included the sodomy provision as Article 125. Article 125 of the UCMJ prohibits sodomy: (a) Any person subject to this chapter who engages in unnatural carnal copulation with another person of the same or opposite sex or with an animal is guilty of sodomy. Penetration, however slight, is sufficient to complete the offense. (b) Any person found guilty of sodomy shall be punished as a court-martial may direct. However, the CRWG recommended that Congress repeal Article 125 in a manner consistent with the Supreme Court decision in Lawrence v. Texas . Although the Lawrence decision did not address the military context, the court did strike down as unconstitutional a state law that prohibited private consensual homosexual sodomy. Other acts involving sodomy, such as forcible sodomy, sodomy involving minors, or where it is "service discrediting," could be prosecuted under Articles 120, "Rape and carnal knowledge," or 134, "The General Article." The General Article states: Though not specifically mentioned in this chapter, all disorders and neglects to the prejudice of good order and discipline in the armed forces, all conduct of a nature to bring discredit upon the armed forces, and crimes and offenses not capital, of which persons subject to this chapter may be guilty, shall be taken cognizance of by a general, special, or summary court-martial, according to the nature and degree of the offense, and shall be punished at the discretion of that court. Legislative provisions have been included in the Senate version of the FY2012 National Defense Authorization Act that would repeal the crime of sodomy under the UCMJ (Article 125) and expand Article 120 ("Rape and Carnal Knowledge") to include three sections applying to (1) rape and assault against any person, (2) sexual offenses against children, and (3) other non-consensual sexual misconduct. According to the Senate Armed Services Committee report: "All offenses previously punishable as forced sodomy under this statute would be punishable under the proposed changes to Article 120, UCMJ." This language was not included in the final version of the law. However, had Art. 125 been repealed, consensual sodomy could not be prosecuted. In some ways, this change would have returned prosecution of sodomy to the pre-1920s situation where sexual behavior could only be prosecuted if force was used or an assault occurred such as rape, except for those behaviors covered under the mentioned General Article. The act of sodomy itself would no longer have existed as a separate crime under the Uniformed Code of Military Justice. Although Art. 125 remains in effect, prosecutions for "consensual" sodomy have not been reported; rather, cases involving 'forced' sodomy have been reported as being enforced. The repeal of Section 654 has encouraged some to advocate for other changes to the law and/or military policy. Activists have complained that despite the repeal, the military discriminates against transgender individuals. The term transgender, which encompasses a broad range of sexual identities and behaviors, applies to individuals whose gender identity does not conform to their assigned sex at birth. The president of the Transgender American Veterans Association says that with the repeal of the military's ban on open service by gays, transgender and transsexuals are 'the last minority that the Defense Department can and does discriminate against.' … Opponents of repealing the military's 'don't ask, don't tell' policy on gays have mentioned – usually in an effort to prevent repeal – the possibility that transvestites and transgender people would also have to be accepted. Based on military fitness policies, individuals who have a history of mental disorders that, in the opinion of the medical examiner, would interfere with or prevent satisfactory performance of military duties are not allowed to serve. Among the disorders cited are "sexual and gender identity disorders." (These disorders are listed in the International Classification of Diseases, 9 th Revision, Clinical Modification or ICD-9-CM, 302.) At one time, homosexuality was listed as a psychiatric disorder, but this was removed from the Diagnostic and Statistical Manual (DSM) in 1973. The 1973 decision to make the change concerning the removal of homosexuality from the DSM as a mental disorder was contentious among its members. Any similar change concerning transgender individuals by the APA, or successful court challenges, could affect military policies. (DSM and ICD have merged their codes.) In one example, following the passage of P.L. 111-321 establishing the process of repealing Section 654, a few college/university campus activists have used the "transgender discrimination" argument as a reason for continuing to block military service recruiters or Reserve Officer Training Corps (ROTC) programs from campus. However, there seems to be little evidence of this issue having adverse effects on military-academia relations. (In the past, those institutions that discriminate against the military by denying ROTC or recruiter access were to be reported in the Federal Register . A repeal of reporting requirements for schools that deny ROTC or recruiter access was contained in the National Defense Authorization Act for Fiscal Year 2013, Section 586.) With the enactment of P.L. 111-321 , and following the waiting period, Section 654 is repealed. However, Congress, the Department of Defense, and perhaps the courts may be presented with additional issues to consider. As a result, the final resolution to these additional issues may extend well beyond the repeal of Section 654 of Title 10, United States Code. | On December 22, 2010, President Obama signed P.L. 111-321 into law. It called for the repeal of the existing law (Title 10, United States Code, §654) barring open homosexuality in the military by prescribing a series of steps that must take place before repeal occurs. One step was fulfilled on July 22, 2011, when the President signed the certification of the process ending the Don't Ask, Don't Tell policy, which was repealed on September 20, 2011. However, in repealing the law and the so-called "Don't Ask, Don't Tell" policy, a number of issues have been raised, but were not addressed by P.L. 111-321. This report considers issues that Congress may wish to consider regarding matters arising as a result of the repeal of §654. Under the Constitution, Congress has the authority for making "rules for the government and regulation" of the military services. It has been suggested that Congress could hold hearings concerning such matters as the anticipated changes in other laws regarding military benefits, for example. Issues for consideration include, but are not limited to, congressional oversight of the repeal process, differences in benefits and privileges some individuals may experience (especially differences created under the Defense of Marriage Act), changes involving sodomy prohibitions, and efforts by some to expand the repeal to include transgender individuals. Certain military benefits and privileges are extended to spouses as defined by law. Under the Defense of Marriage Act, the federal government recognizes marriage as the union of one man and one woman. However, certain states recognize same-sex marriages. Thus, it is possible for a same-sex couple to be legally married but not eligible for certain military benefits and privileges. Laws prohibiting sodomy (defined as "unnatural carnal copulation") in the military context have varied over time. There existed proposed language in the Senate version of the National Defense Authorization Act in the 112th Congress that would remove sodomy from the Uniformed Code of Military Justice, effectively decriminalizing sodomy. Similar language did not exist in the House version. This language was not included in the final law. Instead, use of the term "forced" sodomy has been cited suggesting violations involving "consensual" sodomy will not be enforced. The repeal of the ban on homosexual behavior has encouraged some to expand efforts to end discrimination against transgender individuals. Based on military fitness policies, individuals who have a history of mental disorders that, in the opinion of the medical examiner, would interfere with or prevent satisfactory performance of military duties are not allowed to serve. Among the disorders cited are "sexual and gender identity disorders." (These disorders are listed in the International Classification of Diseases, 9th Revision, Clinical Modification or ICD-9-CM, 302.) At one time, homosexuality was listed as a psychiatric disorder, but this was removed from the Diagnostic and Statistical Manual (DSM) in 1973. Some have argued that other "gender disorders" should also be removed. Along these lines, advocates believe it is unfair for the military to continue to discriminate against these individuals. Others, however, believe that until the DSM and ICD-9-CM are changed, such individuals should continue to be barred from serving. |
The cease-fire between the Philippine government and the Moro Islamic Liberation Front (MILF), in effect since 2001, became jeopardized by a military clash between a force of 50 Philippine Marines and a force of an estimated 400, including MILF fighters, on Basilan island on July 10, 2007. Basilan is just west of the large Philippine southern island of Mindanao. The Marines were ambushed by a force that Philippine military (AFP) spokesmen described as consisting of MILF and Abu Sayyaf fighters. Fourteen Marines were killed, and ten were beheaded. The beheadings especially raised the level of tensions. The Marines entered an MILF area on Basilan designated under the 2001 cease-fire in search of an Italian priest who had been kidnapped, in response to intelligence reports that he was being held there. A MILF spokesman stressed that the AFP did not notify the MILF that the Marines would enter the MILF area. Under the cease-fire, a joint government-MILF Committee on Cessation of Hostilities is responsible for implementing the truce. Philippine government officials stated that the MILF knew of the Marines' rescue operations on Basilan and that the lack of official notification was not a legitimate reason for attacking the Marines. AFP officials asserted that Abu Sayyaf cadre likely did the beheadings, since beheadings are a trademark of the organization. The MILF acknowledged that its forces had participated in the attack on the Marines, but it denied that MILF cadre engaged in beheadings (beheadings, it said, violate Islamic law). The MILF was ambivalent on whether Abu Sayyaf cadre participated in the ambush. The situation escalated when the Philippine government demanded that the MILF turn over MILF cadre involved in the ambush and set a deadline of Sunday, July 22, 2007. Philippine National Security Adviser Norberto Gonzales stated that the government had submitted names to the MILF of MILF cadre involved in the ambush. The MILF declared that it would not surrender its cadre. The deadline passed, and the government and the AFP threatened to open major military operations against the MILF on Basilan and said that the AFP would hunt down the ambushers. The MILF countered that its forces on Basilan would "defend themselves to the death" and that an AFP offensive on Basilan would jeopardize Philippine government-MILF peace talks and that renewed fighting on Basilan could spread to Mindanao. The outcome of this confrontation has potential implications for the U.S. policy of providing military support to the AFP for operations against Abu Sayyaf in the southwest Philippines. The Bush Administration has sought to keep its military support role confined to operations against Abu Sayyaf. It has supported the cease-fire and peace talks between the Philippine government and the MILF. However, a breakdown of the negotiations and the cease-fire likely would confront the Bush Administration with policy decisions regarding a U.S. role in a wider war. (See the final section of this report, " Implications of U.S. Military Involvement ") President Gloria Macapagal-Arroyo voiced strong support for the United States in the aftermath of the September 11, 2001 terrorist attack. The Philippines, she said, is prepared to "go every step of the way" with the United States. President Arroyo allowed U.S. military forces to use Filipino ports and airfields to support military operations in Afghanistan. She cited morality and Philippine national interests as reasons for her pro-U.S. stand. She defined the national interest as linking a struggle against international terrorism with the struggle against terrorism within the Philippines. She supported the U.S. war against Iraq in March 2003, offering the U.S. military air space and refueling facilities and sent about 100 Filipino military personnel to Iraq for postwar assistance. However, in 2004, she withdraw the Filipino contingent from Iraq after Iraqi insurgents kidnaped a Filipino contract worker and threatened to kill him. Philippine terrorism has been multifaceted for at least three decades and has been carried out by different groups with different agendas. A significant communist insurgency, the New Peoples Army (NPA) in the 1970s and 1980s engaged in bombings, assassinations, and kidnapings. The communists today still have an estimated armed strength of over 10,000; and the Bush Administration designated the NPA as a terrorist group in August 2002. Criminal syndicates have practiced widespread kidnapings for ransom. The target of President Arroyo's policy, however, is Muslim insurgency and terrorism. This report provides an overview and policy analysis of the Abu Sayyaf terrorist group in the Philippines and the Philippine-U.S. program of military cooperation against it. It examines the origins and operations of Abu Sayyaf, the efforts of the Philippine government and military to eliminate it, the implications of a greater U.S. military role in attempts to suppress it, and the implications for dealing with the broader problem of Muslim insurgency and terrorism in the Philippines. The report will be updated periodically. Located on the big southern island of Mindanao and the Sulu island chain southwest of Mindanao, Filipino Muslims, called Moros, since the time of Spanish rule, revolted against Spanish colonizers of the Philippines from the 17 th century on, the American rulers of the early 20 th century, and Philippine governments since independence in 1946. From 1899 to 1914, the U.S. military conducted a number of campaigns to suppress Muslim insurgents in the southern Philippines—campaigns which were controversial because of heavy civilian casualties. Muslim grievances after 1946 focused on the growing settlement of Catholic Filipinos on Mindanao, which reduced the geographical area of a Muslim majority (there are about 7 million Filipino Muslims). Muslims revolted in the 1970s under a Moro National Liberation Front (MNLF), which demanded an independent Muslim state. An estimated 120,000 people were killed in the 1970s in heavy fighting between the MNLF and the Philippine armed forces (AFP). Since the late 1970s, there have been two trends in the Muslim problem. The first has been negotiations between the Philippine government and the MNLF. As a result, the MNLF abandoned its goal of an independent Muslim state. An agreement was reached in 1996 that created an autonomous Muslim region. This apparent positive trend was countered by the fragmentation of the Muslim movement. A segment of the MNLF broke away in 1978 and formed the Moro Islamic Liberation Front (MILF). The MILF demanded independence for Muslim populated regions and proclaimed that a Muslim state would be based on "Koranic principles." The MILF gained strength into the 1990s. By 1995-96, U.S. estimates placed armed MILF strength at 35,000-45,000 in seven provinces on Mindanao. The MILF had large base camps and functional governmental operations. Its operations included attacks on the AFP and planting bombs in Mindanao cities. A Bangsamoro Peoples Consultative Assembly of approximately 200,000 people was held in 1996 in MILF-held territory and called for an independent Muslim state. Stepped-up MILF military operations in 1998-99 prompted Philippine President Joseph Estrada to order an all-out military offensive against MILF base camps. The AFP captured the MILF's main base on Mindanao and damaged the MILF militarily. Since then, MILF armed strength has fallen to an estimated 13,000; but it remains the largest Muslim armed force. In 2001, Philippine government-MILF negotiations resulted in a cease-fire. The cease-fire had held, and there have been periodic peace negotiations between the government and the MILF. However, peace talks have come to a stalemate, and elements of the MILF have increased cooperation with Jeemah Islamiah, an Al Qaeda-affiliated terrorist group that emerged in Malaysia, Singapore, and Indonesia after the September 11, 2001 terrorist attack on the United States. Abubakar Janjalani, the son of a fisherman on Basilan island, formed Abu Sayyaf in 1990. Janjalani had become connected with a Muslim fundamentalist movement, Al Islamic Tabligh, in the 1980s. That organization received financial support from Saudi Arabia and Pakistan, including funds to send young Muslim men to schools in the Middle East. Janjalani studied in Saudi Arabia and Libya and became radicalized. When he returned to Basilan, he recruited two groups into Abu Sayyaf (meaning "sword bearer" in Arabic): dissidents from the MNLF and Filipinos who had fought with the Afghan mujaheddin rebels against the Soviet Union. Over the next five years, Abu Sayyaf staged ambushes, bombings, kidnapings, and executions, mainly against Filipino Christians on Basilan and the west coast of Mindanao. Its strength grew only slowly to an estimated 600 by 1995. Abu Sayyaf operations declined for four years after 1995, partly as a result of the 1996 settlement between the Philippine government and the MNLF. In 1998, AFP troops killed Abubakar Janjalani. His brother, Khadaffy, and Ghalib Andang took command. Then in 2000, Abu Sayyaf began kidnaping operations aimed at foreigners, with a principle aim of extracting ransom payments. In April 2000, Abu Sayyaf forces commanded by Andang, aboard fast speed boats, attacked a tourist resort in the Malaysian state of Sabah and kidnaped 21 foreigners, including Malaysians, Frenchmen, Germans, Finns, and South Africans. In July 2000, Abu Sayyaf seized three French journalists. It released the hostages later in the year after it received ransom payments, including money reportedly from European governments funneled through the Libyan government. Estimates of the amount of this ransom range from $10 to $25 million. According to Philippine government officials, Abu Sayyaf used the 2000 ransom to recruit new members, raising its strength to an estimated 1,000 or more, and acquire new equipment, including communications equipment and more fast speedboats. Abu Sayyaf used speedboats again on May 27, 2000, in venturing 300 miles across the Sulu Sea to attack a tourist resort on Palawan, the Philippines' large, westernmost island. Khadaffy Janjalani commanded the operation. Abu Sayyaf kidnaped 20 people, including three Americans. It took them to Basilan where they were held by a faction of Abu Sayyaf headed by a volatile individual, Abu Sabaya. Abu Sayyaf announced in June 2001 that it had beheaded one of the Americans, Guillermo Sobero, of Corono, California. It continued to hold Martin and Gracia Burnham, Christian missionaries of Wichita, Kansas, and Deborah Yap, a Filipino nurse. Most of the other abductees from Palawan were freed after more ransom was paid, reportedly as much as $1 million per person. Throughout 2000 and 2001, Abu Sayyaf kidnaped numerous Filipinos on Basilan and Mindanao, releasing some after ransom payments and executing others. Ex-hostages claimed Abu Sayyaf was demanding $2 million for the Burnhams. Philippine military operations since 2001, supported by the United States, have weakened Abu Sayyaf on Basilan and in the Sulu islands. Abu Sayyaf's armed strength is estimated to have fallen from 1,000 in 2002 to 200-400 in 2006 (200 estimated by Philippine National Security Adviser Norberto Gonzales). However, under the leadership of Khadaffy Janjalanai, Abu Sayyaf reoriented its strategy and appears to have gained new effectiveness as a terrorist organization. Janjalani de-emphasized kidnapings for ransom and instead emphasized developing capabilities for urban bombings. He improved ties with key military factions of the MILF and established cooperation with JI. He also re-emphasized the Islamic nature of Abu Sayyaf. Khadaffy moved some of Abu Sayyaf's operations and leadership from the Sulu islands to the mainland of western Mindanao. In March and April 2003, Abu Sayyaf, JI, and MILF cadre carried out bombings in Davao on Mindanao, which killed 48. Since March 2004, the Philippine government has announced that it uncovered several Abu Sayyaf plots to conduct bombings in Manila, including the discovery of explosives. One reported target was the U.S. Embassy. In April 2004, police officials reportedly determined that a February 2004 bombing of a Manila-based ferry, in which 194 people died, was the work of Abu Sayyaf and the Rajah Solaiman Movement, a group of radical Filipino Muslim converts from the Manila area. In February 2005, Abu Sayyaf carried out three simultaneous bombings in three cities, which indicated a higher level of technical and operational capabilities. In 2006, Abu Sayyaf bombed and destroyed the market in Jolo town on the island of Jolo. The Wall Street Journal of December 3, 2001, quoted Admiral Denis Blair, Commander-in-Chief of the U.S. Pacific Command, that "we're seeing increasing evidence that there are potential current links" between Abu Sayyaf and Osama bin Laden's Al Qaeda terrorist organization. It is accepted that Abu Sayyaf received funding and support from Al Qaeda in the early 1990s. Money came from Mohammed Jamal Khalifa, a Saudi and brother-in-law of bin Laden, who operated a number of Islamic charities in the southern Philippines. Ramzi Yoesef, an Al Qaeda operative, came to the Philippines in 1994. He and other Al Qaeda operatives reportedly trained Abu Sayyaf fighters. Yoesef established an Al Qaeda cell in Manila. Yoesuf used the cell to plan an assassination of Pope John Paul II, the planting of bombs aboard 12 U.S. airliners flying trans-Pacific routes, and the crashing of an airplane into the Central Intelligence Agency's headquarters in Langley, Virginia. Filipino police uncovered the cell in 1995 and provided information on the plot to the C.I.A. and F.B.I.. Yoesef later was arrested in Pakistan and extradited to the United States for trial over his complicity in the 1993 bombing of the World Trade Center. Filipino officials close to President Arroyo contended that the relationship declined after 1995 when the Ramzi Yoesuf plot was uncovered and Khalifa left the Philippines, and other experts concurred with this assessment. They cited the decline in foreign financial support as a key reason for Abu Sayyaf's expanded kidnapings for ransom. However, ties strengthened beginning in 2000-2001 apparently for several reasons. First, in the wake of the September 11, 2001 terrorist attack on the United States, Al Qaeda apparently decided to reconsider Abu Sayyaf as an ally against the United States. Second, in the late 1990s, Jeemah Islamiah and Al Qaeda cadre began to use MILF bases on Mindanao for training and planning operations, which brought JI into direct contact with Abu Sayyaf. Third, as stated previously, Khaddafy Janjalani reoriented Abu Sayyaf towards operations that were more in line with Al Qaeda-JI operations and thus established a stronger basis for cooperation. A secret AFP intelligence report of early 2000 reportedly asserted that Abu Sayyaf received training, arms, and other support from Al Qaeda and other Middle East terrorist groups. AFP officers subsequently reported that "foreign Muslims" were training Abu Sayyaf on Mindanao to conduct urban terrorism and that Osamu bin Laden had ordered stepped-up aid to Abu Sayyaf, including possibly $3 million in 2000. Hostages who escaped Abu Sayyaf captivity and Abu Sayyaf defectors gave similar accounts of Middle Easterners and Afghans conducting training in Abu Sayyaf camps in 2000 and 2001. In 2001, Khadaffy Janjalani reportedly approached Zulkifli, a key JI operative and requested that JI train Abu Sayyaf members. Zulkifli agreed and dispatched JI cadre to Abu Sayyaf camps. By mid-2005, Jeemah Islamiah personnel reportedly had trained about 60 Abu Sayyaf cadre in bomb assembling and detonation. On October 2, 2002, Abu Sayyaf operatives and two Indonesian members of JI conducted a bombing in Zamboanga on Mindanao that killed three people, including a U.S. Special Forces soldier. Several joint bombing operations followed. Abu Sayyaf-JI collaboration also resulted in another important development in Abu Sayyaf's emergence after 2000 as a bona fide member of the Al Qaeda-backed Southeast Asian terrorist network: Abu Sayyaf gained access to MILF camps where JI-MILF training was ongoing, and MILF commands began to support Abu Sayyaf-JI bombings. More evidence of JI-Abu Sayyaf collaboration came with the reports that two Indonesian JI cadre (Umar Patek and Dulmatin), accused of the 2002 Bali bombing, were with Abu Sayyaf forces on Jolo island, as well as at least three other JI members. Leaders of the MILF and MNLF have denied any supportive links with Abu Sayyaf. They have criticized Abu Sayyaf's terrorist attacks against civilians. The MILF rejected the Afghan Taliban's call for a jihad against the United States and condemned the September 11 attack. They have disavowed cooperation with JI and Abu Sayyaf. However, there have been many reports of links between elements of the MILF and Al Qaeda and JI. One example is the findings of the Singapore government following the uncovering of a JI plot in December 2001 to stage multiple bombings in Singapore. Singapore officials reported in January 2002 that an MILF trainer and bomb specialist assisted the group of 13 members of Jeemah Islamiah arrested in Singapore in December 2001 for plotting to bomb U.S. and other foreign targets in Singapore. Subsequent reports in 2002, particularly of Singapore's investigation of Jeemah Islamiah, substantiated that the MILF provided key training and other assistance in recent years to members of Jeemah Islamiah. Jeemah Islamiah also was believed responsible for the bombing in Bali, Indonesia, in October 2002. One of the first pieces of hard evidence of MILF cooperation with Abu Sayyaf was the bombings in Davao on Mindanao in March and April 2003, which killed 48. Zachary Abuza, U.S. expert on Islamic terrorism in Southeast Asia, has identified four of eight MILF base commands as sites of active MILF cooperation with Abu Sayyaf and JI. He also has identified the MILF's Special Operations Group as facilitating joint training and joint operations with Abu Sayyaf. Khadaffy Janjalani and other Abu Sayyaf leaders reportedly have received sanctuary in at least one MILF base camp. The July 2007 ambush of the Philippine Marines on Basilan may be another case of cooperation between a local MILF command and Abu Sayyaf, given the longstanding ties between the two groups on Basilan and the reported Abu Sayyaf attempt to re-establish a significant presence on Basilan after the setbacks suffered in 2002 as a result of the Philippine military operations supported by the United States. Another element in Abu Sayyaf-MILF collaboration reportedly is their relationship with the Rajah Solaiman Movement (RSM). Unlike Muslims of the southern Philippines, the RSM appears to be composed primarily of Filipinos from the northern Philippines, including the Manila area. It has emerged from the estimated 200,000 Filipinos who have converted to Islam since the 1970s; many of these are Filipinos who worked in the Middle East where they converted. The RSM's manpower strength is unknown, but Philippine intelligence reports indicate that it has cells throughout the main island of Luzon, including metropolitan Manila. Abu Sayyaf apparently moved to collaborate with the RSM in order to extend its reach to Manila and other parts of the northern Philippines. A Manila bombing plot uncovered in March 2005 involved the RSM and Abu Sayyaf, according to Philippine intelligence officials. The RSM has cooperated with Abu Sayyaf in several bomb plots including the February 2004 Manila ferry bombing. The RSM also has received financial support and training from elements within the MILF. The RSM leader, Ahmed Islam Santos, underwent training in bombing in the MILF's Camp Bushra on Mindanao in December 2001. This collaboration also suggests that key MILF commanders may not support any agreement between the MILF and the Philippine government, coming out of the post-cease-fire negotiations, that would not include outright independence for the Muslim areas of the southern Philippines. In that scenario, the MILF could split with hardline elements joining even more closely with JI and Abu Sayyaf, which would maintain a high level of terrorist operations despite a settlement agreement. The basic Philippine government policy since August 2000 has been constant military pressure on Abu Sayyaf. In September 2000, President Estrada ordered the AFP to commit over 1,500 troops into Jolo (pronounced "Holo") to conduct operations against Abu Sayyaf units that had taken the foreign hostages in Malaysia. President Arroyo in 2001 ordered 4,500 AFP troops into Basilan island after Abu Sayyaf's hostage-taking on Palawan. In mid-2002, after the completion of the U.S.-supported AFP operation on Basilan, President Arroyo ordered more troops to Jolo Island with the aim of wiping out Abu Sayyaf in its stronghold. AFP strength on Jolo reached 7,000 in 2006. AFP operations have been limited by several factors. One is the mountainous, jungle terrain of the two islands pockmarked by underground caves. A second is the support civilians on Jolo and Basilan reportedly give Abu Sayyaf, although surveys of Muslims on Basilan suggested that many are disillusioned by Abu Sayyaf's violence. A third has been the limited military equipment of the AFP, including an absence of night vision and other surveillance equipment and shortages of helicopters, mortars, naval patrol craft, surveillance aircraft, and even basic necessities like military boots. U.S. military aid has made up for some of these shortfalls of equipment. In January 2007, a major success came when the AFP killed Abu Sayyaf leader, Abu Solaiman, and identified the body of Khadafi Janjalani, the top Abu Sayyaf leader, whom the AFP apparently killed in a battle on Jolo in September 2006. A fourth limitation appears to have been the unevenness in the quality of the AFP. The apparent attrition of Abu Sayyaf strength in 2002 and afterwards reflected AFP successes. However, the fighting on Jolo from 2002 through 2005 appears to have been a stalemate. There also have been reports of corruption within the AFP which have produced failed operations. The most controversial was the failed encirclement of the Abu Sayyaf unit holding the Burnhams and Filipino hostages in a church in the town of Lamitan in June 2001. Several AFP units pulled out of their positions without explanation, allowing the Abu Sayyaf unit to break out of the encirclement. A Catholic priest and other witnesses charged that Abu Sayyaf had bribed AFP commanders to pull units from their positions, and Filipino Catholic bishops called for an inquiry. A Philippine Senate Committee prepared a report in August 2002 citing "strong circumstantial evidence" that AFP commanders at Lamitan had colluded with Abu Sayyaf. In her book about her captivity, Gracia Burnham described Abu Sayaf bribery of Filipino military officials and Abu Sayyaf payoffs to AFP personnel in return for military supplies. A fifth limitation was the hostage situations. In 2000, European governments reportedly pressured the Philippine government to refrain from "excessive" military operations while Abu Sayyaf held the European hostages. In 2002, there reportedly was similar U.S. pressure regarding the Burnhams. Arroyo Administration officials and AFP commanders said they were restrained from air bombing and using artillery and mortars out of concern for the safety of the hostages. A sixth limitation was the AFP deployment of most of its forces in the southern Philippines in the broader areas of Mindanao dominated by the MILF and MNLF. Only a small percentage of Filipino troops was committed against Abu Sayyaf. A final constraint was the danger of AFP operations producing a large numbers of civilian casualties or displaced civilians. The Estrada Administration came under criticism in 2000 over reports that the AFP offensive on Jolo caused civilian casualties and displacement among the island's 600,000 residents. The collaboration of Abu Sayyaf with the MILF and JI also appears to be placing limitations on Philippine operations against Abu Sayyaf. Abu Sayyaf undoubtedly has taken advantage of the truce between the MILF and the Philippine government to establish links with the MILF and JI and gain access to MILF base camps for training and sanctuary. This probably was a factor in the ambush of Philippine Marines on Basilan in July 2007 by an apparent combined MILF-Abu Sayyaf force. The cease-fire has resulted in a substantial reduction in violence and armed clashes. However, the truce apparently has not reduced the movement of JI terrorist personnel and materials between Mindanao and the Indonesian island of Sulawesi under the direction of JI, nor has it prevented JI's growing collaboration with Abu Sayyaf. Negotiations between the Philippine government and the MILF have been protracted and inconclusive. Government predictions of an agreement in 2006 were not realized. Substantial issues and disagreements between the two sides remain to be resolved. One is the issue of "ancestral domain," the size and geographical configuration of an autonomous Muslim entity. The MILF has proposed a unified area geographically. It is traditionally Muslim but includes locales where Christians are the majority. The government has proposed a smaller, "leopard spot" configuration with no geographical unity that is more supportive of Christian populations and powerful Christian political families. The MILF has rejected a government proposal for a census and plebiscite in locales to determine whether they would be included in the Muslim autonomous entity. Another issue is the constitutional-political system in an autonomous Muslim entity: whether an electoral democracy or a traditional system led by Muslim religious and tribal leaders. The issue of elections is particularly important, given the history of extensive vote fraud in the Muslim areas of Mindanao, often with the connivance of national Filipino political parties and leaders. The nature of security forces remain to be resolved, including the jurisdiction of the AFP and the Philippine National Police (PNP) in the Muslim entity. The MILF also seeks agreement on a referendum to be held at some point to determine the final political status of the Muslim entity; such a plebiscite could include an option for full independence. The future role of the MNLF and other non-MILF groups also is a point in dispute between the MILF and the MNLF. The MNLF still has political influence in parts of Muslim Mindanao and the Sulu islands. An Autonomous Region for Muslim Mindanao, negotiated between the Philippine government and the MNLF in 1976, remains in existence, although the government of the Autonomous Region is considered weak and ineffective. Powerful Muslim political families remain independent of the MILF and MNLF and have connections with the Manila government and Filipino political leaders. Beginning in October 2001, the United States sent groups of military observers to Mindanao to assess AFP operations against Abu Sayyaf, render advice, and examine AFP equipment needs. President Bush extended $93 million in military aid to the Philippines when President Arroyo visited Washington in November 2001, and he offered a direct U.S. military role in combating Abu Sayyaf. President Arroyo insisted that the U.S. military role should be advisory and that the AFP would retain full operational responsibility. By late December 2001, the AFP on Mindanao began to receive quantities of U.S. military equipment. Moreover, AFP commanders suggested that they would support President Arroyo if she sought a more direct U.S. military role. The early proposals of the Bush Administration envisaged a large, direct, and assertive role for U.S. forces: a direct combat role for U.S. military personnel, the commitment of the elite Delta Force to lead operations to rescue the Burnhams, and assistance to the AFP against Abu Sayyaf. However, negotiations with the Philippines over the rules of engagement for the Balikatan exercise resulted in a more limited U.S. role, as Filipino officials insisted on a non-combat role for the Americans, operations against only Abu Sayyaf, and a geographical limitation of U.S. operations to only Basilan island and the Zamboanga peninsula. In February 2002, the United States dispatched 1,300 U.S. troops to provide training, advice, and other non-combat assistance to 1,200 Filipino troops against Abu Sayyaf on Basilan island in an operation dubbed "Balikatan" (shoulder-to-shoulder). The U.S. troops included 160 Special Operations personnel and over 300 troops, primarily Navy engineers, to undertake "civic action" projects such as road-building on Basilan. Philippine-U.S. rules of engagement provided that two-man U.S. Special Forces teams could accompany AFP companies in the field on Basilan island. U.S. military officials in the Philippines reportedly favored an early implementation of this plan; but some Bush Administration officials in Washington, including Secretary of Defense Rumsfeld, developed second thoughts about this U.S. role. Rumsfeld did not detail these misgivings, but several have been reported and/or seem apparent. Command arrangements were a difficult issue in Philippine-U.S. negotiations over rules of engagement. The Americans refused to place U.S. personnel under Filipino command but agreed that U.S. personnel would take "operational instructions from Filipino commanders" in the field. Rumsfeld and other officials, however, may have had continued doubts about this kind of arrangement. Relatedly, the uneven and sometimes poor quality of AFP units may have added to these doubts. In mid-June 2002, the Filipinos and Americans finalized arrangements for U.S. Special Forces in the field. U.S. Special Forces personnel would accompany only selected AFP companies that had reached certain specified combat skills and on only closely defined missions. Moreover, this arrangement would end on July 31, 2002, the official termination date of the Balikatan operation. Any extension would have to be re-negotiated. In reality, the arrangements were not implemented before the July 31 deadline. U.S. policy toward the Burnhams, the American missionary couple held hostage, contained several shifts. After the U.S. offer of the Delta Force was ruled out, American officials reportedly advised their Filipino counterparts to exercise military restraint in order to limit the danger to the Burnhams. The Bush Administration made a decision, probably in March 2002, to support the payment of ransom to Abu Sayyaf. The payment of $300,000 reportedly was made by private parties, probably through intermediaries that had contacts with Abu Sayyaf. U.S. FBI officials reportedly helped to deliver the money in April 2002. Abu Sayyaf did not release the Burnhams. The money reportedly did not go to the Abu Sayyaf group under Abu Sabaya which held the hostages. Instead, it went to the Jolo-based Abu Sayyaf faction under Khaddafy Janjalani, who reportedly refused to turn it over to Abu Sabaya. The Bush Administration has not disclosed what went wrong with the ransom attempt. Following the failed ransom attempt, U.S. officials reportedly shifted from their pro-restraint position and advised the AFP to adopt more aggressive tactics to rescue the Burnhams. The U.S. military provided the AFP with intelligence information that Abu Sayyaf moved the Burnhams from Basilan to the Zamboanga peninsula in April 2002 and with key intelligence in the AFP's assault on the Abu Sayyaf team holding the hostages on June 7, 2002. Martin Burnham and Filipino hostage, Deborah Yap, were killed during the fighting; Gracia Burnham was rescued. Despite these changes in the U.S. military role and in U.S. policies and the less than successful attempt to rescue the Burnhams, the Balikatan exercise appears to have accomplished several U.S. goals. Philippine-U.S. security cooperation was advanced. AFP commanders viewed the U.S. role in Balikatan positively, and President Arroyo continued to advocate this kind of cooperation. Most reports indicate that U.S. support enhanced the capabilities of AFP units on Basilan. The period after February 2002 saw more assertive AFP patrolling on Basilan, more encounters with Abu Sayyaf, and an erosion of Abu Sayyaf strength, which apparently led to the Abu Sayyaf decision to leave Basilan with the Burnhams. In March 2003, Philippine officials estimated Abu Sayyaf strength at about 470 with about 380 on Jolo Island. As stated previously, later estimates placed Abu Sayyaf strength between 200 and 400 fighters. Filipino officials voiced praise for the modern equipment U.S. forces provided the AFP, U.S. intelligence information provided by U.S. aircraft and sophisticated communications and tracking equipment, and American assistance in planning operations. U.S. equipment and surveillance were important in the AFP's successful operation later in June 2002 in intercepting Abu Sabaya and other Abu Sayyaf leaders at sea in which Abu Sabaya was killed. The Bush Administration's initiative in offering 350 U.S. personnel to conduct civic action projects on Basilan reportedly proved popular with the people on the island and probably helped to neutralize public support for Abu Sayyaf on the island. The civic action projects (road building, medical care, and well-digging) may have influenced a less negative reaction of Filipino Muslims elsewhere to the U.S. military role, and the favorable Filipino media coverage appears to have helped President Arroyo contain the critics of the United States within the Manila political elite. A key decision for post-July 31 cooperation was whether to extend the U.S. support and assistance role southward from Basilan to Jolo (pronounced "Holo") and other islands in the Sulu group where Abu Sayyaf continued to operate. There was evidence of tough Philippine-U.S. negotiations on this issue and possible division within the American side. President Arroyo and Secretary of Defense Angelo Reyes voiced support for a U.S. assistance role in the Sulus. The continued Abu Sayyaf bombings in autumn 2002 led the U.S. Defense Department to give increased attention to Jolo, an island in the Sulu chain south of Basilan with a population of 620,000 and 648 square miles of rugged mountains and jungle. U.S. officials also cited stronger evidence of connections between Abu Sayyaf and international terrorist groups. Planning and discussions with the Philippine government were underway by December 2002. In February 2003, Pentagon officials described a plan under which the United States would commit 350 Special Operations Forces (SOF) to Jolo to operate with AFP Army and Marine units down to the platoon level of 20-30 troops. Another 400 U.S. support troops would be at Zamboanga on the Mindanao mainland. Positioned offshore of Jolo would be a navy task force of 1,000 U.S. Marines and 1,300 Navy personnel equipped with Cobra attack helicopters and Harrier jets. According to the Pentagon description of the plan, U.S. troops would be in a combat role. This and subsequent statements indicated that the SOF on Jolo would participate in AFP offensive operations against Abu Sayyaf and that the SOF would not be limited to using their weapons for self-defense. The U.S. Marines were described as a "quick reaction" force, undoubtedly meaning that they could be sent on to Jolo to reinforce AFP units. The Cobra helicopters and Harrier jets would give AFP commanders the option of requesting U.S. air strikes in support of AFP operations. These rules of engagement went beyond the U.S. role on Basilan in 2002. President Arroyo and AFP commanders reportedly had agreed to the plan in a meeting of February 4, 2003. The announcement of the plan caused immediate controversy in the Philippines. Filipino politicians and media organs criticized the plan as violating the constitutional prohibition of foreign troops engaging in combat on Philippine soil. Filipino Muslim leaders warned of a Muslim backlash on Mindanao. Filipino experts and civic leaders on Jolo warned that the people of Jolo would not support a U.S. combat role, partly because of the history of U.S. military involvement on the island. During the Philippine wars following the U.S. annexation of the Philippines in 1898, U.S. forces commanded by Generals Leonard Wood and John J. Pershing conducted extensive combat operations against Muslim forces on Jolo, inflicting thousands of civilian casualties. President Arroyo reacted to these criticisms and warnings by asserting that the U.S. role on Jolo would be to train and advise under AFP jurisdiction but would not involve combat. The Bush and Arroyo administrations decided to put the plan on hold and re-negotiate the rules of engagement of U.S. forces. However, after 2002, the United States and the Philippines implemented another phase of U.S. training and support of the AFP, the training of AFP light infantry companies for use against both Muslim insurgents and the communist New People's Army. In 2004, the two sides began to negotiate alternative schemes for military cooperation against Abu Sayyaf. The result was two operations that began in 2005 and continue to the present. One has focused on Abu Sayyaf on western Mindanao, undoubtedly in response to Khadafi Janjalani's shift of Abu Sayyaf operations to the Mindanao mainland. The second focused on Jolo but with a reduced U.S. military role as compared to the plan of 2003. The total U.S. military component in the southern Philippines involved in the operations is normally about 450. The operations apparently have had three objectives: (1) neutralize Abu Sayyaf-Jeemah Islamiah training; (2) kill or capture Khadafi Janjalani and other Abu Sayyaf leaders; and (3) root out the Abu Sayyaf forces and organization on Jolo in a similar fashion to the success on Basilan in 2002. The U.S. military role in western Mindanao reportedly has involved intelligence and communications support of the AFP, including the employment of U.S. P-3 surveillance aircraft; deployment of Navy Seal and Special Operations personnel with AFP ground units; and rules of engagement restricting U.S. personnel to a non-combat role (although such rules normally would allow U.S. personnel to defend themselves if attacked). U.S. and Filipino military personnel also have conducted several military and training exercises in MILF-dominated areas of Mindanao since 2005. U.S. troops landed on Jolo in 2005. The number of U.S. troops on the island has ranged between 180 and 250. Their mission has been to support 7,000 Filipino troops (ten battalions) on the island against Abu Sayyaf. Their role is non-combat similar to the U.S. role on Basilan in 2002. U.S. military personnel live within Philippine military camps and always operate with AFP units. They can use their weapons only when fired upon. U.S. military support on Jolo has the following main components: Training of AFP battalions in conducting operations. This has emphasized training for night combat. As of mid-2007, two Filipino Special Forces battalions and one Scout Ranger battalion were considered fully trained, and the remaining Philippine Army and Marine battalions were undergoing training. Providing equipment to the Philippine battalions, including communications equipment and night vision goggles. Providing intelligence technology to the AFP. Assistance to the AFP in planning operations. Providing aerial intelligence reconnaissance to locate Abu Sayyaf units and personnel in Jolo's jungles. Conducting civic action programs with the AFP to improve the lives of the local populace and turn it against Abu Sayyaf. U.S. troops have repaired and built piers for fishermen and have constructed roads, water purification installations, and farm markets. They have renovated schools and provided medical care. Support U.S. AID projects on Jolo on neighboring Tawi Tawi island, including a new market for Jolo town and a major pier on Tawi Tawi. Reports indicate major successes for the AFP operation on Jolo backed by the United States since 2005, but Abu Sayyaf has not been eliminated. Abu Sayyaf strength on Jolo is down to an estimated 200-300. It has been pushed back to remote areas on the island. Senior leaders have been killed, including Khadafi Janjalani and Abu Solaiman. However, JI leaders Umar Patek and Dulmatin remain at large. Security has improved in many parts of the island as the AFP has established a permanent presence in many of the areas cleared of Abu Sayyaf. New businesses have emerged in the main towns, and people venture out at night. The incidence of bombings and ambushes has declined. The attitude of the people of Jolo toward the U.S. military generally has been positive. As on Basilan in 2002, U.S. conducted and supported civic action projects have been well received by the people. Philippine-U.S. military cooperation against Abu Sayyaf has rebuilt a Philippine-U.S. alliance that had weakened considerably after the Philippines ended U.S. rights to military bases in the Philippines in 1993. During President Arroyo's state visit to Washington in May 2003, the Bush Administration designated the Philippines as a Major Non-NATO ally, a status that could make the Philippines eligible to receive more sophisticated U.S. arms and military training. U.S. support appears to have increased the effectiveness of the AFP in counter-insurgency operations. It also appears to have increased the awareness and commitment of AFP commanders in the southern Philippines to the non-combat components of counter-insurgency strategy. The joint operations and exercises appear to have strong support from the Filipino populace. They served to limit the potential rift between Manila and Washington in 2004 when President Arroyo withdrew the small AFP contingent from Iraq in response to the taking of a Filipino contract worker hostage by insurgents in Iraq. However, the enlarged U.S. military role also carries the risk of political backlashes. Influential Filipino "nationalist" and leftist groups criticized the U.S. military role in Basilan, even though polls indicated overwhelming Filipino public support for it and the influential Catholic Bishops Conference endorsed it. They charged that the U.S. military role violated the Philippine constitution and that the United States was plotting to secure permanent military bases again. This kind of controversy likely will emerge again if the new U.S. military role in the southern Philippines expands into a combat role or if the United States becomes involved in a new Philippine-MILF war. Moreover, incidents involving U.S. military personnel and Filipino civilians have the potential to turn Filipino opinion negative toward the United States. At the end of 2005, four U.S. Marines, stationed on Okinawa, were charged formally with raping a Filipino woman while they were in the Philippines for a military exercises. One Marine was convicted in a Philippine court. The case drew much publicity in the Philippines, particularly over the application of the 1998 Philippine-U.S. Visiting Forces Agreement to the case and especially to the issue of who would hold custody of the Marines until their trial was held and where the convicted Marine would be imprisoned. The U.S. military undoubtedly will be influenced by the increasingly complex Muslim terrorist and insurgency situation that has developed since 2002. As stated previously, Abu Sayyaf's armed strength has dwindled to a few hundred. The cease-fire between the MILF and the Philippine government has held. However, there are other developments of a negative nature that could worsen the overall situation in the southern Philippines and even the Philippines as a whole. Philippine government-MILF negotiations for a political settlement have stalemated; a continued stalemate could weaken the commitments on both sides to maintain the cease-fire and embolden "hard liners" who favor renewing armed struggle. Another negative is the cooperation among Abu Sayyaf, several major MILF commands, and elements of Jeemah Islamiah on Mindanao. JI appears to use Mindanao as a primary base for building up its cadre of terrorists. This cooperation among the three groups appears to be transforming Mindanao into a significant base of operations rather than just a site for training; and these operations appear to target the Philippines for terrorist attacks rather than just neighboring countries. The result was the increase in terrorist bombings since 2002 both in number and destructiveness and an increase in the number of bombings and bomb plots in the northern Philippines, including Manila. The Bush Administration has expressed growing concern over MILF links with JI and Abu Sayyaf and JI's use of the Mindanao-Sulawesi corridor to move terrorists and bombing materials between the Philippines and Indonesia. In April 2005, the U.S. Charge d'Affaires in Manila, Joseph Mussomeli, caused an uproar among Filipino officials when he stated that parts of Muslim Mindanao, with its poverty, lawlessness, porous borders, and links to JI could development into an "Afghanistan-style" situation. In May 2005, U.S. Ambassador Francis Ricciardone announced the cancellation of a U.S.-aided road project in Cotabato province in southern Mindanao, describing Cotabato as a "doormat" for Muslim terrorists. These statements indicated U.S. dissatisfaction with the situation on Mindanao and doubts about the Philippine government's ability to end Muslim terrorism. The Bush Administration has considered placing the MILF on the U.S. list of terrorist organizations. However, the Arroyo Administration has opposed such a move as potentially jeopardizing the peace negotiations. As of the beginning of 2006, the Bush Administration has voiced support for the Philippine-MILF peace negotiations as the best means of de-linking the MILF from JI and Abu Sayyaf. This support boosts the Arroyo Administration against the AFP's advocacy of a militarily-aggressive strategy toward the MILF. Nevertheless, the new U.S. military role in western Mindanao increases the risk of a clash involving U.S. military personnel with the MILF. Since January 2006, U.S. military personnel have conducted several training missions for AFP personnel in the heart of MILF territory. The U.S. contingents have carried out civic action projects (medical, dental, and veterinary services) in nearby Muslim villages. The U.S. initial U.S.-AFP training exercise drew a protest march by Muslim civilian groups allied with the MILF and a warning from an MILF central committee official over the increasing presence of U.S. military forces in the Muslim areas of Mindanao. However, MILF leaders have said they will accept such a U.S. role as long as it is peaceful. Moreover, a breakdown of the negotiations and the cease-fire likely would confront the Bush Administration with policy decisions regarding a U.S. role in a wider war. This is the danger posed by incidents like the July 2007 MILF ambush of the Philippine Marines on Basilan. The AFP could be expected to propose increased supplies of U.S. arms and military equipment; and it likely would argue for a more direct U.S. military role. The Philippine government might change its previous policy of opposition to a U.S. military role against the MILF and encourage U.S. actions against the MILF at least in a role similar to that in the joint operations against Abu Sayyaf. If significant elements of the MILF opposed a peace agreement and moved closer to JI and Abu Sayyaf, and if they were able to continue or expand terrorist operations, the Bush Administration would be faced with a different kind of challenge but one that could include similar pressures for greater U.S. military involvement. That, too, would be the case if a peace agreement were not followed by effective measures against JI on Mindanao. There also would be the challenge of proceeding with implementing projects financed by $260 million in U.S. aid to Mindanao since 2001 (including $25 million in FY2006). This commitment, too, could confront the Administration with a policy decision of whether or not to employ U.S. pressure on the Philippine government to implement faithfully its obligations under a peace agreement. This scenario is plausible, given the reputed poor performance of Philippine governments in implementing the 1977 and 1996 agreements with the MNLF. | From January 2002 until July 31, 2002, the United States committed nearly 1,300 troops to the Philippines to assist Philippine armed forces (AFP) in operations against the Abu Sayyaf terrorist group in the southern Philippines, on the island of Basilan southwest of Mindanao. From 2005 into 2007, the U.S. committed up to 450 military personnel to western Mindanao and Jolo island south of Basilan These U.S. non-combat, support operations were in response to Philippine President Arroyo's strong support of the United States following the September 11 Al Qaeda attack on the United States. A historic Muslim resistance to non-Muslim rulers in the Philippines broke out into massive rebellion in the 1970s. Two large resistance groups, a Moro National Liberation Front (MNLF) and a Moro Islamic Liberation Front (MILF) fought the Philippine government into the 1990s and entered into tenuous truces in 1996 and 2001 respectively. Abu Sayyaf emerged in 1990 as a splinter group composed of former MNLF fighters and Filipinos who had fought in Afghanistan. Abu Sayyaf resorted to terrorist tactics, including executions of civilians, bombings, and increasingly kidnapings for ransom. Abu Sayyaf had links with Osamu bin Laden's Al Qaeda organization in the early 1990s, but these links reportedly dwindled in the late 1990s. After the 2002 Balikatan operation, the remaining Abu Sayyaf leadership established links with Jeemah Islamiah (JI), an Al Qaeda-affiliated group in Southeast Asia that had begun to use Mindanao for training and organizing terrorist strikes. Abu Sayyaf also established links with Rajah Solaiman, a radical Muslim group made up of Filipinos from the northern Philippines who had converted to Islam. Together, these groups carried out major bombings after 2003, including bombings in metropolitan Manila. Philippine government policy has been to apply military pressure on Abu Sayyaf. Operations have been constrained by several factors including difficult terrain, inadequate Philippine military equipment, avoiding clashing with the MILF and MNLF, and reportedly high level of corruption in the Philippine military. U.S. military support, however, did achieve successes. AFP operations against Abu Sayyaf became more aggressive and effective against Abu Sayyaf on Basilan in 2002 and on Jolo island in 2006-2007; Abu Sayyaf strength was seriously eroded to an estimated 200-300, and key commanders have been killed. AFP commanders praised U.S. equipment, U.S. intelligence gathering, and U.S. assistance in planning AFP operations. The U.S. military's civic action projects on Basilan and Jolo appeared to weaken support for Abu Sayyaf on the islands. In 2005, U.S. forces began direct support missions for the Philippine military in western Mindanao against Abu Sayyaf, and U.S. military personnel began joint training exercises with the AFP in MILF areas of Mindanao. U.S. officials expressed concern over the presence of JI on Mindanao and links among JI, Abu Sayyaf, and the MILF. The Bush Administration supported the ongoing peace talks between the Philippine government and the MILF as the best means of eroding the MILF-JI linkage. However, coordination among Abu Sayyaf, JI, and elements of the MILF present the threat of a wider terrorist war in the Philippines and could confront the Bush Administration with decisions for greater U.S. involvement. |
In the year since this report was published in March 2001, Vietnam's labor rights situation appears to remain fundamentally unchanged. The Vietnamese Ministry of Labor, Invalids and Social Affairs (MoLISA) has spearheaded a tripartite revision of Vietnam's 1994 Labor Code. The revisions are due to be debated in the National Assembly in April 2002. From what is known about the revisions, they are likely to help improve working conditions at the margin through such measures as streamlining Vietnam's cumbersome administrative procedures and expanding the country's social insurance system. Notably, the proposed revisions to collective bargaining requirements—outlined below—appear to signal the government's recognition that organizing at the grass-roots, enterprise level needs to be further encouraged and facilitated. However, by themselves the revisions are not likely to significantly help the Vietnam General Confederation of Labor (VGCL) establish its credibility in the rapidly expanding private and foreign-invested sectors. By law, all official unions will still be required to register with the VGCL. Many workers in these sectors see little benefit in joining the official umbrella labor organization, which traditionally has focused on providing social activities rather than pressuring employers for improved wages and working conditions. One result is that some workers have formed unofficial, ad hoc labor associations to push for better conditions in their workplace. Thus far, the government appears to have tolerated, and in some cases even encouraged, this development. However, these associations are scarce, unprofessionalized, and are not permitted to register officially the agreements they negotiate with employers. In 2001, the Vietnamese government accelerated its efforts to substantially revise the 1994 Labor Code, which forms the backbone of the country's labor rights regime. The drafting process has been led by a four-person team headed by a MoLISA official, and including representatives from the Ministry of Justice, the Chamber of Commerce, and the VGCL. The committee's staff includes a representative from the National Assembly's Social Affairs Committee. The ILO and Western business groups—principally the Ho Chi Minh branch of the law firm Baker, MacKenzie—have also commented on drafts of the revisions. In June 2001, the drafting committee presented its revisions to the National Assembly, which is expected to begin debating the measures when it reconvenes in April 2002 for the first of its semi-annual sessions. A number of factors have motivated the Vietnamese government to initiate major labor law reforms. First, when the Labor Code was drafted in the early 1990s, the Vietnamese economy was largely a planned one dominated by state-owned enterprises. Now that the foreign-invested and private sectors together account for an estimated 50% of industrial output, the government has found it necessary to adapt its labor rights regime accordingly. In particular, Hanoi wishes to expand worker rights in—and perhaps government oversight over—the private sector, where an estimated 30% of employees are unionized. The proposed revisions to collective bargaining requirements—outlined below—appear to be a recognition that organizing at the grass-roots, enterprise level needs to be further encouraged and facilitated. Second, Vietnam has found it needs to bring many of its labor rules into compliance with the national treatment obligations of the newly-enacted U.S.-Vietnam bilateral trade agreement. Third, perhaps motivated by China's entry into the World Trade Organization, the government is attempting to attract more foreign direct investment by simplifying administrative procedures. For instance, the revisions eliminate the current requirement that foreign invested enterprises hire official employment services to recruit and hire Vietnamese nationals. Finally, in preparation for the gradual ending of the welfare role that state-owned enterprises traditionally have played, the government realizes the need to expand its social insurance program. Under the revisions, Vietnam would create a new national unemployment insurance program that would be funded by contributions from the government, employers, and workers. Currently, employers are expected to provide unemployment payments to laid-off workers. The Labor Code revisions will not change the requirement that all unions must be recognized by the local office of the VGCL. On the positive side, unaffiliated (and therefore unofficial) "labor associations" continue to sprout up in some private sector enterprises and in occupations such as cooks, porters, and taxi, motorcycle and cyclo drivers. The actual number of these associations remains unknown, though the State Department puts their number in the "hundreds." The VGCL and the government appear to be continuing to tolerate these groups' activities, perhaps because they are not perceived as a threat. For the first time, some high-level MoLISA officials are privately acknowledging the existence of unofficial worker associations. However, the associations remain unprofessionalized in that they appear to be unstaffed, and it is unclear whether or how they receive any financial support. Furthermore, because they are not officially approved unions, these associations are not permitted to register the occasional agreements they negotiate with employers. The State Department's 2001 human rights report implies that collective bargaining practices have continued to make inroads in Vietnam, particularly in the foreign-invested sector. In some regions, the continued development of a competitive market for skilled labor is helping this process. In the past, VGCL officials have called the Labor Code's dispute resolution process over-centralized and inflexible. If the new Labor Code revisions are passed, the procedures for negotiating and registering collective agreements will be streamlined. Presently, such agreements must be approved by local authorities before they can take effect. Under the revised guidelines, agreements would take effect immediately. During the congressional debate over the BTA, many Members urged the Bush Administration to negotiate a bilateral textile agreement soon after the BTA came into effect. Such an agreement would set quotas for Vietnamese textile exports to the U.S., which are expected to dramatically increase. The preliminary stage of the negotiations began in late February 2001, with U.S. Special Negotiator on Textiles David Spooner's "get acquainted" trip to Vietnam. The Vietnamese government reportedly has been reluctant to enter into negotiations, arguing that the two sides should not set quotas until the pattern of U.S.-Vietnam textile trade under MFN rates becomes apparent. The U.S. has significant leverage on the textile issue, however. Not only does Vietnam's textile industry—which employs approximately 25% of the country's industrial workforce—need access to the U.S. market, but also the U.S. could unilaterally impose quotas on Vietnam at any time because Hanoi is not a member of the WTO. Some Vietnam-watchers in the United States report that the Vietnamese government and textile officials are considering urging the country's textile and apparel manufacturers to obtain SA8000 certification to become more attractive to Western importers. Obtaining SA8000 indicates that an enterprise is adhering to basic labor standards set down by the organization Social Accountability International. Since the ILO moved its Vietnam office from Bangkok to Hanoi in January 2001, the organization has deepened its involvement in upgrading the country's labor rights regime. The ILO currently is implementing seven national projects and eight regional or sub-regional projects, the most significant of which is a multi-year program to strengthen implementation of the Labor Code. MoLISA solicited the organization's input on a major revision to the labor code, reforms to the public sector payment plans, and drafts of a new social security act. The Vietnamese government reportedly is on the verge of ratifying the ILO's Convention 138 on minimum age requirements. Additionally, Vietnam is studying the adoption of ILO conventions 184 (occupational safety and health in agriculture) and 161 (occupational health services). Vietnam and the U.S. have made considerable progress in implementing the November 2000 Memorandum of Understanding (MOU) between the U.S. Labor Department and MoLISA. Of the six projects envisioned in the MOU, four (skills training and employment services, unemployment insurance and pension systems, employment of the disabled, and child labor) received MoLISA approval in February 2002, one (industrial relations) is pending approval from the Vietnamese government, and one (HIV/AIDS workplace-based prevention) is currently in the design stage. In March 2002, MoLISA's Vice-Minister traveled to Washington, DC, for official talks with the Labor Department. This report provides information on and analysis of Vietnam's labor rights conditions, a topic that is expected to be raised during Congressional debate over the United States-Vietnam bilateral trade agreement (BTA). Under the agreement, which was signed on July 13, 2000 and requires congressional approval, the United States will restore temporary most-favored nation (MFN, also known as normal trade relations [NTR]) status to Vietnam, a step that would significantly reduce U.S. tariffs on most imports from Vietnam. The World Bank has estimated that Vietnam's exports to the U.S. would rise to $1.3 billion—more than double 1999 levels—in the first year of MFN status, as U.S. tariff rates on Vietnamese exports would fall from their non-MFN average of 40% to less than 3%. In return, Hanoi agreed to undertake a wide range of market-liberalization measures, including extending MFN treatment to U.S. exports, reducing tariffs on goods, easing barriers to U.S. services (such as banking and telecommunications), committing to protect certain intellectual property rights, and providing additional inducements and protections for inward foreign direct investment. On June 8, 2001, President Bush submitted the U.S.-Vietnam bilateral trade agreement (BTA). In Congress, the agreement is subject to special expedited procedures, under which amendments are not permitted and under which Congress must vote on the measure within 90 session-days. Should Congress approve the agreement, the President would then be able to extend conditional MFN treatment to Vietnam through a waiver under the so-called "Jackson-Vanik" provisions of U.S. trade law. Such MFN status would be conditional because it would require annual Presidential extensions of the waiver, which Congress could disapprove. Congressional debate over the BTA is expected to highlight, among other items, Vietnam's labor rights situation. The BTA does not specifically address workers' rights. In the late 1990s, many non-governmental organizations (NGOs) launched high profile campaigns charging that American clothing and footwear multinationals owned or subcontracted with factories in the developing world—including Vietnam—that tolerate poor health and safety conditions, do not allow the freedom to form or join independent unions, employ children, and/or pay insufficient wages. In particular, the campaigns singled out the Vietnamese plants linked to the Nike Corporation, which in recent years has emerged as one of Vietnam's top exporters. These labor rights campaigns, which continue today, have intensified the long-running debate in Congress and elsewhere over whether promotion of workers' rights in other countries should be linked to trade policy. Those in favor of making this linkage argue that the failure of companies in developing countries to adhere to worker rights standards not only deprives workers of their basic human rights, but that it also places some American industries at a competitive disadvantage in trade, suppresses wages in the United States, and shifts employment opportunities to developing countries. Furthermore, many labor advocates contend that international trade agreements can encourage countries to relax their domestic labor laws in order to help their firms become more competitive. During the 1999 World Trade Organization ministerial meeting in Seattle, which was disrupted by large-scale protests over issues such as worker rights, President Clinton pledged to place a higher priority on linking labor rights and trade. A free trade agreement the U.S. signed with Jordan in 2000, for instance, commits the two parties not to weaken their existing labor standards. Opponents of making the linkage argue that free trade helps to empower workers and promote the rule of law—thereby promoting worker rights—and that mandating international adherence to labor standards with the threat of trade sanctions for violating those standards is a form of protectionism that can dampen worldwide economic growth for all nations. Furthermore, opponents contend that trade agreements are not the proper place to address labor standards. This report examines the totality of Vietnam's labor rights regime, from the right of association to wage-related issues. It is divided into six main sections. The first provides a general background of Vietnam's recent political, economic, and legal history. The second provides an overview of Vietnam's labor rights regime, including a description of the present international regime for protecting labor rights, Vietnam's relationship with the International Labor Organization (ILO) and the U.S. Labor Department, and Vietnam's Labor Code. The following two sections provide a detailed look at Vietnam's law and policy in six areas of labor rights: the right of association/collective bargaining; forced labor, including trafficking in women; child labor, including trafficking in children; health and safety; wages, hours and welfare benefits; and discrimination. The penultimate portion of the report provides some international context by contrasting the Vietnamese and Chinese labor rights regimes. Finally, the report concludes with a discussion of the impact the labor rights debate could have on Congressional consideration of the U.S.-Vietnam BTA. A note about sources: Comprehensive analysis and detailed information about labor rights in Vietnam are difficult to obtain, particularly when operating under tight time constraints. News reports about labor activism are scarce, and the Vietnamese government has only recently begun to compile comprehensive information about labor conditions across the country. As the ILO has noted, one of the major problems in Vietnam is a lack of statistical and systematically collected information on labor relations. Correspondingly, the English information that exists is scarce, tends to be anecdotal, and tends to focus on conditions at factories owned by or linked to Western multinationals. In contrast to larger countries like China and India, Vietnam has slipped under the radar screen as far as country-wide studies of worker rights are concerned; the most comprehensive, up-to-date reports that are available are in the State Department's annual human rights report on Vietnam. Even these documents, however, rely heavily on anecdotal evidence and incomplete information that often are compiled by the Vietnamese government. This report will be updated as more information is obtained. Ever since communist North Vietnamese forces defeated U.S.-backed South Vietnam in 1975, reunified Vietnam has been struggling with how to maintain a balance between two often contradictory goals—maintaining ideological purity and promoting economic development. For the first decade after reunification, the emphasis was on the former. By the mid-1980s, disastrous economic conditions led the country to adopt a more pragmatic line, enshrined in the doi moi (renovation) economic reforms of 1986. Under doi moi , the government gave farmers greater control over what they produce, abandoned central state planning, cut subsidies to state enterprises, reformed the price system, and opened the country to foreign direct investment. For the first decade after the doi moi reforms were launched, Vietnam became one of the world's fastest-growing countries, averaging around 8% annual GDP growth from 1990 to 1997. Agricultural production doubled, transforming Vietnam from a net food importer into the world's second-largest exporter of rice and third-largest producer of coffee. The move away from a command economy also helped reduce poverty levels from 58% of the population in 1992 to 37% in 1997. A substantial portion of the country's growth was driven by foreign investment, primarily from Southeast Asian sources, most of which the government channeled into the country's state-owned sector. The economy has staggered since 1997, however, as real GDP growth fell to 5.8% in 1998, and 4.8% in 1999, though it did rebound to 6.7% in 2000. Foreign direct investment plummeted to $600 million in 1999, the lowest level since 1992. Observers have cited Vietnam's failure to tackle its remaining structural economic problems—including unprofitable state-owned enterprises, a weak banking sector, massive red tape, and bureaucratic corruption—as major causes of the country's economic slowdown in recent years. The Asian economic crisis that erupted in 1997 only exacerbated these systemic deficiencies. Unemployment has risen, with some sources claiming that it has more than doubled (to over 2 million) since 1997. Demographics are compounding the economic difficulties; over half of the population is under the age of 25, and over 1 million young people are entering the work force every year. With the Party's legitimacy increasingly derived from providing economic growth rather than ideology, Vietnam's leaders are under enormous pressure to find work for these new entrants. Rapid growth has transformed Vietnam's economy, which has come to be loosely divided into three sectors: the state-owned, the foreign-invested, and the privately owned, which make up roughly 50%, 30%, and 20% of industrial output, respectively. For much of the 1990s, Vietnam's foreign-invested enterprises (FIEs) were among the country's most dynamic. Since the 1997 Asian financial crisis, the private sector has also made impressive gains, to the point where privately owned firms employ nearly a quarter of the workforce. Most of the giant state-owned enterprises (SOEs), meanwhile, are functionally bankrupt, and require significant government subsidies and assistance to continue operating. In 1990, 2.5 million people were employed by state firms. In 2001, this figure is down to 1.6 million. Despite its significant economic gains, Vietnam remains an overwhelmingly poor country; about one-third of Vietnamese children under 5 years of age suffer malnutrition. Per capita gross domestic product (GDP) is estimated at $370, equivalent to $1,850 when measured on a purchasing power parity basis. Vietnam's experiments with political reform have lagged behind its economic changes. A new constitution promulgated in 1992, for instance, reaffirmed the central role of the Communist Party in politics and society. Although personal freedoms have increased dramatically, Hanoi still does not tolerate signs of organized political dissent. In subtle ways, however, the decision to prioritize economic development above ideological orthodoxy has led the Party to slowly loosen its former stranglehold on political power. Recognizing that Party cadres often were ill-suited to administering its own policy directives, for instance, the Party created a more powerful and professionalized executive branch in the 1992 constitution. The new constitution also gave more influence to the legislative branch, the National Assembly, because the Party realized it needed to make the organs of government more responsive at the grass-roots level. Rapid economic growth, increased integration with the global economy, and weak domestic institutions have caused a rise in corruption and a decline in the Vietnamese Communist Party's (VCP) authority, alarming many Party hard-liners. As a result, Vietnamese policy-making in recent years has been virtually paralyzed, as reformist and conservative elements within the Party have battled to a stalemate over how to deal with the major economic and demographic forces transforming the country. The former group calls for a steady roll-out of new reforms and increased integration into the global economy. The latter fears that economic reform will lead to the loss of government control over the economic means of production and financial and monetary levers; they also fear the possible infiltration of heterodox outside ideas. Vietnam's consensus-based decision-making style, combined with the absence of any paramount leader, has meant that these divisions have produced only piecemeal economic reforms, though implementing the BTA may force more significant changes. Many observers believe the upcoming 9 th Party Congress—to be held in the spring of 2001—is unlikely to break the gridlock in the near future. After launching the doi moi economic reforms, Vietnamese leaders gradually established a new legal regime, both to implement the reforms and to attract foreign investors. The 1992 constitution gave the National Assembly the authority to pass and amend all laws, which are supplemented by decrees issued by Vietnam's executive ministries and agencies. Since 1987, Vietnam has produced hundreds of laws and decrees dealing with a wide range of subject areas, including labor law. Many of those laws have been poorly drafted; they have already been amended several times because of their incompleteness or lack of enforcement provisions. The weakness sometimes found in Vietnamese laws may be explained by the fact that since the country's legal regime was neglected during the decades of war, Vietnam has a shortage of trained legislators, lawyers, and legal experts. Also, because Vietnam embarked on a market-oriented economy relatively recently, it lacks expertise in many areas related to the new system, such as management, economics, banking, finance, taxation, and labor. As a result, some laws were drafted by people without experience either in law or in the relevant specialized subject area. This situation, however, has been improving in recent years. The International Labor Organization (ILO) is the United Nations specialized agency with the mandate to monitor labor standards and protect workers' rights. Since its inception in 1919, the ILO has adopted 183 multilateral labor standards as conventions, or treaties, which are binding on countries that ratify them. Eight of these conventions—which deal with freedom of association, the right to collective bargaining, prohibition of forced labor, discrimination in employment, and certain conditions of child labor—are considered "core" labor standards. In 1998, the ILO members adopted the Declaration on Fundamental Principles and Rights at Work. Through this resolution, they agreed that these eight conventions contain principles which all the ILO member governments should adhere to, whether or not they have ratified them. They also agreed that all members would be regularly examined for compliance with the core conventions or standards. Since the 1970's, some U.S. legislation that provides trade benefits to various countries—such as the General System of Preferences—has required compliance with internationally recognized labor standards by U.S. trading partners, except where U.S. national interests require a waiver. The eight core ILO labor standards are the standards generally accepted by Congress for U.S. trade legislation. Though the ILO has no enforcement powers, it has a highly regarded supervisory system to investigate and evaluate compliance with the conventions and a technical assistance program to help countries bring their legislation and practices into compliance. Since the creation of the World Trade Organization (WTO) the United States (including many in Congress) and some of the industrialized countries have pressed for the inclusion of labor standards in multilateral trade agreements and/or the WTO. Many developing countries have opposed these efforts. Vietnam has been a member of the International Labor Organization (ILO) off and on since 1955, rejoining most recently in 1992. Therefore, efforts to bring Vietnam into compliance with ILO conventions and planning for technical assistance programs in Vietnam did not get underway until the early 1990's. Since 1992, Vietnam has ratified 15 conventions, including three of the ILO's eight core human rights conventions: No. 100, equal pay for men and women for work of equal value (ratified by Vietnam in 1997); No. 111, prohibiting discrimination in employment (1997); and No. 182, prohibiting the worst forms of child labor (2000). Currently, the Vietnamese are working on a plan to gradually ratify the remaining core ILO conventions and hope to ratify both forced labor conventions and the minimum age convention. In the early years, ILO programs in Vietnam focused on employment strategy, human resources development, enterprise development, industrial relations, social protection, occupational safety and health, and labor law. As of the year 2000, the ILO's program in Vietnam is being shaped (as it is in all countries) to address the four new ILO strategic objectives: 1) promoting fundamental principles and rights at work; 2) creating greater opportunities for women and men to secure decent employment and incomes; 3) enhancing the coverage and effectiveness of social protection; and 4) strengthening the organizations which support labor and business interests and social dialogue. The number and size of ILO programs in Vietnam has grown progressively since 1992. During the 1999/2000 time period, there were 24 ongoing projects, six of which the ILO defines as promoting fundamental principles and rights at work. In January 2001, the ILO moved its Vietnam in-country office from Bangkok to Hanoi. For several years, the United States and Vietnam have maintained a dialogue on labor issues. This process culminated during President Clinton's trip to Vietnam in November 2000, when the U.S. Department of Labor and the Vietnamese Ministry of Labor signed a memorandum of understanding (MOU) in which they agreed to establish a program of cooperation and dialogue on labor-related issues. As part of this cooperation, the U.S. pledged $3 million in technical assistance to help Vietnam in the following areas: skills training and employment services; unemployment insurance and pension systems; employment of the disabled; labor law and industrial relations; child labor; and HIV/AIDS workplace-based prevention. Funding for the program may need to be increased; following a March 2001 visit to Hanoi by a Department of Labor delegation, it became evident that the cost of implementing the November MOU could exceed $3 million and that the ministry appeared to have the capacity to absorb additional resources. In September 2000, the United States Trade and Development Agency approved a $500,000 grant for conducting a feasibility study for automating Vietnam's Social Security Agency. The AFL-CIO has sent three delegations to Vietnam and a fourth is planned for April 2001. The backbone of Vietnam's labor rights regime is the 1994 Labor Code, which was the country's first systematic codification of labor standards, definition of labor relations, and enunciation of the mutual rights and obligations of workers and employers bound by labor contracts. Drafted with input from the ILO, the Code appears to be loosely modeled on French labor law in terms of its comprehensiveness. Its 198 articles and 17 chapters cover labor contracts, collective labor agreements, working hours and holidays, safety and sanitation, protection of special groups of workers (such as women, children, older employees, workers with disabilities, foreign workers), social insurance, and the settlement of labor disputes. The Code also included provisions on the state's responsibility to create training and work programs. Before the Code was promulgated, Vietnam had issued many separate legal documents covering different aspects of labor law. The Labor Code invalidated only those regulations that were inconsistent with the code. Thus, some older laws, such as the 1990 Law on Trade Unions, are still in effect. The Labor Code applies to all types of businesses and industrial enterprises, foreign and international organizations, and individuals who employ workers. Provisions of this law also apply to foreign and Vietnamese workers who work in Vietnam and to Vietnamese citizens who work overseas. Trade apprentices and domestic servants also are covered by the Code. However, the Code does not extend to Vietnamese or foreign workers governed by provisions of an international treaty where Vietnam is a signatory or participant, state civil servants and officials, the police and the armed forces, and members of political and social institutions. Since the National Assembly approved the Labor Code in June 1994, many more laws and sub-laws have been issued to amend, supplement or explain the practical implementation of the Code. Most have been issued by the Ministry of Labor, War Invalids and Social Affairs (hereinafter Ministry of Labor or Labor Ministry), which is the Ministry responsible for implementing the Labor Code and other related legal documents. The Labor Code was passed after a heated debate within the union movement, the Communist Party, and the government. The dispute spilled into public view to such an extent that a copy of the draft of the Code was published in Vietnamese magazines. When the Code was finalized, the unions had scored a number of victories, including the explicit guarantee of workers' right to strike; the requirement that trade unions be established in all enterprises, not just those that are state-owned; the unionization of foreign-invested enterprises; and the inclusion of provisions establishing minimum wages, maximum working hours, maternity leave, and overtime pay. Implementation and enforcement of Vietnam's labor laws are major problems. Vietnamese monitoring agencies face a shortage of qualified staff, training mechanisms, and funds. As a result, most Vietnamese workers and employers are unaware of the provisions of the Labor Code. For this reason, international sponsors—including the ILO and the U.S. government—have funded many programs to enhance Vietnam's monitoring and enforcement capacities. Implementation has been further hampered by a large major backlog in drafting decrees and by-laws to support the Code. Additionally, there have been allegations that since the 1997 Asian financial crisis, Vietnamese authorities have relaxed their labor law enforcement in the textile and apparel sector—where wage cheating and occupational and safety violations allegedly continue—in response to pressure from multinational textile companies and their governments. Violations of labor laws and regulations are described in Article 192 of the Labor Code. Depending on the seriousness of the violation, penalties could include a warning, a fine, and other punitive measures, such as lost of licences, compulsory payment of compensation, compulsory closing of business operations, or criminal prosecution in accordance with the Criminal Code of Vietnam The Code also states that any person who obstructs, bribes, or harms an authorized inspector or labor officer while he or she is carrying his duty shall be punished by administrative disciplinary measure or prosecuted for criminal liability. Enterprise owners are legally responsible for implementing any decision made by a state authority and can be penalized for a breach of any labor contract or collective agreement. ILO convention 87, dealing with the right of association, has been ratified by 137 countries, though not by Vietnam (nor by the United States). The convention establishes the right of all workers and employers to form and join organizations of their own choosing without prior authorization, and lays down a series of guarantees for the free functioning of organizations without interference by the public authorities. Vietnam has not ratified the ILO Convention on Freedom of Association and Protection of the Right to Organize. However, as an ILO member it is expected to adopt and enforce ILO right of association and collective bargaining standards. There is no true right of association in Vietnam. As with mass political and religious organizations, Vietnamese labor unions are allowed to exist only if they are under Communist Party control. All unions must belong to the Vietnam General Confederation of Labor (VGCL) , which is an organ of the Party. Since the early 1990s, however, the VGCL and local unions have become more assertive, a development tolerated—and in some cases encouraged—by the government. There are reports, for instance, of many unions exerting more influence over workplace conditions, mainly on matters relating to wages, health, and safety—all of which are non-political issues that do not threaten the Party's control. The spread of collective bargaining practices is in the beginning stages, and the government readily acknowledges that greater enforcement and speedier procedures are needed. The number and intensity of strikes, which are permitted under the law, is on the rise. Although the majority of these walkouts have been spontaneous outbursts and have not followed the bargaining process spelled out in the Labor Code, in most cases the government retroactively has supported the labor walkouts. Despite this progress, VGCL officials acknowledge that, in the words of one official, "the operations of grass-roots trade unions have proved very weak in negotiating between employers and employees." Some analysts have pointed out that the absence of the true right of association in Vietnam has prevented speedier improvements in other areas of worker rights such as in health and safety issues. Article 7 (2) of the Labor Code reconfirms workers' constitutional right to organize and join unions or to participate in union activities, as long as these activities are legal and are carried out in accordance with provisions of the 1990 Law on Trade Unions (LTU). This right extends to employees of all commercial and industrial enterprises, as well as to employees of state agencies and social organizations. According to the official sources, 95 percent of public sector workers, 90 percent of workers in state-owned enterprises, and nearly 70 percent of private sector workers are unionized. About 500,000 union members work in the private sector, including foreign-based enterprises. The vast majority of the work force lives in rural areas, is engaged in small-scale farming, and is not unionized. Under the Trade Union Law and other Vietnamese statutes, unions are considered to be organs of the state and responsible to the leadership of the Communist Party. All unions must be recognized by the local office of the VGCL, which functions as the country's umbrella labor organization. By making them extensions of the VCP, Vietnamese law effectively deputizes labor unions, assigning them the often contradictory responsibilities of representing the interests of both the workers and the state. But being a state entity also gives the VGCL and its affiliate unions a seat at the table when the government or the party—at the local, provincial, and national levels—deliberate on any matters that may affect workers' rights directly or indirectly. For instance, the VGCL has the right to propose draft laws and regulations to the National Assembly or the state agencies on any matters that may directly affect the regulation of labor. Article 153 of the Labor Code requires provincial trade union organizations to establish unions within six months at virtually all enterprises with more than ten employees. Vietnamese law also prohibits employers from applying any form of pressure or measures to interfere with the organization and activities of trade unions. In a significant break from past practice, the Code allows the formation of industrial and professional unions that unite workers across enterprises. In another departure, these unions are allowed to join and accept donations from international unions of the same trade. As of 1996, 24 occupational unions had been formed, with over 400,000 members. Although they officially operate under the VGCL's oversight, they have considerably more independence than enterprise unions, which perhaps explains the reports that professional and industrial unions have stronger grass-roots and international ties than the traditional enterprise-based unions. Additionally, enterprise unions are permitted to join any international union of the same trade. Hundreds of unaffiliated 'labor associations' have been organized in occupations such as taxi and motorcycle drivers, cooks, and market porters. Data is sparse about these associations, most of which appear to have sprouted in Ho Chi Minh City. According to reports, the VGCL provides moral support for these groups, but offers no financial assistance. ILO convention 98, which covers collective bargaining, prohibits discriminating against employees for belonging to a union and requires governments to set up a system for voluntary collective bargaining to reach collective agreements between employers and employees. Vietnam reportedly is considering ratifying this standard. Vietnam's Labor Code allows organized workers the right to strike under certain conditions. Strikes are prohibited at public sector enterprises and at enterprises deemed vital to national security, such as those in the electrical, oil, gas, banking, and transportation industries. Vietnamese law requires that before they strike, unions must seek a settlement under the dispute settlement procedures spelled out in the Labor Code and expanded in a 1996 decree. The Code requires that management and labor first attempt to resolve their dispute through the individual enterprise's Labor Reconciliation Council or the local conciliator of the district labor office in the case of enterprises that do not have a labor reconciliation council. If this step proves unsuccessful, unions can take the matter to the provincial Labor Arbitration Council. If the Council's decision is unsatisfactory to the union or if the province does not have an arbitration council—a problem in some provinces—the union can appeal to the People's Court or decide to strike. The 1996 decree prohibits retribution against strikers, and according to the State Department, there have been no credible reports of such retribution in recent years. According to Vietnamese and U.S. government sources, strikes have been on the rise in recent years, with approximately 450 reported walkouts between 1993 and the end of 2000. The State Department, using official Vietnamese figures, reports that over 70 strikes were recorded in 2000. Some observers have pointed to the increase in strikes as signs that unions' clout is increasing. Others, however, attribute the increase more to increased business activity than to a growing labor assertiveness. The VGCL and the government have acknowledged that strikes are growing in intensity, though they tend to avoid mentioning strikes at SOEs, instead focusing on strikes at foreign-invested factories, which according to the State Department have accounted for well over half the reported strikes. Since thousands of workers in inefficient state-owned enterprises would likely be terminated in a fully market-oriented economy, these workers may have less incentive to strike. Most of the strikes appear to occur in the country's southern provinces, concern wage-related issues such as recovering unpaid back wages, and appear to be symbolic, lasting only 1 or 2 days. According to the State Department, most strikes were spontaneous outbursts that were launched independently of the VGCL and did not follow the prescribed dispute settlement/arbitration process, and therefore were technically illegal. The majority of these strikes, however, appear to have been tolerated, or even unofficially supported, by local and provincial offices of VGCL and the government. In some instances, the Vietnamese government has prosecuted employers for abuses leading to strikes. Vietnamese law grants unions the right to bargain collectively on behalf of workers and contains detailed provisions governing collective agreements, which are defined by law as legal documents between an organized group of workers and their employers covering the terms and conditions of employment. In addition to the 11 provisions of Chapter V in the Labor Code, rules and procedures for collective agreements are spelled out in two government decrees, one issued in 1992, the other in 1994. Such agreements are valid if they are approved by over half of the enterprise's employees. The laws' collective bargaining provisions apply to all enterprises (including foreign businesses and international organizations) except government agencies, social and political organizations, and employees who work for enterprises that belong to the military or public security forces. Despite the law's provisions, collective bargaining practices appear to have only begun to make inroads in Vietnam. Anecdotal reports indicate that most collective agreements are concluded in the south and in private and foreign-invested enterprises. In a 1998 review of Vietnam's workers rights situation, the U.S. Overseas Private Investment Corporation (OPIC) reported that in general, working conditions were largely set by individual contracts, not by collective negotiations. Two years later, the VGCL reported that only 15 percent of non-state enterprises had signed labor agreements with their enterprise unions. The OPIC report also noted that most collective bargaining agreements that were reached merely repeated the Labor Code, and thus did not represent true bargaining outcomes. There are some signs that the situation is improving. The State Department has written that unions increased their clout in some enterprises by successfully obtaining multi-year contracts and by writing into contracts prohibitions on 7-day work weeks. In some cases, the increasingly competitive market for skilled labor is helping this process. The Vietnamese government, while stopping short of allowing true freedom of association, has acknowledged that its current collective bargaining process needs improvement. VGCL officials have called the dispute resolution process over-centralized and inflexible, and have proposed revising the Labor Code to make it speedier. Labor Ministry officials have admitted that many enterprises do not set up unions and have not abided by arbitrated settlement. A major contributor to the problem is a lack of statistical and systematically collected information on labor relations issues in general. Vietnamese law requires all employers—including public sector offices and the military—to provide workers with protective equipment, labor safety guidance, and sanitation facilities in the work place. The Labor Code also defines the obligations of employers and the rights and duties of workers in dealing with safety and sanitation, for instance on creating safety training programs. The Code also obligates the government and the VGCL to develop and implement programs on protection, labor safety, and sanitation, and also contains provisions on workers' rights and compensation in case of employment-related accidents and diseases. In practice, however, enforcement is inadequate, in part due to the labor ministry's inadequate funding and a shortage of trained enforcement personnel. In 1999, the Labor Ministry conducted a survey that revealed lack of enforcement, antiquated machinery contributing to workplace hazards and health effects. Investigators found widespread exposure to hazardous chemicals and other materials in the workplace, and noted that most workplace abuses go unreported. The same year, the VGCL reported that there were only 300 labor inspectors for the entire country, half the number it required. The State Department has reported that there is growing evidence that some grass-roots unions have been effective in improving working conditions. Under the Labor Code, the Ministry of Labor is responsible for the determination and periodical adjustment of minimum wages. The wage rate varies by region, type of enterprise, and type of work. For instance, a 1999 Decision of the Ministry of Labor announced that the minimum wage for unskilled Vietnamese workers in normal working conditions for a foreign invested enterprise located in urban districts of Hanoi and Hô Chí Minh City (HCMC) was 626,000 Vietnamese dông (approximately $43 at an exchange rate of 14,558 dong per dollar) per month, while the minimum monthly wage for the same worker who works in a foreign enterprise located outside of big cities was to be 556,000 dông (about $38). The minimum wage for workers employed in rural areas was 487,000 dông (about $33). For other enterprises, the minimum wage was 180,000 dong (about $12) per month, though many SOE employees earn more than this, in the 300,000—500,000 dông range, according to one source. Measured on a purchasing power parity (PPP) basis, these minimum wages are approximately $215 per month ($9.00 per day) for foreign enterprises in Hanoi/HCMC, $190/month ($8.00/day) for foreign enterprises located outside of big cities, $165/month ($7.00/day) for rural foreign enterprises, and $60/month ($2.50/day) for SOEs. The World Bank definition of extreme poverty is income at or below $1 per day (PPP basis). Although these wages may be sufficient to avoid dire poverty conditions, the State Department has described them as "inadequate... for a decent standard of living." The Department has also noted that many families have more than one wage earner, and that many workers receive bonuses or work in more than one job. A recent ILO study found that most enterprises are abiding by the minimum wage rules, with the exception of smaller private sector enterprises. If true, this would mark a significant change from the past, when only foreign-invested enterprises and major SOEs abided by the minimum wage rules. Vietnam's labor laws contain highly detailed rules regulating working hours and vacation time. Under the Labor Code and a 1994 decree, regular working hours are not to exceed eight hours per day and 48 hours per week. Overtime pay is required for additional work hours. In a bid to reduce unemployment, the government in 1999 reduced the workweek for public sector, Communist Party and SOE employees from 48 to 40 hours, and declared that these workers receive at least one day off per week. The Labor Code also has provisions on break time during the day and the week and on vacation and holidays. By law, Vietnamese workers who work a full 12 months a year must have eight full days paid leave for five national holidays a year (including three days for the Lunar calendar New Year) and 12 days of annual leave. In addition to fully paid annual leave, workers may receive a fully paid leave of absence for personal reasons. An employee may, for instance, get three days of leave for his/her own wedding, one day for his/her child's wedding; and three days for the death of a spouse, a child, or a parent. According to the State Department's Human Rights report, "it is uncertain" how well the Government enforces these provisions. Vietnam created its Social Security Agency in 1995. Before then, three agencies—the Ministry of Finance, the Ministry of Labor, and the VGCL—jointly administered the country's social security program, including its social insurance funds. Under Vietnamese labor law there are two types of social insurance funds: 1) a mandatory, employer-contribution social insurance program that applies to all organizations employing at least ten workers and covers medical problems, pregnancy, work-related accidents and diseases, retirement, and life insurance; and 2) a voluntary employee-contribution insurance program that is applied in cases where a worker is not protected by a collective agreement, such as in companies with less than 10 employees or in short-term contract work. In these cases, the employer must pay the independent worker an extra 17% over the regular or agreed salary in order for the latter to pay for his own social insurance. Contributions to social insurance fund are made by: 1) the employers (15% of the total wage fund); 2) the employees (5% of the salary); 3) the government (80%) to insure the implementation of the social insurance system for the workers; and 4) other sources. In recent years, the VGCL has pushed the government to beef up Vietnam's unemployment insurance program. In 1998, for instance, it called on the government to provide at least $500 million to support the estimated 600,000 SOE employees who were to lose jobs due to the country's restructuring program. In addition to the fear of unemployment, fewer SOE workers are receiving subsidized housing, which traditionally had been provided by their employer. The ILO has two core standards dealing with forced labor. Hanoi has ratified neither, though it has asked the ILO for assistance in ratifying both, and to this end the ILO plans to send an advisory mission to Hanoi in early 2001. Convention 29 requires nearly all forms of forced and compulsory labor be phased out within 5 years after ratification. In the interim, certain rules and conditions are placed on the use of forced labor, which is to be used "for public purposes only and as an exceptional measure." Convention 105 prohibits the use of any form of forced or compulsory labor as a means of political coercion or education, punishment for the expression of political or ideological views, or for workforce mobilization. Article 5 (2) of the Labor Code stipulates that ill-treatment of workers and all forms of forced labor are prohibited by law. Although the Vietnamese government denies the use of prison labor without compensation, the State Department's 2000 report on Vietnam's human rights practices notes that prisoners routinely are required to produce food and other goods used in prisons for little or no pay. In late 1999, the government issued a decree requiring 10 days unpaid community service annually for all men under 45 and all women under 35. According to foreign press reports, the legislation was used to press Vietnamese "volunteers" to work on the 1700 km Ho Chi Minh Highway, which roughly follows the route of the Ho Chi Minh Trail used during the Vietnam War. Following criticism of this policy, the Ministry of Labor in late September 2000 issued Circular 22, decreeing that all conscripts or volunteers working on the project must be paid at least 15,000 dong/day—roughly equivalent to a dollar a day. Hanoi has rejected claims that the government conscripted labor at any time on the Ho Chi Minh trail highway project. The State Department points out that Vietnam has a long tradition of communal labor under which persons living along flood-prone levees voluntarily help to build or repair the flood control system. Trafficking in women and children has become a growing problem in Vietnam. Thousands of women and children reportedly have been forced into prostitution, either in Vietnam itself or in neighboring countries, particularly in China and Cambodia. Often, organized trafficking rings kidnap women, lure them with the promise of high-paying jobs, or addict them to heroin and force them to work as prostitutes to earn money for drugs. The state-run media has publicized the problem, Hanoi is cooperating with international organizations, NGOs, and foreign countries, and the government is encouraging grass-roots organizations, such as the Vietnam Women's Union and Youth Union's programs, to help combat the buying and selling of women and children. Vietnam's Criminal Code provides penalties for trafficking in women and children. One-time, small-time offenders face prison terms of 1 to 7 years. Harsher imprisonment terms of 5 to 20 years are applied to repeat offenders, cases involving organized trafficking rings, and cases involving the shipment of women and/or children to foreign countries. The crime of forcing or enticing a woman into prostitution is subject to a term of imprisonment ranging from 6 months to 5 years. If the offense results in grave consequences or if it is a repeat offense, the sentence for the offender will be a term of imprisonment of 3 to 10 years. Prostitution is also illegal in Vietnam, though it is widely tolerated. In 2000 and 2001, revelations surfaced of sweatshop working conditions for Vietnamese women at a factory on American Samoa, a U.S. island territory in the South Pacific. Reportedly, the women were unpaid for months and forced to live and work in unhealthy, almost prison-like conditions. The Korean-owned plant, which reportedly made apparel for major American retailers, was closed in January 2000 following a U.S. Labor Department investigation. The 252 Vietnamese employees, primarily women, had been recruited by semi-private Vietnamese firms and reportedly paid thousands of dollars for the chance to work in Samoa. Some rights groups and congressional investigators are looking into whether the factory and the Vietnamese firms kept the workers in debt bondage and/or violated U.S. laws barring trafficking in humans. Since the early 1980s, Vietnam has exported labor to bring home hard currency. According to one in-depth study of the Samoan case, although Vietnam's "labor export" recruitment companies have official links with various government agencies, in reality they "operate without much audit & supervision from Hanoi." Over 30,000 workers were exported in 2000, generating over $1 billion that was repatriated to Vietnam. Before the scale of the Samoan incident was revealed, Vietnam had announced its desire to vastly expand its labor export program, in part by exporting workers to the U.S. for the first time. The ILO has two core conventions dealing with child labor. The Minimum Age Convention, No. 138, aims at the abolition of child labor, stipulating that the minimum age for admission to employment shall not be less than the age of completion of compulsory schooling. Convention 182, the Worst Forms of Child Labor Convention, prohibits and requires immediate action to eliminate: child slavery and similar practices; the use of children in prostitution, pornography and the drug trade; and work that harms the health, safety or morals of children. In December 2000, Vietnam ratified Convention 182 and reportedly is working to ratify Convention 138 in 2001. The Labor Code sets Vietnam's minimum employment age at 18. Children aged 15-18, so-called "junior workers," may be hired so long as they obtain parental permission. Employers must apply a different set of standards in wages, training, and working hours for junior workers, who cannot work more than 7 hours a day and 42 hours a week. The law also does not permit junior workers to perform heavy labor or work in a hazardous environment. In urban areas, where many children work informally in family businesses, many schools run two sessions to enable children to attend classes. Enforcement of the law is weak, however, as government monitoring and enforcement resources are stretched. A recent Ministry of Labor survey, which was widely publicized in Vietnam, found that about 40,000 children between the ages of 8 and 14 years of age worked part-time or full-time in violation of the Labor Law. There are reports of thousands of children working in exploitative labor conditions, for instance in gold mines and as domestic servants. Generally, poverty appears to be the driving force behind the child labor problem; Vietnamese culture stresses educational achievement, so all but the poorest families generally send their children to school. However, there are many reports of impoverished families "contracting" their children out. As mentioned above, child prostitution has become a major problem, as organized trafficking rings ferry children to Cambodia and China. In rural areas, where compulsory education laws often are not enforced effectively, many children work on family farms. Vietnam is cooperating with ILO child-labor prevention programs, one of which will create a child labor unit in the government, survey the size of the child labor problem, and create a national plan of action. In October 1997, Vietnam ratified the two ILO core standards covering discrimination in the workplace. The Equal Remuneration Convention, No. 100, calls for equal pay and benefits for men and women for work of equal value. The Discrimination (Employment and Occupation) Convention, No. 111, calls for a national policy to eliminate discrimination on the grounds of race, color, sex, religion, political opinion, national extraction or social origin, and to promote equality of opportunity and treatment. Following the Constitutional principle of "equality for all citizens," the Labor Code grants all people the right to work, choose their profession, learn a trade, and improve their skills without discrimination based on sex, ethnic origin, social class, or religious belief. The Code devotes an entire chapter to the treatment of female workers. By law, employers must observe the principle of equality between gender when they hire, pay, and promote female employees. In fact, the state applies some preferential policies in order to encourage the hiring of female workers by giving tax reductions to enterprises employing many female workers. The Labor Code also forbids employers to fire or to unilaterally end a labor contract for reasons of marriage, pregnancy, or taking maternity leave. Women make up approximately 52% of Vietnam's workforce, and about 40% of Vietnamese wage-earners are women. Despite these provisions, the ILO has noted that "in reality women still tend to have unequal access to employment and to productive resources such as credit and land and lack voice in decision-making and representation." The ILO has two on-going projects to promote greater gender equality in Vietnam. The 1990s continued a trend in the People's Republic of China (PRC), begun in the 1980s, of breaking the "iron rice bowl" system of allocated, permanent employment and a variety of free social services, and replacing it with a contractual labor system. A major milestone was the enactment of a comprehensive Labor Law, which unifies in one code the various regulatory schemes governing all forms of businesses, domestic and foreign, State organs, institutions, and public organizations. As in the case of the Labor Code of Vietnam, the Chinese Labor Law does not displace earlier regulations; those that do not conflict with the Labor Law remain in effect. The government agency in charge of labor affairs in China is the Ministry of Labor and Social Security under the State Council. China is a member of the International Labor Organization and has ratified 20 ILO conventions, including two of the eight core conventions, on equal remuneration and minimum age (on Nov. 2, 1990, and Apr. 28, 1999, respectively). Market-oriented reforms, foreign investment, and international trade have contributed to high rates of economic growth and significant reductions in poverty. However, economic reforms have given rise to an urban unemployment rate of an estimated 8 to 13 percent and frequent labor demonstrations in older industrial areas where many state-owned enterprises are going bankrupt. Rural under-employment and an urban-rural income gap of over 2 to 1 has compelled an estimated 120-150 million rural migrants to flock to eastern cities in search of work. This pool of low-wage labor has been vulnerable to exploitation and labor abuses, particularly in Korean, Taiwanese, and Hong Kong-owned factories that produce goods for export or that subcontract to American companies. The following comparison between the Vietnamese and Chinese labor rights will focus on the right of association, collective bargaining, and the special issues of health and safety, wages and hours, forced labor, and child labor. China has been a member of the International Labor Organization since 1919. Until 1971, the China seat was contested by the Republic of China (Taiwan) and the People's Republic of China (founded in 1949). Though the seat was given to the People's Republic of China in 1971, the government did not participate or pay its dues to the ILO until 1983. China has ratified 17 conventions since 1919, including two of the eight core conventions. China ratified three additional conventions and then withdrew from them because they became redundant when No. 138 on minimum age was ratified. The presence of an ILO office in Beijing indicates that cooperation between China and the ILO is growing in all areas, including core standards, occupational safety and health, employment, and social security. Much of this cooperation is requested by the Chinese government. There are four pending freedom of association complaints against China at the ILO, including one concerning Hong Kong. As with all other countries, ILO technical assistance programs in China focus on four areas: increasing compliance with the 8 core labor standards, providing decent employment for men and women, social protection, and social dialogue. Since 1995, the ILO has sponsored programs to promote ratification and implementation of ILO conventions, particularly the core conventions culminating in the ratification of No. 138 on minimum age and several other conventions. Current activities are focused on ratification of core convention 111 on discrimination and other conventions on labor administration, maritime convention and occupational safety and health. Unlike the rest of the region, China has not yet shown interest in the ILO International Program for the Elimination of Child Labor but is participating in a region wide program on trafficking in women and children. In general, Vietnam's unions appear to have considerably more autonomy and influence than their Chinese counterparts. A key reason for this difference is the greater leeway allowed by the Vietnamese government. As one report comparing the two regimes states, "the Vietnamese government has been more willing to grant trade unions some space to defend workers' interests, whereas the Chinese government has chosen to keep the unions under a tight rein." As in Vietnam, China's trade unions are essentially organs of the State and are subject to communist party control. Article 35 of the PRC Constitution guarantees freedom of association, but that right is limited given that unions must belong to the Party-affiliated All China Federation of Trade Unions (ACFTU) . The Labor Law and the Trade Union Law provide in general for the right to organize and participate in trade unions (article 7, paragraph 1 and article 3, respectively) but, unlike the case in Vietnam, that right is not protected under the Constitution, and independent labor unions are illegal in China. Chinese leaders, who preside over a larger and older industrial sector than the Vietnamese and whose economy is undergoing extensive structural changes, deeply fear the rise of a national labor movement similar to Poland's Solidarity. The Communist Party became especially vigilant after the spring of 1989, when workers in Beijing and other cities formed autonomous labor unions and joined students who were demanding political reform. After the military crackdown in June 1989 (the Tiananmen Square incident), the Party purged the ACFTU chairman and several other union officials for allowing their members to join independent labor activists and students demonstrating for democracy. Many labor activists were arrested and sentenced to prison terms of up to 15 years. Unlike Vietnam's Labor Code, neither the Trade Union Law nor the Labor Law of China explicitly requires the establishment of trade unions. The Trade Union Law only states that a trade union may be set up with a minimum of 25 members (article 12, paragraph 1). The ACFTU claims 103 million members, of a total workforce of approximately 740 million, over 500 million of whom are rural workers. Over 90% of the ACFTU's reported members are employed in SOEs. Most workers in China's private sector—which the government says employs about 20 million people—have no union representation, a situation the government is attempting to rectify "as a way of maintaining state control over labor relations." Although they share similar socialist roots, the roles of the ACFTU and the VGCL have begun to diverge. Whereas the VGCL has begun to evolve along the Western model of an advocate for workers' rights, for instance, the majority of ACFTU-affiliated unions appear to function primarily as social organizations and as resources for unemployed workers laid off due to SOE restructuring. Vietnamese industrial unions, which some argue are growing in importance, appear to have considerably more autonomy—in joining international trade union organizations, for instance—than their Chinese counterparts, which are far less important than enterprise unions. Likewise, China's enterprise unions have less autonomy from the Party than in Vietnam; although they are officially encouraged to protect workers' rights and to "supervise management," enterprise union efforts are often hampered by Communist Party authority in the factory and local union federations, which in turn are under the effective control of the local Party affiliate. Unlike Vietnam, the right to strike in China is in a state of legal limbo: there is no provision in the Chinese Labor Law granting the right to strike, nor is there any constitutional guarantee of that right. Nonetheless, the PRC government has acknowledged that many spontaneous strikes and demonstrations do occur. The number of officially recorded strikes soared to more than 120,000 in 1999—a 14-fold increase in five years. Some experts have estimated that labor protests—mostly against lost jobs and benefits, withheld wages and pensions, and corrupt management practices—occur almost weekly in "rust belt areas" where many older, uncompetitive, state-owned enterprises dominate the economy. Reported instances of relatively spontaneous and isolated strikes and demonstrations have not indicated that workers were arrested for their activities. However, in many private enterprises and foreign-owned companies using migrant labor, workers who strike reportedly are fired. Beijing has not tolerated acts involving long-term, autonomous labor organization, combined activities of workers from different enterprises, unapproved labor publications, and other "anti-government" acts. Since the late 1980s, numerous attempts have been made to establish independent unions. The government has persistently arrested or detained most activists involved in these efforts. One exception appears to be the government's treatment of migrant workers, who in 1999 began to form semiautonomous "village labor unions" on the outskirts of some cities to represent their interests in private sector industries. Though they are not part of the ACFTU, these loosely organized groups have been tolerated by local governments. The State Department reports that by some accounts these village unions are effective, relatively independent, and cooperative with city government. In contrast to the Vietnamese Labor Code's detailed provisions on collective bargaining, the Chinese Labor Law contains only three brief articles on this topic. Under the Trade Union Law, workers may enter into collective contracts on remuneration, work hours, rest days and holidays, safety and hygiene, insurance, welfare, and other matters (article 33). In October 2000, the Ministry of Labor and Social Security issued specific measures on collective wage negotiations. Dispute settlement procedures are similar to those of Vietnam—mediation, arbitration, and filing of a lawsuit in a People's Court (Labor Law, articles 77-83)—but as one scholar points out, "collective contracts are relatively meaningless without the right to take collective action." As in Vietnam, most Chinese workers enter into individual contracts with their employers. Chinese laborers' bargaining powers are limited by unemployment pressures, inadequate enforcement of existing laws, and Chinese government policies that forbid the formation of autonomous labor unions. China's Labor Law states that employers must implement State standards for occupational health and safety, educate laborers about occupational health and safety, and prevent accidents in the work process and lessen occupational hazards (article 52). Other provisions require employers to meet standards for health and safety facilities, to provide regular health exams for laborers engaged in hazardous work, and to give workers training for specialized operations (articles 53-55). For their part, laborers must abide by rules on safe operations. If compelled to operate under unsafe conditions, they may refuse to do the work, and report or bring charges against the endangering acts (article 56). By law, trade unions are to play a role in monitoring health and safety conditions (articles 23, 24). Chinese labor regulations contain provisions on workers' compensation for work-related accidents and diseases, and a national law on occupational diseases is expected to be enacted by the end of 2001. However, these regulations are poorly enforced, and the Chinese government has publicized the problem and worked with the ILO to train health and safety officers and to educate local officials. According to official statistics, the number of industrial accidents has declined in recent years. In 1999, several U.S. corporations, many of whom subcontract assembly work to Hong Kong, Taiwanese, and South Korean companies, jointly developed a "Code of Conduct" by which to promote international labor standards in these factories. The results have reportedly been mixed. The Labor Law provides for a system of guaranteed minimum wages (article 48). Beijing does not set a uniform minimum wage, but lets local governments determine their own minimum wage standards. China's per capita income is about two to four times that of Vietnam's ($800 in nominal terms; $4,000 in purchasing power parity terms). The State Department reports that these wages are "usually sufficient to provide a decent standard of living for a worker and family." In some larger cities, the minimum wage for factory workers is about $38 per month, roughly the same as minimum wage levels in Vietnam. However, according to one study, average wages for workers in Beijing, Shanghai, Guangzhou, and Shenzhen range from $175 to $300 per month. According to another study by a U.S.-China trade group, wages at U.S. factories in China were, on average, more than twice as high as wages for comparable jobs at Chinese state-owned enterprises. China's Labor Law has rules on work hours and vacation time, but they are not as detailed as those in the Vietnamese Labor Code. In 1995, China reduced the standard workweek from 44 hours to 40 hours—excluding overtime—eight fewer hours than Vietnam's general standard. The Labor Law mandates a 24-hour rest period weekly for staff and workers (article 38), apparently a broader provision than that in the Vietnamese Labor Code. As in Vietnam, overtime pay is required for extended work hours, which generally are not to exceed one hour per day and which are to be agreed upon by the employer in consultation with the trade union and laborers (article 41). A system of paid annual vacation time is also practiced in China with specific measures formulated by the State Council (article 45). Holidays are not covered under the law, but under separate measures; in spring 2000, the number of paid holidays was increased from 7 to 10 days a year. The Chinese Labor Law stipulates criminal responsibility for persons who compel workers to operate against established rules and under unsafe conditions if major accidents and serious consequences result (article 93). Like the Vietnamese Labor Code, which prohibits ill treatment of workers, the PRC law prohibits employers from using violence, intimidation, or illegal restriction of personal freedom to compel laborers to work. Such acts are punishable by means of detention, a fine, or a warning; if they constitute a crime, criminal responsibility will be pursued (article 96, item 1). Unlike Vietnam, the PRC uses forced labor as a method of punishment for criminal and for socially disruptive actions. The former is referred to as "reform through labor;" the latter is termed "labor reeducation." Labor reeducation in particular has been harshly criticized by Western governments, human rights organizations, and the United Nations. In 1992 and 1994, the United States and China signed memoranda of understanding on prohibiting export trade in prison labor products, but their implementation remains problematic; there have been many reports documenting the export of products in which some stages of assembly were subcontracted to prisoners, who received no payment. Generally speaking, Chinese law prescribes harsher punishments than those in Vietnamese law for crimes of trafficking in women and children. The PRC Criminal Law prescribes punishments for stealing babies or infants for the purpose of extorting money or property (not less than 10 years imprisonment plus fine or confiscation of property); for abducting and trafficking in women or children (between 5 and 10 years of imprisonment, plus fine or confiscation of property); and for buying an abducted woman or child (not more than three years, with exceptions). In especially serious cases, the first two types of crimes may incur the death penalty and confiscation of property. The Law of the PRC on the Protection of Rights and Interests of Women also prohibits trafficking in women (article 36, paragraph 1). It further provides that the relevant government organs must take timely measures to rescue the victims, that the women should not be discriminated against if they return to their former place of residence, and that local government organs will settle any problems that may subsequently arise (article 36, paragraph 2). The Labor Law prohibits employers from recruiting minors under the age of 16 (article 15, paragraph 1), two years lower than the minimum employment age in Vietnam. Juvenile workers—workers between the ages of 16 and 18—are prohibited from performing certain types of physical labor. Until recently, the ILO and UNICEF maintained that there was not a significant child labor problem in China, particularly in the formal and export-oriented economic sectors. However, the decentralization and privatization of the economy has produced widening income gaps, a breakdown in social welfare services, and greater opportunities for crime and corruption. Stagnating rural incomes, rising fees for school, and family financial crises coupled with deteriorating social welfare systems have compelled some poor, rural parents to send their children to work. According to the State Department, the Chinese government publicly maintains that the country does not have a significant child labor problem, and unlike Vietnam has not initiated a program to study the national scope of illegal child labor. Nevertheless, underage labor (13-15 years of age) has been reported in small factories and mines in rural and other remote areas and in the cities where young teenagers work as car washers, garbage collectors, and street vendors. In March 2001, an explosion in an elementary school in rural Jiangxi province killed 37 children who reportedly had been forced by their teachers to manufacture firecrackers. Underage workers have reportedly used fake i.d.'s to work in some foreign-run factories in the coastal provinces. The ACFTU, the Chinese media, non-governmental organizations, and some Chinese lawyers have researched and publicized the problem and provided legal assistance to underage laborers. There have been isolated incidents of traffickers bribing local authorities and taking children from destitute parents by promising to find them work that will provide large remittances. It has been speculated that some child prostitutes in Thailand were trafficked from minority areas in southwestern China. What factors account for the apparently stronger labor rights regime—particularly the greater union independence and assertiveness—in Vietnam vis à vis China? The vast differences in physical and population size between the two countries has played a role. With less than a tenth of China's population, Vietnam may be more dependent on the outside world, both politically and economically. If so, Vietnamese leaders therefore are likely to be more sensitive to prevailing international norms regarding labor rights, which may explain why they have aggressively engaged the ILO and the U.S. Department of Labor in recent months. Despite sharing similar Leninist political structures, relations between labor and the state in Vietnam and China have followed different paths. Some analysts argue that Vietnam's union movement was strengthened by the country's division and its civil war. For over twenty years, Vietnam was divided into a communist north and a capitalist south, giving Vietnam a recent capitalist legacy and labor autonomy that China lacks. Strikes and other militant labor actions, for instance, were a frequent occurrence in the south. In the North, decades of war prevented the Communist Party from imposing the same degree of authoritarian control over the union movement compared with China. Additionally, for a variety of structural and historical reasons, the Vietnamese Communist Party does not seem to have been as authoritarian as its Chinese counterpart. Vietnam's experiment with economic reforms was enacted later and has been far less extensive than that in China. Beijing has had to deal with far more social disruption than has Hanoi, perhaps making China's leaders more sensitive to permitting union independence. For instance, Vietnamese leaders also have not confronted a regime-threatening political experience similar to the Tiananmen protest movement in the spring of 1989. In the months before the demonstrations, China's ACFTU at all levels had pushed for more autonomy from the Party. As part of its crackdown against the protests, the government squelched the ACFTU's assertiveness. However, although Vietnamese unions and laborers possess greater freedoms to advocate for workers and express grievances than their Chinese counterparts, progress in labor rights and conditions in Vietnam remains uncertain. Market-oriented reforms and foreign investment in Vietnam could lead to a greater emphasis on production, more official corruption, and heightened social unrest as they have in China, which may in turn undermine labor rights. Additionally, for all the differences between Vietnam and China, most rights and freedoms in both countries stem not from the law, but from the discretion of the Party. Despite the differences between the two countries, many labor freedoms and rights in Vietnam are still vulnerable to changes in state policy. Since Vietnam's Labor Code was adopted in 1994, it is still being implemented and interpreted. The state of Vietnam's worker rights conditions has become part of the debate over whether Congress should approve the Vietnam-U.S. BTA, which does not contain provisions that explicitly deal with labor rights. The linkage between labor rights and the BTA would have become even more contentious if the Bush Administration had followed up on its proposal to bundle the BTA into a broad-based trade bill that would also include a U.S.-Jordan free trade agreement and new negotiating authority (also known as "fast track" or "trade promotion authority") for the President to negotiate new multilateral trade agreements. Workers' rights—along with environmental conditions—will likely be prominent in the debates over both the Jordan agreement and trade promotion authority. They are also likely to loom large in the debate over the merits of a bilateral textile agreement, which the U.S. and Vietnam are likely to negotiate in the next year. Many proponents of linking labor rights and trade agreements have argued that Congress should not pass the BTA until Vietnam's labor conditions improve further. Some labor rights advocates contend that globalization occasionally has weakened Vietnam's labor rights regime in the textile and apparel industries; at times, textile multinationals and industrialized governments have pushed the Vietnamese government—against the wishes of the VGCL—to relax its enforcement of certain provisions of the Labor Code. Other labor rights advocates argue that while Congress should pass the Vietnam-U.S. BTA, it should do so only after the signing of a textile and apparel agreement that includes conditions on labor rights along the lines of the provisions of the Cambodia-U.S. textile agreement. That agreement, which was signed in January 1999, is designed to reward improvements in labor rights with increased access to the U.S. textile and apparel market. The agreement establishes annual quota levels, which can be increased by up to 14% each year if the U.S. determines that worker rights in the Cambodian textile sector "substantially comply" with "international recognized core labor standards" and Cambodian labor laws. Opponents of linking the Vietnam-U.S. BTA to improvements in labor conditions contend that obtaining MFN status will indirectly help improve Vietnamese labor conditions. By promoting economic development, they argue, the BTA will provide Vietnamese workers with more opportunities, increased knowledge, and improved means to promote their rights. Foreign investment, which is likely to increase if the BTA is passed, is also thought by some to raise working conditions generally by bringing in multinational corporations that pay higher wages and have better health and safety conditions than do local enterprises. Finally, supporters of unconditional passage of the BTA argue that the agreement will improve labor rights by promoting the rule of law in Vietnam. For instance, they point out that the BTA requires Vietnam to publicize in advance most business-related laws and regulations, a move that should enhance the transparency of the country's legal regime. The following list includes various labor laws and regulations that are applied in the Socialist Republic of Vietnam. Most of the titles on this list, with a few exceptions, are in English. They are mainly found in the following two publications: 1) Foreign Investment Laws of Vietnam (loose-leaf), compiled by the Vietnamese Ministry of Planning and Investment and translated by Phillips Fox, an Australian law firm (hereafter Foreign Investment Laws of Vietnam ). 2) Hê Thông Van Ban Quy Pham Pháp Luât Hiên Hành vê Lao Dong — Bao Hiêm Xa Hôi [Compilation of the Current Laws and Regulations on Labor and Social Insurance], compiled by the Ministry of Labor, War Invalids, and Social Affairs (1998) (hereafter BLD). Titles of laws found in the Foreign Investment Laws of Vietnam collection are listed as they are translated therein. Titles from the BLD compilation are listed in Vietnamese, with an English translation in brackets. A. General Laws and Regulations on Labor Relations The Labor Code of the Socialist Republic of Vietnam of 1994 ( Foreign Investment Laws of Vietnam , p. IV-122) Decree 233-HDBT of June 22, 1990 on Labor for Enterprises with Foreign Owned Capital ( Foreign Investment Laws of Vietnam , p. IV-9) [Note: the Labor Code only partially repealed Decree 223-HDBT] Decree 72-CP of Oct. 31, 1995 Providing Details and Guidelines for the Implementation of a Number of Articles of the Labor Code with Respect to Employment ( Foreign Investment Laws of Vietnam , p. IV-351) Circular 16-LDTBXH-TT Providing Guidelines for the Implementation of Decree 72-CP of Oct. 31, 1995 with Respect to Recruitment of Labor ( Foreign Investment Laws of Vietnam , p. IV-515) Decree 198-CP of Dec. 31, 1994 regarding the Implementation of a Number of Articles of the Labor Code with Respect to Labor Contracts ( Foreign Investment Laws of Vietnam , p. IV-213) Circular 21/LDTBXH-TT of Oct. 12, 1996 on the Implementation of a Number of Articles of Decree 198-CP on Labor Contracts ( Foreign Investment Laws of Vietnam , p. IV-551) Decree 23-CP of Apr. 18, 1996 on Implementation of a Number of Articles of the Labor Code with Respect to Female Employees ( Foreign Investment Laws of Vietnam , p. IV-379) Circular 03-LDTBXH-TT of Jan. 13, 1997 Providing Guidelines for the Implementation of a Number of Articles of Decree 23-CP Dated April 18, 1996 on Female Employees ( Foreign Investment Laws of Vietnam , p. IV-587) Circular 79-1997-TT-BTC of Nov. 6, 1997 Providing Guidelines for Implementation of Decree 23-CP dated Apr. 18, 1996 on Female Employees ( Foreign Investment Laws of Vietnam , p. IV-701) B. Trade Unions and Collective Bargaining Rights Law on Trade Unions of July 7, 1990 ( Foreign Investment Laws of Vietnam , p. IV-1) Decree 18-CP of Dec. 26, 1992 on Collective Labor Agreements ( Foreign Investment Laws of Vietnam , p. IV-83) Decree 196-CP of Dec. 31, 1994 on the Implementation of a Number of Articles of the Labor Code with Respect to Collective Labor Agreements ( Foreign Investment Laws of Vietnam , p. IV-195) Pháp Lênh ngày 11/4/1996 cua Uy ban Thuong vu Quôc hôi vê thu tuc giai quyêt các tranh châp lao dông [Decree-Law issued by the Permanent Committee of the National Assembly to regulate procedures in labor disputes] (BLD, p. 1598) Nghi Dinh sô 51/CP ngày 29/8/1996 cua Chính phu vê vu giai quyêt yêu câu cua tâp thê lao dông tai doanh nghiêp không duoc dình công [Decision 51/CP of Aug. 29, 1996, concerning resolution of labor disputes for workers who work in no-strike enterprises] (BLD, p. 1632) Decision 744-TTg of Oct.8, 1996 on Establishment of Provincial Labor Arbitration Councils ( Foreign Investment Laws of Vietnam , p. IV-543) Circular 02-LDTBXH-TT of Jan.8, 1997 Providing Guidelines for the Implementation of Decision 744-T.G. of 1996 on Establishment of Provincial Labor Arbitration Councils ( Foreign Investment Laws of Vietnam , p. IV-586/1) Decision 1208-QD-UB-NC of Mar. 18, 1997 Issuing Provisional Regulations on the Organization and Operation of Labor Conciliatory Councils of Enterprises [Applied in Hô Chí Minh City] ( Foreign Investment Laws of Vietnam , p. IV-616/1) Circular 10-LDTBXH-TT of Mar. 25, 1997 Providing Guidelines for the Organization and Operation of Conciliatory Councils of Enterprises and Labor Conciliatory Offices, p. the Level of Districts, Communes, Cities, and Towns of Provinces and Cities Under the Central Authority ( Foreign Investment Laws of Vietnam , p. IV-623) C. Laws on Salary and Wages Decree 197-CP of Dec. 31, 1994 on Implementation of a Number of Articles of the Labor Code with Respect to Wages ( Foreign Investment Laws of Vietnam , p. IV-203) Circular 10-LDTBXH-TT of Apr. 19, 1995 Providing Guidelines for the Implementation of Decree 197-CP of 1994 on Wages ( Foreign Investment Laws of Vietnam , p. IV-326/9) Circular 11-LDTBXH-TT of May 3, 1995 on Wages of Vietnamese Employees Working in Enterprises with Foreign Owned Capital and Foreign Organizations in Vietnam ( Foreign Investment Laws of Vietnam , p. IV-327) Official Letter 2028-VPCP-KGVX of May 28, 1998 on Salaries, and Official Letter 1824-LDTBXH-TL of June 5, 1998 on Wages in Enterprises with Foreign Owned Capital ( Foreign Investment Laws of Vietnam , p. IV-749 and IV-751, respectively) Decision 385-LDTBXH-QD of Apr. 1, and amended on Apr. 3, 1996 Regulating Minimum Wages for Vietnamese Employees Working in Enterprises with Foreign Owned Capital, Foreign Offices and Organizations and International Organizations ( Foreign Investment Laws of Vietnam , p. IV-375) Decision 708/1999-QD-LDTBXH of June 15, 1999 on Minimum Wages for Vietnamese Working for Foreign Invested Enterprises ( Foreign Investment Laws of Vietnam , p. IV-875) Guidance 1485-LDTBXH-NN of Jun. 30, 1999 (for Ho Chi Minh City) on the Conversion of Wages of Vietnamese Employees from US Dollars into Vietnamese Dong ( Foreign Investment Laws of Vietnam , p. IV-879) Decree 10-2000-ND-CP of Mar.27, 2000 on Minimum Wage in Enterprises ( Foreign Investment Laws of Vietnam , p. IV-895) D. Laws on Work Hours Decree 195-CP of Dec. 31, 1994 on the Implementation of a Number of Articles of the Labor Code With Respect to Working Hours and Rest Breaks ( Foreign Investment Laws of Vietnam , p. IV-187) Circular 07-BLDTBXH-TT of Apr. 11, 1995 on Working Hours and Rest Breaks [Providing guidelines for the implementation of a number of articles of the 1994 Labor Code and Decree 195-CP of 1994 on working hours and rest breaks ( Foreign Investment Laws of Vietnam , p. IV-326/1) Circular 16-LDTBXH-TT of Apr. 23, 1997 Providing Guidelines on Reduction of Working Hours for Persons Performing Extremely Heavy, Toxic, and Dangerous Work ( Foreign Investment Laws of Vietnam , p. IV-637) Decree 10-CP of Mar. 1, 1999 on Working Hours and Rest Breaks [Amending Decree 195-ND-CP dated Dec. 31, 1994 on Working Hours and Rest Breaks ( Foreign Investment Laws of Vietnam , p. IV-825) E. Laws on Safety and Hygiene Decree 06-CP of Jan. 20, 1995 on Occupational Safety and Hygiene ( Foreign Investment Laws of Vietnam , p. IV-223) Circular 22-LDTBXH-TT of Nov. 8, 1996 Providing Guidelines for Declaration, Registration, and Application for Use of Machinery, Equipment, Materials and Substances Subject to Strict Occupational Safety Requirements ( Foreign Investment Laws of Vietnam , p. IV-559) Circular 23-LDTBXH-TT of Nov. 18, 1996 Providing Guidelines for the Implementation of a Regime for Periodical Statistics and Reports on Work-Related Accidents ( Foreign Investment Laws of Vietnam , p. IV-573) Circular 10/1998-TT–BLDTBXH of May 28, 1998 Providing Guidelines for the Implementation of Regulations on Personal Protective Equipment ( Foreign Investment Laws of Vietnam , p. IV-743) Decree 162/1999-ND-CP of Nov. 9, 1999 on the Amendments and Additions to Decree 06-CP of 1995 on Occupational Safety and Hygiene Decree 06 of 1995 ( Foreign Investment Laws of Vietnam , p. IV-881) F. Laws on Social Benefits Decree 12-CP of Jan. 26, 1995 on Social Insurance ( Foreign Investment Laws of Vietnam , p. IV-235) Circular 06-LDTBXH-TT of Apr. 4, 1995 on Social Insurance Providing Guidelines for the Implementation of Decree 12-CP ( Foreign Investment Laws of Vietnam , p. IV-301) Circular 58-TC-HCSN of July 24, 1955 on Social Insurance [Providing Temporary Guidelines for Collection and Payment of Social Insurance] ( Foreign Investment Laws of Vietnam , p. IV-337) Decision 606-TTg of Sept. 26, 1995 Issuing Regulations on the Organization and Operation of Vietnam Social Insurance ( Foreign Investment Laws of Vietnam , p. IV-343 and IV-345) Circular 09-LDTBXH-TT of Apr. 26, 1996 Providing Guidelines for the Issuance and Record -Keeping of Social Insurance Books ( Foreign Investment Laws of Vietnam , p. IV-387) Circular 11-LDTBXH of Apr. 7, 1997 Providing Guidelines for the Application of Social Insurance Regimes for Persons Performing Heavy, Toxic, and Dangerous Work or Extremely Heavy, Toxic, and Dangerous Work ( Foreign Investment Laws of Vietnam , p. IV-631) Decree 93-ND-CP of Nov. 12, 1998 on Social Insurance [Amending and Adding to the Decree 12-CP of Jan. 26, 1995 on Social Insurance ( Foreign Investment Laws of Vietnam , p. IV-811) Decree 58-1998-ND-CP of Aug. 13, 1998 on Health Insurance ( Foreign Investment Laws of Vietnam , p. IV-775) Circular 19-LDTBXH-TT of Aug. 2, 1997 Providing Guidelines for the Implementation of Compensation Plan for Employees Suffering Work-Related Accidents ( Foreign Investment Laws of Vietnam , p. IV-675) G. Enforcement of Labor Laws Decree 38-CP of June 25, 1996 on Administrative Penalties for Labor Offenses ( Foreign Investment Laws of Vietnam , p. IV-431) Circular 01-TT-LDTBXH of Jan. 6, 1997 on Labor Offenses [Providing Guidelines on Procedures for the Application of Penalties, the Collection and the Use of Fines of Labor Offenses; Settlement of Complaints in Relation to Administrative Penalties for Labor Offenses] ( Foreign Investment Laws of Vietnam , p. IV-577) Penal Code of the Socialist Republic of Vietnam, in Selection of Fundamental Laws and Regulations of Vietnam 122 (Hanoi, The Gioi Publishers, 1995) | Congress is currently considering the U.S.-Vietnam bilateral trade agreement (BTA). Under the agreement, which was signed in July 2000 and requires Congressional approval, the United States pledged to extend conditional normal trade relations status to Vietnam, thereby significantly lowering tariffs on imports from Vietnam, in return for Hanoi's agreement to enact a wide range of market-oriented reforms. Congressional discussion over the BTA is expected to highlight Vietnam's labor rights situation, a topic that has become a contentious part of the trade debate in recent years. The BTA itself does not specifically address workers' rights. The evolution of Vietnam's labor rights regime has been heavily conditioned by the tension between maintaining political stability and promoting economic development—two goals that often conflict. On the one hand, Vietnamese workers are not free to form their own independent unions. All unions must belong to the Vietnam General Confederation of Labor (VGCL), an organ of the Communist Party. Analysts have observed that the absence of a true right of association in Vietnam has impeded the improvement of labor rights in other areas. Collective bargaining agreements remain the exception rather than the rule. Vietnam's doi moi (renovation) economic reforms, launched in 1986, have been followed by surging urban unemployment and a rise in child labor, forced prostitution, and the trafficking of women and children. Workers in all sectors of the economy are often exposed to dangerous, unhealthy, and in some cases impoverished "sweatshop" conditions. Rapid economic expansion, corruption, and shortages of funds, training, and personnel have made it extremely difficult for government authorities to enforce Vietnam's labor laws. On the other hand, since the launch of the doi moi reforms, worker rights have made substantial progress. Vietnam rejoined the International Labor Organization (ILO) in 1992 and since then the government, unions, and local groups have intensified their cooperation with the ILO and other international groups. A comprehensive and detailed Labor Code was passed in 1994. Among other advances, it recognized workers' right to strike. There is evidence that over the past decade the VGCL and its member-unions have become more assertive—particularly on matters relating to wages, health, and safety—a development tolerated by the government. By many measures—the coverage of labor laws, the tolerance of wildcat strikes, the slowly increasing clout of grass-roots unions, the relative openness of debate over labor issues—there is evidence that the Vietnamese labor rights regime is more flexible and responsive than its Chinese counterpart. This report details Vietnam's law and policy in six areas of labor rights: the right of association/collective bargaining; forced labor; child labor; health and safety; wages, hours and welfare benefits; and discrimination. This report also provides international context by contrasting the Vietnamese and Chinese labor rights regimes. Comprehensive information about Vietnam's labor conditions are scarce. As more information is obtained, this report will be updated. |
The 112 th Congress continued to take a strong interest in the health of the U.S. research and development (R&D) enterprise and in providing support for federal R&D activities in the course of the FY2012 appropriations process. However, widespread concerns about the federal debt and recent and projected federal budget deficits drove difficult decisions involving prioritization of R&D within the context of the entire federal budget and among competing priorities within the federal R&D portfolio. The U.S. government supports a broad range of scientific and engineering research and development. Its purposes include addressing specific concerns such as national defense, health, safety, the environment, and energy security; advancing knowledge generally; developing the scientific and engineering workforce; and strengthening U.S. innovation and competitiveness in the global economy. Most of the R&D funded by the federal government is performed in support of the unique missions of the funding agencies. The federal government has played an important role in supporting R&D efforts that have led to scientific breakthroughs and new technologies, from jet aircraft and the Internet to communications satellites and defenses against disease. Congress plays a central role in defining the nation's R&D priorities as it makes decisions with respect to the size and distribution of aggregate, agency, and programmatic R&D funding. During the course of the FY2012 appropriations process, some Members of Congress expressed concerns about the level of federal R&D funding in light of the current federal fiscal condition, deficit, and debt. As Congress acted to complete the FY2012 appropriations process it faced two overarching issues: the extent to which the federal R&D investment can grow in the context of increased pressure on discretionary spending and how available funding will be prioritized and allocated. President Obama's proposed FY2012 budget, released on February 14, 2011, included $147.911 billion for R&D in FY2012, a 0.5% increase over the actual FY2010 R&D funding level of $147.139 billion. Adjusted for inflation, the President's FY2012 R&D request represented a decrease of 2.2% from the FY2010 level. This report provides government-wide, multi-agency, and individual agency analyses of the President's FY2012 request as it relates to R&D and related activities, and Congressional appropriations actions. Among its provisions, the President's proposed FY2012 R&D funding maintained an emphasis on increasing funding for the physical sciences and engineering, an effort consistent with the intent of the America COMPETES Act ( P.L. 110-69 ) and the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ). These acts proposed to achieve this objective by authorizing increased funding for three agencies with a strong R&D emphasis in these disciplines: the Department of Energy Office of Science, the National Science Foundation, and the Department of Commerce National Institute of Standards and Technology's core laboratory research and R&D facilities construction funding. Appropriations provided to these agencies have, in aggregate, fallen short of the levels authorized in these acts. (See " Multiagency R&D Initiatives " for detailed information.) More broadly, in a 2009 speech before members of the National Academy of Sciences, President Obama put forth a goal of increasing the national investment in R&D to more than 3% of the U.S. gross domestic product (GDP). President Obama did not provide details on how this goal might be achieved (e.g., how much would be funded through increases in direct federal R&D funding or through indirect mechanisms such as the research and experimentation (R&E) tax credit ); however, doing so likely would have required a substantial increase in public and/or private investment. In addition, advocates for increased federal R&D funding—including President Obama's science advisor, John Holdren—raised concerns about the potential harm of a "boom-bust" approach to federal R&D funding (i.e., rapid growth in federal R&D funding followed by much slower growth, flat funding, or even decline). The biomedical research community experienced a variety of challenges resulting from such a circumstance following the five-year doubling of the NIH budget that was completed in FY2003. With the NIH doubling came a rapid expansion of the nation's biomedical research infrastructure (e.g., buildings, laboratories, equipment), as well as rapid growth in university faculty hiring, students pursuing biomedical degrees, and grant applications to NIH. After the doubling, however, the agency's budget fell each year in real terms from FY2004 to FY2009. Critics assert there have been a variety of damages from this boom-bust cycle, including interruptions and cancellations of promising research, declining share in the number of NIH grant proposals funded, decreased student interest in pursuing graduate studies, and reduced employment prospects for the large number of biomedical researchers with advanced degrees. According to then-NIH Director Elias Zerhouni, the damages have been particularly acute for early- and mid-career scientists seeking a first or second grant. Analysis of federal R&D funding is complicated by several factors, including inconsistency among agencies in the reporting of R&D. As a result of these factors, the R&D agency figures reported by the White House Office of Management and Budget (OMB) and White House Office of Science and Technology Policy (OSTP), and shown in Table 1 , may differ somewhat from the agency budget analyses that appear later in this report. Another factor complicating analysis of the President's FY2012 budget request was the proposal for a Wireless Innovation (WIN) Fund, a part of the Administration's Wireless Innovation and Infrastructure Initiative. Under the President's request, the WIN Fund was to receive $3 billion over seven years (FY2012-FY2018) from receipts generated through electromagnetic spectrum auctions. According to the President's request, the WIN funds were to support research, test beds, and applications development to support leading-edge wireless technologies and applications for public safety, Smart Grid, telemedicine, distance learning, and other broadband capabilities and to facilitate spectrum relocation. Under the President's budget, if the WIN Fund was established, several agencies would have received funding for these purposes, among them the Department of Defense, the Department of Energy, the Department of Commerce, and the National Science Foundation. Congress did not establish the WIN Fund for FY2012. Federal R&D funding can be analyzed from a variety of perspectives that provide unique insights. The authorization and appropriations process views federal R&D funding primarily from agency and program perspectives. Table 1 provides data on R&D by agency for FY2010 (actual), FY2011 (actual) and FY2012 (request) as reported by OMB. Under President Obama's FY2012 budget request, six federal agencies would have received 94.8% of total federal R&D funding: Department of Defense (DOD), 51.8%; Department of Health and Human Services (HHS) (primarily the National Institutes of Health, NIH), 21.9%; Department of Energy (DOE), 8.8%; National Aeronautics and Space Administration (NASA), 6.6%; National Science Foundation (NSF), 4.3%; and Department of Agriculture (USDA), 1.5%. This report provides an analysis of the R&D budget requests for these agencies, as well as for the Departments of Commerce (DOC), Homeland Security (DHS), the Interior (DOI), and Transportation (DOT), and the Environmental Protection Agency (EPA). In total, these agencies accounted for more than 98% of FY2010 federal R&D funding. The largest agency R&D increases in the President's FY2012 request were for DOE, $2.153 billion (19.9%); HHS, $919 million (2.9%, due entirely to a $1.019 billion increase in R&D funding for NIH); NSF, $875 million (16.1%); NASA, $559 million (6.0%); and DOC, $376 million (28.0%). Under President Obama's FY2012 budget request, DOD R&D funding would have been reduced by $3.969 billion (-4.9%), USDA R&D by $461 million (-17.7%), Department of Veterans Affairs R&D by $144 million (-12.4%), and EPA R&D by $11 million (-1.9%). Federal R&D funding can also be examined by the character of work it supports—basic research, applied research, and development—and funding provided for facilities and acquisition of major R&D equipment. (See Table 2 .) President Obama's FY2012 request included $32.895 billion for basic research, up $3.498 billion (11.9%) from FY2010; $33.182 billion for applied research, up $3.383 billion (11.4%); $79.414 billion for development, down $3.891 billion (-4.7%); and $2.420 billion for facilities and equipment, down $2.218 billion (-47.8%). It is important to note that with the projected completion of construction of the International Space Station (ISS) in FY2011, beginning in FY2012 NASA funding for operation of the facility was accounted for as research; previously, NASA ISS funding was accounted for as "facilities and equipment." Combining these perspectives, federal R&D funding can be viewed in terms of each agency's contribution to basic research, applied research, development, and facilities and equipment. (See Table 3 .) The federal government is the nation's largest supporter of basic research, funding 57.0% of U.S. basic research in 2008, primarily because the private sector asserts it cannot capture an adequate return on long-term fundamental research investments. In contrast, industry funded only 17.7% of U.S. basic research in 2008 (with state governments, universities, and other non-profit organizations funding the remaining 25.3%). In the President's FY2012 budget request, the Department of Health and Human Services, primarily the National Institutes of Health (NIH), accounted for more than half of all federal funding for basic research. In contrast to basic research, industry is the primary funder of applied research in the United States, accounting for an estimated 60.8% in 2008, while the federal government accounted for an estimated 32.4%. Among federal agencies, HHS is the largest funder of applied research, accounting for nearly half of all federally funded applied research in the President's FY2012 budget request. Industry also provides the vast majority of funding for development. Industry accounted for an estimated 84.1% in 2008, while the federal government provided an estimated 14.9%. DOD is the primary federal agency funder of development, accounting for 87.7% of total federal development funding in the President's FY2012 budget request. Federal R&D funding can also be viewed in terms of multiagency efforts, such as the National Nanotechnology Initiative, the Networking and Information Technology Research and Development Program, U.S. Global Change Research Program, and presidential initiatives. In 2006, President Bush announced his American Competitiveness Initiative which, in part, sought to increase federal funding for physical sciences and engineering research by doubling funding over 10 years (FY2006-2016) for targeted accounts at three agencies—NSF, all; DOE, Office of Science only; and NIST, the scientific and technical research and services (STRS) and construction of research facilities (CRF) accounts. In 2007, Congress authorized substantial increases for these targeted accounts under the America COMPETES Act ( P.L. 110-69 ), setting aggregate authorization levels for FY2008-FY2010 consistent with a more aggressive seven-year doubling pace. However, aggregate funding provided for these agencies in the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ), the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ), and the Consolidated Appropriations Act, 2010 ( P.L. 111-117 ) fell below these targets. (See Table 4 for individual and aggregate agency appropriations.) In 2010, Congress passed the America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) which, among other things, authorized appropriations levels for the targeted accounts for FY2011-FY2013. The aggregate authorization levels in this act for the targeted accounts are consistent with an 11-year doubling path, slower than the America COMPETES Act's 7-year doubling path. Moreover, aggregate FY2011 funding for the targeted accounts was approximately $12.280 billion, $1.101 billion less than authorized in the act, setting a pace to double over 16 years from the FY2006 level—more than twice the length of time originally envisioned in the 2007 America COMPETES Act and about a third longer than the doubling period established by the America COMPETES Reauthorization Act of 2010. In FY2012 President Obama sought funding for the targeted accounts that would have increased aggregate funding to $13.947 billion, an increase of $1.667 billion (13.6%) above the FY2011 (actual) aggregate funding level of $12.323 billion. However, funding provided for each of the targeted accounts fell short of the President's request: President Obama requested $7.767 billion for NSF; P.L. 112-55 provided $7.033 billion. With respect to the targeted accounts at the National Institute of Standards and Technology (NIST): The President requested $678.9 million for core laboratory research; P.L. 112-55 provided $567.0 million. The President requested $84.6 million for construction of research facilities; P.L. 112-55 provided $55.4 million. President Obama requested $5.416 billion for DOE's Office of Science; P.L. 112-74 provided $4.874 billion. In light of budget constraints, the future of the doubling path appears to be in question. In his FY2010 Plan for Science and Innovation, President Obama stated that he, like President Bush, would seek to double funding for basic research over 10 years (FY2006 to FY2016) at the ACI agencies. In his FY2011 budget documents, President Obama extended the period over which he intended to double these agencies' budgets to 11 years (FY2006 to FY2017). In his FY2012 budget request, President Obama reiterated his intention to double the federal investment for these agencies from their FY2006 levels, though the request did not specify the timeframe during which this is to take place. In addition, the Historical Tables of the President's FY2012 budget—which not only provide retrospective agency data, but also projections of future agency budget authority—show aggregate budget authority for the targeted accounts remaining essentially flat through FY2015, with a small uptick in FY2016. The Administration's September 1, 2011, Mid-Session Review acknowledged that the doubling goal would be delayed: [T]he new funding levels set in [the Department of Defense and Full-Year Continuing Appropriations Act, 2011] mean delaying the goal of doubling funding for key research and development (R&D) agencies.... Figure 1 shows aggregate funding for the agencies as a percentage of their FY2006 funding level, and illustrates how actual (FY2006-FY2011) and authorized appropriations (FY2008-FY2013) compare to different doubling rates using FY2006 as the base year. The thick black line at the top of the chart is at 200%, the doubling level. The data used in Figure 1 are in current dollars, not constant dollars, therefore the effect of inflation on the purchasing power of these funds is not taken into consideration. President Obama's FY2012 budget request sought funding for three multiagency R&D initiatives. The National Nanotechnology Initiative (NNI) received $1.697 billion in FY2012 (estimate), $150 million (-8.1%) below the FY2011 funding level of $1.847 billion and $433 million (-20.3%) less than requested the President's FY2012 request of $2.130 billion. The Networking and Information Technology Research and Development (NITRD) program received $3.739 billion in FY2012 (estimate), essentially the same as in FY2011 and $129 million (3.3%) less than President Obama's request of $3.868 billion. The U.S. Global Change Research Program (USGCRP) received $2.427 billion in FY2012 (estimate), $21 million (-0.9%) below the FY2011 funding level of $2.448 billion and $206 million (-7.8%) less than President Obama's request of $2.633 billion. On December 17, 2011, Congress completed action on the FY2012 regular appropriations bills with passage of H.R. 2055 , the Consolidated Appropriations Act, 2012, which was signed into law ( P.L. 112-74 ) by President Obama on December 23, 2011. P.L. 112-74 includes the nine regular appropriations bills that had yet to be enacted: Department of Defense Appropriations Act, 2012 (as Division A); the Energy and Water Development Appropriations Act, 2012 (as Division B); the Financial Services and General Government Appropriations Act, 2012 (as Division C); the Department of Homeland Security Appropriations Act, 2012 (as Division D); the Department of the Interior, Environment, and Related Agencies Appropriations Act, 2012 (as Division E); the Departments of Labor, Health and Human Services, Education, and Related Agencies Appropriations Act, 2012 (as Division F); the Legislative Branch Appropriations Act, 2012 (as Division G); the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2012 (as Division H); and the Department of State, Foreign Operations, and Related Programs Appropriations Act, 2012 (as Division I). Earlier, on November 17, 2011, Congress completed action on the Consolidated and Further Continuing Appropriations Act, 2012 ( P.L. 112-55 ), which combined into a single measure three regular appropriations bills: the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Act, as H.R. 2112 , Division A; Commerce, Justice, State and Related Agencies Act, as H.R. 2112 , Division B; and Transportation, Housing and Urban Development, and Related Agencies Act, as H.R. 2112 , Division C. President Obama signed the bill into law two days later. Division D of the act amended an earlier continuing appropriations act ( P.L. 112-36 ) providing funding through December 16, 2011, for all agencies covered under the other nine appropriations bills at 1.503% below the FY2011-enacted levels, or until enactment of an appropriation for any project or activity provided for in the act or enactment of the applicable appropriations act for fiscal year 2012 without any provision for such project or activity. Previously, Congress passed and the President signed two bills, both titled the Continuing Appropriations Act, 2012, that provided continuing appropriations for all agencies for FY2012. P.L. 112-33 extended agency funding through October 4, 2011; P.L. 112-36 extended funding through November 18, 2011. The remainder of this report provides a more in-depth analysis of R&D in 12 federal departments and agencies that, in aggregate, receive more than 98% of federal R&D funding. Annual appropriations for these agencies are provided through 8 of the 12 regular appropriations bills. For each agency covered in this report, Table 5 shows the corresponding regular appropriations bill that provides funding for the agency, including its R&D activities. In addition to this report, CRS produces individual reports on each of the appropriations bills. These reports can be accessed via the CRS website at http://crs.gov/Pages/clis.aspx?cliid=73 . Also, the status of each appropriations bill is available on the CRS webpage, Status Table of Appropriations , available at http://www.crs.gov/Pages/appover.aspx . Congress supports research and development in the Department of Defense (DOD) primarily through its Research, Development, Test, and Evaluation (RDT&E) appropriation. The appropriation supports the development of the nation's future military hardware and software and the technology base upon which those products rely. Nearly all of what DOD spends on RDT&E is appropriated in Title IV of the defense appropriation bill. (See Table 6 .) However, RDT&E funds are also appropriated in other parts of the bill. For example, RDT&E funds are appropriated as part of the Defense Health Program, the Chemical Agents and Munitions Destruction Program, and the National Defense Sealift Fund. The Defense Health Program supports the delivery of health care to DOD personnel and their families. Program funds are requested through the Operations and Maintenance appropriation. The program's RDT&E funds support congressionally directed research in such areas as breast, prostate, and ovarian cancer and other medical conditions. Congress appropriates funds for this program in Title VI (Other Department of Defense Programs) of the defense appropriations bill. The Chemical Agents and Munitions Destruction Program supports activities to destroy the U.S. inventory of lethal chemical agents and munitions to avoid future risks and costs associated with storage. Funds for this program have been requested through the Procurement appropriation. Congress appropriates funds for this program also in Title VI. The National Defense Sealift Fund supports the procurement, operation and maintenance, and research and development of the nation's naval reserve fleet and supports a U.S. flagged merchant fleet that can serve in time of need. Requests for this fund are made as part of the Navy's Procurement appropriation. Congress appropriates funds for this program in Title V (Revolving and Management Funds) of the defense appropriations bill. The Joint Improvised Explosive Device Defeat Fund (JIEDDF) also contains RDT&E monies. However, the fund does not contain an RDT&E line item as do the three programs mentioned above. The Joint Improvised Explosive Device Defeat Office, which now administers the fund, tracks (but does not report) the amount of funding allocated to RDT&E. The JIEDDF funding is not included in the table below. RDT&E funds also have been requested and appropriated as part of DOD's separate funding to support efforts in what the Bush Administration had termed the Global War on Terror (GWOT), and what the Obama Administration refers to as Overseas Contingency Operations (OCO). Typically, the RDT&E funds appropriated for GWOT/OCO activities go to specified Program Elements (PEs) in Title IV. However, they are requested and accounted for separately. The Bush Administration requested these funds in separate GWOT emergency supplemental requests. The Obama Administration, while continuing to identify these funds uniquely as OCO requests, has included these funds as part of the regular budget, not in emergency supplementals. However, the Obama Administration will ask for additional OCO funds in supplemental requests, if the initial OCO funding is not enough to get through the fiscal year. In addition, GWOT/OCO-related requests/appropriations often include money for a number of transfer funds. These have included in the past the Iraqi Freedom Fund (IFF), the Iraqi Security Forces Fund (which was not requested in FY2012), the Afghanistan Security Forces Fund, the Mine Resistant and Ambush Protected Vehicle Fund (MRAPVF), and the Pakistan Counterinsurgency Capability Fund (transferred to the State Department in FY2012). Congress typically makes a single appropriation into each of these funds, and authorizes the Secretary to make transfers to other accounts, including RDT&E, at his discretion. In the Consolidated Appropriations Act, 2012, Congress established a new Military Intelligence Program Transfer Fund, granting the Secretary similar authority. For FY2012, the Obama Administration requested $75.325 billion for DOD's baseline Title IV RDT&E and another $397 million in OCO RDT&E. The FY2012 request was $5.330 billion (nearly 7%) below the actual total obligational authority available in FY2010, but only $90 million below the total Title IV and OCO RDT&E provided for in FY2011. In addition to the $75.325 billion baseline request, the Administration requested $100 million as DOD's share of the proposed Wireless Innovation Fund. This fund (approximately $3 billion that would be distributed through various departments) is part of the President's initiative to expand coverage and usage of the nation's wireless networks and to encourage innovation in wireless devices. The Defense Advanced Research Projects Agency (DARPA) was to have managed the $100 million for DOD, if the fund is established. Congress did not establish the WIN fund for FY2012. The House voted to appropriate $72.993 billion for Title IV RDT&E. This included floor action that reduced the Defensewide RDT&E account $16 million below what the House Appropriation Committee recommended, offsetting an increase approved for peer-reviewed prostate cancer research in the Defense Health Program. The House appropriation was $2.432 billion below the Administration's request. Major program decreases included reductions to the Army's Patriot/MEADS ($149 million) and Manned Ground Vehicles ($116 million) programs, the Air Force's National Polar-Orbiting Operational Environment Satellite ($220 million), Rocket System Launch ($125 million) programs, and the Office of the Secretary's Precision Tracking Space System ($161 million) and Prompt Strike Capability ($100 million) programs. Major increases were made to the Air Force's Next Generation Bomber ($100 million) and the Office of the Secretary's U.S.-Israeli Cooperative R&D ($130 million). Also, DARPA's budget request was reduced by $100 million, the Committee citing efficiency gains in programming. The House made no mention of DOD's involvement in the Wireless Innovation Fund. The Senate Appropriations Committee recommended $71.034 billion for Title IV RDT&E, nearly $2 billion less than what the House provided and over $4 billion less than what the Administration requested. The committee recommended more than $1 billion less for Army RDT&E than either the Administration requested or the House approved. Major program decreases included the Army's Warfighter Information Network ($115 million), which was not cut by the House, the Manned Ground Vehicle ($644 million), and Logistics and Engineering Equipment ($160 million), cutting these last two more than the House did. Cuts were also made to the Air Force's National Polar-Orbiting Operational Environment Satellite ($295 million), also cut by the House, and the Next Generation Refueling Aircraft ($135 million), which was not cut by the House. The Senate committee also cut the Chemical Biological Defense Engineering and Manufacturing program ($186 million), which the House fully funded. Major program increases included funds for a new Air Force Weather Satellite Follow-on program ($250 million) to continue technology development associated with the National Polar-Orbiting Operational Environment Satellite, funds for the Office of the Secretary to support the Defense Rapid Innovation Fund ($200 million) and the Office of the Secretary's U.S.-Israeli Cooperative R&D ($130 million). Aside from cutting where the House did not, the Senate committee also did not go along with a number of House cuts, providing all the funds requested for the Army's Patriot/MEADS, the Air Force's Rocket System Launch, the Office of the Secretary's Precision Tracking Space System, and the Missile Defense Agency's Prompt Strike Capability. The Senate also did not go along with the general reduction to DARPA's program, nor did it increase funding for the Air Force's Next Generation Bomber. In the Consolidated Appropriations Act, 2012, Congress approved $72.431 for Title IV RDT&E, roughly splitting the difference between the House and Senate. Reductions made to the Logistics and Engineering Equipment ($77 million), the Prompt Strike ($25 million), the Precision Tracking Space System ($80 million), and the Chemical Biological Defense Engineering and Manufacturing ($84 million) programs were roughly half those sought by either the House or Senate. The Manned Ground Vehicle program was reduced by $435 million. The National Polar-Orbiting Operational Environment Satellite program was terminated. The Rocket Launch System and the Next Generation Refueling Aircraft, which were cut respectively by the House and Senate, were fully funded. Congress also reduced DARPA's RDT&E request by $166 million. Among the programs for which Congress approved increases were the U.S.-Israeli Cooperative R&D ($129 million), the Next Generation Bomber ($100 million), the Rapid Innovation Program ($200 million), and the Weather Satellite ($125 million). For FY2012, the Administration requested an additional $664 million in RDT&E through the Defense Health Program, $407 million in RDT&E through the Chemical Agents and Munitions Destruction program, and $48 million in RDT&E through the National Defense Sealift Fund. To support overseas contingencies, the Administration requested $397 million in OCO-related RDT&E. The Administration also requested $2 million in RDT&E for DOD's Office of the Inspector General. The House voted to increase RDT&E in the Defense Health Program to $1.217 billion. This included an additional $30 million added on the House floor. The House approved the amount requested for the Chemical Agents and Munitions Destruction program and the National Defense Sealift Fund. The House appropriated $5 million for RDT&E in the Inspector General's Office. The Senate Appropriations Committee recommended $1.018 billion for RDT&E in the Defense Health Program and the amount requested for RDT&E in the Chemical Agents and Munitions Destruction Program. The Consolidated Appropriations Act, 2012 provided $1.267 billion in Defense Health Program RDT&E; $407 million, as requested, for the Chemical Agents and Munitions Destruction Program; and $5 million for RDT&E by the Inspector General's Office. For OCO-related RDT&E, the House appropriated $437 million, supporting much of the Administration's request. It provided $10 million less than requested for the Air Force's Unmanned Endurance UAV program, but provided $50 million in funding the Air Force's Intelligence, Surveillance, and Reconnaissance Innovation program. The Senate Appropriations Committee recommended $582 million for OCO-related RDT&E, nearly $200 million more than requested. $105 million of that increase was a result of transferring the Navy's MQ-4 UAV Title IV funding to the OCO funding. In the Consolidated Appropriations Act, 2012, Congress appropriated $526 million for OCO-related RDT&E. This included a $59 million transfer from JIEDDO to the Air Force for the continued development of an endurance unmanned aerial vehicle and a $50 million increase for Intelligence, Surveillance, and Reconnaissance innovations by the Air Force. RDT&E funding can be broken out in different ways. Each of the military departments request and receive their own RDT&E funding. So, too, do various DOD agencies (e.g., the Missile Defense Agency and the Defense Advanced Research Projects Agency), collectively aggregated within the Defensewide account. RDT&E funding also can be characterized by budget activity (i.e., the type of RDT&E supported). Those budget activities designated as 6.1, 6.2, and 6.3 (basic research, applied research, and advanced technology development, respectively) constitute what is called DOD's Science and Technology Program (S&T) and represent the more research-oriented part of the RDT&E program. Budget activities 6.4 and 6.5 focus on the development of specific weapon systems or components (e.g., the Joint Strike Fighter or missile defense systems), for which an operational need has been determined and an acquisition program established. Budget activity 6.6 provides management support, including support for test and evaluation facilities. Budget activity 6.7 supports system improvements in existing operational systems. Congressional policymakers are particularly interested in S&T funding since these funds support the development of new technologies and the underlying science. Ensuring adequate support for S&T activities is seen by some in the defense community as imperative to maintaining U.S. military superiority. The knowledge generated at this stage of development can also contribute to advances in commercial technologies. The FY2012 Title IV baseline S&T funding request was $12.246 billion (not including the $100 million for the Wireless Innovation Fund), about $1.060 billion (8%) less than the total obligational authority available for Title IV baseline S&T in FY2010, but $113 million above that available in FY2011. Given the unspecified reductions to DARPA and the Defensewide account in general, it is not possible to determine how much the House actions supported S&T. However, without these reductions, the House Appropriations Committee had recommended $12.180 billion for S&T, less than the Administration's request. The Senate Appropriations Committee recommended $12.193 billion for S&T. The Consolidated Appropriations Act, 2012 provided $12.438 billion for S&T. Within the S&T program, basic research (6.1) receives special attention, particularly by the nation's universities. DOD is not a large supporter of basic research, when compared to NIH or NSF. However, over half of DOD's basic research budget is spent at universities and represents the major contribution of funds in some areas of science and technology (such as electrical engineering and material science). The FY2012 request for basic research ($2.078 billion) was roughly $263 million (14%) more than what was available for Title IV basic research in FY2010. The House appropriated $2.098 billion, a net increase of $20 million above the request, much of which went to increases for university research. However, the House appropriated $15 million less than requested for the National Defense Education Program. The Senate Appropriations Committee recommended $2.081 billion for basic research. The Consolidated Appropriations Act, 2012 provided $2.116 billion for basic research. This included an increase above the requested levels for the following: $20 million for Army University and Industry Research Centers at Historically Black Colleges, $20 million for Navy competitive university research and $8 million for Navy nanotechnology research, and $12 million for Air Force research in cybersecurity. Congress also appropriated less than requested for the National Defense Education Program ($15 million) and for Basic Research Initiatives ($7 million) in the Office of the Secretary. The Department of Homeland Security (DHS) requested $1.528 billion for R&D and related programs in FY2012, a 36% increase from FY2011. This total included $1.176 billion for the Directorate of Science and Technology (S&T), $332 million for the Domestic Nuclear Detection Office (DNDO), and $20 million for Research, Development, Test, and Evaluation (RDT&E) in the U.S. Coast Guard. The bill passed by the House would have provided $889 million, including $539 million for S&T, $337 million for DNDO, and $13 million for Coast Guard RDT&E. The bill reported by the Senate Committee on Appropriations would have provided $1.076 billion, including $780 million for S&T, $268 million for DNDO, and $28 million for Coast Guard RDT&E. The final appropriation was $984 million, including $668 million for S&T, $289 million for DNDO, and $28 million for Coast Guard RDT&E. (See Table 7 .) The S&T Directorate is the primary DHS R&D organization. Headed by the Under Secretary for Science and Technology, it performs R&D in several laboratories of its own and funds R&D performed by the DOE national laboratories, industry, universities, and others. The Administration requested $1.176 billion for the S&T Directorate for FY2012. This was 53% more than the net FY2011 appropriation of $767 million. The request for Laboratory Facilities included $150 million to support the start of construction at the National Bio and Agro-Defense Facility (NBAF). About $109 million of the request for Research, Development, and Innovation was for radiological and nuclear R&D activities currently conducted in DNDO. The House bill provided $539 million for S&T. For Research, Development, and Innovation, it provided $106 million, just 16% of the request. In Laboratory Facilities, it provided $75 million, or half the request, for NBAF construction. It rejected the proposed transfer of radiological and nuclear R&D activities from DNDO. The committee report stated that "S&T must demonstrate how its R&D efforts are timely, with results relatively well-defined, and above all, make investment decisions based on clear and sensible priorities." It stated the committee's expectation that "the proposed funding levels will force S&T to make more focused, high-return investment decisions." The Senate-reported bill provided $780 million for S&T. For Research, Development, and Innovation, it provided $440 million. The bill approved the proposed transfer of activities from DNDO, but it provided no funding for NBAF construction. The committee report described the amount requested for NBAF as "not a useable construction segment" and directed S&T to provide an updated cost schedule for the project. The final appropriation for S&T was $668 million. This amount included $266 million for Research, Development, and Innovation and $50 million for NBAF construction. The proposed transfer from DNDO was denied. In late 2010, the S&T Directorate announced a reorganization and released a new strategic plan. The reorganization reduced the number of direct reports to the Under Secretary and was accompanied by a change in budget structure, with most of the previous budget lines combined into two new categories: Research, Development, and Innovation (RDI) and Acquisition and Operations Support. According to DHS, the new strategy and organization will result in more robust partnerships with other DHS components, a smaller number of larger projects, and more emphasis on transitioning technology into the field rather than long-term research. The House and Senate committee reports both objected to the new budget structure. The House report described the RDI budget category as "all-encompassing ... too large and vague." The Senate report stated that the new structure "reduces transparency and accountability." The conference report stated that the new RDI category "will enable S&T to more quickly shift resources ... between research activities" and "should ... partially offset the impact of an overall funding reduction," but it directed S&T to submit a quarterly "detailed breakout" of RDI projects "for accountability and visibility." The construction of NBAF would likely result in increased congressional oversight for several years. For construction of NBAF and decommissioning of the Plum Island Animal Disease Center (PIADC), which NBAF is intended to replace, the FY2012 budget justification projected a need for $691 million in total appropriations between FY2012 and FY2017. In the appropriations acts for FY2009 through FY2011, Congress authorized DHS to use receipts from the sale of Plum Island to offset NBAF construction and PIADC decommissioning costs. The House-passed, Senate-reported, and enacted bills for FY2012 all continued this authorization. According to DHS, however, the likely value of such receipts "has been found to be considerably overestimated." The Domestic Nuclear Detection Office is the primary DHS organization for combating the threat of nuclear attack, responsible for all DHS nuclear detection research, development, testing, evaluation, acquisition, and operational support. The Administration requested $332 million for DNDO for FY2012, approximately the same as the FY2011 appropriation of $331 million. The request for Research, Development, and Operations was $58 million less than the FY2011 appropriation; it included no funds for Transformational R&D, which the Administration proposed to transfer to the S&T Directorate. The request for Systems Acquisition was $84 million, versus $30 million in FY2011. Within Systems Acquisition, the request included $37 million for radiation portal monitors and $27 million for the Securing the Cities program, which was previously funded at congressional direction and limited to the New York region. The request proposed expanding Securing the Cities to an additional city in FY2012. The House bill provided $337 million for DNDO. It rejected the transfer of Transformational R&D to the S&T Directorate, but provided only $45 million for that program, versus $96 million in FY2011. The bill provided $20 million for acquisition of radiation portal monitors. It provided $22 million for Securing the Cities, of which only $2 million was for expansion to a new city. The Senate-reported bill provided $268 million for DNDO. It approved the proposed transfer of Transformational R&D. It provided $8 million for radiation portal monitors. Like the House bill, it provided $22 million for Securing the Cities, including $2 million for a new city. The enacted appropriation for DNDO was $289 million. This included $40 million for Transformational R&D, whose transfer to S&T was denied. The radiation portal monitors program received $7 million. Like the House and Senate bills, the conference report included $22 million for Securing the Cities, including $2 million for a new city. Congressional attention has focused in recent years on the testing and analysis DNDO has conducted to support its planned purchase and deployment of Advanced Spectroscopic Portals (ASPs), a type of next-generation radiation portal monitor. Each homeland security appropriations act from FY2007 through FY2011 included a requirement for secretarial certification before full-scale ASP procurement. The House-passed and Senate-reported bills for FY2012 included a similar requirement. In February 2010, DHS decided that it would no longer pursue the use of ASPs for primary screening, although it will continue developing and testing them for use in secondary screening. Although the FY2012 request included funds to purchase and deploy 44 ASPs for secondary screening, the director of DNDO subsequently stated that DNDO will deploy 13 ASPs that it has already purchased but will "end the ASP program as originally conceived." The House committee report expressed an expectation that DNDO will not deploy ASPs prior to certification, even for secondary screening, but noted that radiation portal monitor funding in the House-passed bill "is not restricted" to previous-generation systems. The Senate report stated that "the request to procure and deploy 44 [ASPs] is denied." Noting the cancellation decision, the conference report omitted the previous requirement for ASP certification. It directed DHS to notify the appropriations committees if a successor program is initiated. The global nuclear detection architecture (GNDA) overseen by DNDO remains an issue of congressional interest. The Systems Engineering and Architecture activity includes a GNDA development program as well as programs to develop and assess GNDA activities in various mission areas. The Senate-reported bill directed DNDO to prepare and submit "a strategic plan of investments necessary to implement the Department of Homeland Security's responsibilities under the domestic component of the global nuclear detection architecture." It identified specific items that should be included in the required plan. The enacted bill included similar language. The mission of DNDO, as established by Congress in the SAFE Port Act ( P.L. 109-347 , Title V), includes serving as the primary federal entity "to further develop, acquire, and support the deployment of an enhanced domestic system" for detection of nuclear and radiological devices and material (6 U.S.C. 592). The same act eliminated any explicit mention of radiological and nuclear countermeasures from the statutory duties and responsibilities of the Under Secretary for S&T. Congress may consider whether the proposed transfer of DNDO's research activities to the S&T Directorate is consistent with its intent in the SAFE Port Act. Congress may also choose to consider the acquisition portion of DNDO's mission. Most of DNDO's funding for Systems Acquisition was eliminated in FY2010, and that year's budget stated that "funding requests for radiation detection equipment will now be sought by the end users that will operate them." In contrast, the FY2012 request for Systems Acquisition included funding for ASPs that would be operated by Customs and Border Protection, as well as human-portable radiation detectors for the Coast Guard, Customs and Border Protection, and the Transportation Security Administration. The reasons for this apparent reversal of policy were not provided in the DNDO budget justification for either FY2011 or FY2012. The Consolidated Appropriations Act, 2012 ( P.L. 112-74 ), enacted on December 23, 2011, provided FY2012 appropriations for NIH. The conference agreement on the act ( H.Rept. 112-331 ) gave NIH total discretionary funding of $30.8 billion, virtually unchanged from the FY2011 level (see Table 8 ). However, this total does not reflect an across-the-board rescission of 0.189%. The Obama Administration had requested discretionary budget authority of $31.8 billion for NIH, an increase of $1,062 million (3.3%) over FY2011. In late September 2011, bills from the Senate Appropriations Committee had recommended total discretionary funding of $30.6 billion, slightly below the FY2011 level, while House bills would have provided $31.8 billion, equal to the request. Further details on congressional action follow the discussion of the request below. NIH's organization consists of the Office of the NIH Director and 27 institutes and centers. The Office of the Director (OD) sets overall policy for NIH and coordinates the programs and activities of all NIH components, particularly in areas of research that involve multiple institutes. The institutes and centers (collectively called ICs) focus on particular diseases, areas of human health and development, or aspects of research support. Each IC plans and manages its own research programs in coordination with the Office of the Director. As shown in Table 8 , Congress provides a separate appropriation to 24 of the 27 ICs, to OD, and to a Buildings and Facilities account. (The other three centers, not included in the table, are funded through the NIH Management Fund.) Funding for NIH comes primarily from the annual appropriations bill for the Departments of Labor, Health and Human Services, and Education, and Related Agencies (Labor/HHS), with an additional amount for Superfund-related activities from the appropriations bill for the Department of the Interior, Environment, and Related Agencies (Interior/Environment). Those two bills provide NIH's discretionary budget authority. In addition, NIH receives mandatory funding of $150 million annually that is provided in the Public Health Service (PHS) Act for a special program on diabetes research, and also receives $8.2 million annually for the National Library of Medicine from a transfer within PHS. Each year from FY2002-FY2011 (but not in FY2012), Congress provided that a portion of NIH's Labor/HHS appropriation be transferred to the Global Fund to Fight HIV/AIDS, Tuberculosis, and Malaria. The transfer, in recent years about $300 million, has been part of the U.S. contribution to the Global Fund. The total funding available for NIH activities, taking account of add-ons and transfers, is the program level. Because the "NIH program level" cited in the Administration's FY2012 budget documents does not reflect the Global Fund transfer, Table 8 shows the program level both before and after the transfer. Discussions in this section refer to the program level after the transfer. NIH and other HHS agencies and programs that are authorized under the PHS Act are subject to a budget tap called the PHS Program Evaluation Set-Aside. Section 241 of the PHS Act (42 U.S.C. §238j) authorizes the Secretary to use a portion of eligible appropriations to assess the effectiveness of federal health programs and to identify ways to improve them. The set-aside has the effect of redistributing appropriated funds for specific purposes among PHS and other HHS agencies. Section 205 of the FY2010 Labor/HHS appropriations act capped the set-aside at 2.5%, instead of the 2.4% maximum that had been in place for several years. The provision was carried forward for FY2011 under P.L. 112-10 . The FY2012 budget proposed to increase the set-aside to 3.2%. NIH, with the largest budget among the PHS agencies, becomes the largest "donor" of program evaluation funds, and is a relatively minor recipient. By convention, budget tables such as Table 8 do not subtract the amount of the evaluation tap, or of other taps within HHS, from the agencies' appropriations. FY2012 President's Budget Request. Under the FY2012 request, NIH said it would focus on implementing a new translational medicine program as well as emphasize three other broad scientific areas including advanced technologies, comparative effectiveness research, and support for young investigators. For the new program, NIH proposed to create the National Center for Advancing Translational Sciences (NCATS) to catalyze the development of new diagnostics and therapeutics. To do so, NIH planned to abolish the existing National Center for Research Resources (NCRR) and transfer its programs to various other parts of NIH, including transferring the Clinical and Translational Science Awards (CTSA) program to NCATS. The FY2012 request proposed $485 million for CTSA, a program which funds a national consortium of medical research institutions that work together to accelerate treatment development, engage communities in clinical research efforts, and train clinical and translational researchers. NCATS was to also take charge of the Therapeutics for Rare and Neglected Diseases (TRND) program; the request planned to double support for TRND in FY2012 to $50 million. In FY2011, TRND was funded on an NIH-wide basis. Another proposal for NCATS was that it incorporate the new Cures Acceleration Network (CAN), which was authorized but not funded in the Patient Protection and Affordable Care Act (ACA, P.L. 111-148 , P.L. 111-152 , as amended). The purpose of CAN is to support the development of high need cures and facilitate their FDA review. The ACA authorized $500 million for FY2010 and such sums as may be necessary for subsequent fiscal years for CAN. The law also specified that other funds appropriated under the Public Health Service Act may not be allocated to CAN. The NIH request proposed $100 million for CAN in FY2012. If CAN received funding, NIH would determine which medical products are "high need cures," and then make awards to research entities or companies in order to accelerate the development of such high need cures. In addition to the new program, NIH emphasized three scientific areas in its plans for FY2012: 1. Technologies to Accelerate Discovery. NIH would continue to support development and application of advanced technologies (such as DNA sequencing, microarray technology, nanotechnology, new imaging modalities, and computational biology) to increase understanding of complex diseases, such as cancer and Alzheimer's disease, and enable development of more effective therapies. 2. Enhancing the Evidence Base for Health Care Decisions. NIH would use comparative effectiveness research methodologies to assist in developing individually tailored treatments (personalized medicine) by testing candidate therapies in a group of Health Maintenance Organizations (HMOs) caring for more than 13 million patients. 3. New Investigators, New Ideas. NIH would emphasize two of its programs that support young scientists. The NIH Director's New Innovator Award program provides first-time independent awards to outstanding investigators; the Administration requested $80 million to support these awards in FY2012. The second program, called the NIH Director's Early Independence Program, supports talented junior scientists, allowing them to by-pass the traditional postdoctoral training period and move directly to an independent research career. NIH requested $8.4 million for this program in FY2012. Research Project Grants. Of the funds appropriated to NIH each year, more than 80% go out to the extramural research community in the form of grants, contracts, and other awards. The funding supports research performed by more than 325,000 scientists and technical personnel who work at more than 3,000 universities, hospitals, medical schools, and other research institutions around the country and abroad. The primary funding mechanism for support of the full range of investigator-initiated research is competitive, peer-reviewed research project grants (RPGs). In the FY2012 request, total funding for RPGs, at $16.9 billion, represented about 53% of NIH's proposed budget. The request would support an estimated 36,852 RPG awards, 248 more grants than in FY2011. Within that total, 9,158 would be competing RPGs, 441 more than in FY2011. ("Competing" awards means new grants plus competing renewals of existing grants.) For noncompeting (continuation) RPGs, the FY2012 budget provided an inflation-adjustment increase of 1%. Other Funding Mechanisms. The FY2012 request included an increase over FY2011 for research training stipends for individuals supported by the Ruth L. Kirschstein National Research Service Awards program. The budget request would have raised funding for the program by $13 million to $794 million, allowing NIH to support 16,831 full-time training positions, 29 more than in FY2011. Changes were also proposed in the request for other funding mechanisms within the NIH budget. Support for r esearch centers would increase by $42 million (1.4%) to $3.036 billion. R&D contracts were proposed for a $151 million (4.9%) increase to $3.245 billion (excluding the funding proposed for transfer to the Global HIV/AIDS Fund). The NIH intramural research program would have gained $94 million (2.9%) for a total of $3.382 billion. Research management and support had a requested increase of $19 million (1.3%) to a total of $1.538 billion. Operations of the Office of the Director were proposed for a large increase of $118 million (19%) for a total of $742 million. The appropriation for Buildings and Facilities would increase by almost $76 million (152%) to $126 million. Also funded through the OD account is the NIH Common Fund, which supports research in emerging areas of scientific opportunity, public health challenges, or knowledge gaps that deserve special emphasis and might benefit from collaboration between two or more institutes or centers. For FY2012, the President requested $557 million for the Common Fund, up $14 million (2.6%) from FY2011. Congressional Action on FY2012 Appropriations. The Senate Appropriations Committee reported S. 1599 , its FY2012 Labor/HHS/Education bill, on September 22, 2011 ( S.Rept. 112-84 ). The bill recommended $30.5 billion for NIH, a decrease of $190 million (-0.6%) from the FY2011 level of $30.7 billion and $1,250 million below the request. In addition, the committee released a draft bill for Interior/Environment appropriations that would have provided $80 million for NIH (see Note h on Table 8 ). The committee approved NIH's plan to abolish NCRR and create NCATS, though funding recommended for NCATS and all the other components was lower than requested under the realignment. The NCATS appropriation would have included $20 million for the Cures Acceleration Network and would have maintained level funding for the Clinical and Translational Science Awards. The committee criticized NIH for not providing a formal, timely request for the restructuring proposal. Funding for the PHS Evaluation Set-Aside was maintained at 2.5%. The committee included $299 million in the appropriation for transfer to the Global HIV/AIDS Fund. The House Appropriations Committee did not report a Labor/HHS bill for FY2012, but the chairman of the subcommittee introduced H.R. 3070 on September 29, 2011, accompanied by a detailed funding table (see Note c on Table 8 ). The bill would have provided $31.7 billion for NIH, the same level as the request and an increase of $1,160 million (3.8%) over FY2011. In addition, the House committee included $79 million for NIH in its Interior/Environment appropriations bill (see Note h on Table 8 ). H.R. 3070 did not provide for the creation of NCATS or the elimination of NCRR. It would have funded all the existing NIH components at the same level as the request, except that $100 million would have shifted from Office of the Director to NCRR. The Director was told to ensure that at least $488 million be provided for the CTSA program, and that up to $2 million could be used for an advisory board to plan for the Cures Acceleration Network. The bill required support of at least 9,150 new and competing RPGs, maintenance of an allocation ratio of 90% to 10% in support of extramural versus intramural activities, funding for the PHS Evaluation Set-Aside at 2.4%, and would have prohibited any funding of patient-centered outcomes research (comparative effectiveness research). No funding was included for transfer to the Global Fund. The final conference agreement enacted in P.L. 112-74 gave NIH $30.690 billion in Labor/HHS funding (Division F) and an additional $79 million in Interior/Environment funding (Division E), for a total of $30.769 billion in discretionary budget authority. Although that amount is only $2 million above the FY2011 level of $30.767 billion, it actually gave NIH $299 million (1.0%) more than in FY2011 to spend on its own programs. The FY2011 appropriations required NIH to transfer $297 million to the Global HIV/AIDS Fund, whereas the FY2012 appropriations did not designate any funds for transfer. Funding for the PHS Evaluation Set-Aside was maintained at 2.5%. With the FY2012 appropriations, Congress approved NIH's plan to create NCATS, abolish NCRR, and distribute NCRR's programs to NCATS and other NIH entities. In Table 8 , funding for NCATS and the other realigned programs is displayed for the Senate bill and the enacted FY2012 appropriations, but the columns for FY2011, the FY2012 request, and the House bill display amounts reflecting NIH's original alignment (i.e., they have not been made comparable for the NCATS-related shifts in funding). A table in the explanatory statement accompanying the FY2012 conference report ( H.Rept. 112-331 , pp. 1135-1136) displays the comparable adjustments for FY2011 (which are budget-neutral) and allows comparison with the FY2012 amounts for all the institutes and centers. Analysis of the table indicates that the $299 million increase provided in the FY2012 appropriations was allocated as follows: $76 million boosted the Buildings and Facilities account to $126 million (requested after a large cut in FY2011; $60 million went to two specific increases discussed below (CAN and IDeA); and the $163 million balance was divided proportionally among all the institutes, centers, and the Office of the Director, with each receiving an increase of 0.54%. In the explanatory statement accompanying the conference report, the conferees gave detailed instructions on the implementation of certain aspects of NCATS. They stressed that the role of NCATS is to research ways to re-engineer and streamline the process of therapeutics development. NCATS was directed to foster partnerships between extramural researchers, industry, and government entities to speed commercialization of new therapies through a market-based approach. Funding for two NCATS programs was specified in bill language: at least $488 million from all NIH funds for the CTSA program (a $30 million increase) and up to $10 million for the Cures Acceleration Network. The conferees gave NIH instructions to further study the use of the CAN authority and to survey other federal and private sector activities relating to CAN. They also expressed disappointment with the informal way that NIH had requested the NCATS/NCRR reorganization and mentioned concerns that NIH had not properly involved the Scientific Management Review Board in evaluating the merits of the proposal. They pointed out that another reorganization being contemplated by NIH—a possible merger of the institutes concerned with research on drug abuse and alcohol abuse—should draw on lessons learned from the creation of NCATS. The conferees also made comments on selected other NIH programs, particularly stressing that NIH ensure support of the extramural research community by funding as many new and competing research project grants as possible at a reasonable award level. Extramural research should be maintained at about 90% of the NIH budget, with basic research retaining its current (unspecified) share. The Institutional Development Awards (IDeA) program was given a $50 million increase (22%), and NIH was encouraged to broaden the eligibility criteria for these research capacity and infrastructure grants. Finally, NIH was directed to conduct a trans-NIH review of processes for formulating and completing clinical trials, building on recommendations from a 2010 Institute of Medicine study of cancer clinical trials. The Administration requested $14.447 billion for Department of Energy (DOE) R&D and related programs in FY2012, including activities in three major categories: science, national security, and energy. This request was 24.4% more than the FY2011 appropriation of $11.610 billion. The House-passed bill would have provided $11.256 billion. The Senate-reported bill would have provided $11.552 billion. The final appropriation was $11.904 billion. (See Table 9 for details.) The request for the DOE Office of Science was $5.416 billion, an increase of 12% from the FY2011 appropriation of $4.843 billion. The Administration's stated goal is to double the funding of the Office of Science. This continues a plan initiated by the Bush Administration in January 2006. The original target under both Administrations was to achieve the doubling goal in the decade from FY2006 to FY2016. The current policy no longer specifies a completion date. The FY2012 request was 49% more than the FY2006 baseline. The America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ) authorized $5.614 billion for the Office of Science in FY2012. The House bill would have provided $4.800 billion. The Senate bill would have provided $4.843 billion. The final appropriation was $4.889 billion. The Office of Science includes six major research programs. In the largest program, basic energy sciences, the request included $34 million for a new energy innovation hub on materials for batteries and energy storage and $24 million for the existing hub on fuels from sunlight (previously funded by the DOE Office of Energy Efficiency and Renewable Energy). The biological and environmental research program was to receive $103 million for foundational genomics research (versus $34 million in FY2010). In the high energy physics program, operations ended at the Tevatron facility in Illinois during FY2011. In fusion energy sciences, the request proposed reducing the U.S. contribution to the International Thermonuclear Experimental Reactor (ITER) to $105 million (from $135 million in FY2010). Despite a slip of several years in the expected start-up date for ITER, DOE budget documents for FY2012 stated that "the costs associated with the schedule delays to date ... are manageable within the existing ... [total project] cost range" of $1.45 billion to $2.2 billion. This statement, however, predated the March 2011 Fukushima earthquake and tsunami, which damaged component test facilities in Japan and may result in additional delays. The House, Senate, and final bills all included significantly less than the Administration's request for basic energy sciences, biological and environmental research, and to a lesser extent, nuclear physics. All three bills provided $20 million for the new energy innovation hub and the requested amount for the existing one. The Senate bill would have provided $65 million less than the request for fusion energy sciences, but the House bill and the final bill both included slightly more than the request. The final appropriation for ITER was "not more than" the requested amount. The request for DOE national security R&D was $4.175 billion, a 12.3% increase from $3.718 billion in FY2011. The request proposed a $195 million increase for the naval reactors program to accelerate the continuing design of reactors for the Ohio-class ballistic missile submarine, modernization of the land-based prototype reactor, and recapitalization of program infrastructure. The requests for nuclear weapons R&D and nonproliferation and verification R&D included $168 million and $56 million respectively to fund contractor pension payments resulting from the transition of management contracts at Los Alamos and Lawrence Livermore National Laboratories. The House bill would have provided $3.725 billion for national security R&D, including $123 million less than the request for the naval reactors program and $76 million less than the request for advancing the science of weapons certification. It included a total of $147 million for the Los Alamos and Livermore pension liabilities. The Senate bill would have provided $54 million less than the request for naval reactors. The Senate report directed DOE not to fund design, preparation, or execution of a "scaled experiment," one element of the Administration's proposal for advanced weapons certification. The final appropriation for naval reactors was between the House and Senate amounts. For contractor pension liabilities, the final bill included a total of $224 million, the same as the request. The request for DOE energy R&D was $4.856 billion, up 59.2% from $3.049 billion in FY2011. Most energy efficiency and renewable energy subprograms were to increase by between 50% and 200%, with the exception of R&D on hydrogen and fuel cell technologies, which were to increase by just 2.5%. "Consistent with the Administration's policy to phase out fossil fuel subsidies," the request included no funds for natural gas technologies or unconventional fossil energy technologies. The request for nuclear energy was a 4% increase from FY2011. The request proposed to increase the funding of the Advanced Research Projects Agency–Energy (ARPA-E) more than threefold, to $650 million (including $100 million in mandatory funding from a proposed Wireless Innovation Fund supported by the proceeds of spectrum auctions). The House bill would have provided $2.731 billion for DOE energy R&D, including $1.570 billion less than the request for energy efficiency and renewables and $25 million more than the request for fossil energy R&D. The Senate bill would have provided $2.755 billion, including $1.245 billion less than the request for efficiency and renewables, $195 million less than the request for fossil energy R&D, and $170 million less than the request for nuclear energy. Both bills would have provided about half the request for electricity delivery and reliability R&D and less than half the request for ARPA-E. The final bill included more than either the House or Senate bill, though still less than the request, for ARPA-E and for energy efficiency and renewables. For nuclear energy, it included more than the House or Senate bill or the request. The final appropriation for fossil energy was between the House and Senate bills. The National Science Foundation (NSF) supports basic research and education in the non-medical sciences and engineering. Congress established the Foundation as an independent federal agency in 1950 and directed it to "promote the progress of science; to advance the national health, prosperity, and welfare; to secure the national defense; and for other purposes." The NSF is a primary source of federal support for U.S. university research, especially in certain fields such as mathematics and computer science. It is also responsible for significant shares of the federal science, technology, engineering, and mathematics (STEM) education program portfolio and federal STEM student aid and support. The President's FY2012 budget request for the NSF was $7.767 billion, a $961.1 million increase (14.1%) over NSF's FY2011 Current Plan level of $6.806 billion. Most of the Administration's requested increase would have gone to the main research conduct account. The remainder would have gone to other Foundation accounts, including those that primarily support education, agency operations, and research facilities and equipment. Overall, the distribution of the Administration's FY2012 requested increase was largely consistent with the previously existing distribution of funds across the NSF. P.L. 112-55 provides $7.033 billion to the NSF in FY2012. This amount is $227.2 million (3.3%) more than the FY2011 Current Plan level and $733.9 million (9.4%) less than the President's request. (See Table 10 for details.) Compared to the distribution of funding across NSF accounts under the FY2011 Current Plan, P.L. 112-55 shifts about 1.0% of the Foundation's budget to research and construction activities from education and agency operations in FY2012. This change appears to reflect the position of the House Appropriations Committee's recommendation, which favored the research account, combined with the Senate's position, which favored the construction account. A primary concern in the congressional debate about FY2012 funding for NSF centered on the so-called "doubling path" policy. Since 2006 federal policymakers have sought to increase support for research in the physical sciences and engineering. To that end, they sought to double aggregate funding for the NSF, NIST laboratories and construction accounts, and the DOE Office of Science (collectively, the "targeted accounts"), which many policymakers perceive as key to U.S. innovation and competitiveness. The current status of the doubling path is discussed in detail in this report in the " Presidential Initiatives " section. Another issue raised in the general debate about funding for NSF focused on the Foundation's ability to effectively manage its grants. This is relevant to R&D policy because much of the Foundation's R&D funding is distributed via the grant process. In a House hearing, NSF's Inspector General Allison C. Lerner testified that—among other issues—the Foundation faced ongoing challenges in ensuring that grant recipients comply with grant terms and conditions. According to Lerner's testimony, the NSF attributes this problem, at least in part, to staffing constraints. Lerner postulated that, "If the Foundation's budget continues to grow, the resulting increase in awards to monitor will compound this challenge." Research and Related Activities (RRA) is the largest account at the NSF. It is also the largest source of R&D grants and funding at the Foundation. The Administration requested $6.254 billion for RRA in FY2012, a $743.7 million (13.5%) increase over the FY2011 Current Plan level of $5.510 billion. The Administration's FY2012 request for RRA highlighted research in cyber-infrastructure, clean energy, nanotechnology, robotics, and the SEES (Science, Engineering, and Education for Sustainability) portfolio, among others. P.L. 112-55 provides $5.719 billion for RRA in FY2012. This amount is $209.1 million (3.8%) more than the FY2011 Current Plan level and $534.5 million (8.5%) less than the President's request. Among other things, P.L. 112-55 allows the NSF to transfer up to $50.0 million from RRA to the Foundation's main construction account and permits the NSF to use RRA funds to reimburse other federal agencies for support of the U.S. Antarctic program. If the NSF exercises this authority, the actual amount available to RRA activities in FY2012 would be reduced. The House Appropriations Committee recommended increasing the RRA account by $91.5 million (1.7%) over the FY2011 Current Plan level. As initially passed by the Senate, H.R. 2112 would have reduced the RRA account by $66.9 million (1.2%) from the FY2012 Current Plan level. In addition to the provisions specifically included in the conference report on the bill ( H.Rept. 112-284 ), the report also approves report language included in H.Rept. 112-169 or S.Rept. 112-78 that is not changed by the conference in its report. The conference report on H.R. 2112 (which became P.L. 112-55 ) endorses Administration-proposed reductions to RRA programs in FY2012—except for the proposed changes to the Radio Astronomy program. It also adopts language from H.Rept. 112-169 supporting planned NSF activities in advanced manufacturing and agreed to language from S.Rept. 112-78 providing $165.6 million for cybersecurity research. Provisions in one or more of the reports include encouraging the Foundation to sustain and increase investments in neuroscience; directing the NSF to report on its plans to offer innovation prizes and on ways to balance access to, and protection of, scientific data; and attending to the Foundation's astronomy activities, as well as its support for scientific facilities and instrumentation. P.L. 112-55 also provides $150.9 million in RRA funds for the Experimental Program to Stimulate Competitive Research (EPSCoR) program in FY2012. This amount is $4.1 million more than the FY2011 enacted funding level of $146.8 million and $9.6 million less than the Administration's FY2012 request. The EPSCoR program seeks to improve the research competitiveness of states with historically low federal research funding rates. NSF's FY2012 budget documents indicate that the Foundation plans to have EPSCoR independently evaluated. Other accounts that support R&D at the National Science Foundation include the Major Research Equipment and Facilities Construction (MREFC) and the Education and Human Resources (EHR) accounts. Although EHR primarily funds STEM education programs, the Foundation indicates that it supports R&D in this account as well. The Administration's FY2012 MREFC request for $224.7 million was a $107.6 million increase (91.9%) over the FY2011 Current Plan level of $117.1 million. The MREFC request included funding for the National Ecological Observatory Network (NEON, $87.9 million), Ocean Observatories Initiative (OOI, $102.8 million), and other projects. The Administration requested no new MREFC funds for the Alaska Region Research Vessel or IceCube Neutrino Observatory in FY2012, both of which are now fully funded. P.L. 112-55 provides $167.1 million for the MREFC account in FY2012, which is $50.0 million (42.8%) more than the FY2011 Current Plan level and $57.6 million (25.6%) less than the Administration's FY2012 budget request. In addition, P.L. 112-55 gives the Foundation the option of transferring as much as $50.0 million from RRA to MREFC. The conference report on H.R. 2112 directs the NSF to prioritize projects that are near completion and raises concerns about construction funding management at the Foundation (particularly the management of contingency funds). S.Rept. 112-78 states that its recommendation includes funding for certain ongoing projects (e.g., Atacama Large Millimeter Array) and for continued construction of the OOI. S.Rept. 112-78 also indicates that the NSF may use funds transferred from the RRA account to fully fund OOI or begin work on NEON. The President requested $911.2 million for EHR in FY2012, a $50.2 million increase (5.8%) over the FY2011 Current Plan level of $861.0 million. Relative to the FY2011, the FY2012 request would have shifted (by 1.2%) the EHR portfolio in the direction of graduate support. This is relevant to R&D policy because (1) graduate students are a significant component of the U.S. R&D workforce, and (2) because graduate student enrollment in science and engineering (S&E) fields appears to be increasing, which may increase demand for the Graduate Research Fellowship (GRF) and thereby increase caseload pressure on this account. The Administration's FY2012 request also proposed program changes in EHR including reorganization, addition, and elimination of programs. P.L. 112-55 provides $829.0 million for EHR in FY2012. This amount is $32.0 million (-3.7%) less than the FY2011 Current Plan level and $82.2 million (-9.1%) less than the Administration's request. The conference report on H.R. 2112 endorses the Administration's proposed terminations and reductions in EHR—except for proposed reductions to the Math and Science Partnership and Robert Noyce Scholarship programs. The conference report also adopts FY2011 funding levels for NSF's Broadening Participation at the Core programs (e.g., the Tribal Colleges and Universities Program), directs the NSF to report on how it will address the needs of Hispanic-Serving Institutions, and provides $20.0 million more than the requested level of funding for the Federal Cyber Service: Scholarships for Service program ($45.0 million, total)—among other things. Both H.Rept. 112-169 and S.Rept. 112-78 urge the NSF to ensure that GRF applicants are not rejected for reasons unrelated to the merits of their proposed research (e.g., the applicant's major). S.Rept. 112-78 strongly encourages NSF to continue support for undergraduate STEM education and the Professional Science Master's program. The Administration requested $357.7 million for the Agency Operations and Award Management (AOAM) account, a $58.3 million (19.5%) increase over NSF's FY2011 Current Plan level of $299.4 million. The FY2012 request included funding for a new NSF headquarters. The Administration also sought increases of $1.0 million and $0.3 million, respectively, for NSF's Office of the Inspector General (OIG) and the National Science Board (NSB). P.L. 112-55 provides $299.4 million for the AOAM account, $14.2 million for the OIG ($200,000 increase over the FY2011 Current Plan level), and $4.4 million for the NSB. S.Rept. 112-78 states that the purpose of the increase for the OIG is to enhance accountability. H.Rept. 112-169 encourages the OIG to focus specifically on oversight activities with potential monetary ramifications (such as grantee oversight and management). The Administration's FY2012 budget request proposed funding for certain NSF-wide investments that draw from more than one Foundation account, including the interagency Networking and Information Technology Research and Development (NITRD) and National Nanotechnology Initiative (NNI) efforts, and NSF's Science, Engineering, and Education for Sustainability (SEES) portfolio. For FY2012 the Administration requested $1.258 billion for NITRD and $456.0 million for the NNI. (NSF is a principal funding agency for both of these efforts.) The Administration also asked for $998.2 million for the SEES portfolio. FY2012 congressional funding bills and related documents do not specify funding for these accounts as such. Finally, the Administration's FY2012 request proposed eliminating six NSF programs: Deep Underground Science and Engineering Laboratory, Graduate STEM Fellow in K-12 Education, National STEM Distributed Learning Program, Research Initiation Grants to Broaden Participation in Biology, Science Learning Centers, and the Synchrotron Radiation Center. Funds from these activities would be redirected to other Foundation accounts. The National Institute of Standards and Technology (NIST) is a laboratory of the Department of Commerce with a mandate to increase the competitiveness of U.S. companies through appropriate support for industrial development of precompetitive, 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 final FY2012 appropriation for NIST totals $750.8 million, essentially the same as the $750.1 million provided in FY2011. This amount is 25.0% below the Administration's request; 7.1% above H.R. 2596 , as reported from the House Committee on Appropriations; and 10.4% more than H.R. 2112 , as originally passed by the Senate. Support for research and development under the Scientific and Technical Research and Services (STRS) account increases 14.0% from the FY2011 figure of $497.4 million to $567.0 million. This figure represents a 16.5% decrease from the President's proposal, but is 9.7% more than that contained in H.R. 2596 and is 13.4% above the amount in the Senate-passed version of H.R. 2112 . Under the Industrial Technology Services (ITS) account, the Manufacturing Extension Partnership (MEP) program receives $128.4 million, the same appropriation as FY2011, 10.0% less than the budget request, identical to the support included in H.R. 2596 , and 7.0% above H.R. 2112 as first passed by the Senate. No funding is provided for the Technology Innovation Program (TIP), the Baldrige National Quality Program, or a new program proposed in the President's budget called the Advanced Manufacturing Technology Consortia (AMTech). The construction budget is $55.4 million, 20.7% less than FY2011, 34.5% below the budget proposal, the same as in H.R. 2596 , and 7.7% less than the original Senate-passed version of H.R. 2112 . The Administration's FY2012 budget proposed $1.001 billion in funding for NIST, a 33.4% increase over the FY2011 appropriation. The STRS account would have expanded 36.5% to $678.9 million (excluding the Baldrige National Quality Program which has been transferred out of STRS). Budgeted under the ITS account, the MEP program would have received $142.6 million, 11.1% more than FY2011, while funding for TIP would have increased to $75.0 million, 67.4% over the FY2011 figure. Also under ITS, support for the Baldrige program would have decreased 19.8% to $7.7 million. A new program, AMTech, would have been created and funded at $12.3 million. The construction budget would have increased 21.0% to $84.6 million. (See Table 11 .) H.R. 2596 , as reported from the House Committee on Appropriations, would have provided $700.8 million for NIST, 6.6% below the FY2011 appropriation and 30.0% below the President's request. The $517.0 million in funding for the STRS account represented a 3.9% increase over FY2011, but would have been 23.8% below the proposed budget number. Support for MEP at $128.4 million was the same as FY2011, but would have been 10.0% less than the Administration's request. Construction funding of $55.4 million reflected a 20.7% decrease from the FY2011 figure and was 34.5% below the budget proposal. No appropriations were provided for TIP, the Baldrige program, or AMTech. The FY2012 consolidated appropriations bill covering the Department of Commerce (among other agencies) originally passed by the Senate, H.R. 2112 , would have funded NIST at $680.0 million, 2.9% below the amount in H.R. 2596 , 32.1% below the Administration's budget request, and 9.3% below the FY2011 appropriation. Funding for the STRS account totaled $500.0 million, 3.2% below the figure in H.R. 2596 , 26.4% less than the budget request, and 1.4% below the amount appropriated in FY2011. Under the ITS account, $120.0 million would be provided for the MEP program. This amount was 6.5% less than that recommended in H.R. 2596 and that appropriated for FY2011, as well as 15.8% less than the Administration's budget figure. No funding was provided for TIP, the Baldrige National Quality Program, or AMTech. Construction support would have totaled $60.0 million, 8.3% more than the amount included in the House bill, 29.1% below the President's budget number, and 14.2% below the FY2011 appropriation. NIST's extramural programs (currently the Manufacturing Extension Partnership and the Technology Innovation Program), which are directed toward increased private sector commercialization, have been a source of contention. The Administration's FY2012 budget would have established and provided support for an additional extramural program, AMTech. Some Members of Congress have expressed skepticism over a "technology policy" based on providing federal funds to industry for the development of "pre-competitive generic" technologies. This approach, coupled with pressures to balance the federal budget, has led to significant reductions in appropriations for several of these NIST activities. The Advanced Technology Program (ATP) and the MEP, which accounted for more than 50% of the FY1995 NIST budget, were proposed for elimination. In 2007, ATP was terminated and replaced by the Technology Innovation Program. The final FY2012 appropriations legislation does not provide any funding for TIP or the AMTech program requested by the President. Increases in spending for NIST laboratories that perform the research essential to the mission responsibilities of the agency have tended to remain small. As part of the American Competitiveness Initiative, announced by former President Bush in the 2006 State of the Union address, the Administration stated its intention to double funding over 10 years for "innovation-enabling research" done, in part, at NIST through its "core" programs (defined as the STRS account and the construction budget). In April 2009, President Obama indicated his decision to continue efforts to double the budget of key science agencies, including NIST, over 10 years. In President Obama's FY2011 budget, the timeframe for doubling slipped to 11 years and his FY2012 budget was intentionally silent on a timeframe for doubling. While the FY2012 appropriations do not include an increase in support for NIST, there is a substantial (14.0%) increase in funding for R&D under the STRS account. The Commerce Department's National Oceanic and Atmospheric Administration (NOAA) conducts scientific research in areas such as ecosystems, climate, global climate change, weather, and oceans; supplies information on the oceans and atmosphere; and manages coastal and marine organisms and environments. NOAA was created in 1970 by Reorganization Plan No. 4. The reorganization was intended to unify certain of the nation's environmental activities and to provide a systematic approach for monitoring, analyzing, and protecting the environment. NOAA's R&D efforts focus on three areas: climate; weather and air quality; and ocean, coastal, and Great Lakes resources. The FY2012 appropriation funded NOAA R&D at $580.6 million, $48.4 million (7.7%) less than the FY2011-enacted level of $629.0 million and $156.3 million (21.2%) less than the FY2012 request of $736.9 million. R&D accounted for 11.9% of NOAA's total FY2012-enacted discretionary budget of $4.894 billion. NOAA R&D FY2012-enacted funding consisted of approximately $406 million for research (70.0%), $37 million for development (6.4%), and $137 million for R&D equipment (23.6%). Excluding equipment, about $335 million (75.5%) funded intramural programs and $109 million (24.5%) funded extramural programs. NOAA's administrative structure has evolved into five line offices that reflect its diverse mission, including the National Ocean Service (NOS); National Marine Fisheries Service (NMFS); National Environmental Satellite, Data, and Information Service (NESDIS); National Weather Service (NWS); and Office of Oceanic and Atmospheric Research (OAR). In addition to NOAA's five line offices, Program Support (PS), a cross-cutting budget activity, includes the Office of Marine and Aviation Operations (OMAO). NOAA's FY2012 budget request proposed a budget neutral reorganization of its administrative structure by establishing a Climate Service (CS) line office. The Consolidated Appropriations Act, FY2012 ( P.L. 112-74 ) did not include the NOAA Climate Service as requested by the Administration and recommended by the Senate. OAR is the primary center for R&D within NOAA. The President's FY2012 request would have funded OAR R&D at $175.1 million, a reduction of $214.8 million (55.1%) from the FY2011-enacted level of $389.9 million. Most of the reduction would have resulted from moving R&D funding to the proposed Climate Service. However, the final budget did not include a Climate Service line office and OAR has retained its R&D funding. For 2012, OAR R&D activities and equipment were funded at $348.1 million, a decrease of $41.9 million (10.7%) from the FY2011-eacted level of $389.9 million. FY2012-enacted R&D funding included $281.9 million for research and development and $66.2 million for equipment. Table 12 provides R&D funding levels by line office for FY2010-enacted, FY2011-enacted, FY2012-requested, and FY2012-enacted funding levels. The NOAA Research Council, an internal body composed of scientific personnel, developed the current NOAA 5-Year Research Plan for 2008-2012. The plan identified the most pressing research challenges as a set of six overarching questions. NOAA's research and development portfolio is structured around finding answers to these questions: What factors, human and otherwise, influence ecosystem processes and impact our ability to manage marine ecosystems and forecast their future state? What is the current state of biodiversity in the oceans, and what impacts will external forces have on this diversity and how we use our oceans and coasts? What are the causes and consequences of climate variability and change? What improvements to observing systems, analysis approaches, and models will allow us to better analyze and predict the atmosphere, ocean, and hydrological land processes? How can the accuracy and warning times for severe weather and other high-impact environmental events be increased significantly? How are uncertainties in our analysis and predictions best estimated and communicated? The Administration requested $16.637 billion for NASA R&D in FY2012. This amount was an increase of 11.0% over the FY2011 enacted level of $14.991 billion. The House Appropriations Committee recommended $14.941 billion. The Senate Appropriations Committee recommended $15.885 billion. The final appropriation was $15.850 billion. For a breakdown of these amounts, as well as the amounts authorized for NASA in FY2012 by the NASA Authorization Act of 2010 ( P.L. 111-267 ), see Table 13 . The increase in NASA R&D funding in FY2012, despite a decrease in funding for NASA as a whole, was made possible by the retirement of the space shuttles. The space shuttle program is classified as an operational expense, not R&D. The last shuttle flight was completed in July 2011. The Administration's $5.017 billion request for NASA Science in FY2012 was a 2.0% increase from FY2011. The request included continuation of a global climate research initiative first proposed in FY2011 and support for the development and launch of several missions recommended by the National Academies in the 2007 decadal survey. An independent review of the James Webb Space Telescope (JWST) in October 2010 estimated that the project was 15 months behind schedule and $1.4 billion over budget. The revised JWST program that NASA developed in response to this finding has an estimated total lifecycle cost of $8.835 billion and projects a launch date in 2018. The House committee recommended $4.499 billion for Science, including $100 million less than the request for Earth Science and no funding for JWST. The Senate committee recommended $5.100 billion, including $156 million more than the request for JWST, and recommended capping the development portion of the cost of JWST at $8 billion. The final appropriation was $5.090 billion, including the same amount as the Senate for JWST. The final bill capped the formulation and development cost of JWST at $8 billion. The conference report directed the Government Accountability Office to assess the JWST program continuously and provide annual reports on the program's management, cost, schedule, and technical status. The request for Aeronautics was $569 million, an increase of 6.7% from FY2011. The request included increases for selected research topics, such as the effects of high-altitude ice crystals on aircraft, in categories identified by the 2010 authorization act ( P.L. 111-267 , §902). The requested funding for hypersonics was reduced and focused on foundational research. The House committee recommended the requested amount and supported NASA's proposed shifts of emphasis within the program. The Senate committee recommended $501 million. The final appropriation was $570 million. For Space Technology, the Administration requested $1.024 billion. About half of this total ($497 million) was for Crosscutting Space Technology Development (CSTD), a mostly new activity. The request for CSTD was comparable to the amount authorized for Space Technology in FY2012 by the 2010 authorization act ($486 million). Most of the remainder of the request for Space Technology was for two activities transferred from other accounts: Exploration Technology Development from the Exploration account and Small Business Innovation Research from the Cross-Agency Support account. The request proposed roughly doubling the funding for the transferred activities. The House committee recommended a total of $375 million for Space Technology. The House committee report stated that "NASA's proposal to more than triple the size of this program over the course of two fiscal years is premature," but that ongoing program planning during FY2012 "will put the program in a stronger position to seek additional resources in future requests." The Senate committee recommended $637 million, including $210 million for CSTD. The Senate committee report expressed "regret" at "not being able to fund this promising new program more robustly." The final appropriation was $575 million, to be "prioritized toward the continuation of ongoing programs and activities." The Administration's request for Exploration in FY2012 was $3.949 billion, a 0.5% increase over FY2011 but about 25% less than the authorized amount. Before passage of the final FY2011 appropriation, the bulk of this account funded the Constellation program, including the Orion crew vehicle and the Ares I rocket for carrying humans into low Earth orbit and the heavy-lift Ares V cargo rocket and other systems needed for a human mission to the Moon. In FY2012, the account instead funds development of the Multipurpose Crew Vehicle (MPCV) and heavy-lift Space Launch System (SLS) mandated by the 2010 authorization act. Although this is a substantial change, many elements of Orion and Ares are included in the MPCV and SLS. The Exploration request included $2.810 billion for MPCV and SLS in FY2012, compared with "not less than" $2.994 billion in the FY2011 appropriation and $4.050 billion for FY2012 in the authorization act. The request also included $850 million in FY2012 to help companies develop commercial crew transport services to low Earth orbit, compared with $307 million in FY2011 and $500 million for FY2012 in the authorization act. The House committee recommended $3.645 billion for Exploration, including $3.045 billion for MPCV and SLS and $312 million for commercial crew. The Senate committee recommended $3.775 billion, including $3.000 billion for MPCV and SLS and $500 million for commercial crew. The final appropriation was $3.771 billion, including $3.060 billion for MPCV and SLS and $406 million for commercial crew. The conference report directed NASA to develop "a set of science-based exploration goals; a target destination or destinations that will enable the achievement of those goals; a schedule for the proposed attainment of those goals; and a plan for any proposed collaboration with international partners." The request for the International Space Station (ISS) was $2.842 billion, an increase of 4.7% from FY2011. The request included an additional $60 million for ISS research, as well as increased funding for crew and cargo transportation to and from orbit. Because of the retirement of the space shuttles in FY2011, transportation services in FY2012 will be obtained under contract with international partners and commercial providers. The House committee recommended $2.764 billion for the ISS. The Senate committee recommended $2.804 billion. The final appropriation was $2.830 billion. U.S. Department of Agriculture research and education activities are included in four organizations: the Agricultural Research Service (ARS), National Institute of Food and Agriculture (NIFA), Economic Research Service (ERS), and National Agricultural Statistics Service (NASS). The Administration's FY2012 request included $2.594 billion for these activities, an increase of 0.3% over FY2011 funding of $2.586 billion. The House-passed funding level for these activities was $2.235 billion; the Senate-passed level was $2.539 billion. Final appropriations for FY2012 provided for in the Consolidated and Further Appropriations Act, FY2012 ( P.L. 112-55 ) was $2.533 billion, $60.6 million below the Administration's request and $52.8 million below the FY2011 enacted level. For a breakdown of these amounts, see Table 14 . The Agricultural Research Service is USDA's in-house basic and applied research agency, and operates approximately 100 laboratories nationwide. The ARS also includes the National Agricultural Library, the primary information resource on food, agriculture, and natural resource sciences. The ARS laboratories focus on efficient food and fiber production, development of new products and uses for agricultural commodities, development of effective biocontrols for pest management, and support of USDA regulatory and technical assistance programs. The President requested $1.138 billion for ARS in FY2012, slightly above the FY2011 enacted level. The FY2012 appropriation provides $1.095 billion for the ARS, $38.6 million below the FY2011 enacted level and $43.1 million below the request. The conference report supports the closure of 12 research laboratories at 10 locations and directs ARS to submit a report to the House and Senate Appropriation Committees no later than January 20, 2012, concerning the disposition of these laboratories. Neither the FY2011 continuing resolution nor the FY2012 appropriation provide funding for ARS buildings and facilities. In FY2012, funding from discontinued ARS projects will be redirected to agency research priorities including the conversion of agricultural products into biobased products and biofuels; development of production systems to provide a sustainable balance of crop production, carbon soil sequestration, and net greenhouse gas emissions; development of new measures to control bovine tuberculosis and bovine respiratory diseases; domestic and global market opportunities; new varieties and hybrids of feedstocks; and new healthier foods with decreased caloric density. Other areas of support include funding for research on non-traditional agents and their possible use in food, and for epidemiological and ecologic studies. In addition, the FY2012 appropriation includes support for research at Regional Biofuels Feedstocks Research and Demonstration Centers and for research to develop integrated, sustainable management systems to improve food production and security. The National Institute of Food and Agriculture was established in Title VII, Section 7511 of the Food, Conservation, and Energy Act of 2008 ( P.L. 110-246 , also known as the 2008 farm bill). In the FY2012 appropriation, NIFA is to support larger and longer-term research efforts on issues related to the viability of agriculture. NIFA is responsible for developing partnerships between the federal and state components of agricultural research, extension, and institutions of higher education. NIFA distributes funds to State Agricultural Experiment Stations, State Cooperative Extension Systems, land-grant universities, and other institutions and organizations that conduct agricultural research, education, and outreach. Included in these partnerships is funding for research at 1862 land-grant institutions, 1890 historically black colleges and universities, 1994 tribal land-grant colleges, and Hispanic-serving institutions. Funding is distributed to the states through competitive awards, statutory formula funding, and special grants. The FY2012 appropriation provides $1.202 billion for NIFA, $12.3 million (-1.0%) below the FY2011 enacted level and approximately equal to the request. Conferees stated that they were not in agreement with the Administration's request concerning the termination of extramural research. Conferees also expressed concern about the focus of research programs supported through the Agriculture and Food Research Initiative (AFRI) and maintained that USDA's support should be directed solely on the highest priority agricultural research as determined by Congress. One of the stated primary goals in the President's FY2012 request was for NIFA to emphasize and prioritize competitive, peer-reviewed allocation of research funding. For this reason, the Administration requested funding for the development of new grant management tools. Funding for FY2012 includes support for grant management, as well as for programs that are more responsive to critical national issues such as agricultural security, local and regional emergencies, zoonotic diseases, climate change, childhood obesity, pest risk management, and development of biofuels that contribute to agricultural productivity and sustainability. The act also provides funding for programs that support minority-serving institutions and their recipients. NIFA is responsible for administering the agency's primary competitive research grants program, the Agriculture and Food Research Initiative. In addition to supporting fundamental and applied science in agriculture, USDA maintains that the AFRI makes a significant contribution to developing the next generation of agricultural scientists by providing graduate students with opportunities to work on research projects. A focus of these efforts is to provide increased opportunities for minority and under-served communities in agricultural science. The FY2012 appropriation provides $264.5 million for AFRI, approximately equal to its FY2011 enacted level. AFRI funding is to be directed towards alternative and renewable energy research to develop cost-effective feedstocks for biofuel production. Funding also includes support for global climate change research to develop mitigation capabilities for agricultural production; support for an integrated food safety research program that would have the potential for improving the understanding of disease-causing microorganisms; and funding for international food security and nutrition and obesity prevention research. The act supports initiatives in agricultural genomics, emerging issues in food and agricultural security, the ecology and economics of biological invasions, and plant biotechnology. In addition, it is anticipated that water research will extend beyond water quality to include water availability, reuse, and conservation. The FY2012 appropriation provides $77.7 million for the Economic Research Service, $8.3 million below the request and $4.1 million below the FY2011 enacted level. ERS supports economic and social science information analysis on agriculture, rural development, food, and the environment. ERS collects and disseminates data concerning USDA programs and policies to various stakeholders. The FY2012 appropriation provides continued support for the Organic Production and Market Data Initiative. Funding for the National Agricultural Statistics Service is at $158.6 million in the FY2012 appropriation, $6.8 million below the request and $2.2 million above the FY2011 level. The FY2012 appropriation includes support for improving research efforts in analyzing the impacts of bioenergy production, and for examining concerns pertaining to feedstock storage, transportation networks, and commodity production. Other research areas receiving support include production and use of biomass materials; stocks and prices of distillers' grains; and current and proposed ethanol production plants. FY2012 NASS funding provides for restoration of the chemical use data series on major row crops; post harvest chemical use; and alternating annual fruit, nuts, and vegetable chemical use. Funding is provided to support the third year of the 2012 Census of Agriculture's five-year cycle, intended to measure trends and identify developments in the agricultural community. On October 4, 2011, NASS stated that it intended to reduce the frequency of its reports. Conferees directed NASS to revisit this decision, identify duplication in their reports and surveys by other programs, and release as many reports as possible. The final FY2012 appropriations for the Department of the Interior (DOI) included $846.8 million for research and development, $67.6 million (8.7%) more than the President's request, and $67.2 million (8.6%) more than in FY2010. (See Table 15 .) Funding for DOI R&D is generally included in line items that also include non-R&D funding. Therefore it is not possible to know precisely how much of the funding provided for in appropriations bills will be allocated to R&D unless funding is provided for at the full level of the request. In general, R&D funding levels are determined only after DOI agencies report on their allocation of appropriations. In January 2012, DOI provided detailed information to CRS on R&D funding levels for each of its agencies and for broad program areas; these data were used for the analysis in this section. However, in providing the information, DOI noted that, "The USGS realigned their disciplines in the 2012 budget and at the same time re-baselined their R&D to better align with A-11 definitions." Accordingly, funding levels, differences, and percentage changes provided in this section are internally consistent but may differ from previously published data. The U.S. Geological Survey (USGS) has the largest R&D budget among DOI agencies, accounting for approximately 80% of total DOI R&D funding in FY2012, and is the most R&D-intensive agency in DOI, with approximately 63% of its FY2012 appropriations devoted to R&D activities. The Consolidated Appropriations Act, FY2012 ( P.L. 112-74 ) provided USGS with $1.068 billion for FY2012, approximately the same as the Senate draft, $14 million (1.3%) above H.R. 2584 as reported from the House Committee on Appropriations, $50 million (4.9%) above the President's request, but $16 million below the FY2011 estimated funding level (-1.5%). All USGS funding is provided through the Surveys, Investigations, and Research (SIR) account; the Administration requested funds for a second account in FY2012, National Land Imaging, but no funds were provided. USGS R&D is conducted under seven activity/program areas that constitute DOI's Surveys, Investigations, and Research (SIR) portfolio: Ecosystems; Climate and Land Use Change; Energy, Minerals, and Environmental Health; Natural Hazards; Water Resources, Core Science Systems; and Administration and Enterprise Information. P.L. 112-74 provided $675.5 million in R&D funding for FY2012 under the SIR account, $35.5 million (5.5%) more than in FY2011 and $73.2 million (12.2%) more than the request. Compared to FY2011, funding was cut for four SIR activity/program areas in FY2012: Energy, Minerals, and Environmental Health ($-3.2 million, -3.2%); Climate and Land Use Change (-$2.5 million, -2.4%); Natural Hazards (-$1.1 million, -1.0%), and Administration and Enterprise Information ($0.1 million, -11.4%). Funding for three SIR activity/program areas was increased in FY2012: Water Resources ($12.2 million, 11.0%), Core Science Systems ($29.7 million, 58.8%), all of the increase accounted for the National Geospatial Program which increased by $34.7 million; and Ecosystems ($0.4 million, 0.3%). The Bureau of Ocean Energy Management, Regulation, and Enforcement received the second largest increase in FY2012 DOI agency R&D funding at $63.3 million, an increase of $27.7 million over FY2011 though $5.2 million less than the President's request. Congress provided $16.6 million for the Bureau of Land Management in FY2012, the same as in FY2011, but $5.1 million more than the President's request. The Bureau of Reclamation received $12.0 million, $2.1 million less than in FY2011 and approximately equal to the request. R&D funding for the National Park Service increased by $4.6 million over FY2011 to $30.9 million, slightly higher than the request. The Fish and Wildlife Service received $48.5 million for R&D in FY2012, $1.5 more than in FY2011 and $1.5 million less than the request. The U.S. Environmental Protection Agency (EPA), the regulatory agency responsible for carrying out a number of environmental pollution control laws, funds a broad portfolio of research and development (R&D) activities to provide scientific tools and knowledge to support decisions relating to preventing, regulating, and abating environmental pollution. Beginning in FY2006, EPA has been funded through the Interior, Environment, and Related Agencies appropriations bill. Most of EPA's scientific research activities are funded within the agency's Science and Technology (S&T) appropriations account. This account is funded by a "base" appropriation and a transfer from the Hazardous Substance Superfund (Superfund) account. These transferred funds are dedicated to research on more effective methods to clean up contaminated sites. Prior to 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. Title II of Division E under P.L. 112-74 ( H.R. 2055 ) provided $818.0 million for the EPA S&T account for FY2012 (does not include the 0.16% across-the-board rescission ), including transfers from the Hazardous Substance Superfund account. The total FY2012 enacted funding for the S&T account was $22.3 million (2.7%) below the FY2011 enacted appropriations of $840.3 million (including a 0.2% across-the-board rescission ). The appropriations for EPA's S&T account included in P.L. 112-74 represents 9.7% of the total $8.46 billion included for the agency overall for FY2012. As indicated in Table 16 below, the FY2012 enacted appropriations were more than recommended in the Interior, Environment and Related Agencies FY2012 Appropriations bill ( H.R. 2584 , H.Rept. 112-151 ) as reported by House Appropriations Committee on July 19, 2011, but less than the amounts recommended in a October 14, 2011, draft released jointly by the chairman and ranking member of the Senate Appropriations Subcommittee on Interior, Environment, and Related Agencies, and 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, including EPA scientific research in support of these actions. Actions under the Clean Air Act, in particular EPA controls on emissions of greenhouse gases, as well as efforts to address conventional pollutants from a number of industries, received much of the attention. Several actions under the Clean Water Act, Safe Drinking Water Act, and Resource Conservation and Recovery Act (RCRA), also received some attention. Congressional concerns regarding these issues were prominent areas of debate during oversight and deliberation of EPA's S&T funding levels. 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. For example, Division E, Title IV "General Provisions" in P.L. 112-74 , included provisions specifying requirements and restrictions on the use of FY2012 funds for certain 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). P.L. 112-74 included fewer provisions than the more than 30 provisions proposed in the Interior, Environment, and Related Agencies Appropriations bill H.R. 2584 ( H.Rept. 112-151 ) as reported by the House Committee on Appropriations on July 19, 2011. Additional proposals to address EPA actions also represented a significant proportion of the roughly 250 amendments considered and pending prior to suspension of floor debate of H.Rept. 112-151 on July 28, 2011. Along with the provisions contained in the FY2012 Consolidated Appropriations law as enacted ( P.L. 112-74 ), the conference report ( H.Rept. 112-331 ) included extensive language with regard to specific actions by EPA, in lieu of certain provisions proposed in the House Appropriations Committee-reported bill ( H.R. 2584 ). With regard to EPA's R&D, under the S&T 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). The conferees accepted the reorganization of the budget presentation of certain program activities below the appropriations account level for FY2012 as proposed by the President, including consolidation and modifications of line-items, making the FY2011 enacted levels not comparable to the reorganized line items as reflected in Table 16 below. Newly revised program areas within the S&T account include Clean Air and Climate; Research: Air, Climate and Energy; Research: Chemical Safety and Sustainability; and Research: Sustainability and Healthy Communities. As the table indicates, there was variability among the FY2012 enacted amounts, 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 enacted for FY2011, the FY2012 enacted levels would be a decrease once the 0.16% across-the-board rescission is taken into account. The $23.0 million transfer from the Superfund account included in P.L. 112-74 for FY2012, is the same as 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 activities funded within the S&T account include research conducted by universities, foundations, and other non-federal entities that receive EPA grants, and research conducted by the agency at its own laboratories and facilities. R&D at EPA headquarters and laboratories around the country, as well as external R&D, is managed primarily by EPA's Office of Research and Development (ORD). A large portion of the S&T account funds EPA's R&D activities managed by ORD, including the agency's research laboratories and research grants. The account also provides funding for the agency's applied science and technology activities conducted through its program offices (e.g., the Office of Water). Many of the programs implemented by other offices within EPA have a research component, but the research is not necessarily the primary focus of the program. The EPA S&T account incorporates elements of the former EPA Research and Development account, as well as a portion of the former Salaries and Expenses, and Program Operations accounts, which had been in place until FY1996. Because of the differences in the scope of the activities included in these accounts, apt comparisons before and after FY1996 are difficult. Although the Office of Management and Budget (OMB) reports historical and projected budget authority (BA) amounts for R&D at EPA (and other federal agencies), OMB documents do not describe how these amounts explicitly relate to the requested and appropriated funding amounts for the many specific EPA program activities. The R&D BA amounts reported by OMB are typically significantly less than amounts appropriated/requested for the S&T account. (BA as reported by OMB is included in Table 16 below for purposes of comparison.) This is an indication that not all of the EPA S&T account funding is allocated to R&D. Some Members of Congress and other stakeholders have consistently raised concerns about the adequacy of funding for scientific research at EPA. The adequacy of funding for these activities has been part of a broader question about the adequacy of overall federal funding for a broad range of scientific research activities administered by multiple federal agencies. Some congressional policymakers, scientists, and environmental organizations have expressed concern about the downward trend in federal resources for scientific research over time. Central facets of this debate include the question of whether the regulatory actions of federal agencies are based on "sound science" and how scientific research is applied in developing federal policy. Some Members have also raised concerns that EPA's scientific justifications for several of its rules and regulations have been scrutinized recently as a result of apprehensions regarding quality of data, lack of transparency and effective peer review, and other related research planning and process issues. The final FY2012 appropriations under the Consolidated and Further Continuing Appropriations Act, 2012 ( P.L. 112-55 ) for the Department of Transportation (DOI) included $944 million for research and development, $271 million (22.3%) less than the President's request, $9 million (-0.9%) less than in FY2011, and $125 million (-11.7%) less than in FY2010. President Obama had requested $1.215 billion for Department of Transportation (DOT) R&D in FY2012, an increase of $146 million (13.7%) from the FY2010 enacted level. (See Table 17 .) Two DOT agencies—the Federal Highway Administration (FHWA) and the Federal Aviation Administration (FAA)—account for most of the department's R&D funding (82.4% in FY2012). Final FY2012 funding for FAA R&D and R&D facilities was $367 million, $50 million (-12.0%) less than the President's request, $33 million (9.9%) more than in FY2011, and $45 million (-10.9%) less than in FY2010. The President's request for $190 million for Research, Engineering, and Development (RE&D) was essentially unchanged from the FY2010 enacted level. Of these funds, $77 million ($5 million above the FY2010 level) were for the RE&D NextGen R&D portfolio, focused on the use of alternative and renewable fuels for general aviation aircraft to reduce aviation's effects on the environment. The request for the Environmental and Energy program, including some NextGen research, was $35.8 million, with R&D focused on applications such as modeling environmental impacts of aviation and further advancing technologies that reduce aircraft noise and emissions. Final FY2012 funding for FHWA R&D was $411 million, $137 million (-25.0%) less than the President's request, $37 million (-8.3%) less than in FY2011, and $42 million (-9.3%) less than in FY2010. The FY2012 request for FHWA R&D funding was $548 million, an increase of $95 million (20.9%) over FY2010. Highway Research and Development funding would have increased to $200.0 million, up $33.7 million (20.3%) from FY2010 funding of $166.3 million. Funding for Intelligent Transportation Systems R&D would have increased to $96.1 million in FY2012, up $14.8 (18.1%) from its FY2010 funding level. The ITS Multi-modal Research Program and the Competitive University Transportation Center (UTC) Consortia would each have received $20 million in FY2012. In addition, R&D funding for the State Planning and Research program would have grown to $206.4 million in FY2012, up $23.4 million (12.8%) over FY2010. | Federal research and development (R&D) funding for FY2012 is estimated to total $138.869 billion, $3.845 billion (-2.7%) below the FY2011 funding level of $142.714 billion, and $9.042 billion (-6.1%) below the President's request of $147.911 billion. Among the overarching issues that Congress contended with in the FY2012 appropriations process were the extent to which the federal R&D investment could grow in the context of increased pressure on discretionary spending and how available funding would be prioritized and allocated. The appropriations legislation was incorporated into two bills, the Consolidated and Further Continuing Appropriations Act, 2012 (P.L. 112-55) and the Consolidated Appropriations Act, 2012 (P.L. 112-74). P.L. 112-55, included the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Act; the Commerce, Justice, State and Related Agencies Act; and the Transportation, Housing and Urban Development, and Related Agencies Act, and was passed by Congress on November 17, 2011, and signed into law two days later. P.L. 112-74, incorporating the nine remaining appropriations bills, was passed by Congress on December 17, 2011, and signed into law by President Obama on December 23, 2011. Prior to enactment of these bills, government operations into FY2012 were funded through a series of continuing appropriations acts. President Obama requested $147.911 billion for R&D in FY2012, a $772 million (0.5%) increase from the FY2010 actual R&D funding level of $147.139 billion. At the time the President's FY2012 budget was released, action had not been completed on FY2011 full-year funding so the President's budget compared the FY2012 request to FY2010 appropriations. On April 15, 2011, the Department of Defense and Full-Year Continuing Appropriations Act, 2011 (P.L. 112-10) was signed into law. Division A of the act provided FY2011 appropriations for the Department of Defense; Division B provided full-year continuing funding for FY2011 for all other agencies at their FY2010 levels unless otherwise specified in the act. President Obama's request sought increases in the R&D budgets of the three agencies targeted for doubling over 7 years by the America COMPETES Act, and over 10 years by the America COMPETES Reauthorization Act of 2010 and by President Bush under his American Competitiveness Initiative, as measured using FY2006 funding as the baseline. Although President Obama supported a 10-year doubling in his FY2010 budget, his FY2012 budget was intentionally silent on a timeframe. Congress appropriated $12.529 billion in FY2012 for the targeted accounts, an increase of $207 million (1.7%) over FY2011 funding of $12.323 billion, and $1.417 billion (-10.2%) less than the President's request. For more than a decade, federal R&D has been affected by mechanisms used to continue appropriations in the absence of enactment of regular appropriations acts and to complete the annual appropriations process. Completion of appropriations after the beginning of a fiscal year may cause agencies to delay or cancel some planned R&D and equipment acquisition. |
Many Members of Congress see continued tension between "free speech" decisions of the Supreme Court, which protect flag desecration as expressive conduct under the First Amendment, and the symbolic significance of the United States flag. Consequently, every Congress that has convened since those decisions were issued has considered measures to permit the punishment of those who engage in flag desecration. This report is divided into two parts. The first gives a brief history of the flag protection issue, from the enactment of the Flag Protection Act in 1968 through current consideration of a constitutional amendment. The second part briefly summarizes the two decisions of the United States Supreme Court, Texas v. Johnson and United States v. Eichman , that struck down the state and federal flag protection statutes as applied in the context punishing expressive conduct. In 1968, in the midst of the Vietnam conflict, Congress enacted the first Federal Flag Protection Act of general applicability. The law was occasioned by the numerous public flag burnings in protest of the war. For the next 20 years, the lower courts upheld the constitutionality of the federal statute and the Supreme Court declined to review these decisions. However, during the 20-year period between enactment of the Flag Protection Act and its Johnson decision, the Supreme Court did visit the flag issue three times. Each time the Court found a way to rule in favor of the protestor and overturn a state conviction on very narrow grounds, avoiding a definitive ruling on the constitutionality of convictions for politically inspired destruction or alteration of the American flag. In Street v. New York , the Court overturned a state conviction for flag-burning, holding that the flag-burner was prosecuted for his words rather than his acts. In 1974, the Court overturned a prosecution by finding that the state statute was vague. In Spence v. Washington , the Court held that the taping of a peace symbol to a flag was expressive conduct and thus protected by the First Amendment. In both of these later cases the Court expressly referred to the federal statute in a positive manner. It was against this background that the Supreme Court took the Johnson case. In 1984, during the Republican National Convention in Dallas, TX, Johnson had participated in a demonstration protesting the policies of the Reagan Administration. In front of the city hall, Johnson unfurled an American flag, which another member of the demonstration had taken from a flag pole and had given to him, doused it with kerosene, and set it on fire. He was charged with the desecration of a venerated object in violation of a Texas statute. Johnson was tried, convicted, and sentenced to one year in prison and fined $2,000. The conviction was upheld by the Court of Appeals of the Fifth District of Texas at Dallas. The Texas Court of Criminal Appeals reversed. In a 5 to 4 decision, the U.S. Supreme Court affirmed this reversal on June 21, 1989, thus, in effect, holding that the flag protection statutes of 47 states and the federal statute could not be applied to a flag burning that was part of a public demonstration. In response to this decision, Congress enacted the Flag Protection Act of 1989. The act changed the focus of the protection granted the flag from protecting it against desecration, which the Court had ruled unconstitutional, to protecting its physical integrity. The primary purpose of amending the federal desecration statute was to remove any language which the courts might find made the statute one that was aimed at suppressing a certain type of expression. If the statute was neutral as to expression—for instance, if it proscribed all burning of flags—then, its proponents argued, the statute's prohibitions might be judged under the constitutional test enunciated by the Court in United States v. O ' Brien. Under the O ' Brien test, which is less strict than First Amendment standards applied in expression cases, the government need only show that the statute furthers an important or substantial governmental interest, and that the restriction on First Amendment freedoms is no greater than is essential to the furtherance of that interest. All of the opinions in Johnson had recognized a governmental interest in protecting the physical integrity of the flag to some degree. Therefore, it was at least arguable that such a neutral statute would meet the second part of the test. The new statute made criminal intentionally mutilating, defacing, physically defiling, burning, maintaining on the floor or ground, or trampling upon the flag of the United States. Exemption was given for conduct consisting of disposal of a worn or soiled flag. The term "flag of the United States" was defined to mean any flag of the United States, or any part thereof, made of any substance, of any size, in a form that is commonly displayed. Provision was made for expedited Supreme Court review of the constitutionality of the act. The Flag Protection Act of 1989 became effective on October 28, 1989. On that date protesters in Seattle, WA, and Washington, DC, were arrested for violation of the new act. These cases were dismissed upon findings that the act was unconstitutional as applied to their burning a United States flag in a protest context. The D.C. and Seattle cases were appealed to the Supreme Court under the act's expedited review provision. On June 11, 1990, the Court announced its ruling. In another 5 to 4 decision, the Court held that the Flag Protection Act of 1989 could not be constitutionally applied to a burning of the flag in the context of a public protest. In the summer of 1990, both houses of Congress considered and failed to pass by the required two-thirds vote an amendment to the Constitution which would have empowered Congress to enact legislation to protect the physical integrity of the flag. In six of the last eight Congresses, the House passed proposed constitutional amendments which would have authorized Congress to enact legislation to protect the flag from physical desecration. In the 104 th Congress, the Senate considered a "flag" amendment, but came three votes short of passing it. In the 106 th Congress, S.J.Res. 14 failed, by a vote of 63-37, to receive the necessary two-thirds vote in the Senate. In the 109 th Congress, S.J.Res. 12 failed by a vote of 66 to 34 (one vote short of the necessary two-thirds required for passage). There were no "flag" amendment votes in the Senate in the 105 th , 107 th , 108 th ,110 th , , or 111 th Congresses. In the 112 th Congress, an amendment to the Constitution of the United States to prohibit desecration of the flag has been introduced in both the House and the Senate. H.J.Res. 13 proposes an amendment to the Constitution of the United States which would authorize the Congress to prohibit the physical desecration of the flag of the United States. On Flag Day of 2011, Senator Hatch introduced an identical bill, S.J.Res. 19 , in the Senate. Should Congress approve a proposed flag protection amendment by the required two-thirds majority of each house, the amendment would only become effective upon ratification by the legislatures of three-fourths of the states. In Texas v. Johnson , the majority of the Court held that Johnson's conviction for flag desecration, under a Texas statute, was inconsistent with the First Amendment and affirmed the decision of the Texas Court of Criminal Appeals that held that Johnson could not be punished for burning the flag as part of a public demonstration. The opinion outlined the questions to be addressed in a case where First Amendment protection is sought for conduct rather than pure speech. First, the Court must determine if the conduct in question is expressive conduct. If the answer is yes, then the First Amendment may be invoked, and the second question must be answered. The second question is whether the state regulation of the conduct is related to the suppression of expression. The answer to this question determines the standard which will be utilized in judging the appropriateness of the state regulation. The test of whether conduct is deemed expressive conduct sufficient to bring the First Amendment into play is whether an intent to convey a particularized message was present, and whether the likelihood was great that the message would be understood by those who viewed it. The opinion emphasized the communicative nature of flags as previously recognized by the Court, but stated that not all action taken with respect to the flag is automatically expressive. The context in which the conduct occurred must be examined. The majority found that Johnson's conduct met this test. The burning of the flag was the culmination of a political demonstration. It was intentionally expressive, and its meaning was overwhelmingly apparent. In these circumstances the burning of the flag was conduct "sufficiently imbued with elements of communication" to implicate the First Amendment. The finding that burning the flag in this circumstance was expressive conduct required the Court next to look at the statute involved to see if it was directly aimed at suppressing expression or if the governmental interest to be protected by the statute was unrelated to the suppression of free expression. If the statute were of the latter type, the government would need only show that it furthered an important or substantial governmental interest, and that the restriction on First Amendment freedoms was no greater than is essential to the furtherance of that interest. If the statute was aimed at suppression of expression, then it could be upheld only if it passed the most exacting scrutiny. Texas offered two state interests which it sought to protect with this statute: prevention of breaches of the peace; and preservation of the flag as a symbol of nationhood and national unity. The majority rejected the first of these interests as not being implicated in the facts of this case. No disturbance of the peace actually occurred or was threatened. The opinion also pointed out that Texas had a statute specifically prohibiting breaches of the peace, which tended to confirm that flag desecration need not be punished to keep the peace. The second governmental interest, that of preserving the flag as a symbol of national unity, was found by the majority to be directly related to expression in the context of activity. The Texas law did not cover all burning of flags. Rather it was designed to protect the flag only against abuse that would be offensive to others. Whether Johnson's treatment of the flag was proscribed by the statute could only be determined by the content of his expression. Therefore, an exacting scrutiny standard of review had to be applied to the statute. The majority held that the Texas statute could not withstand this level of scrutiny. There is no separate constitutional category for the American flag. The government may not prohibit expression of an idea merely because society finds the idea offensive, even when the flag is involved. Nor may a state limit the use of designated symbols to communicate only certain messages. The Court, in reviewing the Flag Protection Act of 1989 in United States v. Eichman , expressly declined the invitation to reconsider Johnson and its rejection of the contention that flag-burning as a mode of expression, like obscenity or "fighting words," does not enjoy the full protection of the First Amendment. The only question not addressed in Johnson , and therefore the only question the majority felt necessary to address, was "whether the Flag Protection Act is sufficiently distinct from the Texas statute that it may constitutionally be applied to proscribe appellees' expressive conduct." The government argued that the governmental interest served by the act was protection of the physical integrity of the flag. This interest, it was asserted, was not related to the suppression of expression, and the act contained no explicit content-based limitations on the scope of the prohibited conduct. Therefore the government should only need to show that the statute furthers an important or substantial governmental interest, and that the restriction on First Amendment freedoms is no greater than is essential to the furtherance of that interest. The majority, while accepting that the act contained no explicit content-based limitations, rejected the claim that the governmental interest was unrelated to the suppression of expression. The Court stated: The Government's interest in protecting the "physical integrity" of a privately owned flag rests upon a perceived need to preserve the flag's status as a symbol of our Nation and certain national ideals. But the mere destruction or disfigurement of a particular physical manifestation of the symbol, without more, does not diminish or otherwise affect the symbol itself in any way. For example, the secret destruction of a flag in one's own basement would not threaten the flag's recognized meaning. Rather, the Government's desire to preserve the flag as a symbol for certain national ideals is implicated "only when a person's treatment of the flag communicates [a] message" to others that is inconsistent with those ideals. In essence the Court said that the interest protected by the act was the same interest which had been put forth to support the Texas statute and rejected in Johnson . The opinion went on to analyze the language of the act itself. Again, while there was no explicit limitation found in this language, the majority found that each of the specified terms, with the possible exception of "burns," unmistakably connoted disrespectful treatment of the flag and thus could not be viewed as neutral as to expression. Therefore, although the act was "somewhat broader" than the Texas statute, it still suffered from the same fundamental flaw, namely it suppressed expression out of concern for its likely communicative impact. This being the case, the majority found that the O ' Brien test was inapplicable and the act must be subject to "the most exacting scrutiny." As in Johnson , the statute in question could not withstand this level of scrutiny. | This report is divided into two parts. The first gives a brief history of the flag protection issue, from the enactment of the Flag Protection Act in 1968 through current consideration of a constitutional amendment. The second part briefly summarizes the two decisions of the United States Supreme Court, Texas v. Johnson and United States v. Eichman, that struck down the state and federal flag protection statutes as applied in the context punishing expressive conduct. In 1968, Congress reacted to the numerous public flag burnings in protest of the Vietnam conflict by passing the first federal flag protection act of general applicability. For the next 20 years, the lower courts upheld the constitutionality of this statute and the Supreme Court declined to review these decisions. However, in Texas v. Johnson, the majority of the Court held that a conviction for flag desecration under a Texas statute was inconsistent with the First Amendment and affirmed a decision of the Texas Court of Criminal Appeals that barred punishment for burning the flag as part of a public demonstration. In response to Johnson, Congress passed the Flag Protection Act of 1989. But, in reviewing this act in United States v. Eichman, the Supreme Court expressly declined the invitation to reconsider Johnson and its rejection of the contention that flag-burning, like obscenity or "fighting words," does not enjoy the full protection of the First Amendment as a mode of expression. The only question not addressed in Johnson, and therefore the only question the majority felt necessary to address, was "whether the Flag Protection Act is sufficiently distinct from the Texas statute that it may constitutionally be applied to proscribe appellees' expressive conduct." The majority of the Court held that it was not. Many Members of Congress see continued tension between "free speech" decisions of the Supreme Court, which protect flag desecration as expressive conduct under the First Amendment, and the symbolic importance of the United States flag. Consequently, every Congress that has convened since those decisions were issued has considered proposals that would permit punishment of those who engage in flag desecration. In six of the last eight Congresses, the House passed proposed constitutional amendments which would have authorized Congress to enact legislation to protect the flag from physical desecration. In the 104th Congress, the Senate considered a "flag" amendment, but came three votes short of passing it. In the 106th Congress, S.J.Res. 14 failed, by a vote of 63-37, to receive the necessary two-thirds vote in the Senate. In the 109th Congress, S.J.Res. 12 failed by a vote of 66 to 34 (one vote short of the necessary two-thirds required for passage). There were no "flag" amendment votes in the Senate in the 105th, 107th, 108th, 110th, or 111th Congresses. In the 112th Congress, an amendment to the Constitution of the United States to prohibit desecration of the flag has been introduced in both the House and the Senate. H.J.Res. 13 proposes an amendment to the Constitution of the United States which would authorize Congress to prohibit the physical desecration of the flag of the United States. An identical bill, S.J.Res. 19, has been introduced in the Senate. |
T he Consolidated Appropriations Act of 2016 ( P.L. 114-13 ) made several changes to the tax treatment of Real Estate Investment Trusts (REITs) and the Foreign Investment in Real Property Tax Act (FIRPTA, enacted in the Omnibus Reconciliation Act of 1980, P.L. 96-499 ) as it relates to REITs. REITs are corporations that issue shares of stock, are largely invested in real property, and do not generally pay corporate tax. REITs distribute and deduct most of their earned income as dividends to shareholders. U.S. individual shareholders pay tax at ordinary individual income tax rates on those dividends, rather than the lower rates that normally apply to dividends on corporate stock. Also, FIRPTA imposes a capital gains tax on foreign investments for gains related to real estate, with an exception for a 5% or less ownership of a REIT. The Consolidated Appropriations Act enacted three types of changes to the rules regarding REITs: (1) provisions to prevent tax-free spin-offs of real property into tax-exempt REITs by currently taxable, operating corporations; (2) provisions to increase foreign investment in U.S. REITs by liberalizing FIRPTA rules; and (3) a series of technical revisions to REITs that had been under consideration for some time. Additional modifications to REIT provisions might still be considered in the future if general tax reform is considered. For instance, the REIT provisions proposed in former Ways and Means Chairman Camp's proposed Tax Reform Act of 2014 ( H.R. 1 , 113 th Congress) were generally more restrictive and raised more revenue than the provisions in the Consolidated Appropriations Act. Moreover, other changes made in a tax reform might affect the relative advantage of REITs. This report describes REITs and FIRPTA, provides historical developments, presents an overview of REIT size and activity, explains the provisions in the Consolidated Appropriations Act, and discusses possible policy issues in the future. A REIT is a real estate company that would otherwise be taxed as a corporation, except that it meets certain tests and faces a number of restrictions. These requirements and restrictions are listed in Table 1 . Its primary business is ownership of real estate assets. Unlike ordinary corporations, REITS generally face little or no corporate level tax because distributions to shareholders are treated as deductible expenses. To qualify, a REIT must meet a number of tests, including having at least 75% of its assets and gross income in real estate and distributing at least 90% of profits to shareholders. Dividends paid to individual shareholders are taxed at ordinary individual income tax rates (rather than the lower rates that generally apply to dividends). Basically a REIT is taxed similarly to a partnership in many ways, which is subject to the individual income tax, and largely avoids the corporate-level tax. REITs have a number of restrictions that require concentration of their assets in passive investments, primarily real estate, and ensure broad ownership. The allowance for taxable REIT subsidiaries adopted in 1999, however, has expanded the scope for REITs to operate properties. Over time, the rules governing REITs have been relaxed, both by legislative and regulatory changes, to allow more involvement not just in holding real estate assets, but also in managing properties and services. REITs were originally designed to be passive real estate owners (if they did not simply own mortgages), with properties operated by others. The Tax Reform Act of 1986 allowed REITs to perform customary services and, thus, to operate their properties directly rather than to employ independent contractors. Legislation in the late 1990s, especially allowing taxable REIT subsidiaries, also expanded the scope of operations. Taxable REIT subsidiaries also introduced the possibility of reducing taxes by shifting profits into the REIT parent through higher than market rents, an effect for which some evidence was found (although such transactions are subject to a 100% penalty). These and other changes expanded the scope of assets organized as REITs. Prior to the 2015 legislation and following a regulatory change in 2001, corporations have been able to spin off their real estate assets into a separate REIT through a tax-free reorganization. The number of firms spinning off their properties or considering doing so has been growing. One of the changes in the Consolidated Appropriations Act was to restrict this practice. REITs are organized as equity, mortgage, or hybrid REITs, depending on whether they hold real estate, mortgages, or a combination of both. Today, most REITs are equity REITs. REITs fall into three classes as far as regulation and trading: (1) public REITs traded on the stock exchange, (2) public REITs not traded on the stock exchange but subject to registration with the Securities and Exchange Commission (SEC), and (3) private REITs. REITs are subject to a number of other restrictions and rules. REITs were intended to have passive investments in real estate assets and not to hold property for sale to customers in the ordinary course of business (as a developer would). Gain from these sales would be considered sale of inventory. Such income is not classified as qualified real estate income and there is a 100% prohibited transactions tax on such gain. This tax does not apply to property obtained through foreclosure and there are safe harbors from the tax including limits on the size of the sale and a holding period of two years. In general, a foreign person or corporation is not taxed on U.S. source capital gains income. However, if the income is from selling U.S. real property, the distribution is taxed at the same rates as a U.S. person under the Foreign Investment in Real Property Tax Act (FIRPTA). The FIRPTA rules, adopted in 1980, considered investment in real property to be income effectively connected to business, which is generally subject to U.S. taxes. There is an exception if (1) the investment is made through a qualified investment entity; (2) the U.S. real property is regularly traded on an established U.S. securities market; and (3) the recipient foreign person or corporation did not hold more than 5% of that class of stock or beneficial interest within the one-year period ending on the date of distribution. The American Jobs Creation Act of 2004 ( P.L. 108-357 ) extended the exception to cover capital gains distributions as well as stock sales. Due to a concern that FIRPTA rules discouraged investment in REITs by foreign persons, liberalizing FIRPTA was also included in the Consolidated Appropriations Act. As mentioned above, REITs have changed significantly over time, beginning largely as entities that passively held real estate mortgages, then becoming largely entities holding standard real properties (e.g., apartments and commercial properties) directly, and more recently expanding into entities holding nontraditional assets (such as prisons, timber, billboards, and cell towers). Recent periods have also been marked by a number of tax-free spin-offs of real property of operating corporations, so that their real property was now in a separate tax-exempt REIT. Shortly after the first corporate income tax was introduced in 1909, a Supreme Court Case in 1911, Eliot v. Freeman , ruled that real estate trusts were not taxable entities for purposes of the tax. The issue subsequently came into question again. In 1935, the Supreme Court, in Morrisy v. Commission er , ruled that realty trusts were corporations subject to the corporate tax. (The Court also ruled that RICs were subject to the corporate tax as well, although these firms applied for relief from Congress and received it.) REITs, largely experiencing losses during the depression, and thus not affected by the tax, made no appeals to reverse the treatment through legislation, and most were eventually liquidated. Those that remained appealed to Congress in 1955, but in 1956 President Eisenhower vetoed the first real estate investment trust bill. His veto message contained two reasons for rejecting the legislation. First, he noted that REITs were different from regulated investment companies whose income was derived from the securities of corporations already subject to the tax and thus were not comparable to REITs, who would pay no corporate tax. Secondly, he expressed concern that the provision, although aimed at a small number of trusts, could expand to many other real estate corporations and erode the corporate base. A REIT proposal in 1958 was incorporated into legislation but dropped in conference. Eventually, legislation allowing for REITs that were exempt from the corporate-level tax on distributions was added to the Cigar Excise Tax Act of 1960. The reasons given by legislators were the need for real estate financing due to economic conditions at that time and the creation of a vehicle to allow taxpayers of more modest means to invest in real estate. In addition, the Treasury, which had initially objected to the legislation, withdrew those objections after the resignation of Dan Throop Smith, Under Secretary of Treasury for Tax Policy, who opposed the REIT legislation. REITs were more restricted in the early years than they are today, especially with respect to REITs providing tenant services and taking a more active role in operating properties. REITs were first listed on the stock exchange in 1965, were allowed to acquire and temporarily operate foreclosed property in 1974, and first allowed to organize as corporations in 1976. During the early years, REITs were largely mortgage REITs. By 1971, public equity REITs constituted 22% of total public REIT value (with the remainder about evenly divided between mortgage REITs and hybrids); today they constitute more than 90% of the total and hybrids have virtually disappeared. The growth in equity REITS was in part due to changes in the Tax Reform Act of 1986 which allowed REITs to both own and manage property. Prior to that act, REITs could not provide services to tenants; the 1986 act allowed the provision of customary services, such as heat, light, and trash collection. The first UPREITs, in which a partnership (umbrella partnership) is formed with the REIT as a general partner, were offered in 1992; this structure avoided recognition of capital gains on conversion of debt to equity. In 1993, the five-or-fewer ownership rule was liberalized by counting pensions as multiple investors, reflecting pension beneficiaries. This change made it easier for pension plans to invest in REITs. In 1996, Internal Revenue Service (IRS) guidance began expanding the type of services REITs could provide, beginning with cable television. During the past years, beginning in the late 1990s, REITs began to expand in scope and size, in part due to legislative and regulatory changes. The REIT provisions of the Taxpayer Relief Act of 1997 ( P.L. 105-34 ) expanded the types of services that REITs could offer without being disqualified and made changes that allowed timber REITs. The first timber REIT, Plum Creek, appeared in 1999. In addition, in 1999, taxable REIT subsidiaries were first allowed. These taxable subsidiaries allowed REITs to actively manage and operate properties and provide services beyond customary tenant services. The 1999 legislation also reduced the required distribution from 95% to 90%. In 2004, legislation allowed REITs that violated rules to address them and pay a penalty rather than lose REIT status. In 2008, health care REITs (e.g., REITs that hold assets such as nursing homes) were allowed taxable subsidiaries. In 2001, the IRS held in Revenue Ruling 2001-29 that rental activity was an active business (reflecting changes that expanded the scope of REIT activity), which allowed firms to spin off their real estate assets in a tax-free reorganization. Following this ruling, Georgia Pacific spun off a timber REIT subsidiary, which then merged with Plum Creek to create a Fortune 500 company. Through a series of private letter rulings, IRS also ruled that assets such as billboards, electrical distribution systems, security components, fire protection systems, telecommunications systems, and data storage are real property. Note, however, that related items that might be thought of as nontraditional had long been allowed as real property, including television towers (General Counsel Memorandum 32907, September 1, 1964), railroad property (Revenue Ruling 69-94, in 1969), and microwave towers (Revenue Ruling 75-424). These later rulings led to growth of conversions of parts of ordinary corporations into tax-exempt REIT conversions, spurring concerns about erosion of the corporate base that ultimately led to legislative proposals. Another change in this era that might have adversely affected REITs was the reduction of the tax rate on dividends from ordinary rates to a 15% rate (or zero rate in some cases) in 2003. This change reduced the relative tax advantage of REITs because REIT dividends continued to be taxed at ordinary rates. In 2013, the top rate on dividends (and capital gains) was increased to 20% for high-income taxpayers. Tax law has in some cases encouraged and in others discouraged investment in REITs by foreigners. In 1980, Congress enacted the FIRPTA provisions, which imposed capital gains taxes and a capital gains withholding tax on real estate investments, including those made through REITs. There was an exception for sale of REIT stock of publicly traded U.S. real estate corporations by owners with a 5% or less share. Its general rationale was to equalize the treatment of foreign and domestic investors, although it was also partly in response to concerns about purchases of U.S. farm land by foreign investors. In 1997, amid concerns about the doubling of the 15% withholding tax rate on dividends paid by REITs to foreign investors (the standard withholding rate in the absence of a treaty provision is 30%), the rate in the Model U.S. Tax Convention was set at 15% for investors with a 5% or less interest in a publicly traded REIT or a 10% or less interest in a diversified REIT. In 2003, a U.S.-UK treaty provided no dividend withholding taxes for UK pension funds (for REIT investments, so long as the pension plan owned 10% of less of the REIT), and this provision was later extended to other treaties. The 2004 tax legislation (the American Jobs Creation Act) allowed an exemption from capital gains tax for capital gains distributions to foreign REIT investors with a 5% or less share of the firm. The National Association of Real Estate Investment Trusts (NAREIT), as of November 2015, estimates the current market capitalization of public REITs at $935 billion. Equity REITs (i.e., REITs that invest in property rather than mortgages) account for 94% or the total ($875 billion). REITs traded on the stock market account for 95% of public REITs ($890 billion). These REITs own $1.8 trillion of real estate. In 2014, public traded REITS paid $42 billion in dividends, and public non-traded REITs paid $4 billion. On average, 67% of the annual dividends paid by REITs qualify as ordinary taxable income, 17% qualify as return of capital, and 16% qualify as long-term capital gains. NAREIT data do not include private REITs, but they appear to be worth less than $100 billion. The tax benefits from a REIT vary depending on the taxpayer's circumstances. From a tax perspective, tax-exempt investors have the largest benefit from REIT treatment compared with treatment as a regular corporation because they have a zero personal level tax and are not subject to the unrelated business income tax. Without REIT treatment, income would be subject to a 35% corporate tax rate. An individual investor with a high tax rate investor who receives all income in dividends would pay a tax of 50.47% with a regular corporate investment (a 35% corporate tax and a 23.8% individual level tax, including the 39.6% income tax and the additional 3.8% tax enacted in the Affordable Care Act, on the remaining profit of 65%). With REIT treatment, dividends would be taxed at 39.6% plus the 3.8% tax, which is a 7.17 percentage point difference. (For earnings received as capital gains the difference is greater.) For an investor in an ordinary corporate firm that pays little or no dividends and where gains are not realized, the tax rate for a REIT can be higher than for an ordinary corporation: 43.4% (39.6% plus 3.8%) versus 35%. In general, therefore, for individual taxpayers, REIT tax treatment is most advantageous when ordinary individual income tax rates are low and the investor prefers dividend payouts. Although data on ownership of shares are not consistently available, evidence does not suggest that tax-exempt investors invest heavily in REITs. According to one study, defined benefit (DB) pension fund holdings in REITs were 0.6% of their portfolios. DB and other pension fund assets were reported at $18.8 trillion, suggesting that about 11% of REIT shares are held by pension funds if DC pension plans invest at a similar rate. The majority of REIT assets are in more traditional asset types: 24% in retail (largely shopping centers), 15% each in industrial and office and residential (largely apartments), 11% in health (such as nursing homes), and 8% in self-storage. Recently, attention has been directed to nontraditional REITs and spin-offs, such as timber, data centers, cell towers, prisons, hotels, document storage, casinos, billboards, and communications. As noted earlier, however, these might be viewed as nontraditional not as a legal matter (since many of these types of assets had long been considered real estate assets) but as not the common passive building rentals. Nontraditional REIT asset types account for 4% in timber, 11% in infrastructure, and 4% in lodging and resorts. In a 2014 paper that identified 20 recent nontraditional or recently converted REITs for the years 1999-2015, four timber REITs' market capitalization was $31.4 billion (with Weyerhaeuser accounting for about two-thirds of the total). Five data center REITs accounted for $35.7 billion; two cell tower for $65.4 billion; one real estate for $6.3 billion; two prison for $6.9 billion; one hotel for $2.5 billion; one document storage facility for $6.9 billion; one casino for $3.7 billion; two billboards for $9.0 billion; and one communication center for $6.8 billion. The nontraditional or recently converted REITs amount to a value of $175 billion, or approximately a fifth of REIT valuations, and appeared to be accelerating. A New York Times article has a somewhat overlapping list of spin-offs since 2010, which included an additional 13 tax-free spin-offs, totaling $15.8 billion. Although they were spin-offs from operating companies (such as Darden restaurants, owner of Olive Garden restaurants), many were in more traditional REIT activities, such as health centers, shopping malls, and apartments. That same article noted that several additional spin-offs appeared to be grandfathered in the recent legislation, including Caesars Casinos, MGM Resorts, Boyd Gaming, Hilton, and Energy Future Holdings Corporation. This section summarizes the recent revisions enacted in the Consolidated Appropriations Act ( P.L. 114-13 ) along with the revenue gain or loss estimates by the Joint Committee on Taxation (JCT). The JCT also has a more detailed explanation of each of the changes. As a general rule, a corporation (i.e., the distributing corporation) may spin off part of its business into a separate corporation (i.e., the controlled corporation) without paying taxes on any capital gain from the transaction. Among the conditions required is that the firm be engaged in an active business. Spin-offs into REITs were not allowed until 2001, when the IRS determined that rental of property constituted an active business, which led to an increasing number of spinoffs of real property into REITs. The Consolidated Appropriations Act makes REITs generally ineligible to participate in a tax-free spin-off and this restriction raises $1,902 million in federal tax revenue from FY2016-FY2025. There are some exceptions. The restriction does not apply if, after the spin-off, both the distributing and controlled corporations are REITs. Second, a REIT can spin off its taxable REIT subsidiary if the distributing corporation has been a REIT for three years, the subsidiary has been a taxable REIT subsidiary the entire time, and the REIT had control of the subsidiary. The provision grandfathers firms that had submitted letters requesting private rulings to the IRS on or before December 7, 2015. Subsequent to the enactment of the Consolidated Appropriations Act, the Treasury issued regulations addressing potential methods of circumventing the restrictions on tax free spin-offs, for example, by first participating in a tax exempt spin-off not involving a REIT and subsequently merging into a REIT. The regulations required recognition of gain on transferred assets if the reorganization with a REIT occurs within 10 years before or after a tax exempt merger. Five provisions affect the treatment of foreign shareholders of REITs and taken together cost $2,923 million in federal revenue forgone over 10 years. Two major changes lose significant revenue. One provision increases the share of ownership in REITs that will still avoid taxation under FIRPTA from 5% to 10%. This provision loses $2,297 million in revenue over FY2016-FY2025. The second provision exempts foreign pension funds from FIRPTA at a cost of $1,953 million over the same period. With this change, taxes on capital gains on real estate will not be imposed on foreign pension funds. Withholding provisions will also be adjusted to eliminate withholding of tax by the seller on sales to pension funds. The remaining three provisions gain revenue, and do not arise specifically from the treatment of REITs. The third provision applies in general to real property sales with gain to foreign interests. These sales require a withholding rate of 10% of gross sales in certain circumstances, and this rate is increased to 15%, for a revenue gain of $209 million over FY2016-FY2025. The fourth provision excludes REITs (and RICs) from the so-called cleansing rule that allows an interest in a corporation not to be a U.S. real property interest if the corporation does not hold any real property interests as of the date of disposition and past sales under certain time periods have recognized gains. This provision gains $256 million over the same period. The final (and fifth) provision relates to the dividends-received deduction, which is designed to prevent multiple levels of taxation due to intercorporate ownership. Dividends received from a corporation that holds stock in another corporation (which may be its controlled subsidiary) are fully or partially deductible depending on ownership (e.g., fully deductible for 100% ownership, 80% deductible for ownership between 80% and 20%, and 70% deductible for ownership of less than 20%). Dividends from a REIT are not eligible for the deduction and dividends from a RIC are eligible for a 70% deduction to the extent received from other corporations. In general, dividends from foreign corporations are not eligible for the dividends-received deduction because this income has not been taxed under U.S. law. Dividends that reflect income earned in the United States by that foreign corporation (and thus taxed) are, however, eligible. Treasury regulations indicate that this dividend deduction is not available if attributable to interest income of a RIC and not available at all for dividends from a REIT. The law clarifies, going forward, that dividends from RICs and REITs do not qualify. This provision raises $762 million in federal tax revenue from FY2016 to FY2025. A num ber of minor provisions in the new law affect REITs that have, in most cases, relatively little revenue impact (revenue gain over FY2016-FY2025 is in parentheses). 1. Taxable REIT Subsidiaries: This provision reduces the permissible asset share for taxable REIT subsidiaries from 25% to 20% ($167 million). 2. Safe Harbor from Prohibited Transactions Tax: One of the rules for avoiding the prohibited transactions tax is to limit the affected sales to 10% of asset value. The revision increases the limit to 20%, but retains an average 10% limit over three years ($7 million). 3. Preferential Dividends: REITs are denied deductions for distributions that are not proportional across shareholders. This provision repeals that rule for publicly offered REITs and allows remedies other than loss of deduction for other REITs (-$4 million). 4. Designation of Distributions: A REIT may designate some distributions as capital gains subject to the lower rate capital gains rate (limited to net capital gains), and may also designate some dividends as qualified dividends subject to the lower rate based on dividend income or income subject to the corporate level tax. The IRS has allowed these amounts combined to exceed dividend distributions and has also required proportional designations. The provision limits the total to the amount of dividends designated by a REIT to current dividends paid and provides regulatory authority to the IRS to require proportional designations across shares ($4 million). 5. Asset Test: Debt instruments issued by publicly offered REITs and interests in mortgages on interests in real property (such as a lease) are treated as real property (-$7 million). 6. Asset and Income Test: Interest on a mortgage in which personal property is leased along with real property will be considered real property as long as the personal property is less than 15% of the total, a rule that already applies to rents (-$8 million). 7. Hedging Transactions: Under current law, hedging indebtedness incurred to acquire real estate assets or manage the risk of currency fluctuations is disregarded as part of gross income for the income tests. This provision expands the definition of hedging income that is disregarded to positions that manage risk related to certain prior hedges (-$2 million). 8. Earnings and Profits: The earnings and profits measure determines the extent to which a dividend is a return of capital. Because of an anomaly in the way earnings and profits are measured for REITs, the amount of dividend that is a return on investment can be overstated when dealing with provisions with timing differences. This issue is corrected (-$4 million). 9. Services Provided by Taxable REIT Subsidiaries: Among the rules for safe harbor from the prohibited transactions tax under some circumstances is the requirement that development costs or management of foreclosed property be done by independent contractors. This provision allows this activity to be done by taxable REIT subsidiaries. The base for the current 100% tax on the difference between actual and arm's length rents between a REIT and its taxable subsidiary is expanded to include non-arms-length prices relating to services (-$65 million). The revisions in the Consolidated Appropriations Act may lead to a period with no further REIT revisions. Nevertheless, in the context of tax reform, REITs might be affected directly or indirectly. For example, some of the revenue-raising REIT provisions in former Chairman of the House Ways and Means Committee Dave Camp's proposed Tax Reform Act of 2014 ( H.R. 1 , 113 th Congress) were not enacted in the Consolidated Appropriations Act and might be potential base broadening targets in a tax reform. The major differences between that bill and the recently enacted provisions were a more restrictive limit on spin-offs (the revenue gain was estimated at $5.9 billion in the 2014 bill) by applying the spin-off rules to all transactions including existing REITs and imposing a tax on gain for conversions from regular corporate to REIT status. The 2014 bill also had provisions aimed at restricting nontraditional assets in qualifying for REIT status by disallowing any asset with a life of less than 27.5 years. Billboards, for example, have a life of 20 years and would have been no longer eligible to be treated as real estate qualifying for REIT status. This change was estimated, assuming the spin-off and gains provisions were adopted, to raise $0.6 billion. The bill also specifically disallowed timber REITs, with a delay in implementation. One provision that was included in an earlier version of the tax amendments to the appropriations bill and in the 2014 proposal, but not in the final act, was a cap on the amount of rent or interest based on a fixed percentage of income or sales that qualifies as rental income. A major change in how corporations are taxed could also affect REITs indirectly or even lead to proposals for fundamental changes in REIT treatment. For example, a lowering of the corporate tax rate would reduce the relative tax benefit for REITs and even make taxes on REITs with respect to dividends higher than those on ordinary corporations. A reduction in individual tax rates would benefit REITs. The 2014 proposal reduced the top individual rate to 35% and the corporate rate to 25%. A tax-exempt investor would see the tax benefit of a REIT fall from 35% to 25%, and a high-income individual would see the benefit fall from 7.17 percentage points to 4.05 percentage points. Proposals for fundamental changes in the tax law, perhaps as an element of tax reform, could also have consequences for REITs. For example, Senate Finance Committee Chairman Orrin Hatch has indicated interest in a corporate tax integration proposal that might allow corporate dividend deductions (and presumably taxation at ordinary rates for dividends), a treatment that would move ordinary corporations closer to the treatment of REITs. | The Consolidated Appropriations Act of 2016 (P.L. 114-13) made several changes to the tax treatment of Real Estate Investment Trusts (REITs) and the Foreign Investment in Real Property Tax Act (FIRPTA, enacted in the Omnibus Reconciliation Act of 1980, P.L. 96-499) as it relates to REITs. REITs are corporations that issue shares of stock, are largely invested in real property, and do not generally pay corporate tax. REITs distribute and deduct most income as dividends to shareholders. U.S. individual shareholders pay tax at ordinary individual income tax rates on those dividends (rather than the lower rates normally applied to dividends on corporate stock). REITs were initially introduced, in part, to allow taxpayers of more modest means to invest in real estate. The size and scope of REITs has been increasing in past years, due in part to legislative and regulatory changes. REITs today are estimated to own $1.8 trillion in real estate. Legislative changes have meant REITs are increasingly not only owning and renting property as a passive investment, but also managing it through taxable subsidiaries. U.S. corporations have been spinning off (transferring to a separate corporation organized as a REIT) buildings (and other assets defined as real estate) in a tax-free reorganization. The expanding scope and size of REIT activities has raised issues as to whether the intent of the preferred treatment is still appropriate. Another issue concerning REITs is that provisions in FIRPTA have been discouraging foreign investors from purchasing REIT shares by taxing investments that exceed 5% of the REIT's shares. Capital gains paid to foreign investors are generally exempt from U.S. tax. FIRPTA, however, imposes a capital gains tax on foreign investments for gains related to real estate, with an exception for a 5% or less ownership of a REIT. Investment in other types of securities is not subject to the U.S. capital gains tax. The Consolidated Appropriations Act makes several changes in response to these issues. The act disallows tax-free spin-offs of assets into a tax-exempt REIT by a regular corporation; increases from 5% to 10% the amount of ownership in a REIT by a foreign investor before the capital gains tax applies; and exempts foreign pension funds investing directly or indirectly in real estate from the FIRPTA capital gains tax. These provisions, taken together, result in federal tax revenue losses. There are also some smaller (in revenue effect) provisions affecting foreign investors that gain revenue. In addition to these rules, P.L. 114-13 includes some minor provisions, the most significant of these changes relating to the treatment of taxable REIT subsidiaries. The changes in the Consolidated Appropriations Act may lead to a period with no further REIT revisions. If tax reform is considered, however, additional REIT base broadening provisions might be considered. For example, former Chairman of the House Ways and Means Committee Dave Camp's proposed Tax Reform Act of 2014 (H.R. 1, 113th Congress) contained more restrictive provisions relating to spin-offs as well as other provisions primarily focused on the definition of real estate. Changes in a tax reform, such as lowering the corporate rate or allowing a corporate dividend deduction, could also affect the relative tax benefit of REITs. This report describes REITs and FIRPTA, provides historical developments, presents an overview of REIT size and activity, explains the provisions in the Consolidated Appropriations Act, and discusses possible policy issues in the future. |
The Federal Milk Marketing Order (FMMO) system was established in the 1930s to aid farmers facing low milk prices. As transportation and refrigeration developed in the late 1800s and early 1900s, milk dealers (called "handlers" in the FMMO system) became the main agents moving producers' milk into larger consumption areas. No standard pricing systems existed at this time. Instead, milk dealers controlled the price producers received. Given the high perishability of milk, local dealers were perceived as having asymmetric market power over producers that resulted in unfair buying practices. Producer cooperatives formed in attempts to develop different pricing methods to enhance producer incomes. In the midst of the Great Depression of the 1930s, the federal government established marketing orders that set minimum prices that producers receive for their milk. Thus, FMMOs were intended to level the playing field by returning some market power to milk producers. Federal milk marketing policy is based on the premise that milk producers offer a commodity that is subject to certain unique market conditions: Fluid milk is highly perishable—it must be kept cool or refrigerated almost immediately after production. This creates logistical hurdles throughout the marketing chain. Milk production has no distinct planting and harvest season as compared to field crops—that is, milk production occurs continuously on a daily basis. Most farms have limited on-farm milk storage capacity, and new milk production must move to markets on a regular basis whether prices are high or low. This puts milk producers in a weak bargaining position vis-à-vis milk buyers. Milk production and demand exhibit seasonality patterns that further complicate the marketing process: Milk production tends to increase in the spring and early summer when pastures are lush and the weather is mild, but it tends to decline in the late summer, fall, and winter months. In contrast, milk demand tends to peak in the fall and winter months during the school year and decline in the spring and summer. Fluid milk has a more inelastic demand than most other dairy products—that is, fresh milk consumption is not very sensitive to price changes. However, lower prices do affect the economic viability of the dairy farm. Milk that is produced in excess of fluid needs is processed into manufactured products with a longer shelf-life, such as butter, cheese, powdered milk, yogurt, and ice cream. The dairy industry is a high fixed-cost industry: A dairy farm has substantial investments in infrastructure, equipment, and dairy cattle. For example, it takes nearly two years from the time a calf is born until it is mature enough to join the milking herd and start to generate revenue. During that time it must be housed, fed, and cared for (including veterinary services). These factors place milk producers in a difficult market position that has the potential to lead to instability in the supply and price of milk. Wide fluctuations in the price of milk have been considered an undesirable characteristic of the milk market. Persistent price volatility can cause fluctuations in supply and prices that lead to market instability that can drive producers out of the market. It can also potentially compromise the market's ability to provide consumers a dependable supply of quality milk. FMMOs are designed to stabilize market conditions. FMMOs require milk handlers to pay milk producers uniform prices for milk and adhere to other specified rules. They are designed to assure milk producers of fair treatment in the marketplace while assuring consumers of a consistent and adequate supply of dairy products. FMMOs are permanently authorized and are therefore not subject to periodic reauthorization. The FMMO system has its origins in the 1930s with the Agricultural Adjustment Act of 1933 (48 Stat. 31), which authorized marketing agreements and licensing for processors. The 1935 amendments (49 Stat. 750) to the 1933 act expanded and made explicit the authority of the U.S. Department of Agriculture (USDA) to establish minimum prices for milk. Current FMMOs, however, are based on the Agricultural Marketing Agreement Act of 1937 (1937 act; 50 Stat. 246), as amended, which reenacted and amended the 1933 legislation. The most recent major national revision to FMMOs occurred as part of the 1996 farm bill—the Federal Agriculture Improvement and Reform Act (FAIR Act; P.L. 104-127 )—which included a provision (Section 143) requiring that USDA "consolidate and reform" the FMMO system. The law mandated that USDA reduce the number of milk marketing orders from 31 to no fewer than 10 and no more than 14 by April 4, 1999. USDA published a proposed rule on January 30, 1998, to solicit public comment on proposals for consolidation of the order system, including changes to classified pricing; replacement of the benchmark Basic Formula Price; and changes in order provisions, terminology, and classification of milk by end use. The final rule was published on December 17, 1999, and went into effect on January 1, 2000. Individual FMMOs are established and amended through a formal public hearing process that allows interested parties to present evidence regarding marketing and economic conditions in support of, or in opposition to, instituting or amending an order. This process is described in Appendix B . FMMOs are overseen as part of the Dairy Program, administered by the USDA's Agricultural Marketing Service (AMS). According to testimony USDA provided to the House Committee on Agriculture in 1979, the objectives of FMMOs are as follows: to promote orderly marketing conditions in fluid milk markets, to improve the income situation of dairy farmers, to supervise the terms of trade in milk markets in such a manner as to achieve more equality of bargaining between producers and milk processors, and to assure consumers of adequate supplies of good quality milk at reasonable prices. An additional benefit from FMMOs is that marketing order administrators collect comprehensive statistics on milk and milk markets. USDA and other dairy economists use these statistics to evaluate the effectiveness and equity of milk marketing orders. USDA achieves the objectives of FMMOs through classified pricing, pooling, and minimum producer prices. Minimum prices are formula-based and determined, in part, by the values of milk components (i.e., butterfat, protein, and other solids) that rise and fall with changing market conditions. There are both federal and state milk marketing orders. The FMMO system regulates milk marketing across state lines but within explicitly defined and geographically aligned multistate regions. Following the revisions enacted in 1996 and implemented in 2000, 10 FMMOs currently operate ( Figure 1 ), down from a peak of 83 in 1962. Some states have their own separate state-regulated milk marketing orders, with California being the largest of these. In some of the states, such as Pennsylvania and New York, price regulation of milk is covered in part by a federal order and partly by a state order. In others states (such as California, Montana, and Maine), price regulation of milk is covered by only state orders. In parts of some states, milk has no price regulation. State orders usually regulate milk prices that producers receive for fluid milk. Some states also regulate wholesale and/or retail milk prices. In states regulated by both federal and state orders, states may also consider marketing conditions unique to the state and set marketing requirements or pricing premiums beyond those required by a federal order. FMMOs regulate milk processors, known as handlers. Handlers purchase milk from dairy producers and/or producer cooperatives for fluid-milk bottling plants or dairy-product manufacturing plants. There are three types of handlers: 1. Distributing plants that receive, process, and distribute fluid milk. 2. Supply plants that manufacture dairy products, play a role in balancing milk surplus in a marketing area, and supply milk to fluid plants if needed. 3. Dairy cooperatives that process fluid milk or manufacture dairy products. Unlike other handlers, cooperatives may pay their producer members in whatever manner the cooperative determines. They are not required to pay the FMMO minimum prices, but milk from cooperatives is classified and pooled like milk from other handlers. Handlers qualify for either full or partial regulation. If a plant has sales into a marketing area and meets certain criteria, such as volume thresholds, or the plant is not operated by a government agency or university, its milk sales are fully or partially regulated. Typically, a plant is fully regulated in the marketing area where it distributes most of its milk. A partially regulated plant has sales into a marketing area but does not meet certain criteria. For example, a producer-handler that produces milk, processes it, and markets it may be exempt from obligations to the marketing order pool. Perhaps the most critical aspect of federal orders is their regulation of the price paid to milk producers by handlers of Grade A milk, which accounts for 99% of total U.S. milk production in the United States. In 2015, 61% of U.S. milk production was pooled and marketed under FMMOs. Most of the remaining Grade A milk is regulated by state marketing orders, the largest being the California state order, which regulates about 19% of U.S. milk. About 1% of U.S. milk production is Grade B, which can be used only for certain manufactured dairy products. Grade B farm milk prices are not regulated by FMMOs. Milk handlers (excluding cooperatives) are required to pay no less than the minimum prices established by USDA using the classified pricing system (see " Current Dairy Pricing ") for Grade A milk purchased from milk producers within the FMMO. Milk handlers, however, are free to purchase milk from any producer and to sell their processed milk at any price in any market. Handlers report receipts and end use of milk and maintain adequate records for the USDA market administrator to audit and verify the accuracy of the reported uses (see " USDA Administration "). Each handler operating in the FMMO is treated similarly so that none gain advantage based on a cheaper milk supply. The FMMO system does not regulate milk producers or restrict milk production. FMMOs do not guarantee milk producers a market for their milk, set a fixed price, or set a maximum price. A federal order also does not establish sanitary or quality standards. For milk handlers, the FMMO does not regulate from whom to buy milk, to whom to sell milk, how much milk to buy or sell, or at what price to sell milk. Milk marketing orders require FMMO-regulated milk handlers to pay milk producers minimum prices for Grade A fluid milk. Orders primarily use two milk pricing mechanisms—classified end-use pricing and milk pooling—to determine the minimum price of the milk that handlers pay to producers. In turn, all milk producers within an order receive the same "uniform" price—also called the "blend" price—which represents a weighted share of all end uses of milk. Under the classified pricing system, the minimum price milk handlers must pay for milk components is calculated by formula based on end use. Handlers pay milk producers based on the pounds of milk marketed. The current system of pricing, with several additional adjustments, was implemented in January 2000 following the 1996 farm bill FMMO reform. USDA classifies milk into four classes based on the end use of the milk: 1. Class I : fluid milk used for whole, lowfat, and skim milk, flavored milk, eggnog, and buttermilk; 2. Class II : milk used for soft products such as cottage cheese, yogurt, cream, and ice cream; 3. C lass III : milk used for hard cheeses and cream cheese; and 4. Class IV : milk used for butter and dry products, primarily nonfat dry milk. Class I fluid milk usually receives the highest minimum price under the federal order system. This helps to encourage the movement of milk from milk-surplus areas into milk-deficit areas and ensure sufficient supply of fluid milk to meet peak demand. Some dairy analysts believe that fluid milk would still typically carry a premium in the absence of marketing orders, reflecting transportation and other costs. By pricing surplus milk (i.e., milk in excess of fluid needs) at a lower price than fluid milk, classified pricing prevents such supplies from depressing the price of milk to dairy farmers to the point where the supply may become endangered. The minimum prices aim to protect milk producers from price reductions that might occur during episodes of milk surplus. This price protection can help stabilize milk producers despite weekly or daily variability in production. USDA determines a minimum price for each milk class based on the values of milk components such as butterfat, protein, nonfat solids, and other solids. These values rise and fall with changing market conditions. Formulas for these component values incorporate wholesale prices of manufactured dairy products, yield factors of milk components, and m ake allowance s , or processing costs. Each class price is the sum of its skim milk and butterfat components. Skim milk prices are reported on a per hundredweight basis (cwt, or 100 pounds) and butterfat on a per pound basis. All classes of milk are priced on a standardized cwt basis that assumes that the milk consists of 96.5% skim milk and 3.5% butterfat. See Appendix A for the formulas USDA uses to compute milk components and class prices. Class I and II milk prices are computed differently than Class III and IV prices. Certain component prices used to compute Class I and II milk prices are announced by AMS in advance of a specific pricing month. AMS announces Class III and IV skim milk pricing factors and a butterfat pricing factor that are used to compute the base Class I price. AMS computes the base Class I price using the "higher of" the advanced Class III or IV skim milk pricing factor, also known as the Class I mover, and the advanced butterfat price. The advanced pricing factors are computed using the same wholesale prices used to compute Class III and Class IV prices (see below) using a two-week wholesale product weighted average. A Class I differential is then added to the advanced Class I skim and advanced butterfat pricing factors to determine the actual Class I price in each FMMO. The intention of the Class I differential is to provide a premium to move milk into the high consumption areas of an order. Historically, a major component of the Class I differential for each FMMO has been the cost of transporting fluid milk from a surplus to a deficit region, or the distance differential. Class I differentials may vary between orders and within an order. For example, in the Upper Midwest order, the highest Class I differential is $1.80 per cwt in the marketing area near Chicago, and the lowest Class I differential is $1.60 per cwt in northwestern Minnesota and northeastern North Dakota. Nationally, the southern marketing area in the Florida order has the largest Class I differential at $6.00 per cwt. Class II milk is priced using the announced advanced Class IV skim milk pricing factor. To this is added an additional $0.70 per cwt to encourage milk movement into Class II production. The Class II price is computed using the full month butterfat price. The advanced prices and advanced pricing factors are announced no later than the 23 rd of the month prior to the specific month (see " Milk Pricing Timeline "). Class III and Class IV milk prices are determined by market wholesale prices of four dairy products: (1) Grade AA butter, (2) 40-pound blocks and 500-pound barrels of cheddar cheese, (3) nonfat dry milk, and (4) dry whey. USDA surveys dairy product wholesalers each week to determine the volume sold and the average price received for these manufactured dairy products. AMS reports monthly prices from the weighted average of either four or five weeks of surveyed sales. AMS publishes a schedule of release dates that states which weeks of wholesale prices are included in each month's weighted average. Using these wholesale prices, AMS computes component prices by deducting a fixed "make allowance" from the wholesale product prices and applying a fixed yield factor to the wholesale price. The make allowance is a national estimate of the cost of manufacturing specific products. The yield factor is an estimate of how much product is produced from a certain quantity of component. The make allowances and yield factors apply to all FMMOs. At the end of the month, AMS announces the Class III and Class IV prices computed from the component values. All FMMOs use the same Class III and Class IV prices in computing prices paid by handlers to milk producers. Determining the monthly price that producers receive for their milk is a multistep process spread over three months. It includes the months before and after the month being priced. For illustration, a brief description of the payment timeline for the price month of August 2017 follows: In July, AMS announced advanced prices and pricing factors for Class I and II milk. The announcement was on July 19. The announcement included the base Class I price. A Class I differential that varies by location is added to the base Class I price. The announcement also included the Class II skim milk price. Advanced prices and pricing factors are to be released no later than the 23 rd of the month before the specific price month. AMS announced Class II, Class III, and Class IV prices and component prices on August 30. This announcement is to be released no later than the fifth of the month following the price month. Each FMMO pooled its milk receipts and end-use data for August to compute the uniform price, the minimum price that each handler must pay milk producers. Next, each USDA FMMO milk market administrator releases the uniform price for the order. The release dates for the uniform price are set in regulation and vary by FMMO but are generally "on or before" the 11 th , 13 th , or 14 th of the following month. For August 2017, uniform prices were released in September. FMMO regulations require handlers to pay milk producers a partial payment during the specific price month and a final payment after uniform prices are computed. For August 2017 milk deliveries, milk producers received partial payments in about the third week of August and the final payment about three to four weeks later in September. The second key feature of milk pricing in the FMMOs is the "pooling" of milk. Milk handlers are obligated to report milk receipts and milk end use by class to the FMMO market administrator. The total value of pooled milk receipts, as computed through classified price formulas, is the marketing order's producer-settlement fund . Each month some handlers will pay into the producer-settlement fund, and others will withdraw from the fund (see " Producer-Settlement Fund "). Each market administrator announces the uniform price for the month. Handlers pay milk producers and dairy cooperatives at least a uniform price based on a weighted average of the class prices. However, the computed uniform price paid to milk producers differs across the 10 FMMOs. Four of the marketing orders—Arizona, Appalachian, Florida, and Southeast—pay milk producers based on the skim and butterfat value of milk. In these orders, the values of skim milk and butterfat are computed through the classified formulas. Milk producers are paid based on the pounds of skim milk and butterfat delivered to the marketing pool. For example, in the Southeast Order in August 2017: The uniform skim milk price was $9.83 per cwt, and the uniform butterfat price was $3.0111 per pound; The uniform price was ($9.83 x 0.965) + ($3.0111 x 3.5) = $20.02 per cwt. The other six orders pay producers based on the value of the components as determined through classified pricing. Under the component system, milk producers are paid a uniform price equal to the Class III price plus a producer price differential (PPD). The PPD is an amount roughly equivalent to the sum of the value of all pooled milk for all classes minus the value of cheese components—protein, other solids, and butterfat. This amount is divided by the volume of pooled milk, resulting in a per cwt PPD. The PPD is added to the Class III price to compute the uniform price. For example, in the Central Order in August 2017: The Class III price was $16.57 per cwt as reported by AMS. The PPD was calculated at $0.56 cwt; The uniform price was $16.57 + $0.56 = $17.13 per cwt. Adjustments may factor into the uniform price that producers receive from handlers. One is a somatic cell count (SCC) adjustment, which indicates the likelihood of harmful bacteria in milk. Four orders include adjustments for the SCC in the uniform price. Another is the producer location adjustment to the Class I differential, which is set for the principal pricing points in FMMOs. Handlers in the FMMO adjust the Class I differential based on their location in relationship to the principal pricing point. FMMOs may also make transportation adjustments to the pool for milk that may be shipped between supply and distribution plants when Class I milk is needed. When milk handlers account for milk in the marketing pool and producer-settlement fund, some will pay money into the fund and others will withdraw money. Generally, handlers of Class I milk will pay into the producer-settlement fund, and handlers of lower class milk will withdraw funds when they pay producers the uniform price. Figure 2 provides a simple example of how this works, with two milk producers supplying milk for fluid and cheese use and the handlers paying at the uniform price level. The handlers pay the uniform—or in the example, blend price—of $17.00 per cwt to each producer, the average of Class I at $18.00 per cwt and Class III at $16.00 per cwt. The Class I handler pays $1.00 in the fund and the Class III handler receives $1.00 from the fund, equalizing the blend price for both handlers. The 1937 act gives USDA several authorities to achieve the objectives of the FMMO program. The Dairy Program of AMS administers the FMMOs. A USDA milk market administrator leads each FMMO. The federal costs associated with administering a federal order are partly covered by an assessment levied on handlers. Assessment rates are no more than $0.05 per cwt for the sum of various milk receipts specified in the C ode of F ederal R egulations . USDA milk market administrators' responsibilities include operating a laboratory to test milk to verify milk components, including butterfat, protein, and other solids. An accurate assessment of milk components is crucial to the eventual minimum price determinations for each class of milk end use. establishing market-wide values that must be paid to producers or their cooperatives (i.e., uniform prices) based on an assessment of milk end uses within the FMMO; auditing milk handler records to ensure compliance with order language; and assembling and publishing dairy market information. Although USDA is responsible for developing the rules to regulate each FMMO, the dairy industry plays a major role in this process. Any changes to an FMMO's rules must be approved by milk producers in a referendum or though bloc voting of dairy farmer cooperatives. In addition, Congress can address issues related to the FMMO system through legislation. AMS establishes and amends individual FMMOs through a formal public hearing process that allows interested parties to present evidence regarding marketing and economic conditions. Dairy producers, or their cooperative associations, usually initiate or amend an order by petitioning the Secretary of Agriculture to regulate the pricing of milk in their region. At least two-thirds of the affected producers must approve the proposed order through a referendum. Once established, an order is a legally binding instrument regulating all handlers or processors who dispose of fluid milk products within the specified marketing area. When existing milk marketing orders are amended, a similar procedure is followed as if USDA has proposed a new marketing order: (1) USDA conducts a preliminary investigation; (2) USDA holds a public hearing to allow producers, handlers, and consumers to testify; (3) USDA issues a recommended decision; (4) USDA issues a final decision; (5) producers vote in referendum to approve or reject the amendment; and (6) USDA issues a final order. (See Appendix B on the amendment process.) Some dairy stakeholders have raised concern about how AMS prices milk under federal orders and about the ability of fluid milk processors to manage risk. These include dairy forward pricing and Class I advanced pricing. Also, in 2015 California producers started the process for joining the FMMO system and will likely hold a referendum at some point in the future. A positive vote by these producers would increase the volume of milk production under federal orders. In addition, organic dairy producers have raised concerns about how FMMO pooling applies to organic milk handlers and producers. In 1999, Congress authorized the dairy forward contract pilot program to provide dairy producers with a risk management tool used by other agricultural commodity producers. The program allowed producers who were not members of cooperatives to forward contract with proprietary handlers in exemption of FMMO minimum price requirements. (Dairy cooperatives had already been forward contracting and are not required to pay federal order minimum prices to their members.) Milk used for Class II, Class III, and Class IV purposes could be included in the program. Forward contracting on milk used for Class I (fluid milk) was prohibited. After the pilot program expired in December 2004, Congress established the Dairy Forward Pricing Program (DFPP) in Section 1502 of the 2008 farm bill ( P.L. 110-246 ). The DFPP included most of the language of the pilot program. Alternatively, producers and cooperatives were free to continue to price milk under FMMO minimum payment provisions. The DFPP was authorized through September 30, 2012. After the 2008 farm bill provision expired in 2012, Congress extended the DFPP through September 30, 2013. Congress then reauthorized the DFPP in Section 1424 of the 2014 farm bill ( P.L. 113-79 ), extending the forward contract program through September 30, 2018, with contracts signed by September 2018 to expire by September 30, 2021. In a 2002 report mandated by Congress, USDA concluded that the pilot program was effective in reducing price volatility—the goal of forward contracting. It did not return a higher average payment price for milk. The study found that about 4% of eligible producers participated in the forward contracting pilot, pricing 5.3% of eligible milk under forward contracts. Twenty-two milk handlers offered producers forward contracts, and during the study period, an average of 25 plants received forward contracted milk monthly, ranging from 11 plants in the first month of the study to a high of 35 plants from August 2001 to November 2001. Participation in the DFPP continued to be low. In 2011, AMS Deputy Administrator Dana Coale stated in written testimony to the House Agriculture Committee, "Participation in the program has been minimal, approximately 300 producers of a possible 10,000 to 15,000. Low participation rates may be attributed to perceived unfavorable price relationships and a limited number of processors offering forward contracts." This would indicate that 2% to 3% of producers who are not members of cooperatives use forward contracts. In testimony before the House Committee on Agriculture in March 2017, the International Dairy Foods Association (IDFA) stated that Congress should make the DFPP permanent in the next farm bill. Making the DFPP permanent would eliminate the uncertainty that forward contract users face as the program's termination approaches at the end of a farm bill. In addition, IDFA said Congress should expand the program to include Class I milk to provide fluid processors with the same risk management tool available to dairy product manufacturers. At the same hearing, the National Milk Producers Federation (NMPF) stated that it supported the extension of DFPP but was noncommittal on extending it to Class I milk because of uncertainty on how this change would impact the price computations of milk. Those who oppose forward contracting for Class I milk might argue that it could undermine FMMO minimum pricing since Class I handlers effectively would not be required to pay the Class I price for milk. Some Class I milk processors engage in cross-hedging using the Class III and Class IV Chicago Mercantile Exchange (CME) futures contracts to try to reduce the risk of price swings that may occur in fluid milk. Some analysts believe that FMMO advanced Class I pricing and the Class I formula of the "higher of" the Class III or Class IV skim milk pricing factors compromise the ability of processors to manage price risk in fluid milk (see " Class I and Class II "). The analysts believe that the advanced pricing factors contribute to large basis (cash price minus futures price) risk in using Class III or Class IV futures to hedge against risks for Class I milk. The view is that the utility of a cross-hedge is compromised because the Class I price is set about two weeks in advance of the CME settlement of the Class III and Class IV contracts. During this two-week gap, there could be significant shifts in the cheese or butter/powder markets that alter Class III and Class IV settlement prices. This would undermine the effectiveness of this risk management technique. Also, the Class I mover or "higher of" Class III or Class IV provision results in a risk that Class I prices will not align well with either the Class III or Class IV futures contracts. To address this situation, NMPF and IDFA have proposed that Congress change the way USDA calculates the Class I advanced price. Instead of using the higher of the Class III or Class IV advanced pricing factors, the proposal calls for using the average of the advanced Class III and Class IV pricing factors, plus an additional $0.74 per cwt. According to analysis by the American Farm Bureau Federation, this change in the formula would have significantly reduced the basis risk (cash price minus futures price) on the CME contracts to about $0.02 per cwt, compared with an average of $0.47 per cwt on Class III and an average of $0.90 per cwt on Class IV during the 2001-2017 period. Supporters of this proposed change argue that it would create opportunity for fluid milk processors and large food companies seeking to hedge their costs of milk to more effectively manage price risk. Those that oppose the proposal may be concerned that this change would come through a legislative process instead of through the FMMO hearing process wherein producers and processors could express concerns about the proposal. Producers could also be concerned about effect the proposed formula change could have on the Class I milk price. In February 2015, dairy producers in California petitioned USDA to hold a hearing to promulgate a federal milk marketing order for their state. The petitioners believe that the way the California Department of Food and Agriculture (CDFA) currently administers the state order is causing disorderly marketing within California and that the FMMO system would provide more income to California milk producers. In the 1996 farm bill, Congress authorized a California FMMO if state producers petitioned and approved such an order. The provision also allows California to maintain the state order milk quota. The 2014 farm bill amended the provision on California orders in the 1996 farm bill to require regular rulemaking rather than the expedited process that was used for consolidation of federal orders in the 1996 farm bill. The California state order and FMMOs differ in several ways. If California joins the federal order system, USDA will likely need to address these differences. As examples, California has five classes of milk, computes classified milk pricing differently than FMMO pricing, and has a milk quota system for Class I milk. The petitioning California dairy producers have stated that the California order fails to establish minimum prices in the California market that reflect national values. Specifically, California's Class 4b (equivalent to the FMMO Class III for cheese) formula undervalues whey in such a way that from August 2012 until February 2015, the minimum producer price was $1.96 per cwt lower than the FMMO Class III price. The petitioners assert that this difference in pricing benefits cheese processors in California at the expense of milk producers. The dairy producers argue that the California classified pricing has cost dairy farmers $1.5 billion from 2010 through 2014. The California milk producers stipulate in their petition that if California enters the FMMO system, the state quota system should be preserved. The quota system provides an additional payment from the state pool to quota holders. California originally established the milk quota in 1969 to pay producers of higher-valued fluid milk to join the state pooling system. Analysts estimate that the milk quota was valued at about $1.2 billion in 2015. USDA held public hearings on the California order from September 22 to November 8, 2015. USDA published a proposed rule, or "recommended decision," in the Federal Register on February 14, 2017, and included a 90-day comment period for the California FMMO. The "recommended decision" would allow California to maintain its quota system separate from the FMMO. Payments for the quota milk would be paid through authorized FMMO deductions, but CDFA would manage the quota. The California Order would adopt the four classes of milk of the FMMO system along with the FMMO make allowances and yield factors. USDA is in the process of evaluating public comments, after which it is to release a final decision. Should this be a milk marketing order, California milk producers will vote on it. Milk producers affected by a California FMMO may vote on USDA's final decision, while qualified cooperatives may bloc vote for their members. If two-thirds of milk producers or producers that represent two-thirds of milk production vote positively, the California FMMO would be adopted. Handlers of certified organic milk who operate in FMMO marketing areas are obligated to participate in the FMMO pool for fluid products (Class I). According to the Organic Trade Association (OTA), most organic milk is purchased on long-term forward contracts, and about 65% of organic milk is processed into Class I products. Organic milk handlers pay prices well above the FMMO Class I price for fluid milk and for milk going into manufactured organic dairy products. AMS treats certified organic and conventional milk the same for minimum pricing and pooling under the FMMO system. However, conventional milk cannot be sold as organic milk, and OTA argues that the FMMO system disfavors organic milk handlers and producers. In September 2015, OTA requested a USDA hearing to consider amending how FMMOs treat certified organic milk. Organic milk is pooled in the FMMOs, and organic fluid milk handlers are obligated to pay the FMMO Class I price into the producer-settlement fund. In addition, the FMMO system is supposed to balance fluid supplies with manufacturing milk supplies when necessary. However, an organic fluid bottler would not be able to rely on conventional milk handlers in the FMMO to supply organic milk, because milk handlers cannot substitute conventional milk for organic milk. According to FMMO statistics, organic milk accounted for 5.5% of total fluid milk products across all orders in 2016. OTA proposed that organic milk handlers receive a producer-settlement fund credit. The proposal was based on 7 C.F.R. 1000.76(b), referred to as the "Wichita Option," which governs milk payments by partially regulated distributing plants—plants that occasionally market fluid milk in the order. Under this section, if partially regulated handlers demonstrate that they pay producers more than the FMMO uniform price, they may be exempt from paying into the producer-settlement fund. Under the OTA proposal, if organic milk handlers pay producers a price for all milk—regardless of class usage—above the FMMO Class I price, plus a $2.90 per cwt threshold, they would be eligible for a producer-settlement fund credit. This proposed threshold is the premium for organic milk over conventional milk as calculated by the Central Milk Producers Cooperative, a large marketing agency that supplies milk to various markets. For example, if the FMMO Class I price were $22.00 per cwt and organic handlers paid $26.60 per cwt, the credit would be calculated as ($26.60 - ($22.00 + $2.90)) = $1.70 per cwt credit. If all handlers of Class I milk were obligated to pay $2.00 per cwt into the producer-settlement fund for a certain month, the organic milk handler would be obligated to pay in only $0.30 per cwt ($2.00 - $1.70). If the credit were higher than the monthly Class I handler obligation, organic handlers would not withdraw the difference from the pool. NMPF and 10 milk cooperatives opposed the OTA proposal in comments submitted to USDA. They argue that it would essentially exempt organic milk from FMMO revenue sharing and that it does not ensure that organic milk producers would receive the money, or a share of the money, that handlers kept by not paying into the producer-settlement fund. Also, opponents believed the proposal could harm conventionally produced milk in the balancing function between fluid and manufactured products. For example, if supplies of organic milk were larger than demand for fluid organic milk, the excess organic milk would likely end up being used as Class I fluid milk, resulting in conventional milk typically used as Class I being pushed into manufacturing classes, lowering uniform prices for all producers. OTA withdrew its request for a hearing on January 12, 2017. OTA noted that the public record provided no explanation for why no hearing had been scheduled during the 16 months that had lapsed since OTA had requested a hearing. In the withdrawal letter, OTA noted that it could resubmit the proposal in the future. Appendix A. USDA Classified Milk Formulas Below are the FMMO price formulas for each of the four classes of milk. Each class price is the sum of its skim milk and butterfat components derived from wholesale prices for Grade AA butter, 40-pound blocks and 500-pound barrels of cheddar cheese, nonfat dry milk (NDM), and dry whey that USDA reports each month. The component prices (protein, butterfat, other solids, nonfat solids) are derived from the wholesale products and then used to compute skim milk and butterfat values. All classes of milk are priced on a standardized hundredweight basis (cwt, 100 pounds) that assumes that they are 96.5% skim milk and 3.5% butterfat. Skim milk prices are reported on a per cwt basis and butterfat on a per pound basis. The class formulas are adjusted to reflect the different weight reporting basis—0.965 for cwt and 3.5 for pounds. Class I = (Class I skim milk price x 0.965) + (Class I butterfat price x 3.5) Class I Skim Milk Price = Higher of advanced Class III or IV skim milk pricing factors + applicable Class I differential. Class I Butterfat Price = Advanced butterfat pricing factor + (applicable Class I differential divided by 100). The advanced pricing factors are computed using price formulas for skim and butterfat from the Class III and Class IV formulas below, except they are based on a two-week weighted average. The advanced factors are announced by the 23 rd of the month prior to the specific pricing month. Class II = (Class II skim milk price x 0.965) + (Class II butterfat price x 3.5) Class II Skim Milk Price = Advanced Class IV skim milk pricing factor + $0.70. Class II Butterfat Price = Butterfat price + $0.007. Class II Nonfat Solids Price = Class II skim milk price divided by 9. The advanced class IV skim milk pricing factor is also announced by the 23 rd of the month, but the butterfat price for Class II milk is based on the actual monthly butterfat price and not an advanced price. A premium of $0.70 (for cwt) and $0.007 (for pounds) is added to the skim and butterfat price, respectively, to attract milk to Class II use. Class III = (Class III skim milk price x 0.965) + (Butterfat price x 3.5) Class III Skim Milk Price = (Protein price x 3.1) + (Other solids price x 5.9). Protein Price = ((Cheese price - $0.2003) x 1.383) + ((((Cheese price - $0.2003) x 1.572) - Butterfat price x 0.9) x 1.17). Other Solids Price = (Dry whey price - $0.1991) times 1.03. Butterfat Price = (Butter price - $0.1715) times 1.211. The formulas include a four- or five-week weighted average of wholesale prices for cheese, dry whey, and butter with a make allowance deduction of $0.2003 for cheese and $0.1991 for dry whey. The yield factors are 1.383 and 1.572 for cheese and 1.03 for dry whey. The butterfat price is the same for Class IV. Class IV = (Class IV skim milk price x 0.965) + (Butterfat price x 3.5) Class IV Skim Milk Price = Nonfat solids price x 9. Nonfat solids price = (Nonfat dry milk price - $0.1678) x 0.99. Butterfat price = (Butter price - $0.1715) times 1.211. The Class IV price formulas include a four- or five-week weighted average of NDM and butter wholesale prices with a make allowance deduction of $0.1678 for NDM and $0.1715 for butter. The yield factors are 0.99 for NDM, 1.211 for butter, and 9 for the pounds of nonfat solids in 100 pounds of milk. Appendix B. The Amendment Process for Federal Orders Amending an existing milk marketing order follows procedures similar to what would be followed to create a new marketing order. The process can be summarized in the following six steps: 1. Pre hearing procedures including preliminary investigation by USDA. Although any producer or handler can petition USDA for a change in the federal order system, such a request usually emanates from dairy producers or their cooperative associations. USDA then investigates their proposals and determines whether a hearing is necessary. The amendment process requires that a formal notice of a hearing be published in the Federal Register , giving the time and place of the hearing and the proposals to be considered. 2. Public hearing . The principal participants at the hearing are representatives of producers, handlers, and consumers, who appear as witnesses and present evidence on how a proposed change in an order would affect their interests. The hearing is presided over by a USDA administrative law judge, who handles procedural questions and decides on the order of witnesses. Except for official documents, the public hearing record is the sole source of information for appraising the issues. At the close of a hearing, the judge presiding over the case sets a time period within which witnesses may file written briefs. 3. Recommended decision issued by USDA. After the hearing, the record is turned over to the AMS Dairy Program for study and preparation of a recommendation on the issues. The preparation time varies depending on the complexity of the issues. A proposed decision is made public by the Administrator of AMS. Interested persons appraise the potential effects of the proposed amended order and file written comments on the amended order. 4. Final decision issued by USDA. The Dairy Program is required to reexamine the findings and conclusions in light of the exceptions received and then provide a draft final decision to the Secretary of Agriculture for review, approval, and publication. The provisions of the order contained in the decision are USDA's final proposed regulations and are the provisions presented to producers for their approval. 5. Producer approval . Before USDA can issue an amended order, the affected producers and cooperatives must approve it by referendum. Approval is contingent on a favorable vote either by two-thirds of the eligible producers or by producers who supply two-thirds of the milk sold in the marketing area. A dairy cooperative may bloc vote its membership on all questions involving new or amended orders. When this occurs, all producers within the cooperative are considered to have voted as the cooperative voted. 6. Final order . In the event of a favorable vote, USDA will publish the final order in the Federal Register . An important feature of the approval process is that producers are required to vote on the order as amended, not just the amendment to the order. This requirement is not explicit in the statute. Instead, it represents a long-standing USDA approach in carrying out the federal milk marketing order program. Although the amendment process usually allows for conflicting views to be resolved in advance of the final vote, some producers may conceivably have to choose between an order with which they are dissatisfied and no order at all. | Federal Milk Marketing Orders (FMMOs) are geographically defined fluid-milk demand areas. Under FMMO law and regulations, the U.S. Department of Agriculture (USDA) establishes a minimum milk price, and those who buy milk from producers, known as handlers, are required to pay milk producers no less than this established price. Handlers are responsible for reporting milk receipts by end use to FMMO milk market administrators and maintain adequate records so that administrators may audit and verify the accuracy of the reported uses. The two main features of the FMMO system are classified pricing and pooling of milk. The FMMO system recognizes four different classes of milk: Class I (fluid use), Class II (soft products such as ice cream), Class III (cheese), and Class IV (butter and milk powder). Milk handlers report all milk receipts by end use, and the FMMO values this "pool" of milk receipts through fixed minimum-price formulas to compute the four class prices. Milk handlers pay milk producers at least the weighted-average price of all class uses—known as a "uniform" price or "blend" price. The main objectives of FMMOs are to (1) promote orderly marketing conditions in fluid milk markets, (2) improve the income situation of dairy farmers, (3) supervise the terms of trade in milk markets in such a manner as to achieve more equality of bargaining between milk producers and milk processors, and (4) assure consumers of adequate supplies of good quality milk at reasonable prices. FMMOs are permanently authorized in the Agricultural Marketing Agreement Act of 1937, as amended, and not subject to reauthorization. FMMOs are established and amended through a formal public-hearing process that allows interested parties to present evidence regarding marketing and economic conditions in support of, or in opposition to, instituting or amending an order. Most FMMO changes are made administratively by USDA through the rulemaking process, which must then be approved by farmers in a referendum. Legislation can also address issues related to the FMMO system. The most recent major national revision to FMMOs occurred as part of the 1996 farm bill (P.L. 104-127). It reduced the number of orders from 31 to 11 (now 10 since 2004) and made changes to classified pricing, order provisions, terminology, and classification of milk by end use. The 1996 farm bill provisions went into effect on January 1, 2000. FMMOs continue to operate under those reforms, although there have been some changes in the operations of orders brought about through FMMO hearings and rulemaking since then. Several dairy issues have attracted stakeholder attention. Milk industry stakeholders have proposed two changes to how milk is priced. Milk handlers may forward contract milk purchases used to manufacture dairy products. Milk processors, who would like to use forward contracts as a risk management tool, have asked Congress to expand forward contracting rules to fluid milk. Also, both milk processors and producers have proposed that USDA change the method used to calculate the Class I milk price. Some stakeholders believe that altering the Class I milk formula could improve their ability to manage price risk. In addition to these pricing issues, California milk producers petitioned USDA to establish a California federal order, which would bring an additional 20% of national milk production under federal regulations. Lastly, the Organic Trade Association (OTA) petitioned USDA to alter FMMO pricing requirements for organic milk handlers. Organic milk handlers are required to pool organic milk under FMMO regulations, but OTA argues that classified pricing and pooling disfavor organic handlers. |
Foreign assistance is one of the tools the United States has employed to advance U.S. interests in Latin America and the Caribbean, with the focus and funding levels of aid programs changing along with broader U.S. policy goals. Current aid programs reflect the diversity of the countries in the region. Some countries receive the full range of U.S. assistance as they continue to struggle with political, socioeconomic, and security challenges. Others, which have made major strides in democratic governance and economic and social development, no longer receive traditional U.S. development assistance but continue to receive some support for security challenges, such as combating transnational organized crime. Although U.S. relations with the nations of Latin America and the Caribbean have increasingly become less defined by the provision of assistance as a result of this progress, foreign aid continues to play an important role in advancing U.S. policy in the region. Congress authorizes and appropriates foreign assistance to the region and conducts oversight of aid programs and the executive branch agencies charged with managing them. Efforts to reduce budget deficits in the aftermath of the recent global financial crisis and U.S. recession have triggered closer examination of competing budget priorities. Congress has identified foreign assistance as a potential area for spending cuts, placing greater scrutiny on the efficiency and effectiveness of U.S. aid programs. This report provides an overview of U.S. assistance to Latin America and the Caribbean. It analyzes historical and recent trends in aid to the region as well as the Obama Administration's FY2016 request for State Department and U.S Agency for International Development (USAID)-administered assistance. It also examines legislative developments on foreign aid appropriations for Latin America and the Caribbean in FY2016, and raises questions Congress may examine as it considers future appropriations for the region. The United States has long been a major contributor of foreign assistance to countries in Latin America and the Caribbean. Between 1946 and 2013, it provided the region over $160 billion in constant 2013 dollars (or nearly $78 billion in historical, non-inflation-adjusted, dollars). U.S. assistance to the region spiked in the early 1960s following the introduction of President Kennedy's Alliance for Progress, an anti-poverty initiative that sought to counter Soviet and Cuban influence in the aftermath of Fidel Castro's 1959 seizure of power in Cuba. After a period of decline, U.S. assistance to the region increased again following the 1979 assumption of power by the leftist Sandinistas in Nicaragua. Throughout the 1980s, the United States provided considerable support to the Contras , who sought to overthrow the Sandinista government, and to Central American governments battling leftist insurgencies. U.S. aid flows declined in the mid-1990s following the dissolution of the Soviet Union and the end of the Central American conflicts (see Figure 1 ). U.S. foreign assistance to Latin America and the Caribbean began to increase once again in the late 1990s and remained on a generally upward trajectory through the past decade. The higher levels of assistance were partially the result of increased spending on humanitarian and development assistance. In the aftermath of Hurricane Mitch in 1998, the United States provided extensive humanitarian and reconstruction aid to several countries in Central America. The establishment of the President's Emergency Plan for AIDS Relief (PEPFAR) in 2003 and the Millennium Challenge Corporation (MCC) in 2004 provided a number of countries in the region with new sources of U.S. assistance. More recently, the United States provided significant amounts of assistance to Haiti in the aftermath of a massive January 2010 earthquake. Increased funding for counternarcotics and security programs also contributed to the rise in U.S. assistance through 2010. Beginning with President Clinton and the 106 th Congress in FY2000, successive Administrations and Congresses have provided substantial amounts of foreign aid to Colombia and its Andean neighbors in support of "Plan Colombia"—a Colombian government initiative to combat drug trafficking, end its long-running internal armed conflict, and foster development. Spending on counternarcotics and security assistance received another boost in FY2008 when President George W. Bush joined with his Mexican counterpart to announce the Mérida Initiative, a package of U.S. counterdrug and anticrime assistance for Mexico and Central America. In FY2010, Congress and the Obama Administration split the Central America portion of the Mérida Initiative into a separate Central America Regional Security Initiative (CARSI) and created a similar program for the countries of the Caribbean known as the Caribbean Basin Security Initiative (CBSI). After more than a decade of generally increasing aid levels, U.S. assistance to Latin America and the Caribbean began to decline in FY2011. This was partially the result of reductions in the overall U.S. foreign assistance budget. The Obama Administration and Congress have sought to reduce budget deficits in the aftermath of the recent global financial crisis and U.S. recession and have identified foreign assistance as a potential area for spending cuts. U.S. assistance to Latin America and the Caribbean decreased each year between FY2010 and FY2014. While aid to the region increased slightly in FY2015, spending caps and across-the-board cuts that were included in the Budget Control Act of 2011 ( P.L. 112-25 ), as amended, could place downward pressure on the aid budget for the foreseeable future. The recent decline in U.S. assistance to Latin America and the Caribbean also reflects changes in the region. As a result of stronger economic growth and the implementation of more effective social policies, the percentage of people living in poverty in Latin America fell from 44% in 2002 to 28% in 2013. Likewise, electoral democracy has been consolidated in the region; every country except Cuba now has a democratically elected government (although some elections have been controversial). These changes have allowed the U.S. government to concentrate its resources in fewer countries and sectors. For example, USAID closed its mission in Panama in 2012 following the country's graduation from foreign assistance, and the agency has largely transitioned out of providing support for family planning and elections administration as many governments throughout the region have demonstrated their ability to finance and carry out such activities on their own. Some Latin American nations, such as Brazil, Chile, Colombia, Mexico, and Uruguay, have begun providing foreign aid to other countries. The United States has partnered with these nations through so-called "trilateral cooperation" initiatives to jointly plan and fund development and security assistance efforts in third countries. Other countries, such as Bolivia and Ecuador, have demonstrated less interest in working with the United States, leading to significant reductions in U.S. assistance and the closure of USAID missions. As a result of these developments in the region and competing U.S. foreign policy priorities elsewhere in the world, U.S. assistance to Latin America and the Caribbean as a proportion of total U.S. foreign assistance dropped from 12% in FY2004 to 7% in FY2014. The Obama Administration's FY2016 budget request would increase assistance to Latin America and the Caribbean for a second consecutive year and reverse the reductions in aid to the region that have occurred since FY2011. It included nearly $2 billion for Latin America and the Caribbean, a 26% increase over the estimated FY2015 level (see Table 1 ). The requested increase in assistance was almost entirely the result of the Administration's intention to allocate over $1 billion in aid to Central America to promote prosperity, security, and good governance and to address the root causes of migration from the region. The Administration's FY2016 foreign aid request for Latin America and the Caribbean would shift the emphasis of U.S. assistance efforts toward development and humanitarian assistance programs (see Figure 2 ). More than $842 million (about 42%) of the request for the region would go toward such programs. Development assistance seeks to foster sustainable broad-based economic progress and social stability in developing nations. Such funding is often used for long-term projects in the areas of democracy promotion, economic reform, basic education, human health, and environmental protection. This assistance is provided primarily through the Development Assistance (DA) and Global Health Programs (GHP) accounts, which would receive $615 million and $214 million, respectively, under the Administration's FY2016 request. In terms of humanitarian assistance, the Administration requested $13 million through the Food for Peace (P.L. 480) account to address immediate food security needs in the region. While funding provided through the GHP accounts would remain relatively stable, the FY2016 request included nearly $401 million more DA funding than the United States provided to the region in FY2015. The vast majority of the additional DA funding would be used to support development efforts in Central America. Another $597 million (30%) of the Administration's FY2016 request for the region would be provided through the Economic Support Fund (ESF) account, which has as its primary purpose the promotion of special U.S. political, economic, or security interests. In practice, the ESF account generally funds programs that are designed to promote political and economic stability and are often indistinguishable from those funded through the regular development and humanitarian assistance accounts. The Administration's FY2016 request for the region included $14 million more ESF assistance than was provided in FY2015. The remaining $551 million (28%) of the Administration's FY2016 request for Latin America and the Caribbean would support security assistance programs. This includes $464 million requested under the International Narcotics Control and Law Enforcement (INCLE) account, which supports counternarcotics and civilian law enforcement efforts as well as projects designed to strengthen judicial institutions. It also includes $9 million requested under the Nonproliferation, Anti-terrorism, De-mining, and Related programs (NADR) account, which funds efforts to counter global threats, such as terrorism and proliferation of weapons of mass destruction. Additionally, $78 million was requested under the Foreign Military Financing (FMF) and International Military Education and Training (IMET) accounts to provide equipment and personnel training to Latin American and Caribbean militaries. Total security funding for the region would decline by about $8 million, with an increase in FMF aid more than offset by decreases in INCLE, NADR, and IMET assistance. While INCLE aid for Central America, provided through the Central America Regional Security Initiative (CARSI), would increase by $35 million, INCLE aid for Colombia and Mexico would be cut by $18 million and $30 million, respectively, compared to FY2015 estimates. Following a sharp increase in the number of unaccompanied children and other migrants and asylum seekers from Central America arriving at the U.S. border in FY2014, the Administration announced a whole-of-government " U.S. Strategy for Engagement in Central America " that is designed to promote prosperity, security, and good governance in the sub-region. More than $1 billion (51%) of the Administration's FY2016 aid request for Latin America and the Caribbean would be allocated to Central America, with the majority of those funds concentrated in the "northern triangle" countries of El Salvador , Guatemala , and Honduras . Compared to FY2015, bilateral aid for El Salvador would increase from $47 million to $119 million, bilateral aid for Guatemala would increase from $114 million to $226 million, and bilateral aid for Honduras would increase from $71 million to $163 million. As noted above, nearly all of the increased bilateral aid would be provided through the DA account. About half of the Administration's $1 billion aid request for Central America would be provided through regional programs. Assistance provided through the Central America Regional Security Initiative (CARSI) , which has been the principal component of U.S. engagement with Central America in recent years and has yielded mixed results, would increase from $270 million in FY2015 to $287 million in FY2016. Assistance provided through USAID's Central America Regional program would increase from $49 million to $65 million. The request also included an additional $137 million that would be provided through the State Department's Western Hemisphere Regional program in support of the new Central America strategy. Although it is unclear how much funding from the regional programs would go to each country, the majority likely would be allocated to El Salvador, Guatemala, and Honduras. Colombia would continue to be the single largest recipient of U.S. assistance in Latin America under the Administration's FY2016 request, though aid for the country would fall from $301 million in FY2015 to $289 million in FY2016. Colombia has received significant amounts of U.S. assistance to support counternarcotics and counterterrorism efforts since FY2000, but funding levels have declined in recent years as the security situation in Colombia has improved, the Colombian government has taken ownership of programs, and the United States has shifted the emphasis of its aid away from costly military equipment toward economic and social development efforts. According to the FY2016 request, U.S. assistance would support the Colombian government's efforts to eradicate and interdict coca, expand its institutional presence in conflict zones, demobilize and reintegrate ex-combatants, carry out land restitution, implement justice sector reforms, and provide humanitarian aid to conflict victims and vulnerable populations. U.S. assistance would also support the implementation of a potential peace agreement to end Colombia's 50-year internal conflict. Haiti , which has received high levels of aid for many years as a result of its significant development challenges, would once again be the second-largest recipient of U.S. assistance in the region under the FY2016 request. U.S. assistance increased significantly after Haiti was struck by a massive earthquake in January 2010 but has gradually declined from those elevated levels. The Administration's FY2016 request would provide $242 million to support the Post-Earthquake U.S. Government Strategy for Haiti, which includes four strategic pillars: infrastructure and energy, food and economic security, health and other basic services, and governance and rule of law. This would be a slight reduction compared to the estimated $244 million provided in FY2015. U.S. assistance to Mexico would decline considerably under the Administration's FY2016 request. Mexico traditionally has not been a major recipient of U.S. assistance given its status as an upper middle income economy, but it began receiving large amounts of aid through the anticrime and counterdrug program known as the Mérida Initiative in FY2008. The Administration's FY2016 request would provide $142 million for Mexico, a 14% reduction compared to FY2015. FY2016 aid would be used to support the Mexican government's efforts to combat transnational crime, reform rule of law institutions, protect human rights, strengthen border security, provide educational and vocational opportunities for at-risk youth, and carry out conservation and clean energy initiatives. U.S. assistance provided through the Caribbean Basin Security Initiative (CBSI) would also decline under the Administration's FY2016 request. CBSI funding supports efforts to increase citizen security and address the root causes of crime and violence in the Caribbean. The FY2016 request would provide $53.5 million to implement community-based policing programs, support police and justice sector reforms, provide equipment and training to partner nation security forces, and offer vocational training and other opportunities to at-risk youth. Compared to the FY2015 funding level, assistance provided through the CBSI would decline by about 10% in FY2016. Since Congress has not enacted a comprehensive foreign assistance authorization measure since FY1985, annual Department of State, Foreign Operations, and Related Programs appropriations bills tend to serve as the primary legislative vehicles through which Congress reviews U.S. assistance and influences executive branch foreign policy. The House Committee on Appropriations reported its bill ( H.R. 2772 ) on June 15, 2015, and the Senate Committee on Appropriations reported its bill ( S. 1725 ) on July 9, 2015. Neither measure received floor consideration. Instead, after several continuing resolutions, Congress chose to include foreign aid funding in the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ), which President Obama signed into law on December 18, 2015. The legislation includes $32.9 billion for bilateral economic assistance and international security assistance worldwide. This global funding level is 2.8% higher than the Administration's FY2016 request and about 1% lower than the FY2015 estimated level. It is unclear how much foreign assistance will be directed to Latin America and the Caribbean, since, for the most part, appropriations levels for individual countries and programs are not specified in the legislation or the accompanying explanatory statement. The appropriations levels that are specified in the legislation and explanatory statement differ from the Administration's request in several respects. Perhaps the most noteworthy difference involves funding for Central America. The legislation provides up to $750 million to implement the new U.S. Strategy for Engagement in Central America , which is $250 million less than requested. This includes about $68 million for El Salvador ($51 million less than requested), $128 million for Guatemala ($98 million less than requested), and $98 million for Honduras ($65 million less than requested). It also includes $349 million for CARSI , which is $62 million more than was requested for the initiative. The legislation places a number of conditions on the funds, requiring the State Department to withhold 75% of the assistance for the "central governments of El Salvador, Guatemala, and Honduras" until the Secretary of State certifies that those governments are "taking effective steps" to improve border security, combat corruption, increase revenues, and address human rights concerns, among other actions. There are several other instances where appropriations levels differ from those in the Administration's request. The measure appears to provide $12 million more than was requested for Colombia , $8 million more than was requested for Mexico , and $4 million more than was requested for the CBSI . In all three cases, it shifts the emphasis of aid toward security concerns by providing less assistance than was requested through the ESF account and providing more than was requested through the INCLE account. The act also stipulates that "not more than" $191 million may be provided to Haiti , which is $50 million less than was requested. It requires the State Department to withhold all assistance for the "central Government of Haiti" until the Secretary of State certifies that the Haitian government is "taking effective steps" to hold free and fair elections, strengthen the rule of law, combat corruption, and increase government revenues. While the request did not include any funding to support environmental programs in Brazil , the omnibus provides $10.5 million for such programs. It also provides $6.5 million for democracy programs in Venezuela , which is $1 million above the request. In the coming months, Congress will continue to oversee the implementation of foreign aid programs in Latin America and the Caribbean and begin to consider the Obama Administration's FY2017 foreign assistance request for the region. As Members engage in oversight and contemplate future appropriations, they might consider questions such as: How effective are U.S. assistance programs in the region? To what extent are aid recipients implementing the structural reforms necessary to fully benefit from assistance and sustain programs started with U.S. funding? How do conditions on U.S. assistance influence the policies and actions of recipient governments? To what extent do socioeconomic and security conditions in Latin America and the Caribbean affect the United States? How many years and what levels of U.S. assistance will be necessary to achieve U.S. objectives in the region? How do U.S. policy priorities in the Western Hemisphere compare to U.S. priorities elsewhere in the world? How did the 20% decline in annual U.S. assistance appropriations for Latin American and the Caribbean between FY2011 and FY2014 affect U.S. influence in the region? To what extent have countries in the region taken financial and administrative responsibility for programs that the U.S. government has stopped funding? How successful have recent trilateral cooperation initiatives been and should they be expanded in the future? What other forms of engagement could the U.S. government use to advance its policy priorities in Latin America and the Caribbean as U.S. relations with the region become less defined by the provision of foreign assistance? | Geographic proximity has forged strong linkages between the United States and the nations of Latin America and the Caribbean, with critical U.S. interests encompassing economic, political, and security concerns. U.S. policymakers have emphasized different strategic interests in the region at different times, from combating Soviet influence during the Cold War to advancing democracy and open markets since the 1990s. Current U.S. policy is designed to promote economic and social opportunity, ensure the safety of the region's citizens, strengthen effective democratic institutions, and secure a clean energy future. As part of broader efforts to advance these priorities, the United States provides Latin American and Caribbean nations with substantial amounts of foreign assistance. Trends in Assistance Since 1946, the United States has provided more than $160 billion of assistance to the region in constant 2013 dollars (or nearly $78 billion in historical, non-inflation-adjusted, dollars). Funding levels have fluctuated over time, however, according to regional trends and U.S. policy initiatives. U.S. assistance spiked during the 1960s under President Kennedy's Alliance for Progress, and then declined in the 1970s before spiking again during the Central American conflicts of the 1980s. After another decline during the 1990s, assistance remained on a generally upward trajectory through the first decade of this century, reaching its most recent peak in the aftermath of the 2010 earthquake in Haiti. Aid levels for Latin America and the Caribbean declined in each of the four fiscal years between FY2011 and FY2014 before increasingly slightly in FY2015. FY2016 Obama Administration Request The Obama Administration's FY2016 foreign aid budget request would increase assistance to Latin America and the Caribbean for a second consecutive year. The Administration requested nearly $2 billion to be provided through the State Department and the U.S. Agency for International Development (USAID), which would be a 26% increase over the estimated FY2015 level. The requested increase in assistance is almost entirely the result of the Administration's proposal to provide over $1 billion in aid to Central America to promote prosperity, security, and good governance and to address the root causes of migration from the sub-region. Under the request, the balance of U.S. assistance would shift toward development aid and away from security aid, as three of the four major U.S. security initiatives in the region would see cuts. Aid levels for Colombia, Haiti, and Mexico would decline compared to FY2015, but those countries would continue to be among the top recipients in the region. Congressional Action In recent years, the annual Department of State, Foreign Operations, and Related Programs appropriations measure has been the primary legislative vehicle through which Congress reviews U.S. assistance and influences executive branch policy. Although the House and Senate Appropriations Committees reported out their respective bills (H.R. 2772 and S. 1725) in June and July 2015, no action was taken on those measures. After funding foreign aid programs through a series of continuing resolutions, Congress included foreign assistance appropriations in the Consolidated Appropriations Act, 2016 (P.L. 114-113), which the President signed into law on December 18, 2015. The legislation includes $32.9 billion for bilateral economic assistance and international security assistance worldwide; this funding level is 2.8% higher than the Administration's FY2016 request and about 1% lower than the FY2015 estimated level. It is currently unclear how much foreign assistance will be directed to Latin America and the Caribbean in FY2016, since, for the most part, appropriations levels for individual countries and programs are not specified in the legislation or the accompanying explanatory statement. The appropriations levels that are specified differ from the Administration's request in several respects. The legislation provides $250 million less than was requested for Central America and $50 million less than was requested for Haiti. It also appears to provide slightly more assistance than was requested for Colombia, Mexico, and the Caribbean Basin Security Initiative (CBSI). Given these funding levels it appears as though the region will receive less assistance than the Administration requested for FY2016 but more than it received in FY2015. |
In June 2007, the Supreme Court issued its decision in Ledbetter v. Goodyear Tire & Rubber Co., Inc. , a case that involved questions about the timeliness of claims filed under Title VII of the Civil Rights Act, which prohibits discrimination in employment on the basis of race, color, religion, sex, or national origin. By a 5-4 vote margin, the Court rejected the plaintiff's argument that each paycheck she received reflected a lower salary due to past discrimination and therefore constituted a new violation of the statute. Instead, the Court held that "a new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from the past discrimination." As a result, the Court held that the plaintiff had not filed suit in a timely manner. Initially, the decision appeared to limit some pay discrimination claims based on Title VII, but did not affect an individual's ability to sue for sex discrimination that results in pay bias under the Equal Pay Act. Although the Court's decision made it more difficult for employees to sue for pay discrimination under Title VII, the decision was recently superseded by the Lilly Ledbetter Fair Pay Act of 2009, which amended Title VII to clarify that the time limit for suing employers for pay discrimination begins each time they issue a paycheck. From 1979 until 1998, Lilly Ledbetter worked as a supervisor for the Goodyear Tire & Rubber Company. Although Ledbetter initially received a salary similar to the salaries paid to her male colleagues, a pay disparity developed over time. By 1997, the pay disparity between Ledbetter and her 15 male counterparts had widened considerably, to the point that Ledbetter was paid $3,727 per month while the lowest paid male colleague received $4,286 per month and the highest-paid male colleague received $5,236 per month. In 1998, Ledbetter filed a charge of discrimination with the Equal Employment Opportunity Commission (EEOC) alleging that Goodyear had unlawfully discriminated against her on the basis of her sex in violation of Title VII. According to Ledbetter, her current pay was discriminatorily low due to a long series of decisions reflecting Goodyear's pervasive discrimination against female managers in general and Ledbetter in particular. A jury found in her favor, and the district court entered judgment for backpay and damages, but the appellate court reversed. The Supreme Court granted review in order to resolve disagreement among the appellate courts regarding the proper application of the time limit for filing claims in Title VII disparate treatment pay cases. Under Title VII, it is an "unlawful employment practice" for an employer to discriminate "against any individual with respect to his compensation ... because of such individual's race, color, religion, sex, or national origin." Individuals who want to challenge an employment practice as unlawful are required to file a charge with the EEOC within a specified period—either 180 days or 300 days, depending on the state—"after the alleged unlawful employment practice occurred." The question that arose in the Ledbetter case was how to determine precisely what types of activities constitute an unlawful employment practice for purposes of starting the clock on the filing deadline. Ledbetter argued that two different employment practices could qualify as having occurred within the 180-day charging period preceding the filing of her EEOC claim: (1) the paychecks that were issued to her during that period, each of which she alleged constituted a separate act of discrimination, or (2) a 1998 decision denying her a raise, which she contended was unlawful because it perpetuated the discriminatory pay decisions from previous years. In contrast, Goodyear argued that Ledbetter's claim was time barred because the discriminatory acts that affected her current pay had taken place prior to the 180 days that preceded the claim Ledbetter filed with the EEOC. The Supreme Court granted review to resolve the dispute. Ultimately, the Supreme Court ruled in favor of Goodyear, holding that Ledbetter's suit was time barred because no unlawfully discriminatory acts had taken place within the 180-day charging period. In rejecting Ledbetter's claim on statutory grounds, the Court majority relied heavily on the principle that Title VII claims alleging disparate treatment require evidence of discriminatory intent. Because there was no evidence that Goodyear had acted with discriminatory intent when it issued the paychecks Ledbetter received during the charging period or when the company had denied her a raise in 1998, the Court found that Goodyear had not engaged in an unlawful employment practice during the specified time period. As a result, the fact that Ledbetter may have been suffering from the continuing effects of past discrimination was not sufficient for her to establish a claim within the statutorily mandated filing period. In issuing its decision, the Ledbetter majority relied on a series of precedents in analogous employment discrimination cases. For example, one such case, United Air Lines, Inc. v. Evans , involved a female flight attendant who was not granted seniority when she was rehired despite the fact that she had originally been forced to resign when she got married. Although the Court agreed that the company's discriminatory policy had a continuing effect, that effect was not sufficient to establish a present violation. Similarly, in Lorance v. AT&T Technologies, Inc. , the Court rejected a challenge to a discriminatory seniority system because the complaint had been filed when the discriminatory effect was felt, rather than within the charging period established by the original discriminatory act, namely the adoption of the seniority system. In light of these and other precedents, the Court concluded: The EEOC charging period is triggered when a discrete unlawful practice takes place. A new violation does not occur, and a new charging period does not commence, upon the occurrence of subsequent nondiscriminatory acts that entail adverse effects resulting from the past discrimination. But of course, if an employer engages in a series of acts each of which is intentionally discriminatory, then a fresh violation takes place when each act is committed.... [C]urrent effects alone cannot breathe life into prior, uncharged discrimination.... Of primary concern to the Court was the question of discriminatory intent. In general, claims such as Ledbetter's, which allege unlawful disparate treatment, must demonstrate discriminatory intent. According to the Court, allowing Ledbetter to shift the intent associated with the discriminatory pay decisions to later paychecks would have the effect of imposing liability in the absence of the required intent. The Court also appeared concerned that allowing Ledbetter's claim to proceed would undermine Title VII enforcement procedures and filing deadlines, which were designed in part to protect employers from defending against discrimination claims that are long past. According to the Court, Title VII's short filing deadline "reflects Congress' strong preference for the prompt resolution of employment discrimination allegations through voluntary conciliation and cooperation." The Court also rejected Ledbetter's reliance on Bazemore v. Friday , a pay discrimination case involving employees who were, prior to enactment of Title VII, separated into a white branch and a black branch, with the latter group receiving lower salaries. Although the Bazemore Court held that an employer who adopts a discriminatory pay structure violates Title VII whenever it issues a paycheck to disfavored employees, the Ledbetter Court distinguished the two cases, arguing that the paychecks in Bazemore reflected the employer's ongoing retention of a discriminatory pay structure—a current violation of the statute—while the paychecks in Ledbetter reflected the continuing effect of an isolated, past violation of the statute. Finally, although the EEOC has interpreted Title VII to allow challenges based on discriminatory pay each time a paycheck is received, the Court declined to defer to the agency's interpretation. In contrast, the dissent in Ledbetter strongly disagreed with the majority's analysis. According to the dissent, treating the actual payment of a discriminatory wage as an unlawful employment practice would be more faithful to precedent, would better reflect workplace realities, and would be more consistent with the overall purpose of Title VII. Specifically, the dissent argued that the Court's holding was inconsistent with the result in Bazemore , contending that Bazemore recognized that paychecks that perpetuate past discrimination constitute a fresh instance of discrimination every time they are issued. The dissent also drew an analogy between pay discrimination claims and sexual harassment hostile work environment claims, which involve a series of discrete acts that recur and are cumulative in impact. Since hostile work environment claims may be filed even when some of the discrete acts that form the basis for a claim have taken place outside of the charging period, the dissent would have allowed Ledbetter's claim to proceed as well. The dissent also distinguished pay bias claims from other types of employment discrimination, arguing that pay discrimination is fundamentally different from other types of employment bias. For example, employees, who are generally aware when they suffer adverse employment actions related to promotion, transfer, hiring, or firing, may not know they have suffered pay discrimination, particularly because salary levels are often hidden from the employee's view and pay disparities become apparent only over time. As a result of these differences, the dissent argued that the precedents upon which the Court relied were inapplicable because those cases involved easily identifiable acts of discrimination. Finally, the dissent criticized the majority's opinion as inconsistent with the overall anti-discrimination purpose of Title VII. Although the Ledbetter decision was subsequently overturned by statute, at the time of the ruling, many commentators noted the possible effects that the case could have on the workplace. First, employees might have had a more difficult time bringing pay discrimination claims under Title VII. If employees brought pay discrimination claims early in order to meet the statutory filing deadline, they might have had difficulty proving discrimination if the pay disparity remained small. If employees brought pay discrimination claims later, however, then they might not have been able to meet the filing deadline. As a result of this dilemma, employers might have experienced an increase in pay discrimination claims being filed against them, since some employees might have filed claims in order to meet the deadline even in cases where discrimination was unclear. It is also important to note that the Ledbetter decision affected more than just pay bias cases involving sex discrimination. Because Title VII applies to discrimination on the basis of race, color, national origin, sex, and religion, many other classes of claimants were potentially affected by the decision. Furthermore, the Ledbetter case also affected pay discrimination under parallel employment discrimination statutes that are patterned on Title VII, such as the Age Discrimination in Employment Act (ADEA), the Rehabilitation Act of 1973, and the Americans with Disabilities Act (ADA). Employees who filed pay discrimination claims alleging race or age discrimination, for example, might have been more negatively affected by the decision than employees who alleged sex discrimination because the latter group still had recourse under the Equal Pay Act (EPA). The EPA, which prohibits discrimination on the basis of sex with regard to the compensation paid to men and women for substantially equal work performed in the same establishment, does contain a statute of limitations for filing claims but has, thus far, been interpreted in such a way that each issuance of an unequal paycheck is treated as a new discriminatory act. In addition, the Ledbetter decision spurred congressional efforts to overturn the ruling. Since Ledbetter was decided on statutory grounds, several legislators who disagreed with the Court's interpretation introduced legislation clarifying that unlawful employment practices under Title VII include each issuance of a paycheck that reflects a discriminatory compensation practice. Such congressional action is not uncommon. For example, the Lorance decision, cited as precedent by the Ledbetter majority, was subsequently superseded by Congress in the Civil Rights Act of 1991. After the Ledbetter decision was handed down, several bills to amend Title VII in light of the opinion were introduced in both the 110 th and 111 th congressional sessions. As passed by Congress and signed into law by President Obama on January 29, 2009, the Lilly Ledbetter Fair Pay Act of 2009 ( H.R. 11 / S. 181 ) clarifies that the time limit for suing employers for pay discrimination begins each time they issue a paycheck and is not limited to the original discriminatory action. This change is applicable not only to Title VII of the Civil Rights Act, but also to the Age Discrimination in Employment Act (ADEA), the Rehabilitation Act of 1973, and the Americans with Disabilities Act (ADA). | This report discusses Ledbetter v. Goodyear Tire & Rubber Co., Inc., a case in which the Supreme Court considered the timeliness of a sex discrimination claim filed under Title VII of the Civil Rights Act, which prohibits employment discrimination on the basis of race, color, religion, sex, or national origin. In Ledbetter, the female plaintiff alleged that past sex discrimination had resulted in lower pay increases and that these past pay decisions continued to affect the amount of her pay throughout her employment, resulting in a significant pay disparity between her and her male colleagues by the end of her nearly 20-year career. Under Title VII, a plaintiff is required to file suit within 180 days after an alleged unlawful employment practice has occurred. Although the plaintiff in Ledbetter argued that each paycheck she received constituted a new violation of the statute and therefore reset the clock with regard to filing a claim, the Court rejected this argument, reasoning that even if employees suffer continuing effects from past discrimination, their claims are time barred unless filed within the specified number of days of the original discriminatory act. On January 29, 2009, President Obama signed the Lilly Ledbetter Fair Pay Act of 2009 (H.R. 11/S. 181). This legislation supersedes the Ledbetter decision by amending Title VII to clarify that the time limit for suing employers for pay discrimination begins each time they issue a paycheck. |
Legislatively, the pursuit of reform of the U.S. Postal Service (USPS) began during the 104 th Congress. On June 25, 1996, Representative John McHugh introduced H.R. 3717 , the Postal Reform Act of 1996. The reform movement culminated in the 109 th Congress. On December 9, 2006, Congress enacted H.R. 6407 , the Postal Accountability and Enhancement Act (PAEA). President George W. Bush signed it into law on December 20, 2006 (PAEA; P.L. 109-435 ; 120 Stat. 3198). A number of factors encouraged the movement for postal reform. Perhaps foremost were the financial challenges of the USPS. First class mail use was declining as customers substituted electronic alternatives, such as e-mail and online bill paying, for hard-copy letters. Yet the USPS's costs—about 76% of which were labor-related—rose with the addition of 2 million new addresses each year and mounting obligations for USPS future retiree health benefits. Additionally, the USPS, its board of governors, the Government Accountability Office (GAO), mailers' organizations, postal labor unions, and most recently a presidential commission said that the Postal Reorganization Act of 1970 no longer provided a viable business model. The rate-setting process was criticized for preventing the USPS from responding quickly to an increasingly competitive marketplace. Critics also argued that long-standing political and statutory restrictions impeded efforts to modernize the mail processing network and close unneeded facilities. Finally, passage of the Postal Civil Service Retirement System Funding Reform Act of 2003 (PCSRSFRA; P.L. 108-18 ; 117 Stat. 624) helped sow the seeds for reform. The PCSRSFRA was enacted after it was discovered that the USPS was over-funding its retirees' pensions. The act reduced the USPS's pension outlays. However, it shifted the costs of postal employees' military service-related pension costs from the U.S. Treasury to the USPS—a $27 billion obligation. The PCSRSFRA also required much of the reduction from the previous pension outlay levels to be put toward lowering the USPS's debt and funding an escrow account. The law did not, however, dedicate the escrow fund to any particular use (e.g., postal worker benefits), meaning that the USPS had to make a large annual payment that neither provided operational benefits nor generated revenues. According to a CRS analysis using CQ.com's "Law Track" tool, the PAEA makes more than 150 changes to current federal law. The law's major changes include the following: Definition of the term "Postal Service." Section 101 of the law defines "postal service" to mean "the delivery of letters, printed matter, or mailable packages, including acceptance, collection, sorting, transportation, or other functions ancillary thereto." This provision is significant because previously the law did not define "postal service," an omission, critics have contended, that permitted the USPS to undertake nonpostal activities (e.g., the sale of prepaid phone cards) to the detriment of private-sector firms. Alteration of the USPS's budget submission p rocess. Section 603 altered the budget submission process for the USPS's Office of Inspector General (USPSOIG) and the Postal Rate Commission (PRC). In the past, the USPSOIG and the PRC submitted their budget requests to the USPS's Board of Governors. Accordingly, past presidential budgets did not include the USPSOIG's or PRC's funding requests or appropriations. Under the PAEA, both the USPSOIG and the PRC—which the PAEA renamed the Postal Regulatory Commission—must submit their budget requests to Congress and to the Office of Management and Budget, and they are to be paid from the Postal Service Fund. The law further requires USPSOIG's budget submission to be treated as part of USPS's total budget, while the PRC's budget, like the budgets of other independent regulators, is treated separately. Return of m ilitary o bligations to the Treasury. Section 802 of the law relieves the USPS of the $27 billion cost of paying postal worker pension benefits that are attributable to military service. Repeal of the e scrow account . Section 804 of the law abolished the escrow account established by P.L. 108-18 . Establishment of the Postal Service Retiree Health Benefits Fund . Sections 801 to 803 of PAEA change the USPS from funding its retirees' health care costs from an out-of-pocket or pay-as-you-go basis to prefunding these obligations. To this end, the PAEA requires the USPS to pay more than $5 billion annually from FY2007 and FY2016 to build a retiree health benefits fund (RHBF) from which both USPS employees and USPS retirees will be paid come FY2017. The funds previously deposited in the escrow account were used to seed this new fund. A s tronger r egulator. Title VI of the law replaces the Postal Rate Commission with the Postal Regulatory Commission (PRC). The new regulator has subpoena power and a broader scope for the regulation of the USPS and the examination of the USPS's activities. For example, the PAEA requires the PRC to curb the USPS's issuance of nonpostal products, and to annually determine the USPS's compliance with the PAEA's requirements. Separation of USPS p roduct t ypes and rate-setting . Title II of the law divides USPS products into "market-dominant" and "competitive" classes. Market-dominant products include those products and services that the USPS need not compete with the private sector to provide. Market-dominant products include (1) first-class mail letters and sealed parcels, (2) first-class mail cards, (3) periodicals, (4) standard mail, (5) single-piece parcel post, (6) media mail, (7) bound printed matter, (8) library mail, (9) special services, and (10) single-piece international mail. Competitive products include those for which a competitive market exists. They include (1) priority mail, (2) expedited mail, (3) bulk parcel post, (4) bulk international mail, and (5) mailgrams. This separation of products into two types is significant because critics have said that the USPS has used revenues from market-dominant products (e.g., first class mail) to cross-subsidize competitive products (e.g., overnight package delivery). This, they contend, is unfair competition. Under PAEA, the USPS may raise the rates (prices) of products in the market-dominant class by no more than the Consumer Price Index for All Urban Consumers (CPI-U). Prices of products in the competitive class must be based on market-type factors, such as "costs attributable," which Section 202 of the statute defines as "the direct and indirect postal costs attributable to such products through reliably identified causal relationships." An e xpedited r ate- s etting p rocess. Under the former rate-setting system, the USPS would submit a request to the Postal Rate Commission to raise postage prices that detailed the proposed increases and the justifications for them. This began a quasi-judicial process in which all interested parties, including citizens and business firms, would submit testimony to the commission concerning USPS's proposed postage rates. The Postal Rate Commission would hold a hearing, take testimony from witnesses, and issue a recommended decision, which the USPS's Board of Governors could accept or reject. Frequently, the entire process took more than six months, and the results were difficult to predict. The PAEA replaced this process with a less adversarial and more expeditious process that takes less than two months. Now, when the USPS wants to raise postage rates, it files a notice with the PRC, which takes public comments and verifies the proposed rates' compliance with the law. Reform of i nternational m ail r egulation. Section 407 of the law clarifies the authority of the Secretary of State to set international postal policy and enter agreements, and requires him/her to apply customs laws equally to private shipments and "shipments of international mail that are competitive products." New q ualifications and l engths of t erms in o ffice for the USPS's g overnors. Section 501 of the PAEA requires that members of the Board of Governors of the USPS "be chosen solely on the basis of their experience in the field of public service, law or accounting or on their demonstrated ability in managing organizations or corporations (in either the public or private sector) of substantial size." Of the nine governors, at least four would have to "be chosen solely on the basis of their demonstrated ability in managing organizations or corporations (in either the public or private sector) that employ at least 50,000 employees." Governors' terms are reduced from nine to seven years. Increased USPS t ransparency. Section 204 requires the USPS to release more details on its finances and operations. In its financial reporting, the USPS must provide the same information that private firms provide under Section 4 of the Sarbanes-Oxley Act. GAO study on the USPS's b usiness m odel. Section 710 of the PAEA requires the GAO to assess the options for a future business model for the USPS. The GAO was required to deliver its report by January 20, 2011, and did so. The inherent complexity of lawmaking and the execution thereof invites disagreement and confusion over what a law means. Should agencies interpret a statute based upon the text of the statute alone? Should they consider Congress's intent or try to ascertain the "original understanding" of the statute? Newly enacted statutes can be particularly susceptible to differing interpretations as political actors attempt to implement the statute. As described earlier, the PAEA made numerous significant changes to U.S. postal law. Because of its length—more than 20,000 words—and complexity, it is not surprising that disagreements concerning implementation of the PAEA have arisen. As the words of the PAEA develop into governmental actions, Congress may mitigate some of the possible negative effects through active oversight of the USPS and the PRC. To date, it is unclear if the Administration of President Barack Obama has any concerns regarding the implementation of the PAEA. However, his predecessor, President George W. Bush, did issue a signing statement that addressed a number of sections of PAEA, often in the context of the separation of powers. These include the following: Section 205 permits "any interested person (including an officer of the Postal Regulatory Commission representing the interests of the general public)" to "lodge a complaint" with the PRC. The statement said the executive branch shall construe this portion of the statute "not to authorize an officer or agency within the executive branch to institute proceedings in Federal court against the Postal Regulatory Commission." Section 404 establishes 39 U.S.C. 409(h), which limits the circumstances under which the Department of Justice may represent the Postal Service in legal cases. The signing statement declared that the executive branch "shall construe subsection 409(h) of title 39 ... which relates to legal representation for an element of the executive branch, in a manner consistent with the constitutional authority of the President to supervise the unitary executive branch and to take care that the laws be faithfully executed." Section 405 of the statute amends 39 U.S.C. 407 so that the "Secretary of State shall be responsible for formulation, coordination, and oversight of foreign policy related to international postal services and other international delivery services," and Section 405 places certain limitations on the Secretary's powers to conclude treaties. Section 405 also places requirements upon the Secretary (e.g., the Secretary must "coordinate with other agencies as appropriate" in carrying out his or her responsibilities). The signing statement said that the executive branch shall construe this portion of the statute "in a manner consistent with the President's constitutional authority to conduct the Nation's foreign affairs, including the authority to determine which officers shall negotiate for the United States and toward what objectives, to make treaties by and with the advice and consent of the Senate, and to supervise the unitary executive branch." Subsections 501(a) and 601(a) established 39 U.S.C. 202(a) and 502(a), which set the qualification requirements for members of the Board of Governors. The signing statement declared that this "purport[s] to limit the qualifications of the pool of persons from whom the President may select appointees." The executive branch, it continued, shall interpret this portion of the statute "in a manner consistent with the Appointments Clause of the Constitution." Subsection 605(c) requires the appointment of an inspector general within 180 days of the enactment of the statute. The signing statement said that the "executive branch shall also construe as advisory the purported deadline in subsection 605(c) ... as is consistent with the Appointments Clause." As enacted by Subsection 1010(e) of the act, 39 U.S.C. 404(c) requires the USPS to "maintain one or more classes of mail for the transmission of letters sealed against inspection." It prohibits the opening of such mail "except under authority of a search warrant authorized by law, or by an officer or employee of the Postal Service for the sole purpose of determining an address at which the letter can be delivered, or pursuant to the authorization of the addressee." The signing statement declared that the executive branch will interpret this prohibition "in a manner consistent ... with the need to conduct searches in exigent circumstances ... and the need for physical searches specifically authorized by law for foreign intelligence collection." Subsection 504(d) and Section 2009 of Title 39, as amended by Section 603 of the act, and Sections 701(a)(2), 702(b), 703(b), 708(b), and 709(b)(2) of the statute, require the PRC to provide budget requests and assorted reports to Congress. The signing statement said that the executive branch shall construe the "provisions ... that call for executive branch officials to submit legislative recommendations to the Congress in a manner consistent with the constitutional authority of the President to supervise the unitary executive branch and to recommend for congressional consideration such measures as the President shall judge necessary and expedient." Taken as a whole, then, the signing statement's individual contentions amount to a defense of executive branch authorities against perceived or possible legislative encroachments. Congress may wish to consider the merits of these executive branch claims and query the current Administration to see if it shares these views. PAEA replaced the Postal Rate Commission with the Postal Regulatory Commission. This new regulatory agency has both greater powers and greater duties than its predecessor. To date, the PRC has completed numerous tasks that were integral to executing PAEA's objectives, such as establishing "a modern system for regulating rates and classes for market-dominant products"; "further defining" the term "workshare discount," which refers to postage discounts provided to mailers for the presorting, pre-barcoding, handling, or transportation of mail; promulgating "regulations to ... prohibit the subsidization of competitive products by market-dominant products"; and prescribing "the content and form" of the annual reports USPS must issue. The PRC also has conducted annual determinations of the USPS's compliance with PAEA, and issued numerous opinions on USPS proposals to alter rates, products, and services. Congress has held many hearings on the USPS since enactment of the PAEA during which it has examined the implementation of PAEA and the role of the PRC. However, in order to assess the PRC's development as an agency and to further understand the directions in which the PRC is developing, Congress may wish to examine the PRC's actions since the enactment of the PAEA, review its annual expenditures, and confer with its commissioners and employees. After running modest profits from FY2004 through FY2006, the USPS lost $25.4 billion between FY2007 and FY2011. The USPS's financial difficulties have made it difficult for the USPS to make its RHBF payments as scheduled by the PAEA. Congress reduced the FY2009 payment amount from $5.4 billion to $1.4 billion ( P.L. 111-68 ), and the USPS made the payment. Congress also delayed the FY2011 payment to August 1, 2012 ( H.Rept. 112-331 ). However, the USPS was unable to make the FY2011 payment, and the agency has said it cannot make the FY2012 $5.6 billion payment which is due on September 30, 2012. As Table 1 indicates, the USPS must make payments of $5.6 billion to $5.8 billion in PAEA-mandated RHBF payments through FY2016. Both the PRC and the USPS Office of Inspector General have issued reports that suggest that the PAEA payment schedule for future retiree health benefits is too aggressive. The PRC estimated that the USPS should pay $3.4 billion per year, while the USPSOIG has said that the USPS should pay $1.6 billion per year through 2016 to fund its obligations. In light of this, Congress may wish to reassess the PAEA's payment schedule and the differing calculations of the USPS's obligation. Additionally, confusion has arisen as to what might occur should the USPS fail to make its annual payment to the Retiree Health Benefits Fund. The PAEA does not address what should occur in such an instance. Congress may wish to address this matter by considering building in consequences or a mechanism for missed or less-than-full payments, such as the automatic rollover of a shortfall into a subsequent fiscal year's scheduled payment. The PAEA's Section 302 addresses the surfeit of USPS non-retail facilities. The law states: Congress finds that— (A) the Postal Service has more than 400 logistics facilities, separate from its post office network; (B) ... the Postal Service has more facilities than it needs and the streamlining of this distribution network can pave the way for the potential consolidation of sorting facilities and the elimination of excess costs; (C) the Postal Service has always revised its distribution network to meet changing conditions and is best suited to address its operational needs; and (D) Congress strongly encourages the Postal Service to— (i) expeditiously move forward in its streamlining efforts; and (ii) keep unions, management associations, and local elected officials informed as an essential part of this effort and abide by any procedural requirements contained in the national bargaining agreements. In the move to reduce the number of these facilities, Section 302(c)(1) of the PAEA requires the USPS to produce a facilities plan that includes the procedures that the Postal Service will use to— (i) provide adequate public notice to communities potentially affected by a proposed rationalization decision; (ii) make available information regarding any service changes in the affected communities, any other effects on customers, any effects on postal employees, and any cost savings; (iii) afford affected persons ample opportunity to provide input on the decision; and (iv) take such comments into account in making a final decision. Section 302(c)(5) forbids the USPS from closing or consolidating "any processing or logistics facilities without using procedures for public notice and input consistent with those described [above]." The USPS published its facilities plan in June 2008. The plan neither lists all the types of processing and logistics facilities that exist nor provides public notice and input for closing them. The USPS's plan only provides public input processes in its section on area mail processing closures. As noted above, the PAEA's Section 302 states that the USPS must devise and employ public notification and input processes prior to the closure of all "processing and logistics facilities." Yet the USPS has been criticized for closing some types of non-retail facilities without following the PAEA-required processes. Congress may wish to examine whether there is a discrepancy between Section 302 of PAEA and current USPS practices, and whether the PRC has the jurisdiction and authority to enforce Section 302. As noted above, Section 101 of the PAEA defined "postal service" to mean "the delivery of letters, printed matter, or mailable packages, including acceptance, collection, sorting, transportation, or other functions ancillary thereto." Section 102(c)(2) of the law did permit the USPS to continue providing the types of nonpostal services (e.g., photocopy and notary services) it had been providing prior to January 1, 2006. However, Section 102(c)(3) required the PRC to review each nonpostal service offered by the Postal Service ... [to] determine whether that nonpostal service shall continue, taking into account— (A) the public need for the service; and (B) the ability of the private sector to meet the public need for the service. Section 102(c)(4) mandated that "[a]ny nonpostal service not determined to be continued by the Postal Regulatory Commission [under Section 102(c)(3)] shall terminate." Additionally, PAEA's Section 102(c)(5) required that when the PRC authorized the USPS to sell a nonpostal service, the PRC had to designate whether the service would be priced and regulated as a market-dominant product, a competitive product, or an experimental product. Taken as a whole, then, the PAEA's Section 102 aimed to direct the USPS to provide postal services and to refrain from offering new nonpostal services. Since the enactment of the PAEA, this latter objective has come into question. As mail volumes and revenues have dropped, the USPS has sought ways to increase its postal product and services revenues. In May 2009, the USPS proposed holding a "summer sale" that would give reduced postage prices to mailers who had sent over 1 million mail pieces in a six-month period. (The PRC promptly approved this proposal, and the USPS held the sale.) Five months later, the USPS announced it would begin selling Hallmark greeting cards at some of its retail postal facilities. (The PRC previously had approved greeting card sales.) However, the USPS has said that these steps are not sufficient, and that it would like to be given greater authority to sell new nonpostal services. For example, then Postmaster General John Potter testified before the Senate Subcommittee on Federal Financial Management, Government Information, Federal Services, and International Security that we are simply unable to generate the revenue necessary to support our retail and delivery network at their current size.... Other national [postal services] complement their traditional offerings with banking, cell phone, logistics, and other services to generate the income necessary to offset the costs of their universal service obligation—costs that cannot be met solely by the price of postage. [W]e believe the time has come to allow the Postal Service to introduce new lines of business at its retail facilities.... This change is only possible with the concurrence of Congress through new legislation, and we ask for your consideration in this regard. Whether the USPS would benefit from additional authority to sell nonpostal products is unclear. Additionally, the USPS argument for the need for greater authority to sell nonpostal services rests on a broader argument—that the USPS's business model is "broken." Just four months after the enactment of the PAEA, then Postmaster General Potter testified before Congress that, [u]nfortunately, significant changes in the communications and delivery markets have made continued success under the original law problematic. That is why our Nation is fortunate that so many have recognized this and acted to preserve affordable, universal Postal services. I appreciate the efforts of this committee, both houses of Congress, Comptroller General David Walker, the administration, and the President's Commission on the U.S. Postal Service. It is my hope that 30 years from today a future Postmaster General will sit at this table and report on the progress made possible by the Postal Accountability and Enhancement Act of 2006. Unfortunately, our business model remains broken, even with the positive pricing and product changes in the new law. With the diversion of messages and transactions to the Internet from the mail, we can no longer depend on printed volume growing at a rate sufficient to produce the revenue needed to cover the costs of an ever-expanding delivery network. This argument has been reiterated by the USPS's chief financial officer, Joseph Corbett, who said the USPS's "business model, quite frankly, is broken. It doesn't work for a declining-volume scenario." The argument that the USPS's business model is "broken" and cannot cover its operating costs without being allowed to enter nonpostal lines of business appears to rest on a fundamental assumption: that over the long run the USPS's operating costs will continue to outstrip its operating revenues in perpetuity; and that this lag of revenue growth behind cost growth is the result of declining mail volumes (and the resultant revenues). Hence, the need for the USPS to reap additional revenues by offering new nonpostal services. In its PAEA Section 710 report, GAO states, "USPS's business model is not viable due to USPS's inability to reduce costs sufficiently in response to continuing mail volume and revenue declines." As Congress further considers the USPS's request for broader authorities to provide nonpostal services, it may wish to investigate these fundamental assumptions regarding postal economics and the possible ramifications for the USPS's operations. | President George W. Bush signed the Postal Accountability and Enhancement Act (PAEA; P.L. 109-435; 120 Stat. 3198) on December 20, 2006. The PAEA was the first broad revision of the 1970 statute that replaced the U.S. Post Office with the U.S. Postal Service (USPS), a self-supporting, independent agency of the executive branch. This report describes Congress's pursuit of postal reform and summarizes the major provisions of the new postal reform law. The report also suggests possible PAEA-related oversight issues for Congress. Legislatively, the pursuit of reform of the U.S. Postal Service (USPS) began during the 104th Congress, in 1996. A number of factors encouraged the movement for postal reform. Perhaps foremost were the financial challenges of the USPS. A decade later, Congress enacted the PAEA, which made over 150 changes to postal law. Some of the more significant alterations are defining the term "postal service"; restricting the USPS's authority to provide nonpostal services; altering the USPS's budget submission process; requiring the USPS to prefund its future retiree health benefits by establishing the Postal Service Retiree Health Benefits Fund; and replacing the USPS's regulator, the Postal Rate Commission, with the more powerful Postal Regulatory Commission. The inherent complexity of lawmaking and the execution thereof invites disagreement and confusion over what a law means and how it should be implemented. In the six years since the enactment of the PAEA, some issues and questions concerning the law's provisions have arisen. These include, but are not limited to, possible executive branch concerns about the PAEA and the separation of powers; the cost of prefunding USPS future retiree health benefits; the role of the public in the closure of nonretail postal facilities; the USPS's authority to provide nonpostal products and services, and the viability of the USPS's business model. This report will be updated should events warrant. |
With the signing of the Omnibus Appropriations Act for FY2009 ( H.R. 1105 , P.L. 111-5 ) on March 11, 2009, the National Aeronautics and Space Administration (NASA) was funded at $17.78 billion for the fiscal year. Of that total, $5.76 billion was allocated to Space Operations, which include the Space Shuttle and the International Space Station. For FY2008, NASA had received $5.53 billion for Space Operations. As NASA continued to fly Space Shuttle missions to the International Space Station, the agency awaited the announcement of a new administrator to replace Michael Griffin, who resigned in January. On March 11 President Obama said he would appoint a new NASA director soon, and that one of biggest tasks of the new director would be "shaping a mission for NASA that is appropriate for the 21 st Century." NASA launched its first space station, Skylab, in 1973. Three crews were sent to live and work there in 1973-1974. It remained in orbit, unoccupied, until it reentered Earth's atmosphere in July 1979, disintegrating over Australia and the Indian Ocean. Skylab was never intended to be permanently occupied, but the goal of a permanently occupied space station with crews rotating on a regular basis, employing a reusable space transportation system (the space shuttle) was high on NASA's list for the post-Apollo years following the moon landings. Budget constraints forced NASA to choose to build the space shuttle first. The first launch of the shuttle was in April 1981. When NASA declared the shuttle "operational" in 1982, it was ready to initiate the space station program. In his January 25, 1984 State of the Union address, President Reagan directed NASA to develop a permanently occupied space station within a decade, and to invite other countries to join. On July 20, 1989, the 20 th anniversary of the first Apollo landing on the Moon, President George H. W. Bush voiced his support for the space station as the cornerstone of a long-range civilian space program eventually leading to bases on the Moon and Mars. That "Moon/Mars" program, the Space Exploration Initiative, was not greeted with enthusiasm in Congress, primarily due to budget concerns, and ended in FY1993, although the space station program continued. President Clinton dramatically changed the character of the space station program in 1993 by adding Russia as a partner to this already international endeavor. That decision made the space station part of the U.S. foreign policy agenda to encourage Russia to abide by agreements to stop the proliferation of ballistic missile technology, and to support Russia economically and politically as it transitioned from the Soviet era. The Clinton Administration strongly supported the space station within certain budget limits. The International Space Station program thus began in 1993, with Russia joining the United States, Europe, Japan, and Canada. An Intergovernmental Agreement (IGA) established three phases of space station cooperation. The IGA is a treaty in all the countries except the United States, where it is an Executive Agreement. It is implemented through Memoranda of Understanding (MOUs) between NASA and its counterpart agencies. During Phase I (1995-1998), seven U.S. astronauts remained on Russia's space station Mir for long duration (several month) missions with Russian cosmonauts, Russian cosmonauts flew on the U.S. space shuttle seven times, and nine space shuttle missions docked with Mir to exchange crews and deliver supplies. Repeated system failures and two life-threatening emergencies on Mir in 1997 raised questions about whether NASA should leave more astronauts on Mir , but NASA decided Mir was sufficiently safe to continue the program. ( Mir was deorbited in 2001.) Phases II and III involve construction of the International Space Station itself, and blend into each other. Phase II began in 1998 and was completed in July 2001; Phase III is underway. President George W. Bush, prompted in part by the February 2003 space shuttle Columbia tragedy, made a major space policy address on January 14, 2004, directing NASA to focus its activities on returning humans to the Moon and eventually sending them to Mars. Included in this "Vision for Space Exploration" was a decision to retire the space shuttle in 2010. The President said the United States would fulfill its commitments to its space station partners. Under the original ISS schedule, assembly of the station would have been completed in 2002, with operations at least through 2012. President Bush restructured the space station program in 2001, and left it unclear when assembly would be completed. NASA briefing charts in March 2003 showed space station operations possibly continuing until 2022. Under President Bush's January 2004 "Vision for Space Exploration," however, NASA plans to complete its utilization of ISS in 2016 (though the other partners may continue to use it after that time). ISS segments have been and continue to be launched into space on U.S. or Russian launch vehicles and assembled in orbit. The space station is composed of a multitude of modules, solar arrays to generate electricity, remote manipulator systems, and other elements. (Details can be found at http://spaceflight.nasa.gov/home/index.html .) The U.S. space shuttle has been the major vehicle taking crews and cargo back and forth to ISS, but the shuttle system encountered difficulties after the Columbia disaster and did not resume flights until 2006. Russian Soyuz spacecraft are also used to take crews to and from ISS, and Russian Progress spacecraft deliver cargo, but cannot return anything to Earth, since it is not designed to survive reentry into the Earth's atmosphere. A Soyuz is always attached to the station as a lifeboat in case of an emergency. "Expedition" crews have occupied ISS on a 4-6 month rotating basis since November 2000. Originally the crews had three members (two Russians and one American, or two Americans and one Russian). Crew size was temporarily reduced to two (one American, one Russian) while the U.S. shuttle was grounded in order to reduce resupply requirements. The number of astronauts who can live on the space station is limited in part by how many can be returned to Earth in an emergency by lifeboats docked to the station. Only Russian Soyuz spacecraft are available as lifeboats. Each Soyuz can hold three people, limiting crew size to three if only one Soyuz is attached. The plan is that crew size will grow to six once assembly is completed. Each Soyuz must be replaced every six months. The replacement missions are called "taxi" flights since the crews bring a new Soyuz up to ISS and bring the old one back to Earth. Therefore, under normal conditions, the long duration Expedition crews are regularly visited by taxi crews, and by the space shuttle bringing up additional ISS segments or exchanging Expedition crews. When the shuttle is unavailable, Expedition crews are taken back and forth on the "taxi" flights. In order to contract for Soyuz service to the ISS, NASA has needed an exemption from the Iran Nonproliferation Act (INA) ( P.L. 106 - 178 ), which banned U.S. payments to Russia in connection with the International Space Station (ISS) unless the U.S. President determined that Russia was taking steps to halt proliferation of nuclear weapons and missile technology to Iran. In 2005 Congress amended INA to exempt Soyuz flights to the ISS from the ban through 2011. It also extended the provisions of the INA to Syria and North Korea, and renamed it the Iran, North Korea, and Syria Nonproliferation Act (INKSNA). NASA asked for a legislated extension of this exemption, and waiver authority was extended until July 1, 2016, in the Continuing Appropriations Act of 2009 ( P.L. 110 - 329 ). (For details see CRS Report RL34477, Extending NASA's Exemption from the Iran, North Korea, and Syria Nonproliferation Act , by [author name scrubbed] and Mary Beth Nikitin.) From FY1994 to FY2001, the cost estimate for building ISS grew from $17.4 billion to about $25 billion. The $17.4 billion estimate did not include launch costs, operational costs after completion of assembly, civil service costs, or other costs. NASA estimated the program's life-cycle cost (all costs, including funding spent prior to 1993) from FY1985 toFY2012 at $72.3 billion. In 1998, GAO estimated the life-cycle cost at $95.6 billion (GAO/NSIAD-98-147). More recent, comparable, life-cycle estimates are not available from NASA or GAO. As costs continued to rise, Congress voted to legislate a $25 billion cap on development of the ISS program, plus $17.7 billion for associated shuttle launches, in the FY2000-FY2002 NASA authorization act ( P.L. 106 - 391 ). In January 2001, however, NASA announced that the cost would be over $30 billion, 72% above the 1993 estimate, and $5 billion above the legislated cap. NASA explained that program managers had underestimated the complexity of building and operating the station. The Bush Administration signaled it supported the legislated cap, would not provide additional funds, and NASA would have to find what it needed from within its Human Space Flight account. In February 2001, the Bush Administration announced it would cancel or defer some ISS hardware to stay within the cap and control space station costs. The decision truncated construction of the space station at a stage the Administration called "core complete." In 2001, the space station program office at Johnson Space Center (JSC) estimated that it would cost $8.3 billion from FY2002 toFY2006 to build the core complete configuration, described at that time as all the U.S. hardware planned for launch through "Node 2," plus the launch of laboratories being built by Europe and Japan. NASA subsequently began distinguishing between "U.S. Core Complete" (the launches through Node 2, which, prior to the Columbia tragedy, was scheduled for February 2004) and "International Partner (IP) Core Complete" which included the addition of European and Japanese laboratory modules (then anticipated in 2008). The new policy was followed by President Bush's January 2004 "Vision for Space Exploration," which directs that U.S. research on ISS be restricted only to that which supports the Vision. A new research plan, incorporating the President's Vision, was issued by NASA in June 2006, as mandated by the 2005 NASA authorization act ( P.L. 109 - 155 ). At a January 2005 Heads of Agency meeting, the partners endorsed a final configuration of ISS, but NASA subsequently announced changes to it. The agency now plans to conduct only 16 (instead of 28) shuttle launches to the ISS, all before the end of FY2010 (September 30, 2010), and has dropped plans to launch the centrifuge and its accommodation module, and Russia's Science Power Platform. The agency plans to meet with the other ISS partners to discuss these changes. The changes to the ISS are largely due to the new direction NASA is taking in response to the Vision for Space Exploration. The Vision calls for development of a Crew Exploration Vehicle, now named Orion, to take astronauts to and from the Moon, and a Crew Launch Vehicle, now named Ares I. Orion also can take them to and from the ISS, and NASA Administrator Griffin stated at a September 19, 2005 press conference that Orion would be used to take crews to and from the ISS, and to serve as a lifeboat for them. If Orion is built as announced, it would fulfill the U.S. commitment to build a crew return capability, and allow the ISS crew size to increase to its originally planned complement of seven. An Earth-orbit capability is planned by 2014 (although NASA now considers early 2015 more likely) with the ability to take astronauts to and from the Moon following no later than 2020. The Space Transportation System (STS)—the Space Shuttle—is a partially reusable launch vehicle and is the sole U.S. means for launching humans into orbit. It consists of an airplane-like Orbiter, with two Solid Rocket Boosters (SRBs) on each side, and a large, cylindrical External Tank (ET) that carries fuel for the Orbiter's main engines. The Orbiters and SRBs are reused; the ET is not. NASA has three remaining spaceflight-worthy Orbiters: Discovery , Atlantis , and Endeavour . More than 100 shuttle launches have taken place since April 1981. Two ended in tragedy, each killing seven astronauts. In 1986, the space shuttle Challenger exploded 73 seconds after launch because of the failure of a seal (an O-ring) between two segments of an SRB. In 2003, the space shuttle Columbia disintegrated as it returned to Earth after 16 days in orbit (see CRS Report RS21408, NASA ' s Space Shuttle Program: The Columbia Tragedy, the Discovery Mission, and the Future of the Shuttle , by [author name scrubbed]). A hole in Columbia ' s left wing, caused during launch by a piece of foam insulation that detached from the ET, allowed hot gases to enter the wing during reentry, deforming it and causing the shuttle to break up. The Columbia Accident Investigation Board (CAIB) found that the tragedy was caused by technical and organizational failures, and made 29 recommendations, 15 of which it said should be completed before the shuttle returned to flight. Sean O'Keefe, NASA's Administrator from December 2001-February 2005, said NASA would comply with the CAIB recommendations. NASA launched the space shuttle Discovery on the first of two "Return to Flight" (RTF) missions—STS-114—on July 26, 2005, and it successfully landed on August 9. On July 27, however, NASA announced that a piece of foam had detached from STS-114's ET during launch, similar to what happened to Columbia . Cameras and other sensors on Discovery and on the International Space Station—to which Discovery was docked for much of its mission—imaged the Orbiter and determined that it was not damaged, but further shuttle launches were suspended. Meanwhile, the images revealed that two "gapfillers"—ceramic coated fabric placed between thermal protection tiles—were protruding on the belly of the Orbiter that could have affected aerodynamic heating during reentry. One of the Discovery astronauts removed them during a space walk. The second RTF mission—STS-121—was scheduled for September 2005, but deferred. STS-121 launched on July 4, 2006, and returned safely to Earth on July 17. The shuttle Atlantis launched September 9 on STS 115, during which construction of the International Space Station was resumed. Current plans for the shuttle include nine more flights to complete the ISS before the shuttle is permanently grounded in 2010. Also planned is another flight to service the Hubble Space Telescope. Following the Columbia disaster, then-Administrator Sean O'Keefe had cancelled the Hubble servicing mission, partly on the grounds that shuttle astronauts would not be able to reach the ISS as a haven in case the shuttle was unable to return to earth. The decision was put under review by the new Administrator, Michael Griffin, and on October 31, 2006, he announced that the Hubble mission would be undertaken in 2008. The servicing would extend the life of the telescope through 2013. To deal with emergencies, NASA planned to prepare a "launch on need" mission with a second shuttle ready to launch on a rescue mission if the first was found defective during the servicing mission. The launch was in final stages of preparation when a major data handling unit already in place in the Hubble telescope failed in late September 2008. A backup unit in the telescope was activated, but the service mission was revised to include carrying a second data handling unit, which had been stored on earth, to replace the failed one. NASA determined that assessing and preparing the second unit for installation and service would delay the mission until May or June of 2009. NASA attempted unsuccessfully for many years to develop a "second generation" reusable launch vehicle (RLV) to replace the shuttle. In 2002 NASA indicated the shuttle would continue flying until at least 2015, and perhaps 2020 or beyond. The Columbia tragedy, and President Bush's 2004 Vision for Space Exploration—to return astronauts to the Moon by 2020 and someday send them to Mars—forced NASA to revise that plan. The President's Vision calls for the shuttle program, which absorbs approximately 25% of NASA's annual budget, to be terminated in 2010. A primary motivation is to make that funding available to implement other aspects of the Vision, although there also is concern about shuttle safety. Congress has been debating the Vision, including its impact on the shuttle and on U.S. human access to space. Some Members wanted to terminate the shuttle earlier than 2010 because they feel it is too risky and/or that the funds should be spent on accelerating the Vision. Others want to retain the shuttle at least until a new spacecraft, the Crew Exploration Vehicle (CEV), is available to take astronauts to and from the ISS. The CEV is now planned for 2015 at the earliest, leaving a multi-year gap during which U.S. astronauts would have to rely on Russia for access to the ISS. The 2008 NASA Authorization Act ( P.L. 110 - 422 ) included a provision requiring NASA to "terminate or suspend any activity of the Agency that, if continued between the date of enactment of this Act and April 30, 2009, would preclude the continued safe and effective flight of the Space Shuttle after fiscal year 2010 if the President inaugurated on January 20, 2009, were to make a determination to delay the Space Shuttle's scheduled retirement." (Sec. 611d.) Funding for the shuttle for FY2008 was $3.981 billion. For FY2009, NASA requested $2.982 billion for the shuttle, but that amount reflects NASA's new system for funding program overhead costs, which created a new Cross-Agency Support account. By the new accounting system, the comparable shuttle funding for FY2008 was $3.267 billion. The omnibus appropriations bill ( P.L. 111-8 ) appropriated the requested $2.982 billion. (For details on the NASA budget, see CRS Report RS22818, National Aeronautics and Space Administration: Overview, FY2009 Budget, and Issues for Congress , by [author name scrubbed] and [author name scrubbed].) In passing the 2005 NASA authorization act ( P.L. 109 - 105 ), Congress basically agreed with the President's plan for directing NASA's attention to a return to the Moon and manned missions to Mars. Included in the Moon-Mars "Vision" is the plan to end flights of the Space Shuttle in 2010, and restriction of U.S. experiments on the ISS mostly to those that forward the goal Moon-Mars goal. A number of critical questions remain, however. Adequacy of funding is the chief question raised about NASA's activities. In presenting the Moon-Mars vision, the President did not request significantly increased money for NASA, despite chronic indications that the missions it was already charged with were underfunded. NASA has responded to the new mission by cutting back funding for its other activities, primarily in scientific research and aeronautics. Although Discovery ' s "Return to Flight" mission of July 2006 was a success, the ability of the shuttle fleet to carry out enough flights to complete construction of the ISS by 2010 is still in question. With a history of more than a hundred successful missions, it might be assumed that another 15 or so would be considered more or less routine, but instead, each launch is still a major and risky event. The great complexity of the vehicle and the extreme environment in which it operates require constant attention to possible accidents and malfunctions, many of which must be addressed on an ad hoc basis. The future role of the ISS is also unclear. Assuming that enough shuttle flights are made to carry out "core completion" of the station by 2010, it is not clear what will be done with the ISS after that. In particular, there will be a gap of several years between retirement of the shuttle in 2010 and beginning of flight of the Crew Exploration Vehicle, to be designed for the return to the moon but able to serve as a vehicle to reach the ISS. | The International Space Station (ISS) program began in 1993, with Russia joining the United States, Europe, Japan, and Canada. Crews have occupied ISS on a 4-6 month rotating basis since November 2000. The U.S. Space Shuttle, which first flew in April 1981, has been the major vehicle taking crews and cargo back and forth to ISS, but the shuttle system has encountered difficulties since the Columbia disaster in 2003. Russian Soyuz spacecraft are also used to take crews to and from ISS, and Russian Progress spacecraft deliver cargo, but cannot return anything to Earth, since they are not designed to survive reentry into the Earth's atmosphere. A Soyuz is always attached to the station as a lifeboat in case of an emergency. President Bush, prompted in part by the Columbia tragedy, made a major space policy address on January 14, 2004, directing NASA to focus its activities on returning humans to the Moon and someday sending them to Mars. Included in this "Vision for Space Exploration" is a plan to retire the space shuttle in 2010. The President said the United States would fulfill its commitments to its space station partners, and the shuttle Discovery made the first post-Columbia flight to the ISS in July 2006. Shuttle flights have continued and completion of the space station is scheduled before the shuttle is retired in 2010. Meanwhile NASA has begun development of a new crew launch vehicle, named Ares, and a crew exploration vehicle, named Orion. NASA programs were funded for FY2008 in Division B of the Consolidated Appropriations Act (P.L. 110-161). The Space Operations program, which includes the space shuttle and the ISS, was funded at $6.734 billion. For FY2009 NASA requested $5.775 billion for these programs, but in the process revised its budgeting to move its overhead costs to a new account called Cross-Agency Support. Under the new system, the FY2008 Space Operations program would have received $5.526 billion, about $250 million less than the FY2009 request. NASA is currently operating under a continuing resolution (Division A of P.L. 110-329), which funded most civilian activities through March 6, 2009. Under the continuing resolution, Space Operations are funded at the $5.526 billion rate appropriated for FY2008. An FY2009 NASA authorization bill (H.R. 6063) was introduced May 15, 2008. Among the provisions in the one-year authorization bill was a "Sense of the Congress" urging cooperation in the Moon/Mars activities with other nations pursuing human space flight. It also requires that NASA "terminate or suspend any activity of the Agency that, if continued between the date of enactment of this Act and April 30, 2009, would preclude the continued safe and effective flight of the Space Shuttle after fiscal year 2010 if the President inaugurated on January 20, 2009, were to make a determination to delay the Space Shuttle's scheduled retirement." Congress passed the bill September 27, and it was signed by the President October 15 (P.L. 110-422). |
Growing recognition of the crucial role that technological innovation plays in the U.S economy has led to increased congressional activity with respect to the intellectual property laws. As evidenced by provisions within several patent reform bills pending before the 111 th Congress, the operation of the U.S. Patent and Trademark Office (USPTO) is among the subjects of legislative interest. Many knowledgeable observers have expressed concern that the USPTO does not possess the capability to process the large number of patent applications that it receives. The growing backlog of filed, but unexamined applications could potentially lead to long delays in the time the USPTO requires to grant patents. Some experts believe that the concept of "deferred examination" may assist in alleviating the growing USPTO inventory of applications that have yet to be reviewed. Under current law, a USPTO examiner reviews each patent application that is filed. In contrast, the patent offices of many foreign nations, including Canada, Germany, Japan, and the United Kingdom, do not automatically examine every application. In these offices, an examiner will not consider the application unless the applicant submits a request for examination, including an additional fee. Failure to file such a request within a specified time period—usually from three to five years—results in the abandonment of the application. Deferred examination may hold potential benefits. Some inventors who file patent applications may subsequently decide not to expend the additional resources needed to obtain patents. If, for example, an invention proves less promising than it initially appeared due to technical or marketplace developments, or government approval to market the technology cannot be obtained, a patent applicant may rationally decide not to pursue the matter further. The USPTO then does not need to review those applications, allowing others to move through the agency more quickly. On the other hand, some experts believe that deferred examination holds negative consequences, such as marketplace uncertainty. Firms may not know for many years whether their new products will infringe a patent that resulted from deferred examination. This report provides an overview of deferred patent examination. It begins by offering a brief review of patent acquisition proceedings as well as challenges faced by the USPTO. The report then introduces the concept of deferred examination. The potential positive and negative consequences of deferred examination upon the environment for innovation within the United States are then explored. The report closes by identifying salient design parameters for deferred examination systems and reviewing congressional options. The U.S. Constitution provides Congress with the power "To promote the Progress of Science and useful Arts, by securing for limited Times to ... Inventors the exclusive Right to their ... Discoveries." In accordance with the Patent Act of 1952 (the "Patent Act"), an inventor may seek the grant of a patent by preparing and submitting an application to the USPTO. Under current law, each application is then placed into queue for eventual review by officials known as examiners. The USPTO publishes most, but not all, pending patent applications "promptly after the expiration of a period of 18 months" from the filing date. Among the applications that are not published prior to grant are those that the applicant represents will not be the subject of patent protection abroad. In particular, if an applicant certifies that the invention disclosed in the U.S. application will not be the subject of a patent application in another country that requires publication of applications 18 months after filing, then the USPTO will not publish the application. USPTO officials known as examiners then determine whether the invention disclosed in the application merits the award of a patent. The USPTO examiner will consider a number of legal requirements, including whether the submitted application fully explains and distinctly claims the invention. In particular, the application must enable persons skilled in the art to make and use the invention without undue experimentation. In addition, the application must provide the "best mode," or preferred way, that the applicant knows to practice the invention. The examiner will also determine whether the invention itself fulfills certain substantive standards set by the patent statute. To be patentable, an invention must meet four primary requirements. First, the invention must fall within at least one category of patentable subject matter. According to the Patent Act, an invention which is a "process, machine, manufacture, or composition of matter" is eligible for patenting. Second, the invention must be useful, a requirement that is satisfied if the invention is operable and provides a tangible benefit. Third, the invention must be novel, or different, from subject matter disclosed by an earlier patent, publication, or other state-of-the-art knowledge. Finally, an invention is not patentable if "the subject matter as a whole would have been obvious at the time the invention was made to a person having ordinary skill in the art to which said subject matter pertains." This requirement of "nonobviousness" prevents the issuance of patents claiming subject matter that a skilled artisan would have been able to implement in view of the knowledge of the state of the art. If the USPTO allows the patent to issue, its owner obtains the right to exclude others from making, using, selling, offering to sell, or importing into the United States the patented invention. Those who engage in those acts without the permission of the patentee during the term of the patent can be held liable for infringement. Adjudicated infringers may be enjoined from further infringing acts. The patent statute also provides for an award of damages "adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The maximum term of patent protection is ordinarily set at 20 years from the date the application is filed. At the end of that period, others may employ that invention without regard to the expired patent. Although patent term is based upon the filing date, the patentee gains no enforceable legal rights until the USPTO allows the application to issue as a granted patent. A number of Patent Act provisions may modify the basic 20-year term, including examination delays at the USPTO and delays in obtaining marketing approval for the patented invention from other federal agencies. Like most rights, those provided by a patent are not self-enforcing. Patent owners who wish to compel others to respect their proprietary interests must commence enforcement proceedings, which most commonly consist of litigation in the federal courts. Although issued patents enjoy a presumption of validity, accused infringers may assert that a patent is invalid or unenforceable on a number of grounds. The Court of Appeals for the Federal Circuit (Federal Circuit) possesses nationwide jurisdiction over most patent appeals from the district courts. The Supreme Court enjoys discretionary authority to review cases decided by the Federal Circuit. The growing popularity of the patent system has placed strains upon the resources of the USPTO. During 2009, the USPTO received 485,500 applications—a decrease of 2.3% from the 496,886 applications it received during the 2008 fiscal year. The number of applications filed in 2009 was still greater than the 468,330 filed in 2007, however. In turn, this figure was substantially larger than the annual filings achieved just a few years ago. In 2000, for example, 293,244 applications were filed at the USPTO. The USPTO has candidly admitted that "the volume of patent applications continues to outpace our capacity to examine them." As a consequence, the USPTO reportedly holds an inventory in excess of 1.2 million patent applications that have yet to be reviewed by an examiner. In addition, a USPTO examiner in 2009 would not review a patent application until, on average, 25.8 months after it was filed. The "first action pendency" during 2000 was 13.6 months. Many observers believe that if current conditions continue, the backlog and delay are likely to grow at the USPTO in coming years. Long delays for patent approvals may negatively impact high technology industries by increasing uncertainty about the availability and scope of patent rights. For market segments that feature a rapid pace of innovation and short product cycles, such as consumer electronics, lengthy USPTO delays may also significantly devalue the patent right. Put simply, by the time a patent issues, the entire industry might have moved on to more advanced technologies. Commerce Secretary Gary Locke reportedly described the length of time the USPTO requires to issue patents as "unacceptable," explaining that "[t]his delay causes uncertainty for inventors and entrepreneurs and impedes our economic recovery." USPTO Director David Kappos recently opined that "[e]very quality patent application that sits on the shelf represents jobs not created." In addition, under current law, USPTO delays may qualify certain patents for an extension of term. For example, if the USPTO does not respond to an application within 14 months of the day it is filed, the term of a patent that results from that application is extended by one day for each day of delay. Given that the average first action pendency is now almost 26 months, this rule of "Patent Term Adjustment" may cause many U.S. patents to have a term that exceeds 20 years. A patent with a longer term may be of greater value to its proprietor, but also may impact the ability of others to develop competing products. The USPTO has developed a number of initiatives in order to address its backlog of unexamined patent applications. The agency has hired many new examiners, including 1,193 in 2006; 1,215 in 2007; and 1,211 in 2008. The significance of this hiring rate should be assessed in view of the fact that in 2009, the total size of the patent examining corps was 6,242. The recent economic downturn has caused the USPTO to limit new hiring, however. As the title of recent congressional testimony by the Government Accountability Office—"Hiring Efforts Are Not Sufficient to Reduce the Patent Application Backlog" —indicates, many observers are of the view that "[d]ue to both monetary and infrastructure constraints, the USPTO cannot simply hire examiners to stem the tide of applications." In 2007, the USPTO also proposed rules with respect to claims and so-called continued applications that were designed to reduce its examination burdens. These rules would have limited the number of claims that could be filed in a particular patent application, unless the applicant supplied the USPTO with an "Examination Support Document" in furtherance of that application. They would have also limited the number of continued applications that could be filed, absent a petition and showing by the patent applicant of the need for such applications. These rules never came into effect due to a temporary court ruling enjoining their implementation. In the face of considerable opposition to these rules by many members of the patent bar and innovative firms, the USPTO announced on October 8, 2009, that it was rescinding the rules package entirely. More recently, the USPTO announced a "Patent Application Backlog Reduction Stimulus Plan." Under that program, an individual, small firm, or other enterprise that qualifies as a "small entity" may choose to abandon a previously filed application. If the applicant does so, he may select another application to be examined on an expedited basis. According to the USPTO, "[t]his procedure allows a small entity applicant who has multiple applications currently pending before the USPTO to have one of the applications accorded special status for examination if the applicant is willing to expressly abandon an application that has not been examined." The Patent Application Backlog Reduction Stimulus Plan has reportedly been the subject of only limited participation. As record-setting patent filing rates continue to strain agency resources, the USPTO has actively considered new concepts for administering the patent examination system. Explaining that it "frequently receives suggestions that the USPTO adopt a deferral of examination procedure," the USPTO held a roundtable on February 12, 2009, in order to obtain input on the possibility of adopting this system. The remainder of this report reviews the concept of deferred examination. The Patent Act currently requires the USPTO to review each patent application to determine whether it should issue into a patent or not. Inventors pay for this service upon filing their applications. The USPTO has established an optional deferral procedure through regulation. In order to defer, the applicant must pay an additional $130 processing fee and, at the outset, choose the number of months of deferral. The maximum period of deferral is 36 months. However, applicants have reportedly used this procedure infrequently. An alternative regime employed by certain other patent-granting nations is termed "deferred examination," or, more rarely, "examination on request." Under this procedure, patent applications are not automatically placed into queue to be examined. Rather, the applicant must make an additional, affirmative request for examination, and pay an additional fee. This request must be made within a stipulated period of time—for example, three, five, or seven years—or the application is deemed to have been abandoned. Deferred examination is reportedly employed by many patent-granting nations, including each of the top 10 U.S. trading partners with the exception of Mexico. Jurisdictions that have adopted deferred examination report that many applicants never request a substantive examination. Further, the number of applications that are never examined appears to increase as the period of deferral is lengthened. For example, the European Patent Office (EPO) requires that a request for examination be made within six months of the EPO's publication of the so-called European Search Report. Because the EPO typically takes about one year to publish its search report, examination must be requested within approximately 18 months. In 2008, the EPO reported that requests for examination were received with respect to 93.5% of all applications. In contrast, the Japan Patent Office (JPO) currently operates under a longer, three-year period of deferral. In 2008, the JPO reported that only 65.6% of all applications proceeded to examination. Prior to 2001, when the JPO allowed an even lengthier seven-year period of deferral, the dropout rate was correspondingly greater. According to one estimate, as many as 65% of JPO applications were never examined. The experience of the Canadian Intellectual Property Office (CIPO) is similar. Canadian law allows for a five-year period of deferral that reportedly results in a "dropout rate" of about 35% of filed applications. Other patent offices have also reported substantial dropout rates as well. Applicants may choose not to pursue their filed applications further for a number of reasons. They may determine that marketplace, regulatory, or technical developments have made further prosecution of that application not worthwhile. Some inventors may also determine that the inventions disclosed in their filed applications do not meet the legal standards of patentability. In particular, the EPO and certain other patent offices provide all applicants with a "Search Report" that lists other patents, journal articles, and other references that document the state of the art. Upon reviewing this information, some applicants may determine that it is unlikely their inventions would be considered patentable, and therefore decline to request examination. Other applicants may no longer be in business or lack funding to continue to advance their applications. The possibility of U.S. adoption of deferred examination has proven to be a controversial topic. While some patent professionals believe that the possibility of "examination upon request" would advantage both patent applicants and the USPTO, others believe that this system has too many negative aspects to be worthy of adoption. This report next considers some of the possible benefits and drawbacks of deferred examination. Supporters of deferred examination assert that U.S. adoption would result in a reduction of workload for the USPTO. Under this view, many inventors who file applications at the USPTO might subsequently choose not to pursue them further. This set of applications need not receive any review whatsoever by agency examiners. This application dropout would in turn provide more resources for the USPTO to examine undeferred applications. Although the potential application dropout rate in the United States may be difficult to predict, some observers believe that the experience of foreign patent offices suggests that the reduction of USPTO workload could potentially be significant. Others note that even a small decrease in applications that require examination would nonetheless assist the USPTO. Proponents of a deferred examination system also contend that with increasing application pendency rates at the USPTO, the United States effectively operates under a de facto deferral regime today. As a result, any potential negative consequences of deferred examination have to some extent already been realized, while the advantages of a formal "examination upon request" system have yet to be obtained. Some firms within the life sciences industry also explain that deferred examination provides a good match for products that are subject to lengthy regulatory approval delays. For example, drugs and certain medical devices require the approval of the Food and Drug Administration (FDA) prior to being sold to the public. Innovators of those products may need to file a patent application earlier in their development cycle in order to attract venture capital. However, the final design of the product is not certain until later in the development cycle. A delay during examination may allow the applicant to more closely tailor the claims of the patent to the final design of the product. In addition, some products submitted for regulatory review do not obtain FDA approval. The FDA may determine that some drugs and medical devices are not safe and effective within the meaning of the Federal Food Drug & Cosmetic Act. In such cases, as journalist Steve Seidenberg describes the matter, sponsors of rejected products "wind up with patents they can't use." Deferred patent examination may also make better use of government resources with respect to products that may never receive regulatory approval. Other advocates of deferred examination observe that this system has been used by leading patent offices for many years. As explained by Robert J. Yarbrough, chairman of the Pennsylvania Intellectual Property Forum, the "benefits and pitfalls of deferred examination should be well known." Mr. Yarbrough asserts that the United States could potentially draw upon this experience in designing its own system. Although some experts believe that adoption of a deferred examination would work to the advantage of the patent community, others believe that this approach might fail to realize its purported benefits and also involves additional detriments. Many observers have suggested the possibility that deferred examination might increase uncertainty in the marketplace. As explained by David M. Simon, chief patent counsel of Intel Corporation [D]eferred examination that results in patents not issuing until perhaps ten years after filing could result in substantial claw back from the public domain when those deferred applications issue. Businesses will be surprised with patents suddenly issuing to preclude successful products. Other observers go further, suggesting that some patent applicants may attempt to manipulate the deferral system strategically. Some applicants may elect not to pursue allowance of their patents while monitoring the activities of their competitors. They might then attempt to amend their patent applications in an effort to obtain patent coverage of a competitor's product. Although this possibility exists under current law, deferred examination may provide another mechanism for creating so-called "submarine patents"—patents that remain submerged within the USPTO for many years, only to surface and surprise the marketplace. Skeptics of deferred examination recognize that the USPTO currently houses a significant inventory of unexamined applications and experiences long examination pendencies, trends that may lead both to marketplace uncertainty and strategic behavior by applicants. But they are concerned that adoption of deferred examination may exaggerate these unwelcome trends. Writing for the American Intellectual Property Law Association (AIPLA), Executive Director Q. Todd Dickinson asserts that "although inventories tend to rise and fall over time, the creation of a deferred examination system would institutionalize a delay option in examination and may create further uncertainty in the system." Others believe that the relatively high dropout rates associated with foreign deferred examination systems will not be realized in the United States. According to these accounts, elements that contribute to the abandonment of applications abroad may not exist to the same extent domestically. In particular, the United States is a large market that has a long tradition of enforcing patents. Under this view, a U.S. patent might be more valuable to firms than patents granted by other nations. In turn, applicants may be less willing to abandon a U.S. application than an application filed elsewhere. Seemingly supporting this argument is the fact that the current USPTO rule allowing for deferred examination is little used. The USPTO reported on January 28, 2009, that since the deferral alternative commenced on November 29, 2000, fewer than 200 applications have been deferred. The reason for this low usage rate may be due to a variety of factors, potentially including lack of widespread knowledge of the provision and long application pendency rates even absent an express deferral. Given the potential complexity of each individual decision to abandon an application, a precise estimate of dropout rates within a proposed U.S. deferred examination system is likely unachievable. Other commentators have expressed concern that a deferred examination system may have a negative impact upon the revenue that the USPTO receives through the fees it charges. AIPLA Executive Director Q. Todd Dickinson observes that the potential risk to USPTO income "will largely depend on the fees established for participating in deferred examination, on the assumed drop-out rate and loss of income from other fees." On the other hand, to the extent deferred examination leads to a decrease in initial filing fees, this system could potentially increase patent filing rates. This step could cause inventors to decrease the care with which they prepare applications, however, out of the recognition that they may not request examination for all of them. As Tom DiLenge, general counsel and vice president of the Biotechnology Industry Organization (BIO) writes, "some BIO members are concerned that a deferred examination system with a low threshold for initial application filings would lead to an increase in poor-quality filings, thereby triggering more public criticism of the patent system." This brief discussion suggests that a deferred patent examination system potentially holds both positive and negative aspects. It also indicates a number of system parameters that the designers of a deferred examination system for the United States could potentially manipulate in an attempt to maximize its perceived advantages while minimizing its perceived disadvantages. Perhaps the most obvious of these parameters is the period of possible deferral. Leading foreign patent offices offer maximum periods of deferral ranging from approximately two years (at the European Patent Office) to seven years (at the German Patent and Trademark Office), with other patent offices providing intermediate periods of deferral. Experience suggests that the longer the period of maximum deferral, the greater the number of applications for which examination will never be requested. However, longer periods of deferral may also increase marketplace uncertainty about the availability and scope of patent rights. In deferral systems, the party who requests examination is usually the applicant. However, some deferral systems allow third parties to request examination as well. Upon receiving notice that a third party has exercised its "activation right," the applicant must either enter examination or abandon the application. The activation right is intended to allow competitors of the patent applicant and other interested members of the public to obtain earlier certainty regarding the existence and extent of patent rights. Some commentators have expressed concern that liberal use of activation rights may burden patent applicants, however, and propose that the USPTO impose a fee in order to prevent abuses. Designers of a deferred examination system must also decide whether it applies to all patent applications, or instead to a more limited number based upon a particular field of technology or other factor. In addition, the system could require deferral to be affirmatively elected, or alternatively apply deferral as a default. The current USPTO regulation allowing for deferral of application operates on an "opt-in" basis. As typically framed abroad, however, deferral is an "opt-out" system that obliges applicants to request examination. Whether deferred applications should be subject to different rules with respect to the pre-grant publication of applications has also been discussed. Under current law, not all applications are published "promptly after the expiration of a period of 18 months" from the filing date. Notably, if an applicant certifies that the invention disclosed in the U.S. application will not be the subject of a patent application in another country that requires publication of applications 18 months after filing, then the USPTO will not publish the application. Many commentators have suggested that all deferred applications should be published, regardless of whether the applicant will pursue foreign patents or not. Under this position, the policy goal of alerting the public about pending patent applications is of particular significance when a deferred application may not issue for many years after it is filed. As a result, the exception for domestic-only applications would be eliminated if the application is deferred. The fee structure with respect to deferred applications may also be adjusted in view of the policy goals and fiscal needs of the USPTO. As one possibility, patent attorney Robert J. Yarbrough, who generally supports a deferred examination system, writes that the deferred "applicant should pay no higher fees than any other applicant and, preferably, should be given a discount." For example, the USPTO currently assesses a $220 examination fee that could be waived until the applicant requests that the USPTO perform this service. Another issue for consideration is the impact of deferred examination upon the term of a patent. Under current law, the maximum term of a patent is 20 years from the date the application was filed. Because the applicant obtains no enforceable rights until the USPTO allows the patent to issue, each day the application spends at the USPTO effectively reduces the period during which the patent owner enjoys propriety rights. Deferred examination implies that the effective term of patent would be reduced by the period measured from the filing date until the date the patent owner requests examination. At least one commentator has proposed that deferred examination be "term neutral." Under this proposal, each day that an application is deferred would result in one day of term extension for any patent that results from that application. As an example, if a period of three years elapses between the date of filing and the date that examination is requested, then the maximum term of the patent would be 23 years from the date of filing. No current system of deferred examination is believed to provide for patent term extension in this manner. Some observers have also proposed that patents that result from deferred applications be subject to "intervening rights." Intervening rights allows a specific enterprise to engage in activities that would otherwise infringe an issued patent. The Patent Act currently allows third parties to enjoy intervening rights when a patent is amended by either reissue or reexamination, or where a patent is revived after failure to pay a maintenance fee. Some commentators have suggested that intervening rights should also apply to patents that issued from deferred applications, provided that an enterprise commercialized a product during the deferral period that subsequently became subject to a patent. A variety of options are available for Congress with respect to deferred examination. If the current situation is deemed appropriate, then no action need be taken. Alternatively, Congress could introduce a statutory deferred examination regime into the U.S. patent system via legislation. A third congressional option is to allow or encourage the USPTO to enact regulations that would encourage, or perhaps mandate, deferred examination of patent applications. Whether deferred examination may be achieved by the USPTO through rulemaking, or whether congressional intervention would be required, is not entirely certain. The Patent Act currently requires the USPTO to examine each filed application. However, Congress has also granted to the USPTO the power to "establish regulations, not inconsistent with law, which ... shall govern the conduct of proceedings in the Office." The USPTO apparently relied upon this procedural rulemaking authority in order to enact its current regulation regarding deferred examination. Assuming that the USPTO reasoned correctly, this regulation could potentially be expanded in order to develop a more full-fledged deferred examination system. As explained by Arti Rai, administrator for external affairs at the USPTO, "an improved system of deferred examination could in all likelihood be implemented through PTO regulation, so long as the PTO's procedural-rulemaking authority is not interpreted in an unduly cramped fashion." On the other hand, uncertainty over the precise extent of USPTO procedural rulemaking authority may prevent or limit further adaption of a deferred examination system absent congressional intervention. Because this proposal potentially requires many changes to existing law with respect to such matters as fees, pre-grant publication of applications, intervening rights, and patent term, a court could potentially consider expanded deferred examination regulations to be substantive in nature and therefore beyond the ability of the USPTO to promulgate. A legislative rather than regulatory response may therefore provide the most appropriate mechanism for adopting a deferred examination system. The growing value of intellectual property within the world economy has placed increased demands upon the USPTO to process accurately a quantity of patent applications that was nearly unimaginable a generation ago. The USPTO has in part responded by encouraging policy discussion regarding new procedures for managing its increasingly strained resources. The possibility of U.S. adoption of deferred examination—a patent office practice that is accepted globally but controversial domestically—has once more become part of the discussion regarding patent reform. Ultimately, whether or not a deferred patent examination system would benefit the environment for innovation in the United States remains an open question. | Recent congressional interest in the patent system has in part focused upon the capabilities of the U.S. Patent and Trademark Office (USPTO). Many experts have expressed concern that the USPTO lacks the capacity to process the large number of patent applications that it receives. The USPTO's growing inventory of filed, but unexamined applications could potentially lead to longer delays in the USPTO patent-granting process. Under current law, a USPTO examiner automatically reviews each patent application that is filed. Some observers have suggested that the USPTO instead adopt a system of "deferred examination" in order to alleviate its growing backlog. Under this system, the USPTO would not automatically review each application. Applicants would instead be required to submit a specific request for examination. Failure to file such a request within a specified time period—typically ranging from three to five years—would result in the abandonment of the application. Deferred examination may hold potential benefits. For example, some inventors who file a patent application may subsequently decide ultimately not to expend further resources in obtaining a patent on that technology due to marketplace developments or other reasons. The USPTO then does not need to review those applications, allowing others to move through the agency more quickly. Deferred examination may be particularly suitable for enterprises that sell products, including pharmaceuticals and medical devices, that may have a long development cycle and be subject to regulatory approval. Proponents of deferred examination observe that numerous foreign patent offices have used this system for many years. They further explain that given increasingly lengthy delays, the USPTO effectively operates under a de facto deferral regime today. On the other hand, some experts believe that deferred examination holds negative consequences. Deferred examination may cause many years to pass between the time an application was filed and the date a patent issues. Other firms may not know for some time whether their new products will infringe a patent that resulted from deferred examination. It is also possible that applicants could use the system strategically. They may choose to defer examination, monitor the industry, and then amend their applications in order to obtain patents that cover the successful products of their competitors. Opponents of deferred examination are also skeptical that a significant number of applications will "drop out" of the USPTO if this system were adopted. They also explain that the USPTO currently allows applicants to delay prosecution for up to three years, but that this procedure is rarely used. Designers of a deferred examination system may potentially manipulate a number of parameters in an attempt to maximize potential benefits while minimizing perceived disadvantages. Among these parameters are the maximum length of the deferral period, the ability of third parties to request examination of a deferred application, the framing of the system as an "opt-in" or "opt-out" procedure for applicants, pre-grant publication of deferred applications, the fee structure, the impact of deferred examination upon patent term, and the availability of third party "intervening rights" for patents that issue from deferred applications. Options for implementing deferred examination include both legislation and USPTO rulemaking. |
The Budget and Accounting Act of 1921 (P.L. 67-13; 42 Stat. 20-27) established for the first time the requirement that the President annually submit a budget proposal to Congress. The President's budget proposal, or the Budget of the United States Government as it is referred to in Section 1105(a) of the U.S. Code , consists of estimates of spending, revenues, borrowing, and debt; policy and legislative recommendations; detailed estimates of the financial operations of federal agencies and programs; and other information supporting the President's recommendations. Initially, the 1921 act required the President to include budget information for the upcoming fiscal year, as well as for the most recently completed and current fiscal years. Under the 1921 act, the deadline for submission was set as "the first day of each regular session" of Congress. Budgets during the Administrations of Presidents Harding, Coolidge, and Hoover were submitted in December; during the Administrations of President Franklin D. Roosevelt and subsequent Presidents, budgets were submitted in January or February. The deadline was changed in 1950, 1985, and 1990, but always required that the budget be submitted either in January or February. Under current law (31 U.S.C. §1105(a)), the President is required to submit the annual budget on or after the first Monday in January, but no later than the first Monday in February. For nearly half a century after the 1921 act took effect, Presidents submitted their annual budgets to Congress toward the beginning of the session but were not required to update the budget submissions later in the session. As the federal budget became larger, more complex, and more dynamic, Congress felt a greater need for more extensive and updated budgetary information from the President. This view was expressed by the House Rules Committee in its report on the Legislative Reorganization Act of 1970 (P.L. 91-510; 84 Stat. 1140): Very often, as the appropriations process moves forward, conditions relating to the President's budget change. Frequently, Members are not fully informed about such changes and what effect they will have on the total Budget. No official Executive pronouncements are made subsequent to the Budget submission; no supplementary budgetary information is presented; no firm foundation except the January Budget is available in the Congress. This inexact, imprecise, and haphazard system must be substantially improved if the Congress is to analyze effectively the President's program and, with any degree of accuracy, forecast the expenditure and revenue levels of the National Government. The Legislative Reorganization Act of 1970 made several changes in the federal budget process in response to Congress's request for more budgetary information from the President, chiefly by requiring that the President's budget cover not just the upcoming fiscal year but also the four ensuing fiscal years. In addition, Section 221(b) of the act requires the President to submit to Congress an update of the budget in the middle of the legislative session. The requirement, which was first effective in 1972, is codified at 31 U.S.C. §1106 (see this report's Appendix for the current text of the statutory requirement). The update is commonly referred to as the mid-session r eview (or MSR), but sometimes is referred to as the supplemental summary of the b udget . The most current mid-session review (FY2017) is available at https://www.whitehouse.gov/omb/budget/MSR . Congress and the President have made two changes since 1972 pertinent to the requirement for a mid-session review. First, in conjunction with a change in the start of the fiscal year from July 1 to October 1, made by the Congressional Budget Act of 1974 (CBA, P.L. 93-344 ; 88 Stat. 299-300), the deadline for submission of the mid-session review was changed from June 1 to July 15. The CBA also provided for a transition quarter "commencing July 1, 1976, and ending on September 30, 1976" for which the President was required to prepare, as soon as practicable, budget estimates "in such formal detail as he may determine." The second change pertained to the budget enforcement procedures established on a temporary basis by the Balanced Budget and Emergency Deficit Control Act of 1985 (BBEDCA). Under Section 241 of BBEDCA, the President was required, in the preparation of the annual budget, to adhere to statutory deficit targets that w ere enforced by sequestration. Section 242 of BBEDCA extended the same constraint to the preparation of the mid-session review. The restriction expired at the end of FY1995, along with the deficit targets themselves. Under 31 U.S.C. §1106, the mid-session review must include, in part (A) substantial changes in or reappraisals of estimates of expenditures and receipts; (B) substantial obligations imposed on the budget after its submission; (C) current information on matters referred to in section 1105(a)(8) and (9)(B) and (C) of this title; and (D) additional information the President decides is advisable to provide Congress with complete and current information about the budget and current estimates of the functions, obligations, requirements, and financial condition of the United States Government. The content and structure of the mid-session review has varied by President. Generally, Presidents have included both required and optional elements such as (1) technical re-estimates of expenditures and receipts, (2) updates to economic assumptions and forecasts, (3) changes to the estimated condition of the Treasury, (4) revised versions of select the summary tables from the original budget request, and (5) discussion of the potential effects of enacted and proposed appropriations. It is not uncommon for legislative or economic changes to occur close to the deadline for submission of the mid-session review. In such cases, the President may be unable to provide a detailed review of the effects they may have on the estimates included in the President's original budget submission. The President's mid-session review may include changes to the amount of budget authority requested in the original budget submission. Any such changes must be accompanied by a statement of the potential effects of those changes and "supporting information as practicable." The mid-session review may also include discussion of the potential effects of pending budgetary reforms or other legislative proposals that have not been enacted. Finally, the mid-session review may include other legislative proposals or administration initiatives. For example, President George W. Bush's FY2003 mid-session review included a chapter discussing the President's management agenda and other government-wide management initiatives, including several E-Government reforms. President Barack Obama's FY2013 mid-session review included a section discussing the effects of several enacted and proposed initiatives intended to create jobs and economic growth, such as the Hiring Incentives to Restore Employment Act ( P.L. 111-147 ; 124 Stat. 71). Since the first year the mid-session review was required (FY1973), each President has submitted at least one mid-session review on time and at least one late. Controversy has occasionally surfaced regarding the timing of its submission to Congress. On more than one occasion, some Members of Congress have suggested that the President has timed submission of the mid-session review in order to gain a political or legislative advantage over Congress. Table 1 provides information on the timing of submission of the mid-session review for FY1973-FY2017. The 45-year period identified in Table 1 covers all or part of the Administrations of eight Presidents, including the last three years of the Nixon Administration; the full terms of the Ford, Carter, Reagan, George H. W. Bush, Clinton, and George W. Bush Administrations; and the eight years of the Obama Administration. During this period, the mid-session review was submitted, on average, 7.80 calendar days late. For FY1973, FY1974, and FY1975, the deadline for submission of the mid-session review was June 1. The Congressional Budget Act of 1974 (CBA), enacted on July 12, 1974, changed the deadline for submission of the mid-session review from June 1 to July 15. In addition, Section 502 of CBA established a transition period "commencing July 1, 1976, and ending on September 30, 1976" for which the President was required to prepare, as soon as practicable, budget estimates "in such form and detail as he may determine." Since the first year the mid-session review was required it was submitted, on average, 8 calendar days late. In 23 of the 45 years, the mid-session review was submitted after the deadline, with delays ranging from 1 to 52 calendar days. When the mid-session review was late, it was delayed, on average, three weeks (20.96 calendar days). In 22 of the 45 years, the mid-session review was submitted on or before the deadline. Seven of the 22 timely submissions were made on the deadline. In 11 instances, the mid-session review was submitted fewer than 10 days before the deadline. In the remaining four instances, the mid-session review was submitted at least two weeks before the deadline. For FY1978, FY2000, and FY2001, the mid-session review was submitted in late June—16, 17, and 19 calendar days ahead of the deadline, respectively. For FY1999, it was submitted on May 26, 1998—50 calendar days before the deadline. Figure 1 shows the number of days the mid-session review was submitted before or after the deadline for each year from FY1973-FY2017. The submission of the mid-session review was delayed for more than three weeks on nine occasions: FY1985, FY1986, FY1987, and FY1988 under the Reagan Administration; FY1994 and FY1998 under the Clinton Administration; FY2002 under the George W. Bush Administration; and FY2010 and FY2012 under the Obama Administration. The delays for FY1994, FY2002, and FY2010 occurred in presidential transition years. The circumstances surrounding the instances where submission was delayed longer than three weeks are discussed in further detail below. During the first three years of his Administration, President Reagan submitted the mid-session review either on time or no more than 15 days late. During the next four years of his Administration, however, growing and persistent deficits made his relationship with Congress on budgetary matters especially turbulent, marked by delay and gridlock in all phases of legislative action on the budget. The mid-session reviews for four consecutive years, FY1985-FY1988, were submitted between 22 and 46 days late. On September 29, 1987, the Balanced Budget and Emergency Deficit Control Reaffirmation Act of 1987 (Title I of P.L. 100-119 ) was enacted, which in part amended the Balanced Budget and Emergency Deficit Control Act of 1985 (Title II of P.L. 99-177 ) to modify the sequestration process. A requirement was added that the President include in the mid-session review preliminary sequestration estimates as well as the economic and technical assumptions that would be used in the initial sequestration report for the fiscal year due in August. The joint explanatory statement accompanying the conference report on the 1987 act noted: For FY 1989 and beyond, the President's July 15 mid-session budget report must provide an estimate of the deficit excess and net deficit reduction computed using the economic and technical assumptions that he will use in the initial sequestration report for that fiscal year. It is imperative that the Director of OMB actually deliver this mid-session report by July 15. When he issues the initial sequestration report, he is required to use those same economic and technical assumptions. The increased significance given to the mid-session review by virtue of this change in the sequestration process may account, in part, for the improved record of submission beginning with FY1989. President Reagan's mid-session review for that year was 13 days late. The improved record of submission continued for all four years of the George H. W. Bush Administration, covering FY1990-FY1993. The requirement under the 1985 Balanced Budget Act was effective for three years (FY1989-FY1991), but was terminated under revisions made by the Budget Enforcement Act (BEA) of 1990. On July 15, 1993, the Clinton Administration notified Congress that it would delay the submission of the mid-session review for FY1994 so that it would reflect the impact of the Omnibus Budget Reconciliation Act (OBRA) of 1993, which was then pending before the House and Senate. On that date, the Administration provided preliminary mid-session estimates of the deficit. President Clinton signed OBRA of 1993 into law on August 10 (as P.L. 103-66 ) and transmitted the mid-session review for FY1994 to Congress on September 1, 48 days late. President Clinton's action stirred controversy in Congress, in part, because some Members wanted an updated assessment of the budgetary situation before voting on the conference report on OBRA of 1993. On July 20, 1993, the Senate tabled an amendment (by a vote of 56 to 43) offered by Senator Pete Domenici to H.R. 20 , the Hatch Act Reform Amendments. Senator Domenici's amendment stated: It is the sense of the Senate that the President should submit the supplementary budget as required by law no later than July 16 and the requisite information therein required, but in no event later than July 26, 1993. Senator Larry Craig discussed various patterns in the timing of submission of the mid-session review during years in which the House and Senate considered reconciliation legislation. President Clinton used the mid-session review for FY1994 in part to recount the actions that led to the enactment of OBRA of 1993 and to discuss the features of that act. As had been the case for FY1994, the submission of the mid-session review for FY1998 was delayed until after Congress completed action on reconciliation legislation. The delay in this case, until September 5, 1997, was the longest incurred in the more than 25-year history of the mid-session review—52 days. Unlike the experience for FY1994, however, the delay was not accompanied by controversy. In May 1997, the Clinton Administration and congressional leaders reached agreement on a plan to balance the budget by FY2002. On August 5, President Clinton signed into law the two reconciliation acts that implemented most of the balanced-budget policies. The delayed issuance of the mid-session review for FY1998 allowed President Clinton to render a final accounting with respect to the budgetary impact of the two measures, which amounted to $247 billion in savings over five years (yielding an estimated surplus of $63 billion for FY2002). The issuance of the mid-session review again was associated with controversy in 2001, although possibly more for its contents than the timing of its release. President George W. Bush submitted his transition budget for FY2002 to Congress on April 9 (reflecting the delay that typically occurs in a presidential transition year). His budget recommended, among other things, that Congress enact a 10-year tax cut of approximately $1.6 trillion while at the same time preserving the entire surplus in the Social Security trust funds. In May, Congress adopted the budget resolution for FY2002 ( H.Con.Res. 83 ), affirming its commitment to a somewhat smaller tax cut (about $1.35 billion) and to preserving the Social Security surplus. The on-budget surplus, which excludes the transactions of the Social Security trust funds, was estimated at that time to be about $30 billion for FY2001 and $48 billion for FY2002. These amounts represented the resources that could be allocated during the remainder of the session for additional defense spending and other budget priorities (principally under "reserve fund" procedures) without violating the pledge to preserve the Social Security surplus. Following the adoption of the budget resolution, the House and Senate agreed to a revenue reconciliation measure providing the recommended level of tax cuts; President Bush signed it into law on June 7. During the remainder of June and into July, the House and Senate focused on the consideration of the regular appropriations bills. The FY2002 mid-session review was issued on August 22 (38 days late), while the House and Senate were in recess. It indicated that, owing largely to unexpected weakness in the economy, the estimates of the on-budget surpluses for FY2001 and FY2002 had dropped to $1 billion for each year. Accordingly, the amount available for allocation to defense spending and other priorities had been reduced significantly. The returning House and Senate faced the prospect of completing action on the regular appropriations measures for FY2002 with less than a month before the beginning of the fiscal year (on October 1) and under much tighter budgetary constraints than had previously been assumed. The FY2010 mid-session review was issued on August 25 (41 days late), while the House and Senate were in recess. It showed a reduction in the FY2009 deficit estimate in the May budget submission of $262 billion (from $1.841 trillion to $1.580 trillion), owing largely to a $250 billion reduction in the placeholder for a financial stabilization reserve, but an increase of $243 billion in the FY2010 deficit estimate (to $1.502 trillion, an amount equal to 10.4% of the Gross Domestic Product). The timing of budget submissions by President Obama in 2009 for FY2010 was affected by several factors. First, 2009 was a presidential transition year, which led to the President submitting his budget proposal on May 7. OMB also claimed that rapidly changing economic conditions made it difficult to develop stable economic assumptions or reliable budgetary estimates. Some Members, however, expressed the view that the announced delay in the submission of the mid-session review until the August recess reflected an effort to withhold unfavorable news about economic and budgetary developments that could impede the consideration of priority legislation. Many of the economic and fiscal conditions that existed during President Obama's first year in office had persisted, to varying degrees, until the submission of the FY2012 mid-session review. In addition, the submission deadline for the FY2012 mid-session review coincided with the negotiations between the President and Congress over the debt ceiling, which culminated in the enactment of the Budget Control Act of 2011 (BCA, P.L. 112-25 ) on August 2, 2011. The FY2012 mid-session review was submitted on September 1, 2011, one month after the enactment of the BCA, and reflected, in part, the changes resulting from that legislation. The FY2012 mid-session review projected a lower deficit for FY2012 and each of the following 9 years covered by the 10-year budget window than the President's budget had estimated in February. According to the mid-session review, the reductions in projected deficits were due primarily to the terms of the BCA. The mid-session review was submitted more than three weeks before the deadline on one occasion: FY1999 under the Clinton Administration. In 1998, President Clinton submitted the mid-session review for FY1999 nearly two months (50 days) early—on May 26. In February 1998, the President's budget for FY1999 estimated a $10 billion deficit for the current year, FY1998. The mid-session review revised this estimate to a surplus of $39 billion, which the Administration referred to as "an historic achievement" in a press statement announcing the release of the FY1999 mid-session review. The prospect of the first surplus in nearly three decades, and growing surpluses in the following years, sparked congressional interest in acting on sizeable tax-cut legislation during the session. President Clinton argued instead that the budget surpluses should be "reserved" until changes could be made in the Social Security program to strengthen its long-term financial soundness, and some have suggested that, by releasing the mid-session review early, President Clinton was able to use the favorable budgetary news to improve his position during policy negotiations with Congress. Section 1106. Supplemental budget estimates and changes.— (a) Before July 16 of each year, the President shall submit to Congress a supplemental summary of the budget for the fiscal year for which the budget is submitted under section 1105(a) of this title. The summary shall include— (1) for that fiscal year— (A) substantial changes in or reappraisals of estimates of expenditures and receipts; (B) substantial obligations imposed on the budget after its submission; (C) current information on matters referred to in section 1105(a)(8) and (9)(B) and (C) of this title; and (D) additional information the President decides is advisable to provide Congress with complete and current information about the budget and current estimates of the functions, obligations, requirements, and financial condition of the United States Government; (2) for the 4 fiscal years following the fiscal year for which the budget is submitted, information on estimated expenditures for programs authorized to continue in future years, or that are considered mandatory, under law; and (3) for future fiscal years, information on estimated expenditures of balances carried over from the fiscal year for which the budget is submitted. (b) Before July 16 of each year, the President shall submit to Congress a statement of changes in budget authority requested, estimated budget outlays, and estimated receipts for the fiscal year for which the budget is submitted (including prior changes proposed for the executive branch of the Government) that the President decides are necessary and appropriate based on current information. The statement shall include the effect of those changes on the information submitted under section 1105(a)(1)-(14) and (b) of this title and shall include supporting information as practicable. The statement submitted before July 16 may be included in the information submitted under subsection (a)(1) of this section. (c) Subsection (f) of section 1105 shall apply to revisions and supplemental summaries submitted under this section to the same extent that such subsection applies to the budget submitted under section 1105(a) to which such revisions and summaries relate. | The Budget and Accounting Act of 1921 established for the first time the requirement that the President annually submit a budget proposal to Congress. Under current law (31 U.S.C. §1105(a)), the President is required to submit the budget proposal to Congress on or after the first Monday in January, but no later than the first Monday in February. For further information, see CRS Report R43163, The President's Budget: Overview of Structure and Timing of Submission to Congress, by [author name scrubbed]. For nearly half a century after the 1921 act took effect, Presidents submitted their annual budgets to Congress toward the beginning of the session but were not required to update their budget submissions later in the session. As the federal budget became larger and more complex, Congress felt a need for more extensive and updated budgetary information from the President. Section 221(b) of the Legislative Reorganization Act of 1970 requires the President to submit to Congress an update of the budget proposal in the middle of the legislative session. This update, commonly referred to as the mid-session review (or MSR), was first required for FY1973. The mid-session review for FY2017 is available at http://www.whitehouse.gov/omb/budget/MSR. Pursuant to 31 U.S.C. §1106, the mid-session review must include, in part, (1) any substantial changes to estimated receipts or expenditures, (2) changes resulting from enacted or pending appropriations, and (3) estimated end-of-year Treasury figures. Presidents also have some discretion regarding additional content and overall structure of the mid-session review. For example, in addition to the required elements, some Presidents have included updates to their original budget request or discussion of the potential effects that pending legislative proposals may have on their budgetary estimates. Since the first year the mid-session review was required, each President has submitted at least one mid-session review on time and at least one late. Controversy has occasionally surfaced regarding the timing of its submission to Congress. At times, some Members of Congress have suggested that the President has timed submission of the mid-session review in order to gain a political or legislative advantage over Congress. Delayed Submission of the Mid-Session Review. During the 45 years that the President has been required to submit a mid-session review, it has been submitted, on average, 8 calendar days late. In 23 of the 45 years, the mid-session review was submitted after the deadline, with delays ranging from 1 to 52 days. When the mid-session review was submitted late, it was delayed, on average, 21 calendar days. Timely and Accelerated Submission of the Mid-Session Review. In 22 of the 45 years, the mid-session review was submitted on time. Seven of the 22 timely submissions were made on the deadline, including FY2017. In 11 instances, the mid-session review was submitted fewer than 10 days before the deadline. In the remaining four instances, the mid-session review was submitted at least two weeks before the deadline. For FY1978, FY2000, and FY2001, the mid-session review was submitted in late June—16, 17, and 19 calendar days ahead of the deadline, respectively. For FY1999, it was submitted on May 26, 1998—50 calendar days ahead of the deadline. This report, which provides an overview of the mid-session review and analysis of the timing of the mid-session review, will be updated annually or as developments warrant. |
The District of Columbia Tuition Assistance Grant (DCTAG) program was created in 1999 to address concerns about the public postsecondary education offerings available to District of Columbia residents. In the 1990s, the University of the District of Columbia (UDC), which, at the time, was the only public institution of higher education (IHE) in Washington, DC, faced a series of obstacles that threatened its existence. In the midst of financial shortfalls across the District's government, the school's budget was severely reduced, from $76 million in FY1992 to $43 million in FY1995. In 1996, when UDC's budget was reduced by an additional $16.2 million, fall enrollment dropped from 10,000 students the previous year to 7,600 students. The next fall, acting UDC President Julius E. Nimmons, Jr. laid off 125 faculty members, nearly one-third of the institution's full-time faculty, as well as 200 of the university's 437 non-faculty employees. The school's accreditation, though thrown into doubt, was renewed in 1997. Despite reforms put into place after the reaccreditation, UDC remained under public scrutiny for several years. As a possible indicator that the public higher education available in Washington, DC, did not meet their needs, District residents enrolled in postsecondary institutions outside of their home jurisdiction at a rate far higher than their peers elsewhere in the United States. In the fall of 1998, 3,116 District residents were enrolled as undergraduate freshmen in IHEs, of whom 1,163 (37%) attended public or private institutions in DC. The national average for postsecondary attendance within an individual's jurisdiction of residence that year was 82%, with Vermont's 54% in-state attendance ranking as the second lowest in the nation. This disparity in college-attendance trends across states raised concerns about the cost for District students attending IHEs. In each of the 50 states, some form of public higher education is made available to in-state students at a lower cost than the price of tuition and fees offered to students from outside the state, thereby reducing the average total postsecondary education cost for residents of that jurisdiction. In academic year (AY) 1999–2000, "dependent undergraduates from the District of Columbia paid [an average of] $7,890 per year in tuition minus all grant aid … more than twice the national average" of $3,215 per student annually. Although similar issues arising elsewhere in the United States might be rectified through the reallocation of resources among public IHEs and the development of policies at the state level, supporters of the program argued that both the District of Columbia's unique role and status as the nation's capital and the state of local governance required remedies of this sort to be achieved through federal action. In general, budgetary authority for Washington, DC, rests in the hands of Congress, as: The Constitution gives Congress the power to "exercise exclusive Legislation in all Cases whatsoever" pertaining to the District of Columbia. In 1973, Congress granted the city limited home rule authority and empowered citizens of the District to elect a mayor and city council. However, Congress retained the authority to review and approve all District laws, including the District's annual budget. While Congress retains the power to determine the appropriation and allocation of funds, it typically cedes much of the daily governance to local government. However, in the 1990s, troubled city services, a poor credit rating that hindered the District's ability to borrow funds, and an FY1995 budget deficit of $722 million led to federal intervention. Two pieces of legislation, the District of Columbia Financial Responsibility and Management Assistance Act of 1995 ( P.L. 104-8 ) and the National Capital Revitalization Act of 1997 ( P.L. 105-33 ), increased the federal role in the governance of the District of Columbia. New oversight committees were formed and many of the "state functions" normally carried out by the District of Columbia's government were temporarily transferred to Congress. As Congress attempted to rejuvenate the District of Columbia's local government and improve the standard of living for the average citizen, an increasing number of concerns were raised about the postsecondary education opportunities available to District residents. In March 1999, Washington, DC's Delegate to Congress Eleanor Holmes Norton and Representatives Tom Davis and Constance Morella introduced a bill that would create a program to provide support for higher education to DC residents. On November 12, 1999, the District of Columbia College Access Act ( P.L. 106-98 ) was signed into law, authorizing the DCTAG program for FY2000 to FY2005. Congress defined the program's purpose as "enabl[ing] college-bound residents of the District of Columbia to have greater choices among institutions of higher education." The DCTAG program provides grants to District residents, regardless of need or merit, to attend eligible public and private not-for-profit IHEs in the United States. When the program was first enacted, $10,000 annual scholarships (with a cumulative cap of $50,000) were available exclusively for use at public IHEs in Maryland and Virginia, and annual grants of $2,500 (with a cumulative cap of $12,500) were available exclusively for tuition and fees at a limited number of private colleges and private historically black colleges and universities (HBCUs) in Maryland and Virginia. Both the $10,000 scholarship for attendance at a public not-for-profit school and the $2,500 grant for attendance at certain private schools were intended to assist DC high school graduates in pursuing a postsecondary education and to provide them with a "greater range of options" for their postsecondary education. The act also included a provision (Section 3(c)(1)(a)(ii)) that permitted the mayor of the District of Columbia to broaden the list of public institutions eligible to receive program funds, which could include IHEs outside Maryland and Virginia. In May 2000, Mayor Anthony Williams exercised this administrative authority and expanded the program to provide up to $10,000 per student per year (with a cumulative cap of $50,000) toward the difference between in-state and out-of-state undergraduate tuition and fees at all public colleges and universities nationwide. The District of Columbia College Access Improvement Act of 2002 ( P.L. 107-157 ) further amended the program to provide awards of up to $2,500 per student per year (with a cumulative cap of $12,500) to assist students with paying the tuition and fees for any private HBCU nationwide. The addition of these eligible institutions was intended to help expand DC residents' access to HBCUs nationwide. Since its original authorization in 1999, the DCTAG program has been reauthorized twice, once in 2004 ( P.L. 108-457 ) and again in 2007 ( P.L. 110-97 ). The 2007 reauthorization extended the appropriation of funds for the DCTAG program through FY2012 and introduced a means-testing provision prohibiting Washington, DC, residents from families with taxable annual incomes of $1,000,000 or greater from receiving awards. The DCTAG program is currently operating under a Continuing Resolution ( P.L. 113-46 ). The DCTAG program is administered by the mayor of the District of Columbia, through the Office of the State Superintendent of Education's (OSSE's) Higher Education Financial Services. As mandated by statute, the District of Columbia government established a dedicated account for program funds, with separate line items for federal appropriations, District government contributions, unobligated balances from prior appropriations, and interest earned on the balance. OSSE has taken the further step of creating two separate accounts, one for short-term expenditures (within 90 days) and one for longer-term needs, both of which can receive direct deposits from federal appropriations. If the funds made available for the program are not sufficient to fully support all applicants at the maximum allowable grant amount, the mayor is required to ratably reduce awards—first reducing those granted to first-time recipients and then those granted to renewing recipients. Should this be required, the mayor is authorized to apply ratable reductions based on student financial need and administrative burden. The size of the DCTAG award that a District of Columbia resident can receive is based on the type of institution attended (see Table 1 ). District of Columbia residents are eligible to receive DCTAG funds in amounts not to exceed $10,000 per student per year (with a total per student cap of $50,000) to attend any public Title IV eligible four-year IHE in the United States. Because the UDC provides an in-state tuition rate for DC students, District of Columbia residents are specifically prohibited from using DCTAG funds to reduce the cost of attending UDC. Likewise, students may not use DCTAG funds to attend the Community College of the District of Columbia—the open-admission, two-year IHE that was split off from UDC in August 2009 as a separate institution—because it offers reduced tuition to residents of Washington, DC. Private, nonprofit Title IV eligible HBCUs nationwide and private Title IV-eligible nonprofit IHEs in the Washington, DC, metropolitan area (defined as the District of Columbia; the cities of Alexandria, Falls Church, and Fairfax in Virginia; Arlington and Fairfax counties in Virginia; and Montgomery and Prince George's counties in Maryland) are eligible to accept DCTAG funds in amounts not to exceed $2,500 per student per year (with a total per student cap of $12,500). Nationwide, public Title IV-eligible two-year IHEs are eligible to accept DCTAG funds in amounts not to exceed $2,500 per student per year (with a total per student cap of $10,000). To receive funds under the DCTAG program, any of the aforementioned institutions, except HBCUs, are required to enter into an agreement with the mayor of the District of Columbia regarding reporting requirements and the institution's use of funds to supplement, not supplant assistance that it would otherwise provide eligible students. To become and remain eligible for a grant under the DCTAG program, a student must be a resident of the District of Columbia; be a citizen, national, or permanent resident of the United States; be able to provide evidence from the Immigration and Naturalization Service that he or she is in the United States for other than a temporary purpose with the intention of becoming a citizen or permanent resident; or be a citizen of any one of the Freely Associated States; be enrolled or accepted for enrollment, on at least a half-time basis, in a degree, certificate, or other program (including a study-abroad program approved for credit by the student's home institution) leading to a recognized educational credential at an eligible institution; maintain satisfactory progress in his or her course of study, as defined by Section 484(c) of the Higher Education Act of 1965, as amended; not be in default on a federal student loan; be 24 years of age or younger at the time of initial application, unless enrolled in the program prior to the 2006–2007 academic year; have either graduated from a secondary school or received the equivalent of a secondary school diploma or have been accepted for enrollment as a freshman at an eligible institution; and be domiciled in the District of Columbia for not less than the 12 consecutive months preceding enrollment at an eligible IHE, if undergraduate study is started within three calendar years (excepting periods of National Service or service in the Armed Forces or the Peace Corps) of high school graduation or its equivalent or be domiciled in the District of Columbia for not less than five consecutive years preceding enrollment at an eligible IHE, if undergraduate study is started more than three calendar years after high school graduation or its equivalent. Post-baccalaureate students who have already earned a bachelor's degree or students whose family's federal taxable income equals or exceeds $1,000,000 annually are ineligible to participate in the DCTAG program. To receive funds through the DCTAG program, an eligible student must first submit a DC OneApp, the District of Columbia's online application that District residents use to apply for the District of Columbia's state-level higher education grant programs; then fill out the Free Application for Federal Student Aid (FAFSA); and finally, submit required supporting DC OneApp documents, including income or benefits verification or a document no older than 45 days from the date of the DC OneApp submission that reflects the name and address of either the applicant or their parent or legal guardian, proof of high school or equivalent completion (first-time applicants only), and a student aid report. After a student submits a successful application and the grant size is determined, awards are paid directly to the eligible IHE at which the student is enrolled. In the case of public institutions, the grant may be no larger than the difference between the in-state and out-of-state tuition and fees, and in no case may the grant be larger than $10,000 per year, as previously indicated in Table 1 . Grants awarded to students attending school on a less than full-time basis are prorated. To participate in the DCTAG program, institutions must complete (or have completed) a Program Participation Agreement; fill out a Minimum Requirements Invoice for a Public or a Private Institution, including the W-9 form; and email an invoice for eligible students. Because DCTAG funds are not intended to cover the full cost of college attendance, students may seek additional sources of financial assistance. Title IV federal student aid programs, administered by the Department of Education, constitute a large share of such support. The maximum loan or grant amount for each of these programs is determined by a different need analysis calculation involving, but not limited to, the cost of attendance and the total estimated financial assistance from other sources. For the purpose of these calculations, funds received through the DCTAG program would most likely be considered either scholarships or state assistance, both of which are considered estimated financial aid. As a result, receiving a DCTAG award may reduce the federal student aid available to a student. For a list of additional student support available to District of Columbia residents, see the Appendix . The DCTAG program is funded through annual appropriations, which are available until expended and do not expire at the end of each fiscal year. From the program's inception through FY2007, these funds were included in annual District of Columbia Appropriations Acts; beginning in 2008, program funds were appropriated through annual Federal Services and General Government Appropriations Acts. Between FY2010 and FY2013 appropriated funds for the DCTAG program either remained level or decreased through various acts and Continuing Resolutions. Table 2 details the funding levels for each year of the program's existence. Because of the program's carryover authority, any funds remaining at the end of a fiscal year may be used to award grants in future years. Table 3 details the available and expended funds for FY2012 and FY2013. Aside from general administrative duties that the District of Columbia must fulfill under the DCTAG program, the mayor must submit to Congress an annual report detailing the number of eligible students served and the amount of grant awards disbursed, any reduction in grant size, and the credentials earned by eligible student cohorts. The Government Accountability Office (GAO) also is required to monitor the program, particularly with respect to barriers to enrollment for program participants and overall program efficacy. In 2005, GAO released a report that recommended actions be taken to improve the way in which student data are verified, the reconciliation of cash balances against financial management system totals, and the models used to predict yearly awards. The District of Columbia's Office of the State Superintendent of Education reports that it has addressed all of GAO's concerns. As of April 2013, a total of 19,664 students have received approximately $317.5 million in DCTAG awards and have attended over 600 IHEs in 49 states. In AY2011–2012 alone, approximately $33.4 million in DCTAG funds supported 5,253 students enrolled in postsecondary institutions. In AY2011-2012, DCTAG recipients primarily choose to attend public IHEs and public HBCUs, as Figure 1 shows. In the fall of 2010, 2,503 District of Columbia residents who had graduated from high school within the previous 12 months enrolled in Title IV-eligible two- or four-year degree-granting IHEs as freshmen. That same year, 1,448 recent graduates from Washington, DC, high schools received first-time DCTAG awards (see Table 4 ), meaning that approximately 58% of the recent high school graduates from Washington, DC, who enrolled as freshmen at eligible IHEs in 2010 received DCTAG funds. This figure does not include those students who enrolled at ineligible institutions or otherwise did not meet eligibility requirements. Therefore, the DCTAG program does appear to assist a relatively large number of those students choosing to pursue a postsecondary education at eligible IHEs shortly after graduating high school in financing their postsecondary education. According to data collected in the American Community Survey, during the period from 2010 to 2012, an average of approximately 85% of District of Columbia residents who were enrolled in grades 9-12 attended public schools and 15% attended private schools. According to DCTAG program data, from AY2006–2007 through AY2011–2012, approximately 68% of DCTAG recipients had attended a DC public or charter high school, whereas approximately 27% had attended private schools. Since its inception, DCTAG participation has increased, and the number of recent high school graduate participants also has increased significantly; however, participation rates have leveled off somewhat in recent years, as shown in Table 4 . The District of Columbia is divided into eight subdivisions, or wards, each of which is home to approximately 75,000 residents. Every ward is represented in the DC Council by an elected councilmember, making wards discrete political units. Because household income, educational attainment, and other social factors vary greatly among the wards, measures of social equity are often calculated by ward. OSSE data demonstrate how awards have been distributed across wards in the past several years. Table 5 compares the average median family income and the percentage of DCTAG recipients within each ward. The data seem to indicate that those wards with the lowest average median family income (i.e., wards 4, 5, 7, and 8) have a higher percentage of DCTAG recipients than those wards with the highest median family income (i.e., wards 1, 2, 3, and 6). The most recent OSSE data available show that the six-year undergraduate graduation rate for DCTAG recipients is slightly below the national average. For instance, for the 2005 cohort, nationwide, 58.3% of students completed their bachelor's degree within six years of enrollment, whereas 48.5% of DCTAG recipients completed their bachelor's degree within six years of enrollment. While there has been a substantial increase in the amount appropriated for the DCTAG program from its inception (see Table 2 ), there has been no change to the maximum award size in response to the trend of rising postsecondary education costs, which may be leaving many program participants paying more per year for their education than in previous years or possibly limiting their choices of which institution to attend. The extent to which DCTAG awards may be covering a declining amount of the differential between in-state and out-of-state tuition is a commonly raised concern about the DCTAG program. This section of the report examines the extent to which the maximum award may be bridging the gap between in-state and out-of-state tuition. It also examines growth in maximum awards as a share of all awards. Most DCTAG recipients choose to attend a public IHE, for which they can receive up to $10,000 per year towards the difference between in- and out-of-state tuition. Even though the number of DCTAG recipients on the whole has remained relatively stable, there has been a noticeable increase in the number of $10,000 awards disbursed each year since 2004, as shown in Table 6 . The nationwide increase in tuition and fees may be contributing to this upturn in maximum awards received, although there may be other factors that impact this, such as students' choices to attend four-year IHEs rather than two-year IHEs. In AY2011-2012, 66% of those DCTAG recipients who received the maximum annual DCTAG award of $10,000 enrolled at public four-year IHEs in Delaware, Maryland, North Carolina, Pennsylvania, and Virginia (regional IHEs). Moreover, most of those students enrolled in a small number of those regional IHEs. For instance, Figure 2 shows that of the 978 students who received the maximum $10,000 DCTAG award and attended a regional IHE in AY2011-2012, 528 (54%) attended one of six schools: Pennsylvania State University, University Park; Bowie State University; George Mason University; Norfolk State University; the University of Maryland, College Park; and Virginia Commonwealth University; the other 450 (46%) students who received the maximum award attended 53 other regional IHEs. The average in- and out-of-state tuition differential for these six most-attended regional IHEs was $14,092; therefore, on average, a DCTAG recipient who attended one of these schools and who received the maximum annual award would still face a gap of an average of $4,092 in out-of-state tuition. To meet the program's stated purpose of providing access to a greater range of postsecondary educational options, Congress could consider increasing the maximum annual DCTAG award to account for the in- and out-of-state tuition differential at popular regional public IHEs at which many DCTAG recipients are receiving the maximum annual award, currently, a differential of approximately $14,100 per year. Such a decision would likely be weighed in relation to competing demands for resources. Alternatively, Congress could consider better matching individual students' financial need to DCTAG funds awarded through means testing or by lowering the current $1 million income cap for participation. Tuition and fees at private not-for-profit four-year IHEs also have grown considerably since DCTAG was created, but the maximum annual award—$2,500—has not increased. Table 7 shows that, since AY2004-2005, the median tuition and fees for such institutions in the District of Columbia has increased by 42.5%, while the percentage of DCTAG recipients enrolled in DC area private not-for-profit four-year IHEs in each year has decreased slightly. Table 8 shows a similar but slightly more pronounced result for DCTAG participants choosing to attend private not-for-profit four-year HBCUs. Since AY2004-2005, the median tuition and fees at such institutions has increased by 34.6%, while the percentage of DCTAG recipients attending has decreased by 2.6%. Although the increase in tuition and fees at DC private nonprofit IHEs and private HBCUs nationwide may not have deterred DCTAG recipients from attending such schools, the unchanged $2,500 award does not go as far as it did 10 years ago, thereby causing recipients to pay more out-of-pocket costs than in years past. In addition to federal student aid, there are several other programs that are available to residents of Washington, DC: The District of Columbia College Access Program (DC CAP) is a nonprofit organization that was founded in 1999 to encourage and enable DC high school students to enroll in postsecondary schools and provides them with educational counseling and financial assistance to help them succeed. In partnership with the District of Columbia Public School system (DCPS), District of Columbia charter schools, and OSSE, DC CAP serves DC high school students, primarily from low-income, minority, and single-parent households, during both high school and college, through counseling, seminars, and preparatory programs. In addition, the organization offers high school graduates need-based Last Dollar Awards of up to $2,070 per student per year for up to five years to cover unmet college expenses. DC Adoption provides scholarships to students who were adopted from the DC Child & Family Services Agency after October 1, 2001, and students who lost one or both parents as a result of the events of September 11, 2001. Students may receive up to $10,000 toward the cost of postsecondary education per year for up to six years. The Mayor's Scholars Undergraduate Fund provides need-based grants to eligible DC residents, which they can apply towards the cost of pursuing their first undergraduate degree at a public or private institution located within DC. Grants can equal up to $3,000 at the University of the District of Columbia (UDC) Community College, up to $7,000 at UDC, and up to $10,000 at private institutions. Individuals who receive DCTAG assistance are also eligible to receive Mayor's Scholars Undergraduate Fund grants. The program was first announced in October 2012 and began operating in FY2013. | To address concerns about the public postsecondary education offerings available to District of Columbia residents, the District of Columbia College Access Act of 1999 (P.L. 106-98) established the District of Columbia Tuition Assistance Grant (DCTAG) program. The program is meant to provide college-bound DC residents with a greater array of choices among institutions of higher education by providing grants for undergraduate education. Grants for study at public institutions of higher education (IHEs) nationwide offset the difference between in-state and out-of-state tuition and fees, up to $10,000 per year and a cumulative maximum of $50,000. Students may also receive grants of up to $2,500 per year and a cumulative maximum of $12,500 for undergraduate study at Historically Black Colleges and Universities (HBCUs) nationwide and private IHEs in the Washington, DC, metropolitan area. DCTAG program grants are provided regardless of need or merit. However, to be eligible to receive a program grant, individuals must, among other criteria, be District of Columbia residents; be enrolled or accepted for enrollment on at least a half-time basis in a degree, certificate, or credential granting program; maintain satisfactory progress in their course of study; be 24 years of age or younger; and have received a secondary school diploma or its equivalent. Post-baccalaureate students who have already earned a bachelor's degree or students whose family's federal taxable income equals or exceeds $1 million annually are ineligible to participate. As of February 2012, a total of 18,663 students have received a total of $307 million in DCTAG awards and have attended over 600 institutions of higher education (IHEs) in 49 states. There has been a substantial increase in the amount appropriated for the DCTAG program since its inception (from $17 million in FY2000 to $28.4 million in FY2013), but there has been no change to the maximum award size in response to rising postsecondary education costs, which may be leaving many program participants paying more per year for their education than in previous years or possibly limiting their choices of which institution to attend. This report first discusses the history of the DCTAG program and the events and legislation leading up to its passage. It then describes the program's administration, including recipient eligibility and the amount of award available based on the type of institution attended, award interaction with federal student aid, and funding. Next, the report presents DCTAG performance data, such as the types of institutions DCTAG recipients primarily attend and the types of students served by the program (e.g., the number of grants received, by DC ward). Finally, the report provides an analysis of grant benefits and discusses the extent to which DCTAG awards may be bridging the gap between in-state and out-of-state tuition. |
The health care reform debate raises many complex issues including those of coverage, accessibility, cost, accountability, and quality of health care. Underlying these policy considerations are issues regarding the status of health or health care as a moral, legal, or constitutional right. It may be useful to distinguish between a right to health and a right to health care. An often cited definition of "health" from the World Health Organization describes health as "a state of complete physical, mental and social wellbeing and not merely the absence of disease or infirmity." "Health care" connotes the means for the achievement of health, as in the "care, services or supplies related to the health of an individual." For purposes of this report, discussion will be limited to constitutional and legal issues pertaining to a right to health care. Numerous questions arise concerning the parameters of a "right to health care." If each individual has a right to health care, how much care does a person have a right to and from whom? Would equality of access be a component of such a right? Do federal or state governments have a duty to provide health care services to the large numbers of medically uninsured persons? What kind of health care system would fulfill a duty to provide health care? How should this duty be enforced? The debate on these and other questions may be informed by a summary of the scope of the right to health care, particularly the right to access health care paid for by the government, under the U.S. Constitution, and under interpretations of the U.S. Supreme Court. The United States Constitution does not explicitly address a right to health care. The words "health" or "medical care" do not appear anywhere in the text of the Constitution. The provisions in the Constitution indicate that the framers were somewhat more concerned with guaranteeing freedom from government, rather than with providing for specific rights to governmental services such as for health care. The right to a jury trial, the writ of habeas corpus, protection for contracts, and protection against ex post facto laws were among the few individual rights explicitly set forth in the original Constitution. In 1791, the Bill of Rights was added to the Constitution, and additional amendments were added following the Civil War, and thereafter. Most constitutional amendments dealt with civil and political rights, not social and economic rights. However, there have been proposals to add a specific right to health care as an amendment to the U.S. Constitution. For example, in 1944, President Franklin D. Roosevelt, in his State of the Union address, advanced his idea of a "Second Bill of Rights" which would include "[t]he right to adequate medical care and the opportunity to achieve and enjoy good health." More recently, Representative Jesse L. Jackson Jr. introduced H.J.Res. 30 on February 14, 2011, a bill which proposes an amendment to the U.S. Constitution ensuring a right to health care. The proposed amendment reads, "Section 1. All persons shall enjoy the right to health care of equal high quality. Section 2. The Congress shall have power to enforce and implement this article by appropriate legislation." Even though the U.S. Constitution does not explicitly set forth a right to health care, the Supreme Court's decisions in the areas of the right to privacy and bodily integrity suggest the Constitution implicitly provides an individual the right to access health care services at one's own expense from willing medical providers. However, issues regarding access to health care do not usually concern access where a person has the means and ability to pay for health care, but rather involve situations where a person cannot afford to pay for health care. The question becomes, not whether one has a right to health care that one can pay for, but whether the government or some other entity has the obligation to provide such care to those who cannot afford it. If the Supreme Court were to find an implicit right to health care for persons unable to pay for such care, it might do so either by finding that the Constitution implicitly guarantees such a right, or that a law which treats persons differently based on financial need creates a "suspect classification." In either case, the Court would evaluate the constitutionality of legislative enactments that unduly burden such rights or classifications under its "strict scrutiny" standard of review, thus according the highest level of constitutional protection offered by the equal protection guarantees of the Constitution. Absent a finding of an implicit fundamental right to health care for poor persons under the Constitution, or that wealth distinctions create a "suspect class," the Court would likely evaluate governmental actions involving health care using the less rigorous "rational basis" standard of review. Most health care legislation would likely be upheld, as it has been, so long as the government can show that the legislation bears a rational relationship to a legitimate governmental interest. Despite the lack of discussion of health care rights in the Constitution, arguments have been made that the denial by the federal government of a minimal level of health care to poor persons transgresses the equal protection guarantees under the Constitution. While the equal protection clause of the Fourteenth Amendment applies only to the states, similar equal protection principles are applicable to the federal government through the Due Process Clause of the Fifth Amendment. A litigant challenging a federal action has the burden of proving that the governmental action places an undue burden on the exercise of an individual's fundamental right. The standard of review used in cases involving fundamental rights is called "strict scrutiny." Using this heightened standard of review, if the Court determines that a fundamental right has been unduly burdened, the governmental action will only be upheld if the government can demonstrate that the action is necessary to achieve a compelling governmental interest. The Supreme Court has held that the Due Process Clause of the Fourteenth Amendment provides constitutional protection for certain rights or "liberty interests" related to privacy. Legislative enactments that implicate the right to privacy have been reviewed under the heightened strict scrutiny standard of review. Thus, the right to privacy has been held to include the right to procreate, use contraception, have an abortion, and maintain bodily integrity. While the Supreme Court has held that the Constitution implicitly confers a fundamental right to privacy, the Court has not elevated health care to the status of a fundamental right. The Court has evaluated governmental actions involving health care using the less rigorous "rational basis" standard of review. Under this standard, a governmental action will be upheld if the action bears a rational relationship to a legitimate governmental interest. For example, in Maher v. Roe , the Supreme Court held that a state could refuse to provide public assistance for non-therapeutic abortions under a program that subsidized all medical expenses otherwise associated with pregnancy and childbirth. In other words, while the constitutional right to an abortion protected a woman's right to choose whether or not to terminate a pregnancy, it did not mean abortion was a health right. In Harris v . McRae , the Supreme Court held that the Medicaid program's refusal, under the Hyde Amendment, to pay for medically necessary abortions did not burden a woman's fundamental right to choose an abortion. The Court applied the rational basis standard of review and found that poor pregnant women were not denied equal protection of the laws because the abortion provisions were rationally related to a governmental "interest in protecting the potential life of the fetus." The Court also noted that while the Due Process Clause of the Fourteenth Amendment affords protection against unwarranted government interference with freedom of choice regarding certain personal decisions, it "does not confer an entitlement to such funds as may be necessary to realize all the advantages of that freedom." The Court stated further, To translate the limitation on government power implicit in the Due Process Clause into an affirmative funding obligation would require Congress to subsidize the medically necessary abortion of an indigent woman even if Congress had not enacted a Medicaid program to subsidize other medically necessary services. Nothing in the Due Process Clause supports such an extraordinary result. Whether freedom of choice that is constitutionally protected warrants federal subsidization is a question for Congress to answer, not a matter of constitutional entitlement. In other words, a woman has a constitutional right to terminate her pregnancy, but that right is not unduly burdened if she cannot afford an abortion. More broadly, the Constitution does not obligate the states or the federal government to pay for medical expenses, even for the health care needs of poor persons. The Court's use of the rational basis test for constitutional analyses of health care legislation extends to other, related areas, such as housing and education. In the welfare area, the Court has, at times, acknowledged the importance of public assistance to poor persons. In Goldberg v. Kelly , where the Court held that due process rights attach to welfare benefits, the Court stated, From its founding the Nation's basic commitment has been to foster the dignity and well-being of all persons within its borders.... Welfare, by meeting the basic demands of subsistence, can help bring within the reach of the poor the same opportunities that are available to others to participate meaningfully in the life of the community.... Public assistance, then is not mere charity, but a means to "promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity." While the Court recognized the state's duty to meet the basic needs of its citizens, it declined to impose an affirmative duty to do so, making it clear that welfare is not a constitutional right, and the state does not have an obligation to provide resources to meet subsistence needs. For a classification that treats people differently—such as health care services for some poor persons but not all who are in need—to rise to the highest level of constitutional protection, the classification must be found to be a "suspect classification" by the Supreme Court. According to the Court, the constitutional guarantee of equal protection is not a source of substantive rights, but rather a "right to be free from invidious discrimination in statutory classifications and other governmental activity." In cases where the Court determines state or federal governmental classifications to be "suspect," it will apply the strict scrutiny standard of review. Thus, the Court has applied the strict scrutiny test to suspect classifications based on race, ethnicity, and national origin. The High Court, however, has not seen fit to consider financial need or distinctions on the basis of wealth as suspect classifications for purposes of its equal protection analysis. For example, in Dandridge v. Williams , the Court upheld a Maryland welfare distribution scheme whereby an upper limit was placed on the amount of assistance any one family could receive. This meant that larger families with greater need received less aid per child than smaller families. The Court stated the following: In the area of economics and social welfare a State does not violate the Equal Protection Clause merely because the classifications made by its laws are imperfect. If the classification has some "rational basis," it does not offend the Constitution simply because the classification "is not made with mathematical nicety or because in practice it results in some inequality." Thus, the Court concluded that while the Constitution may require procedural safeguards for the distribution of economic and social welfare benefits, as it held in Goldberg v. Kelly , it "does not empower this Court to second-guess state officials charged with the difficult responsibility of allocating limited public welfare funds among the myriad of potential recipients." The Court has reaffirmed this holding in subsequent cases. In like manner, in the health care area, the Court has again applied the more deferential "rational basis" standard of review in assessing the constitutionality of distinctions or classifications in the provision of health care on the basis of wealth. Health care legislation will generally be upheld so long as the government can show a legitimate purpose and a rational basis for carrying out the program. The Supreme Court has held that persons under governmental control, in circumstances where they are dependent upon the government for their basic needs, have a right to a minimal amount of medical care. However, the Supreme Court has not based its decisions defining a right to medical care for persons with limited freedoms on a fundamental right to health care. Rather, in the case of prisoners, the Supreme Court has held that they are entitled to adequate food, clothing, shelter, and medical care as a component of the protections accorded by the Eighth Amendment. "[D]eliberate indifference to serious medical needs of prisoners constitutes the 'unnecessary and wanton infliction of pain,'... proscribed by the Eighth amendment," said the Court, raising the possibility of pain and suffering that can amount to cruel and unusual punishment. In like manner, involuntarily confined mentally disabled patients have a right to safe conditions, including food, shelter, and medical care, as well as minimally adequate training to avoid placement in physical restraints, as part of their substantive liberty interests guaranteed by the Due Process Clause of the Fourteenth Amendment. While the United States Constitution and Supreme Court interpretations do not identify a constitutional right to health care at the government's expense, Congress has enacted numerous statutes which establish and define statutory rights of individuals to receive medical services from the government. In addition, other statutes, such as Title VI of the Civil Rights Act of 1964 which prohibits discrimination under federally funded programs, affect the manner of delivery of services under federal grants. Congress' authority to enact health care legislation derives from the enumerated powers set forth in Article I, Section 8 of the Constitution. Congress' power to tax and spend for the general welfare and its power to regulate interstate commerce have been the primary sources of constitutional authority for most health care legislation. The most frequently utilized grant of power in the United States Constitution for the enactment of health care legislation is found in Article I, Section 8, clause 1, which states, in part, that "[t]he Congress shall have Power to lay and collect Taxes, ... to ... provide for the ... general Welfare of the United States." The last paragraph of this section provides that Congress shall have the authority "to make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers." The "foregoing Powers" include this specific power, popularly known as the taxing and spending power, as well as the power to regulate interstate commerce, another constitutional authority available to Congress for the enactment of health care legislation. The Supreme Court has recognized that Congress's power to tax is extremely broad. In United States v. Doremus , the Court stated that "[i]f the legislation enacted has some reasonable relation to the exercise of the taxing authority conferred by the Constitution, it cannot be invalidated because of the supposed motives which induced it." Recently, the Supreme Court, in National Federation of Independent Business v. Sebelius (NFIB) , upheld a requirement in the Patient Protection and Affordable Care Act (Affordable Care Act/ACA) beginning in 2014, that most individuals carry health insurance or pay a penalty for noncompliance as a valid exercise of Congress' authority to levy taxes. Chief Justice Roberts, in his opinion, stated that "the mandate is not a legal command to buy insurance. Rather it makes going without insurance just another thing the Government taxes, like buying gasoline or earning income. And if the mandate is in effect just a tax hike on certain taxpayers who do not have health insurance, it may be within Congress' constitutional power to tax." In reaching this conclusion, the Court looked beyond the "penalty" label given to the individual mandate by Congress, and instead relied heavily upon the consequences that the provision would have for affected individuals. Specifically, Chief Justice Roberts, writing for the majority, found that the operation of the individual mandate had many similarities to other taxes. For example, it is to be assessed as part of a taxpayer's annual income tax return; it varies by income and number of dependents; and, it is to be administered by the IRS. The Chief Justice's opinion also suggested that there are limits to the magnitude of financial incentives that Congress could create under the taxing power, but declined to "decide the precise point at which an exaction becomes so punitive that the taxing power does not authorize it." In like manner, the power to spend for the general welfare is one of the broadest grants of authority to Congress in the United States Constitution. The scope of the national spending power was brought before the United States Supreme Court in a landmark case in 1937 dealing with the newly enacted Social Security Act. In Steward Machine Co. v. Davis , the Court sustained a tax imposed on employers to provide unemployment benefits to individual workers. It was argued that the tax and a state credit that went with the state's tax were "weapons of coercion, destroying or impairing the autonomy of the States." The Supreme Court, however, held that relief of unemployment was a legitimate object of federal spending under the "general welfare" clause, and that the Social Security Act, which also included old age benefits for individuals so they might not be destitute in their old age, as well as provisions for child welfare and maternal child health projects, was a legitimate attempt to solve these problems in cooperation with the states. Subsequent Supreme Court decisions have not questioned Congress's policy decisions as to what kinds of spending programs are in pursuit of the "general welfare," and so numerous programs have been funded in such diverse areas as education, housing, veterans' benefits, the environment, welfare, health care, scientific research, the arts, community development, and public financing of election campaigns. The Supreme Court accords great deference to a legislative decision by Congress that a particular spending program provides for the general welfare. Indeed, the High Court has suggested that the question whether a spending program provides for the general welfare is one that is entirely within the discretion of the legislative branch. Thus, in Buckley v. Valeo , the Supreme Court held that federal funding of election campaigns was a proper exercise of Congress's power to spend for the general welfare: Appellants' "general welfare" contention erroneously treats the General Welfare Clause as a limitation upon congressional power. It is rather a grant of power, the scope of which is quite expansive, particularly in view of the enlargement of power by the Necessary and Proper Clause…. It is for Congress to decide which expenditures will promote the general welfare…. In this case, Congress was legislating for the "general welfare"—to reduce the deleterious influence of large contributions on our political process, to facilitate communication by candidates with the electorate, and to free candidates from the rigors of fundraising…. Whether the chosen means appear "bad," "unwise," or "unworkable" to us is irrelevant; Congress has concluded that the means are "necessary and proper" to promote the general welfare, and we thus decline to find this legislation without the grant of power in Art. I, §8. In National Federation of Independent Business v. Sebelius , the Supreme Court addressed Congress' power to spend for the general welfare, but in the context of Congress' ability to impose conditions on federal grant funds. At issue was the provision in the Affordable Care Act that would require the states to expand their Medicaid programs by 2014 to cover virtually all poor Americans under the age of 65, or risk losing all of the Medicaid funding that they receive from the federal government. The Court accepted the argument that states were being "coerced" into expanding Medicaid benefits because failure to implement the expansion could result in the loss of all federal Medicaid funds. While Chief Justice Roberts, in his majority opinion, found that the termination of existing Medicaid funds was coercive, his opinion also went on to find that the statutory provision authorizing withholding of all Medicaid program funds could be severed in its application so as to allow withholding of just the new ACA funds associated with the expansion. In other words, states could decline to participate in the Medicaid expansion without financial penalty. The newly articulated limitations on Congress' power under the Spending Clause under NFIB are significant, because, for the first time, the High Court has struck down conditions on federal grants to states that it determined cross the line from enticement to coercion. However, Chief Justice Roberts declined to fix the "outermost line where persuasion gives way to coercion," finding only that the ACA Medicaid expansion requirements were "surely beyond" that line. Congress has the power to regulate health care matters under its power to regulate interstate commerce, and it did so when it enacted the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA) which directly regulates the health care industry by imposing continuing insurance requirements for persons who lose employment-related health insurance benefits. Congress has also generally regulated employee benefits, including health insurance, under the Employee Retirement Income Security Act of 1974 (ERISA). In other legislation related to ERISA, Congress has also enacted various health insurance plan mandates for childbirth delivery hospital stays, breast reconstruction payments for mastectomies, and certain mental health coverage annual and lifetime limit requirements. In National Federation of Independent Business v. Sebelius , the Supreme Court upheld a requirement in the Affordable Care Act that most individuals acquire health insurance coverage beginning in 2014, as a valid exercise of Congress' power to levy taxes. However, before upholding the individual mandate on taxing power grounds, the High Court addressed what most thought was the constitutional basis for Congress imposing such a requirement on individuals, i.e. , Congress' power to regulate interstate commerce. Chief Justice Roberts, along with four other Justices, accepted the argument made by the challengers to the Affordable Care Act that, while the Commerce Clause allows Congress to regulate economic activity, it does not allow Congress to compel individuals to enter into that activity. The Court noted that this distinction is important because ignoring it would undermine the principle that the federal government is a government of limited and enumerated powers. The Court also found that there was no limiting principle with respect to the individual mandate—that if Congress were allowed to require the purchase of health insurance, it could require individuals to make purchases as a solution to almost any problem. The effect of this holding is limited by the fact that the Court upheld the individual mandate as a valid exercise of Congress' power to levy taxes. The Medicare program, established as Title XVIII of the Social Security Act in 1965, is the largest health care program enacted by Congress pursuant to its power to tax and spend for the general welfare. Medicaid (Title XIX), also enacted in 1965, and the Children's Health Insurance Program (CHIP) (Title XXI), enacted in 1997, are examples of voluntary federal/state partnership programs providing health care benefits to certain low-income persons. The Supreme Court has not taken a case challenging these health care programs as an unconstitutional exercise of Congress's taxing and spending power, possibly because the law on this point was settled by its earlier 1937 decision, discussed above, upholding Title II (Old Age Benefits) and Title III (Unemployment Compensation) of the same act. However, the Supreme Court recently rendered a decision in a case challenging two provisions of the Affordable Care Act, and while the Court upheld the majority of that health care reform law, the Court did limit Congress' ability to condition certain grants under the Medicaid program. Another example of a health care program is the Hospital Survey and Construction Act (Hill-Burton Act), enacted in 1946, which offers federal construction funds to hospitals, nursing homes, and other health facilities on the condition that the facilities provide a reasonable volume of services to indigent patients, and make their services available to all persons residing in the facility's area. Congress has also created a statutory right to certain emergency services under the Emergency Medical Treatment and Active Labor Act (EMTALA). EMTALA imposes a legal obligation on hospitals that participate in Medicare to provide screening, examination, and stabilization of emergency medical conditions and women in labor, prior to transferring them to another facility. In addition, Congress has provided for health care services in many other contexts, including access to health care services for uninsured and underinsured persons through tax incentives to non-profit organizations such as hospitals for providing charitable care, and by grant programs that fund certain "safety net providers," such as community health centers, migrant health centers, and other health facilities that serve medically underserved populations. On March 23, 2010, the President signed into law H.R. 3590 , the Patient Protection and Affordable Care Act (Affordable Care Act/ACA), P.L. 111-148 , a comprehensive health care reform statute. The Affordable Care Act, which will be fully implemented by 2014, will restructure the private health insurance market, particularly for individuals purchasing coverage on their own (who may qualify for premium credits) and small businesses, partly by supporting states' creation of "American Health Benefit Exchanges" through which eligible individuals and small businesses can access private insurers' plans. Considerable attention has been paid to Section 1501 of Title I of ACA, which will require most individuals to have health insurance that meets minimum essential coverage requirements beginning in 2014. This provision imposes a tax on people who do not purchase the required health insurance for themselves and their dependents. Some individuals will be provided subsidies to help pay for their premiums and cost-sharing. Others would be exempt from the individual mandate. Section 2001 of Title II of ACA, provides that, beginning in 2014, or sooner at state option, nonelderly, non-pregnant individuals with income below 133% of the federal poverty level will be made newly eligible for Medicaid. From 2014 to 2016, the federal government will cover 100% of the Medicaid costs of these newly eligible individuals, with the percentage dropping to 90% (with states covering the difference) by 2020. This change represents the most significant expansion of Medicaid eligibility in many years. In addition, the health reform law adds new mandatory benefits to Medicaid, including, for example, coverage of services in free-standing birthing centers and tobacco cessation services for pregnant women. The new law also expands state options for providing home- and community-based services as an alternative to institutional care, and provides financial incentives to states to do so. Among the Medicaid financing changes, the health reform law reduces Medicaid disproportionate share hospital allotments, increases certain pharmacy reimbursements, increases primary care physician payment rates for selected preventive services, and increases federal spending for the territories. Several lawsuits were filed shortly after enactment of the Affordable Care Act in various federal courts challenging the constitutionality of two key provisions of the Act: the requirement compelling certain individuals to have health insurance (i.e., the individual mandate), and the expansion of the Medicaid program, which requires that states provide coverage to most adults under the age 65 with incomes up to 133% of the federal poverty level. On June 28, 2012, the United States Supreme Court, in National Federation of Independent Business v. Sebelius (NFIB) , a case brought by 26 states and the National Federation of Independent Business, issued a highly anticipated decision largely affirming the constitutionality of ACA. Before addressing whether the individual mandate was valid under Congress's taxing power, the Court tackled what had been a primary focus of the litigation: whether Congress's power to regulate interstate commerce gives it the authority to impose the individual mandate. Chief Justice Roberts, along with four other Justices, accepted the argument made by the challengers to ACA that while the Commerce Clause allows Congress to regulate economic activity, it does not allow Congress to compel individuals to enter into that activity. According to the Court, this distinction is important because ignoring it would undermine the principle that the Federal Government is a government of limited and enumerated powers. The Court also found that there was no limiting principle with respect to the individual mandate—that if Congress were allowed to require the purchase of health insurance, it could require individuals to make purchases as a solution to almost any problem. With respect to the individual mandate, Chief Justice Roberts, writing for the majority, upheld the individual mandate as a constitutional exercise of Congress's authority to levy taxes . In reaching this conclusion, the Chief Justice's opinion looked beyond the "penalty" label that had been given to the provision by Congress, and instead relied heavily on the consequences that the provision would have for affected individuals. Specifically, he found that the operation of the individual mandate had many similarities to other taxes. For example, it is to be assessed as part of a taxpayer's annual income tax return; it varies by income and number of dependents; and it is to be administered by the IRS. The Chief Justice's opinion also suggested that there are limits to the magnitude of financial incentives that Congress could create under the taxing power, but declined to "decide the precise point at which an exaction becomes so punitive that the taxing power does not authorize it." With regard to the Medicaid expansion provision, the Court held that Congress cannot threaten the states with the loss of all federal Medicaid funding if the states decline to expand Medicaid coverage as mandated by the Affordable Care Act. The Court found that compelling the states to participate in a "new grant program" or else face the possible loss of all federal funds under the current Medicaid program was coercive and unconstitutional under the Tenth Amendment. In other words, Congress acted constitutionally in offering states funds under ACA to expand Medicaid to the new coverage group. If a state decides to accept the new ACA Medicaid expansion funds, it must abide by the new expansion coverage rules. However, if a state chooses not to participate in the expansion it cannot lose all of its funds under the current Medicaid program. The states must have a "genuine choice" to accept or reject the new requirements. In addition to lawsuits brought to challenge various provisions of ACA, states have considered, and some have passed, bills attempting to nullify, opt out of, or limit the provisions of ACA. Some states have also enacted, with voter approval, constitutional amendments opposing federal health reform measures. An alternative approach to opting out of federal health care requirements has involved consideration of state legislation to create an interstate compact which would give states primary responsibility to regulate health care goods and services. Such an interstate compact would require the consent of Congress under Article I, § 10, Cl. 3 of the United States Constitution. On March 10, 2010, Virginia became the first state in the nation to enact a statute which states that, as a matter of law in Virginia, no individual (with certain exceptions) "shall be required to obtain or maintain a policy of individual insurance coverage," except as required by a court or state agency. This state statute, entitled the Virginia Health Care Freedom Act, is arguably inconsistent with Section 1501 of ACA, which requires individuals to purchase health insurance coverage beginning in 2014. While Virginia was the first state to pass a law relating to the federal requirement to purchase health insurance, legislators in at least 47 state legislatures from 2009 to 2012 have introduced bills to limit, change, or oppose various federal actions relating to health care reform, including the mandate to purchase health insurance or implementation of a single payer system. Most measures seek to make or keep health insurance optional for individuals, and to ensure that individuals can purchase any kind of coverage they want. A Utah bill, signed into law on March 22, 2010, prohibits an individual health insurance mandate, and, in addition, prohibits any state agency from implementing federal health reform measures without the Utah legislature "specifically authorizing the state's compliance or participation in, federal health care reform." As of June 2012, state statutes had been enacted in Arizona, Colorado, Florida, Georgia, Idaho, Indiana, Kansas, Louisiana, Missouri, Montana, New Hampshire, North Dakota, Oklahoma, South Carolina, South Dakota, Tennessee, Texas, Utah, Virginia and Wyoming that oppose elements of federal health care reform provisions in ACA. Some proposed state measures to opt out of, or limit, federal health reform measures have been in the form of state constitutional amendments which must be approved by a ballot vote. For example, the resolution passed by the Arizona legislature, and approved by Arizona voters on November 2, 2010, amended the Arizona state constitution to provide that "a law or rule shall not compel any person, employer or health care provider to participate in any health care system." A similar state constitutional amendment providing in part that a "person or employer may pay directly for lawful health care services and shall not be required to pay penalties or fines for accepting direct payment from a person or employer for lawful health care services," was approved by voters in Oklahoma on November 2, 2010. However, Colorado voters disapproved a similar ballot measure on the same date. The Wyoming state legislature has approved a similar proposed constitutional amendment to be placed on the voter ballot on November 6, 2012, as have Alabama and Florida. A direct conflict between federal and state laws raises constitutional issues which are likely to be resolved in favor of federal law under the Supremacy Clause of the Constitution, which states: "This Constitution, and the Laws of the United States which shall be made in Pursuance thereof; ... shall be the supreme Law of the Land; ... any Thing in the constitution or Laws of any State to the Contrary notwithstanding." When Congress legislates pursuant to its delegated powers, state laws, and even state constitutional provisions, must yield. For example, in Cooper v. Aaron , 358 U.S. 1 (1958), the U.S. Supreme Court upheld the federal law mandating desegregation of public schools in the face of Arkansas's constitutional amendment which prohibited integration. Now that the Supreme Court has upheld the individual coverage mandate in the Affordable Care Act in NFIB v. Sebelius , this federal law fully applies to individuals, and any contradictory state laws will have no effect on this ACA provision, other than, in some cases, barring state agencies and employees from enforcing the individual mandate as of 2014. Another approach some states have taken to oppose or opt out of provisions of the Affordable Care Act is to enter into an interstate compact with other states. Interstate compacts are agreements between two or more states that are used for cooperative interactions across state lines. The earliest interstate compacts were used to settle boundary disputes; however, beginning with the establishment of the Port of New York Authority in 1921, compacts began to be used to address more complex, regional issues requiring intergovernmental cooperation. Recent interstate agreements have addressed such wide-ranging concerns as law enforcement and crime control, education, driver licensing and enforcement, nuclear waste control, transportation, insurance regulation, and disaster assistance. There are approximately 200 interstate compacts in effect today. As of June 2012, 25 states have considered interstate compact legislation which would give states primary responsibility for the regulation of health care goods and services, and, seven states, Georgia, Indiana, Oklahoma, Missouri, South Carolina, Texas, and Utah, have passed legislation assenting to an interstate health compact. This health care compact, which would require approval by Congress before it would be effective, provides that authority and responsibility for health care matters would reside with the compact member states. It also provides that states would have the authority to "suspend," by state legislation, federal laws and regulations inconsistent with state health care laws, and Congress would assent to providing funding on an annual basis to the states to carry out their responsibilities. On the state level, governmental obligations to provide health care services either generally or for particular groups of persons may be found in a number of state constitutions. Thirteen state constitutions contain provisions which specifically refer to health. The constitutions of the states of Alaska, Hawaii, Michigan, North Carolina, New York, and Wyoming have provisions which require the state to promote and protect the public health. For example, Alaska's constitution provides that "[t]he legislature shall provide for the promotion and protection of public health." And Wyoming's constitution states, "As the health and morality of the people are essential to their well-being, … it shall be the duty of the legislature to protect and promote these vital interests." Other state constitutional provisions permit, and sometimes require, legislative action to fund health care services for specific activities or for certain groups, such as indigent persons. Mississippi has a constitutional provision that authorizes laws for the care of the indigent sick in state hospitals. Arkansas's constitution has a provision requiring the legislature to provide for the treatment of the insane. By and large, however, state constitutional provisions authorize, but do not require, the provision of health care services. Some state courts have liberally construed state constitutional provisions mandating care of the poor to include the provision of health care services. For example, in Graham v. Reserve Life Ins. Co ., a provision in the North Carolina constitution mandating "beneficent provision for the poor" was held to require state provision of free medical treatment to indigent sick persons. And the constitutionality of Alabama's Health Care Responsibility Act, which imposed financial responsibility for the medical care of county indigents on counties, was upheld in part on the basis of Alabama's constitutional provision requiring counties "to make adequate provisions for the maintenance of the poor." As a general matter, state constitutional rights may be more expansive than those found under the federal Bill of Rights, since federal rights set the minimum standards for the states. States are always free to provide for greater protections for their citizens than are provided on the national level. The provision of health care services under a state health care program may be subject to limitations under equal protection provisions in a state constitution. In 2009, Massachusetts denied state subsidies for the purchase of health insurance to a category of noncitizen immigrants lawfully residing in Massachusetts, specifically those who would be ineligible for certain federal benefits (those in the United States for less than five years, and certain others). Prior to that time, all lawful immigrants in Massachusetts were eligible for coverage under Massachusetts' Commonwealth Care program, with subsidies provided for those individuals with incomes below 300% of the federal poverty level. The Supreme Judicial Court of Massachusetts, in Finch v. Commonwealth Health Insurance Connector Authority , used a strict scrutiny standard of review to determine that the state did not demonstrate a compelling interest that would justify excluding certain classes of lawful resident aliens from the state's subsidized health insurance program. The court noted that the state was undergoing a financial crisis at the time the Commonwealth Care program was amended, and that the motivation for the provision appeared to be fiscal, which could not constitute a compelling justification for the exclusion of certain classes of legal aliens from the subsidized insurance program. "The discrimination against legal immigrants that [the statute's] limiting language embodies violates their rights to equal protection under the Massachusetts Constitution." | The health care reform debate raises many complex issues including those of coverage, accessibility, cost, accountability, and quality of health care. Underlying these policy considerations are issues regarding the status of health care as a constitutional or legal right. This report analyzes constitutional and legal issues pertaining to a right to health care, as well as the power of Congress to enact and fund health care programs. The United States Supreme Court's decision in NFIB v. Sebelius, which upheld most of the Patient Protection and Affordable Care Act (Affordable Care Act/ACA), is also discussed. The United States Constitution does not set forth an explicit right to health care, and the Supreme Court has never interpreted the Constitution as guaranteeing a right to health care services from the government for those who cannot afford it. The Supreme Court has, however, held that the government has an obligation to provide medical care in certain limited circumstances, such as for prisoners. Congress has enacted numerous statutes, such as Medicare, Medicaid, and the Children's Health Insurance Program, that establish and define specific statutory rights of individuals to receive health care services from the government. As a major component of many health care entitlement statutes, Congress has provided funding to pay for the health services provided under law. Most of these statutes have been enacted pursuant to Congress's authority to "make all Laws which shall be necessary and proper" to carry out its mandate "to … provide for the … general Welfare." Congress has also used other constitutional powers, such as its power to regulate interstate commerce and its power to levy taxes, to enact legislation relating to health insurance and health care. In 2010, Congress enacted the Affordable Care Act, a comprehensive health care reform law which includes a requirement, effective in 2014, that most individuals purchase health insurance, and which significantly expands the Medicaid program. A number of lawsuits were filed challenging various provisions of this legislation, and, on June 28, 2012, the Supreme Court upheld the majority of ACA's provisions. Significantly, the Court upheld the requirement that individuals purchase health insurance as a valid exercise of Congress' taxing power, but the Court limited Congress' power to spend for the general welfare by holding that Congress cannot threaten the states with the loss of all federal Medicaid funds if the states decline to expand Medicaid coverage as mandated by ACA. In addition, several states have passed laws, amended their state constitutions, or entered into interstate compacts to attempt to "nullify" or "opt out" of the federal individual health insurance mandate and other federal health care provisions. Direct conflicts between federal laws and state nullification statutes or state constitutional amendments would raise constitutional issues which are likely to be resolved in favor of federal law under the Supremacy Clause of the United States Constitution. A number of state constitutions contain provisions relating to health and the provision of health care services. State constitutions may provide constitutional rights that are more expansive than those found under the federal Constitution since federal rights set the minimum standards for the states. |
Retiring Justice John Paul Stevens has not authored many opinions relating to intellectual property law, but those he has written reflect his interest in striking an appropriate balance between the protection of intellectual property rights and public access to the products of creative and inventive minds. His intellectual property opinions seek to serve the central purposes of the Copyright and Patent Clause of the Constitution—(1) encourage and reward the creativity of authors and inventors by offering them exclusive legal rights to their respective writings and discoveries, and (2) promote the progress of science and useful arts by requiring that the monopoly privileges last only for a limited period, after which the public gains free access to such work. This report examines Justice Stevens' opinions involving copyright law, patent law, and state sovereign immunity and patent infringement lawsuits. A brief summary of the basic principles and provisions of copyright and patent law precedes each section describing these opinions. Copyright is a federal grant of legal protection for certain original works of creative expression, including books, movies, photography, art, and music. The Copyright Act refers to the creator of such works as an "author;" ownership of a copyright initially vests in the author, but the author may transfer ownership of the copyright to another person or company. A copyright holder possesses several exclusive legal entitlements under the Copyright Act, which together provide the holder with the right to determine whether and under what circumstances the protected work may be used by third parties. The grant of copyright permits the copyright holder to exercise, or authorize others to exercise, the following exclusive rights: the reproduction of the copyrighted work; the preparation of derivative works based on the copyrighted work; the distribution of copies of the copyrighted work; the public performance of the copyrighted work; and the public display of the copyrighted work, including the individual images of a motion picture. Therefore, a party desiring to reproduce, adapt, distribute, publicly display, or publicly perform a copyrighted work must ordinarily obtain the permission of the copyright holder, which is usually granted in the form of a voluntarily negotiated license agreement that establishes conditions of use and an amount of monetary compensation known as a royalty fee. There are, however, other ways a third party may legally use a copyrighted work in the absence of affirmative permission from the copyright holder, including the use of statutory licenses or reliance upon the "fair use" doctrine. The doctrine of "fair use" recognizes the right of the public to make reasonable use of copyrighted material, under particular circumstances, without the copyright holder's consent. For example, a teacher may be able to use reasonable excerpts of copyrighted works in preparing a scholarly lecture or commentary, without obtaining permission to do so. The Copyright Act mentions fair use "for purposes such as criticism, comment, news reporting, teaching, scholarship, or research." However, a determination of fair use by a court considers four factors: the purpose and character of the use including whether such use is of a commercial nature or is for nonprofit educational purposes, the nature of the copyrighted work, the amount and substantiality of the portion used in relation to the copyrighted work as a whole, and the effect of the use upon the potential market for or value of the copyrighted work. Because the language of the fair use statute is illustrative, determining what constitutes a fair use of a copyrighted work is often difficult to make in advance—according to the U.S. Supreme Court, such a determination requires a federal court to engage in "case-by-case" analysis. Violation of one of the exclusive rights of the copyright holder constitutes infringement, and the copyright holder may bring a civil lawsuit against the alleged infringer to collect monetary damages and/or to obtain an injunction to prevent further infringement. The direct infringer is not the only party potentially liable for infringement; the federal courts have recognized two forms of secondary copyright infringement liability: contributory and vicarious. The concept of contributory infringement has its roots in tort law and the notion that one should be held accountable for directly contributing to another's infringement. For contributory infringement liability to exist, a court must find that the secondary infringer "with knowledge of the infringing activity, induces, causes or materially contributes to the infringing conduct of another." Vicarious infringement liability is possible where a defendant "has the right and ability to supervise the infringing activity and also has a direct financial interest in such activities." For manufacturers of consumer electronics and personal computers, the Supreme Court's 1984 decision in Sony Corporation of America v. Universal City Studios is considered the "Magna Carta" of product innovation and the technology age. The Sony decision held that the sale of the home video cassette recorder (VCR) did not constitute contributory infringement of the copyrights on television programs, because such a "staple article of commerce" is capable of "substantial noninfringing uses" that include "time-shifting"—recording a television program to view it once at a later time, and thereafter erasing it. Sony's embrace of time-shifting as a "fair use" of copyrighted works has created a safe harbor from copyright infringement liability for developers and sellers of electronic devices that facilitate the recording, storage, and playback of copyrighted media, such as the digital video recorder (DVR and TiVo), portable music and video players (iPod), and personal computers. Some commentators consider the Sony decision to be the "legal foundation of the Digital Age." The outcome of Sony "meant that companies could invest in the development of new digital technologies without incurring the risk of enormous liability for the potential misuses of those technologies by some of their consumers." The Sony case concerned a lawsuit in which owners of copyrights on broadcast television programs sought to hold Sony Corporation liable for contributory copyright infringement due to its manufacture and sale of the Betamax VCR that Betamax customers used to record some of the broadcasts. The district court ruled in favor of Sony because the court concluded that noncommercial home recording of material broadcast over public airwaves was a fair use of copyrighted works. The U.S. Court of Appeals for the Ninth Circuit disagreed, believing that the home use of a video tape recorder was not a fair use because it allowed for mass copying of copyrighted television programming. The appellate court held that the copyright owners were entitled to appropriate relief, including an injunction against the manufacture and marketing of the Betamax video recorder or royalties on the sale of the equipment. The Supreme Court reversed the Ninth Circuit. Justice Stevens authored the majority opinion that garnered the support of four other justices. He was concerned that the Ninth Circuit's ruling, "if affirmed, would enlarge the scope of respondents' statutory monopolies to encompass control over an article of commerce that is not the subject of copyright protection. Such an expansion of the copyright privilege is beyond the limits of the grants authorized by Congress." He explained that defining the scope of the copyright monopoly grant "involves a difficult balance between the interests of authors ... in the control and exploitation of their writings ... on the one hand, and society's competing interest in the free flow of ideas, information, and commerce on the other hand." Justice Stevens also noted that historically, Congress has been primarily responsible for amending copyright law in response to changes in technology. He elaborated: The judiciary's reluctance to expand the protections afforded by the copyright without explicit legislative guidance is a recurring theme. Sound policy, as well as history, supports our consistent deference to Congress when major technological innovations alter the market for copyrighted materials. Congress has the constitutional authority and the institutional ability to accommodate fully the varied permutations of competing interests that are inevitably implicated by such new technology. While Justice Stevens observed that the "Copyright Act does not expressly render anyone liable for infringement committed by another," he nevertheless acknowledged that the lack of such statutory authorization does not preclude the imposition of vicarious liability on parties who have not themselves engaged in infringing activity. He observed that the only contact between Sony and its customers occurs at the moment of sale of the Betamax video recorder. The video equipment may be used for both infringing and noninfringing purposes, as it is "generally capable of copying the entire range of programs that may be televised: those that are uncopyrighted, those that are copyrighted but may be copied without objection from the copyright holder, and those that the copyright holder would prefer not to have copied." As there was no precedent in copyright law for imposing vicarious liability on Sony because it sold the video recording equipment with constructive knowledge that its customers might use it to make unauthorized copies of copyrighted programming, Justice Stevens sought guidance from patent law, defending the appropriateness of such reference "because of the historic kinship between patent law and copyright law." He first found that the Patent Act contained an express provision that prohibits contributory infringement liability in the case of the sale of a "staple article or commodity of commerce suitable for substantial noninfringing use." He then quoted from an earlier Supreme Court case involving contributory patent infringement that had said "a sale of an article which though adapted to an infringing use is also adapted to other and lawful uses, is not enough to make the seller a contributory infringer. Such a rule would block the wheels of commerce." While recognizing that there are differences between copyright and patent laws, Justice Stevens believed that the contributory infringement doctrine as it is used in patent law should also be applied to copyright law. Therefore, he "imported" the "staple article of commerce doctrine" from patent law into copyright law, in the passage below: The staple article of commerce doctrine must strike a balance between a copyright holder's legitimate demand for effective – not merely symbolic – protection of the statutory monopoly, and the rights of others freely to engage in substantially unrelated areas of commerce. Accordingly, the sale of copying equipment, like the sale of other articles of commerce, does not constitute contributory infringement if the product is widely used for legitimate, unobjectionable purposes. Indeed, it need merely be capable of substantial noninfringing uses. With this test articulated, Justice Stevens analyzed whether the Betamax was capable of commercially significant noninfringing uses. He identified one potential use that met this standard: "private, noncommercial time-shifting in the home." Such time-shifting could be "authorized" time-shifting (recording noncopyrighted programs or material whose owners did not object to the copying) as well as unauthorized time-shifting (where the copyright holders did not consent to the practice). However, in his view, even unauthorized time-shifting is not infringing because such activity falls within the scope of the Copyright Act's "fair use" doctrine. Because the Betamax is capable of substantial noninfringing uses, Sony's manufacture and sale of such equipment to the public did not constitute contributory copyright infringement. Justice Stevens concluded the Court's majority opinion as follows: One may search the Copyright Act in vain for any sign that the elected representatives of the millions of people who watch television every day have made it unlawful to copy a program for later viewing at home, or have enacted a flat prohibition against the sale of machines that make such copying possible. It may well be that Congress will take a fresh look at this new technology, just as it so often has examined other innovations in the past. But it is not our job to apply laws that have not yet been written. Applying the copyright statute, as it now reads, to the facts as they have been developed in this case, the judgment of the Court of Appeals must be reversed. The Copyright Clause of the Constitution authorizes Congress: "To promote the Progress of Science ... by securing for limited Times to Authors ... the exclusive Right to their respective Writings…." Therefore, this constitutional provision indicates that the rights conferred by a copyright cannot last forever; rather, a copyright holder may exercise his/her exclusive rights only for "limited Times." At the expiration of that period of time, the copyrighted work becomes part of the public domain, available for anyone to use without payment of royalties or permission. In 1790, the First Congress created a copyright term of 14 years for existing and future works, subject to renewal for a total of 28 years. By 1909, both the original and the renewal term had been extended to 28 years, for a combined term of 56 years. Additional extensions were enacted between 1962 and 1974. When the current Copyright Act was enacted in 1976, Congress revised the format of copyright terms to conform with the Berne Convention and international practice. Instead of a fixed-year term, the duration of copyright was established as the life of the author plus 50 years. In 1998, Congress passed the Copyright Term Extension Act (CTEA) that added 20 years to the term of copyright for both subsisting and future copyrights to bring U.S. copyright terms more closely into conformance with those governed by the European Union. Hence, the law currently provides that an author of a creative work may enjoy copyright protection for the work for a term lasting the entirety of his/her life plus 70 additional years. Plaintiffs representing individuals and businesses that rely upon and utilize materials in the public domain filed a lawsuit against the U.S. Attorney General to obtain a declaration that the CTEA is unconstitutional. Among other things, plaintiffs argued that in extending the term of subsisting copyrights, the CTEA violated the "limited Times" requirement of the Copyright Clause. The lower court held in favor of the Attorney General, finding no constitutional problems. The U.S. Court of Appeals for the District of Columbia Circuit affirmed the district court. Justice Ginsburg wrote the majority opinion in Eldred v. Ashcroft , in which the Court upheld the CTEA by a vote of 7-2. She stated that "[h]istory reveals an unbroken congressional practice of granting to authors the benefit of term extensions so that all under copyright protection will be governed evenhandedly under the same regime." She rejected the plaintiffs' argument that the "limited Times" requirement requires a forever "fixed" or "inalterable" copyright term. Ultimately, the Court found that the unbroken congressional practice for more than two centuries of applying adjustments to copyright term to both existing and future works "is almost conclusive." Justice Stevens wrote a vigorous dissent in Eldred ; Justice Breyer filed a separate dissenting opinion. Justice Stevens concluded that any extension of the life of an existing copyright beyond its expiration date exceeds Congress's authority under the Copyright Clause. He noted that the Copyright Clause was "both a grant of power and a limitation," and that the "limited Times" requirement serves the purpose of promoting the progress of science by ensuring that authors' creative works will enter the public domain once the period of exclusivity expires. He criticized the majority opinion's reliance on the history of Congress's "unbroken pattern" of applying copyright extensions retroactively, arguing that "the fact that Congress has repeatedly acted on a mistaken interpretation of the Constitution does not qualify our duty to invalidate an unconstitutional practice when it is finally challenged in an appropriate case." Justice Stevens opined that "[e]x post facto extensions of copyrights result in a gratuitous transfer of wealth from the public to authors, publishers, and their successors in interest. Such retroactive extensions do not even arguably serve ... the purpose[] of the Copyright ... Clause." He concluded his dissent by making this observation: By failing to protect the public interest in free access to the products of inventive and artistic genius – indeed, by virtually ignoring the central purpose of the Copyright... Clause – the Court has quitclaimed to Congress its principal responsibility in this area of the law. Fairly read, the Court has stated that Congress' actions under the Copyright ... Clause are, for all intents and purposes, judicially unreviewable. That result cannot be squared with the basic tenets of our constitutional structure. According to section 101 of the Patent Act, one who "invents or discovers any new and useful process, machine, manufacture, or any composition of matter, or any new and useful improvement thereof, may obtain a patent therefore, subject to the conditions and requirements of this title." Thus, the subject matter that is eligible for patent protection may be divided into four categories: processes, machines, manufactures, and compositions of matter. The statutory scope of patentable subject matter under § 101 of the Patent Act is quite expansive—the U.S. Supreme Court once observed that the legislative history describing the intent of § 101 was to make patent protection available to "anything under the sun that is made by man." Notwithstanding the breadth of patentable subject matter, the Supreme Court has articulated certain limits to § 101, stating that "laws of nature, natural phenomena, and abstract ideas" may not be patented. The Court has elaborated on this restriction in several cases, including the following explanation: [A] new mineral discovered in the earth or a new plant found in the wild is not patentable subject matter. Likewise, Einstein could not patent his celebrated law that E=mc 2 ; nor could Newton have patented the law of gravity. Such discoveries are "manifestations of ... nature, free to all men and reserved exclusively to none." Process patents (also called method patents) involve an act, or series of steps, that may be performed to achieve a given result. The Patent Act defines a "process" to mean a "process, art, or method, and includes a new use of a known process, machine, manufacture, composition of matter, or material." However, this statutory definition is not particularly illuminating "given that the definition itself uses the term 'process.'" It has thus been up to the courts to interpret the scope of patentable processes under § 101 of the Patent Act. Software-related inventions may be patented if they meet the statutory requirements of the Patent Act. Today more than 20,000 software patents are granted each year. While software patents comprised approximately 2% of all patents awarded in the early 1980s, they now account for approximately 15% of the total number of U.S. patent issued each year. At the dawn of the computer age in the 1970s, however, inventions relating to computer software were ineligible for patent protection due to a 1972 Supreme Court case, Gottschalk v. Benson . The Benson Court held that mathematical algorithms, though they may be novel and useful, may not be patented. The Court rejected patent claims for an algorithm used to convert binary code decimal numbers to equivalent pure binary numbers (in order to program a computer), because such claims "were not limited to any particular art or technology, to any particular apparatus or machinery, or to any particular end use." A patent on such claims, according to the Court, "would wholly pre-empt the mathematical formula and in practical effect would be a patent on the algorithm itself." The Benson Court then pronounced that "[p]henomena of nature, though just discovered, mental processes, and abstract intellectual concepts are not patentable, as they are the basic tools of scientific and technological work." After Benson , patent applicants tried to obtain patents on mechanical devices and processes that included the use of a computer program to run the machine or implement the process. In a 1978 case, Parker v. Flook , Justice Stevens wrote the majority opinion, joined by five other justices, in which the Court rejected this attempt to runaround Benson . In Flook, the patent application described a method for computing an "alarm limit," which is a number that may signal the presence of an abnormal condition in temperature, pressure, and flow rates during catalytic conversion processes. Justice Stevens criticized the patent claims, as follows: The patent application does not purport to explain how to select the appropriate margin of safety, the weighting factor, or any of the other variables. Nor does it purport to contain any disclosure relating to the chemical processes at work, the monitoring of process variables, or the means of setting off an alarm or adjusting an alarm system. All that it provides is a formula for computing an updated alarm limit. Although the computations can be made by pencil and paper calculations, ... the formula is primarily useful for computerized calculations producing automatic adjustments in alarm settings. Although the patent applicant attempted to distinguish the case from Benson by pointing out that his application called for "post-solution" activity—the adjustment of the alarm limit to the figure computed according to the formula—Justice Stevens rejected this argument: The notion that post-solution activity, no matter how conventional or obvious in itself, can transform an unpatentable principle into a patentable process exalts form over substance. A competent draftsman could attach some form of post-solution activity to almost any mathematical formula; the Pythagorean theorem would not have been patentable, or partially patentable, because a patent application contained a final step indicating that the formula, when solved, could be usefully applied to existing surveying techniques. While he allowed that an "inventive application" of a mathematical formula may be patented, he determined that the Flook's application contained no claim of patentable invention. Rather, the application "simply provides a new and presumably better method for calculating alarm limit values." He then concluded that "a claim for an improved method of calculation, even when tied to a specific end use, is unpatentable subject matter under § 101." However, Justice Stevens commented at the end of his opinion: To a large extent our conclusion is based on reasoning derived from opinions written before the modern business of developing programs for computers was conceived. The youth of the industry may explain the complete absence of precedent supporting patentability. Neither the dearth of precedent, nor this decision, should therefore be interpreted as reflecting a judgment that patent protection of certain novel and useful computer programs will not promote the progress of science and the useful arts, or that such protection is undesirable as a matter of policy. Difficult questions of policy concerning the kinds of programs that may be appropriate for patent protection and the form and duration of such protection can be answered by Congress on the basis of current empirical data not equally available to this tribunal. It is our duty to construe the patent statutes as they now read, in light of our prior precedents, and we must proceed cautiously when we are asked to extend patent rights into areas wholly unforeseen by Congress. Only three years after Flook, the Supreme Court issued a 5-4 decision that appears to conflict with Flook. The opinion of the Court in Diamond v. Diehr was written by Justice Rehnquist, who had dissented in Flook . The Diehr Court upheld the patentability of a computer program-controlled process for producing cured synthetic rubber products, stating: [A] physical and chemical process for molding precision synthetic rubber products falls within the § 101 categories of possibly patentable subject matter. That respondents' claims involve the transformation of an article, in this case raw, uncured synthetic rubber, into a different state or thing cannot be disputed. The respondents' claims describe in detail a step-by-step method for accomplishing such, beginning with the loading of a mold with raw, uncured rubber and ending with the eventual opening of the press at the conclusion of the cure. Industrial processes such as this are the types which have historically been eligible to receive the protection of our patent laws. The fact that several of the process's steps involved the use of a mathematical formula and a programmed digital computer did not pose a barrier to patent eligibility, according to the Diehr Court: [T]he respondents here do not seek to patent a mathematical formula. Instead, they seek patent protection for a process of curing synthetic rubber. Their process admittedly employs a well-known mathematical equation, but they do not seek to pre-empt the use of that equation. Rather, they seek only to foreclose from others the use of that equation in conjunction with all of the other steps in their claimed process. Finally, the Court concluded that "a claim drawn to subject matter otherwise statutory does not become nonstatutory simply because it uses a mathematical formula, computer program, or digital computer." Justice Stevens wrote a lengthy dissent in Diehr , joined by three other justices who were in the Flook majority. He noted that the Benson decision in 1972 had "clearly held that new mathematical procedures that can be conducted in old computers, like mental processes and abstract intellectual concepts ... are not patentable processes within the meaning of § 101." In Justice Stevens' view, Diehr's patent claim concerning a method of using a computer to determine the amount of time a rubber molding press should remain closed during the synthetic rubber-curing process "is strikingly reminiscent" of the method of updating alarm limits that the Court had held unpatentable in Flook . He argued that "[t]he broad question whether computer programs should be given patent protection involves policy considerations that this Court is not authorized to address." Justice Stevens would have preferred that the Court's opinion contained the following: (1) an unequivocal holding that no program-related invention is a patentable process under §101 unless it makes a contribution to the art that is not dependent entirely on the utilization of a computer, and (2) an unequivocal explanation that the term "algorithm" as used in this case, as in Benson and Flook , is synonymous with the term "computer program." The Diehr decision and its appellate progeny encouraged software patent applicants to follow "the doctrine of the magic words," whereby the applicant could obtain a patent on software inventions "only if the applicant recited the magic words and pretended that she was patenting something else entirely," such as hardware devices, some sort of apparatus, or other machines. However, in 1994 the U.S. Court of Appeals for the Federal Circuit, which has exclusive appellate jurisdiction in patent cases, did away with this charade. The Federal Circuit issued an en banc decision, In re Alappat , in which it concluded that "a computer operating pursuant to software may represent patentable subject matter." The Patent Act grants patent holders the right to exclude others from making, using, offering for sale, or selling their patented invention throughout the United States, or importing the invention into the United States. Whoever performs any one of these five acts during the term of the invention's patent, without the patent holder's authorization, is liable for infringement. Defendants who may be sued for patent infringement include private individuals, companies, and also the federal government. Yet when state governments and state institutions (such as state-owned universities) infringe patents, the patent holder currently has very limited legal recourse because of the U.S. Supreme Court's jurisprudence concerning the Eleventh Amendment to the U.S. Constitution. The Eleventh Amendment, with limited exceptions, bars an individual from suing a state under federal law without the state's consent. While states may consent to suit by waiving the privilege of sovereign immunity, in limited circumstances Congress may also abrogate, or overrule, that immunity by passing a statute pursuant to the enforcement power under § 5 of the Fourteenth Amendment. Congress passed the Patent and Plant Variety Protection Remedy Clarification Act (Patent Remedy Act) in 1992. The language of the statute specifically and unequivocally abrogated state sovereign immunity and subjected the states to suits for monetary damages brought by individuals for violation of federal patent law. The validity of this statute was challenged in Florida Prepaid v. College Savings Bank . College Savings Bank held a patent for its financing methodology, based on certificates of deposit and annuity contracts, designed to guarantee investors funds for future college expenses. The state of Florida soon adopted College Savings Bank's methodology and created the Florida Prepaid Postsecondary Education Expense Board (the Board) to issue similar financing options to its own residents. Consequently, College Savings Bank filed a claim for patent infringement against the Board under the Patent Remedy Act. The principal issue in Florida Prepaid was whether the Patent Remedy Act had legitimately abrogated state sovereign immunity from suit for patent infringement. College Savings Bank argued that Congress had lawfully done so pursuant to the due process clause by ensuring an individual an adequate remedy in the case of a deprivation of property perpetrated by the state in the form of patent infringement. The district court agreed with College Savings Bank, and the Federal Circuit Court affirmed. However, the Supreme Court, in a 5-4 decision, overturned the Federal Circuit decision, holding that the PRCA was not a valid use of the § 5 enforcement power of the Fourteenth Amendment and therefore not a legitimate abrogation of state sovereign immunity. Justice Stevens filed a dissenting opinion, joined by three other justices. He first observed that the Constitution vested Congress with plenary authority over patents, and that Congress had passed laws providing federal courts with exclusive jurisdiction of patent infringement litigation. He noted that there is "a strong federal interest in an interpretation of the patent statutes that is ... uniform," and that such federal interest is "threatened ... by inadequate protection for patentees." In Justice Stevens' view, it was "appropriate for Congress to abrogate state sovereign immunity in patent infringement cases in order to close a potential loophole in the uniform federal scheme, which, if undermined, would necessarily decrease the efficacy of the process afforded to patent holders." He believed that the Patent Remedy Act was a proper exercise of Congress's power under §5 of the Fourteenth Amendment to prevent state deprivations of property without due process of law. Supporting the concern for potential due process violations, he referred to the legislative history of the Patent Remedy Act that included congressional findings that state remedies would be insufficient to compensate inventors whose patents had been infringed, and also that state infringement of patents was likely to increase. Justice Stevens argued that the Patent Remedy Act "merely puts" states in the same position as the federal government and private users of the patent system when it comes to the possibility of being held accountable for patent infringement. At the conclusion of his dissent, Justice Stevens criticized the majority opinion's "aggressive sovereign immunity jurisprudence" that "demonstrates itself to be the champion of States' rights." | This report briefly surveys decisions of retiring Justice John Paul Stevens in intellectual property cases. An examination of Justice Stevens' written opinions relating to intellectual property law reveals a strong desire to ensure that the rights of intellectual property creators are balanced with the rights of the public to access creative and innovative works. No decision embodies this interest more than Justice Stevens' majority opinion in Sony Corporation of America v. Universal City Studios, Inc., a landmark copyright case issued in 1984 that paved the way for the development and sale of popular consumer electronics, such as the video recorder (VCR, DVR, TiVo), portable music and video players (iPod), personal computers, and other devices that permit the recording and playback of copyrighted content. In addition, Justice Stevens issued a lengthy dissent in the 2003 case Eldred v. Ashcroft, in which he asserted that Congress lacked the power to pass a law that extended the term of existing copyrights by 20 years. Such a retroactive extension delays the entrance of copyrighted works into the public domain and, in Justice Stevens' opinion, is a violation of the Constitution's Copyright Clause that authorizes Congress to grant exclusive intellectual property rights to authors and artists for "limited Times." In the area of patent law, Justice Stevens authored the majority opinion in the 1978 case Parker v. Flook that sought to severely restrict the availability of patent protection on inventions relating to computer software programs. Yet just three years later, the Supreme Court's decision in Diamond v. Diehr effectively opened the door to the allowance of patents on some computer programs. Justice Stevens wrote a strongly worded dissent in Diehr in which he suggested that Congress would be better suited than the Court to address the policy considerations of allowing patent protection for computer programs. His written opinions in both of these cases reveal an interest in judicial restraint, not wanting to extend patent rights into areas that Congress had not contemplated. Justice Stevens dissented from the 1999 opinion, Florida Prepaid v. College Savings Bank, in which a majority of the Court invalidated Congress's attempt to abrogate state sovereign immunity and authorize patent holders to file suits for monetary damages against states and state instrumentalities that infringe their patent rights. Justice Stevens believed that the 1992 Patent and Plant Variety Protection Remedy Clarification Act was a proper exercise of Congress's authority under §5 of the Fourteenth Amendment to prevent state deprivations of property without due process of law, and he expressed his disagreement with the majority opinion's expansive protection of states' rights. |
This report provides background data on U.S. arms sales agreements with and deliveries to its major purchasers during calendar years 2001-2008. It provides the total dollar values of U.S. arms agreements with its top five purchasers in five specific regions of the world for the periods 2001-2004, 2005-2008, and for 2008, and the total dollar values of U.S. arms deliveries to its top five purchasers in five specific regions for those same years. In addition, the report provides a listing of the total dollar values of U.S. arms agreements with and deliveries to its top 10 purchasers for the periods 2001-2004, 2005-2008, and for 2008. The data are official, unclassified, United States Defense Department figures compiled by the Defense Security Cooperation Agency (DSCA), unless otherwise indicated. The data have been restructured for this report by DSCA from a fiscal year format to a calendar year format. Thus a year in this report covers the period from January 1-December 31, and not the fiscal year period from October 1-September 30. The following regional tables ( Tables 1-5 ) provide the total dollar values of all U.S. defense articles and defense services sold to the top five purchasers in each region indicated for the calendar year(s) noted. These values represent the total value of all government-to-government agreements actually concluded between the United States and the foreign purchaser under the Foreign Military Sales (FMS) program during the calendar year(s) indicated. In Table 6 , the total dollar values of all U.S. defense articles and defense services sold to the top 10 purchasers worldwide are provided for calendar year period noted. All totals are expressed as current U.S. dollars. The following regional tables ( Tables 7-11 ) provide the total dollar values of all U.S. defense articles and defense services delivered to the top five purchasers in each region indicated for the calendar year(s) noted for all deliveries under the U.S. Foreign Military Sales (FMS) program. These values represent the total value of all government-to-government deliveries actually concluded between the United States and the foreign purchaser under the FMS program during the calendar year(s) indicated. Commercial licensed deliveries totals are excluded, due to concerns regarding the accuracy of existing data. In Table 12 , the total dollar values of all U.S. defense articles and defense services actually delivered to the top 10 purchasers worldwide is provided. The delivery totals are for FMS deliveries concluded for the calendar year(s) noted. | This report provides background data on United States arms sales agreements with and deliveries to its major purchasers during calendar years 2001-2008, made through the U.S. Foreign Military Sales (FMS) program. In a series of data tables, it lists the total dollar values of U.S. government-to-government arms sales agreements with its top five purchasers, and the total dollar values of U.S. arms deliveries to those purchasers, in five specific regions of the world for three specific periods: 2001-2004, 2005-2008, and 2008 alone. In addition, the report provides data tables listing the total dollar values of U.S. government-to-government arms agreements with and deliveries to its top 10 purchasers worldwide for the periods 2001-2004, 2005-2008, and for 2008 alone. This report is prepared in conjunction with CRS Report R40796, Conventional Arms Transfers to Developing Nations, 2001-2008, by [author name scrubbed]. That annual report details both U.S. and foreign arms transfer activities globally and provides analysis of arms trade trends. The intent here is to complement that elaborate worldwide treatment of the international arms trade by providing only the dollar values of U.S. arms sales agreements with and delivery values to its leading customers, by geographic region, for the calendar years 2001-2004, 2005-2008, and 2008. Unlike CRS Report R40796, this annual report focuses exclusively on U.S. arms sales and provides the specific names of the major U.S. arms customers, by region, together with the total dollar values of their arms purchases or deliveries. This report will not be updated. |
Despite long-standing commitments to protect threatened species from overexploitation and to support natural resource management development, some argue that the scope and scale of illegal wildlife trade has risen to historic levels. According to U.S. government estimates, illegal trade in endangered wildlife products, including elephant ivory, rhino horns, and turtle shells, is worth at least an estimated $7 billion to $10 billion annually. This figure does not include illegal logging and illegal fishing, which can account, respectively, for roughly an additional $30 billion to $100 billion annually and $10 billion to $23 billion annually. Such figures may place illegal wildlife trafficking among the top 10 most lucrative criminal activities worldwide. The continued existence of black markets for wild plants and animals is widely considered to be driven by ongoing consumer demand as well as gaps in natural resource management, law enforcement, and trade controls. Wildlife trafficking appears disproportionately to impact parts of the developing world that possess valuable natural resources, but do not have the capacity or political will to manage such resources transparently and effectively. Beyond its role in species extinction and endangerment, illegal wildlife trade has also been associated with the spread of disease and proliferation of invasive species. Moreover, high prices for illegal wildlife, combined with often lax law enforcement and security measures, have motivated the involvement of transnational organized crime syndicates, who view such trafficking as an opportunity for large profits with a low risk of detection. Even where heightened security measures to protect wildlife are implemented, they have not consistently had a deterrent effect. Instead, some wildlife trafficking operations have become more elaborate and, at times, more dangerous. Traffickers are known to employ sophisticated hardware for poaching operations, including night vision goggles, military-grade weapons, and helicopters. Park rangers have also been killed in the line of duty by poachers. Some shipments of the wildlife contraband and the illicit profits that result from such trafficking often involve circuitous routes, support from corrupt officials, a complex web of anonymous financial mechanisms, and broad networks of complicit middlemen, processers, exporters, and retailers along the transnational supply chain. Some suggest that armed groups in Africa and Asia, which happen to be located in biologically diverse areas, are using natural resources to finance violent and politically destabilizing activities. Various observers have alleged the involvement of non-state armed groups, including separatist and Islamist militant groups, in Africa and South Asia. Reports further suggest that military officers in some African countries may be involved or complicit in poaching operations. Well established Asian and Eurasian organized crime groups are further suspected of bankrolling poaching operations and facilitating the international movement of wildlife contraband. Increased recognition of the potential consequences of wildlife trafficking has caused many to question the efficacy of existing U.S. and international responses and consider new options for addressing the problem. In November 2012, for example, then-Secretary of State Hillary Clinton announced the beginning of a revitalized effort to combat international wildlife trafficking. Central to this renewed effort were enhanced diplomatic outreach; targeted public diplomacy campaigns; continued international training and technical assistance, and cooperation to enhance natural resource governance and wildlife law enforcement capabilities; and expanded partnerships with non-governmental organizations. The U.S. intelligence community has also begun to consider wildlife trafficking as a major transnational organized crime threat. In March 2013, the Director of National Intelligence (DNI) James R. Clapper testified before Congress on the U.S. intelligence community's assessment of worldwide threats, stating that "illicit trade in wildlife, timber, and marine resources constitutes a multi-billion dollar industry annually, endangers the environment, and threatens to disrupt the rule of law in important countries around the world." The U.S. intelligence community is also reportedly conducting further assessment of wildlife trafficking as a national security issue. In July 2013, President Barack Obama issued Executive Order 13648 on Combating Wildlife Trafficking. The Executive Order identified poaching of protected species and the illegal trade in wildlife and their derivative parts and products as an escalating international crisis that it is in the national interest of the United States to combat. It directed the Secretaries of State and Interior and the Attorney General to establish a Presidential Task Force on Wildlife Trafficking, develop and implement a National Strategy for Combating Wildlife Trafficking, and convene an Advisory Council on Wildlife Trafficking composed of non-governmental expert members. Congress has long held an interest in issues related to the status of endangered species in international trade and policy responses to stem poaching and illicit trafficking of wild animals and plants. The 113 th Congress continues to be involved in addressing the illegal wildlife trade through oversight and proposed legislation. Issues for Congress have centered on the extent to which existing legal tools and authorities are over- or under-utilized to respond to wildlife trafficking, including U.S. military assistance, justice sector training and capacity building programs, tools to combat transnational organized crime, free trade agreements, anti-money laundering regulations, trade sanctions, and investigative rewards programs. The cross-border and transnational export, import, sale, or purchase of wild animal and plant resources becomes illegal when it is conducted in contravention to international commitments or domestic laws. Such commitments and laws may variously prohibit outright taking, transporting, or hunting of selected species, as well as harvesting of certain species beyond an established quota or physical boundary. Laws and regulations also prohibit the export, import, sale, or purchase of certain species without appropriate permits, authorization, or documentation. Further, some laws regulate the processing of plant and wildlife products. Chief among international commitments pertaining to the protection of wild animals and plants, including their parts, products, and derivatives, is the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES; see text box). Illegal wildlife trade ranges in scale from single-item, local bartering to multi-ton, commercial-sized exports of animal and plant consignments. Wildlife contraband may include live pets, hunting trophies, fashion accessories, cultural artifacts, ingredients for traditional medicine, wild protein for human consumption (or bushmeat), and other products. Although there is no distinct criminal profile that describes wildlife poachers and traffickers, illicit wildlife trade networks often involve a combination of local hunters, regional middlemen, wildlife experts, criminal entities, global suppliers, front companies, online retailers, corrupt officials, and consumers willing to purchase such contraband. The primary motivation to engage in illegal wildlife trade appears to be economic gain, coupled with ongoing demand that exceeds what the market can legally supply in many parts of the world, including primarily China, where recent economic growth is driving the expansion of households with disposable income, as well as the United States, and Western Europe. Further depletions of already-rare wildlife populations often cause the perverse effect of driving up black market prices for endangered wildlife products—which reportedly have risen up to $90,000 for a live Lear Macaw, $50,000 for a kilogram of rhino horn, $8,000 for a luxury shahtoosh shawl, $1,200 for a kilogram of tiger bones or beluga caviar, and $1,000 for a kilogram of raw elephant ivory. Some point to the involvement of transnational criminal groups in illegal wildlife trade as a cause for concern. According to a series of U.N. studies on the illicit traffic of wildlife, experts claim that Chinese, Japanese, Italian, and Russian organized crime syndicates are "heavily involved in illegal wildlife trade." While such claims do not suggest that organized crime syndicates are involved in all forms of wildlife trafficking, the U.N. reports suggest that syndicates are "strongly present" in some sectors and "significant and growing." Anecdotal evidence indicates that both licit and illicit wildlife has been found comingled with shipments of other contraband goods, including drugs, weapons, stolen cars, and human beings. In one instance, customs officials recovered Colombian cocaine-filled condoms that had been inserted into a crate of snakes. Other mixes of narcotics and wildlife include cases involving elephant tusks stuffed with hashish and exotic parrots smuggled with methamphetamine pills. Valuable wildlife products can be used in lieu of cash as a means to launder money or exchange for other illicit commodities, such as drugs and weapons. In South Africa, for example, street gangs have reportedly provided highly prized, but illegal, catches of abalone to Asian crime syndicates in exchange for methamphetamine. In some cases, particularly those linked to ivory and rhino horn poaching in Africa and South Asia, anecdotal evidence points to the potential involvement of armed groups, including terrorists, warlords, and insurgents. The following sections describe several illustrative forms of international illegal trade in wildlife, including trafficking in elephant ivory, rhino horn, caviar, and so-called bushmeat. International trade in African elephants ( Loxodonta africana ) and their parts has been restricted under Appendix I since 1989, pursuant to CITES. The 1989 CITES decision followed a decade of rampant ivory poaching that is estimated to have cut the total African elephant population to less than half its size in the late 1970s. In the immediate years after the 1989 decision took effect, poaching appeared to drop significantly and African elephant populations in many parts of Sub-Saharan Africa began to recover. Today, an estimated total of approximately 420,000 to 650,000 African elephants can be found in 37 countries in sub-Saharan Africa. Elephant population trends, however, vary significantly by region, and the majority of known African elephants appear to be concentrated in Southern and Eastern Africa. Vibrant population growth primarily in Southern Africa has offset potentially large declines of forest elephants in Central Africa. On the other hand, anecdotal indications of recent large-scale elephant killings suggest an uptick in poaching and a potential reversal of overall population trends. According to data compiled for the CITES-sponsored project Monitoring the Illegal Killing of Elephants (MIKE), poaching levels have increased since 2006. An estimated 17,000 elephants (range: 7,800 to 26,000) may have been illegally killed in 2011 at MIKE reporting sites in Africa—suggesting that the continental total of illegal killed elephants in 2011 was higher. Early estimates for 2012 suggest that poachers may have killed more than 30,000 African elephants. Several widely reported incidents indicate an escalation in the poaching tactics and methods used in Central Africa. Observers point to a series of elephant killings in Bouba N'djida National Park in northern Cameroon in recent years as indicative of a worrying pattern of commercial-scale poaching. Other reports have described poaching incidents in Garamba National Park in the Democratic Republic of Congo (DRC) and in Minkébé National Park in Gabon. Various reports further raise the possibility that poachers may include elements of some African militaries and several non-state armed groups, such as the Congolese, Ugandan, Sudanese, and Tanzanian militaries, Sudanese janjaweed , the Lord's Resistance Army (LRA), and the Somali terrorist organization Al Shabaab. In the case of the LRA, many observers have speculated on the extent to which the group relies on ivory poaching for financing and resources. Although few consider the LRA to be deeply enmeshed in the transnational logistics of ivory trafficking, some reports suggest that the group may be bartering ivory—primarily poached in DRC's Garamba National Park—for arms, supplies, and other military equipment from Sudanese military personnel. Dozens of African wildlife rangers have been killed by suspected poachers in recent years, many in apparent reprisal attacks. Ivory seizure data collected by the Elephant Trade Information System (ETIS) reinforce claims that elephant poaching is increasing. According to recent ETIS data, both the volume of illegally traded ivory as well as the number of large-scale illegal consignments trafficking internationally may be increasing. The increase in large-scale seizures, defined as consignments containing 800 kilograms of elephant ivory or more, is of particular concern to law enforcement officials, who suspect that well-organized criminal syndicates are likely involved in such movements. According to TRAFFIC International, there were 13 large-scale seizures of African elephant ivory in 2011 alone, likely representing some 2,500 elephants. Driving contemporary poaching is surging demand for ivory products in East Asia, where, historically, elephant ivory has long been valued for its cultural significance, as a symbol of status of wealth, and as an ingredient in the traditional treatment of certain types of health ailments. China, in particular, has reportedly emerged as a major consumer of elephant ivory, driven in part by recent economic growth and the growing affluence of its citizens. Anecdotal reports suggest that Chinese expatriate communities working and living in Africa are playing a significant and perhaps growing role in elephant ivory smuggling. Asian criminal syndicates are reportedly involved in large-scale smuggling operations and may be collaborating with African criminal groups. There are five living species of rhinoceros in the world, the survival of which are all threatened by over-hunting and habitat loss. Three species are native to Asia: the Sumatran rhino ( Dicerorhinus sumatrensis ), the Javan rhino ( Rhinoceros sondaicus ), and the Indian rhino ( Rhinoceros unicornis ). Two species are native to Africa: the Black rhino ( Diceros bicornis ) and the White rhino ( Ceratotherium simum ). All five species have been subject to CITES trade prohibitions since the mid-1970s. According to estimates by the International Union for the Conservation of Nature (IUCN) from 2012, there are approximately 140-210 Sumatran rhinos and 35-45 Javan rhinos remaining in the wild. The last of the Vietnamese subspecies of the Javan rhino was shot in 2010 for its horn. The Indian rhino, in contrast, is experiencing modest population growth, up to approximately 3,264 rhinos, due largely to strict protections by Indian, and more recently, Nepalese authorities. In the early 1900s, fewer than 200 Indian rhinos were believed to exist. Despite redoubled conservation efforts initiated in the 1990s, surging demand in recent years for illegal rhino horn, particularly in Asian countries such as Vietnam, along with the corresponding increase in the involvement of organized international criminal syndicates in rhino horn smuggling, may imperil population gains made by African rhino species. According to IUCN estimates from 2010, the African Black rhino population has increased to 4,880 since its nadir in 1995 of 2,410. The White rhino population has grown to approximately 20,165 in 2010. Much of these African conservation gains are the result of initiatives in South Africa—home to some 40% of African Black rhinos and 90% of White rhinos—which have combined private sector conservation incentives with strong wildlife management, monitoring, and law enforcement. Yet, 668 rhinos were illegally killed in 2012 in South Africa alone, a record since authorities first began tracking such information in 1990. As of July 18, 2013, a total of 488 additional rhinos were reported poached in South Africa. At this rate of killings, African rhino population growth is unlikely to be sustained. In other sub-regions of Africa, rhino conservation prospects are already dim. In 2011, the IUCN concluded that a subspecies of the Black rhino in West Africa went extinct and the number of Northern White rhinos (distinct from the South Africa-based species) has dwindled to single digits. Contemporary demand for rhino horn continues despite heighted rhino protection efforts, including GPS chipping and DNA tracking, as well as increased enforcement and penalties against perpetrators. This surging demand originates primarily among consumers in Asia, who have reportedly driven the retail price of ground rhino horn to a height of as much as $20,000 to $30,000 per kilogram. Such consumers seek rhino horn out as an ingredient in traditional remedies for fevers, headaches, and hangovers. More recently, claims that rhino horn can cure cancer have further fueled demand. Another consumer base for rhino horn emerged in Yemen, where ornate rhino-horn dagger handles have long been coveted among the elite. In total, one estimate indicates that more than 4,000 African rhino horns have been illegally sold in Asia between January 2009 and September 2012, amounting to some 12.6 tons of rhino horn available for purchase on the black market. In contrast, some 3.1 tons of rhino horn were estimated to have been illegally sold between January 2006 and September 2009. Due in large part to its high black market prices, the illegal rhino horn trade has become one of the most structured wildlife crime activities, according to the CITES Secretariat. There are reportedly "clear indications" of highly organized, mobile, and well-financed criminal groups involved in both poaching and subsequent illegal trade of African rhino horn. Observers suggest that criminal actors use sophisticated tools to poach rhinos, including helicopters, night-vision goggles, tranquillizer darts, and silenced heavy-caliber guns. In addition to poaching, organized criminal groups have stolen rhino horns from government stocks, museums in Europe, private collections, antique dealers, auction houses, and taxidermists. Authorities in South Africa have documented evidence of suspected abuse of legal trophy hunting as a means to illicitly procure rhino horn for further black market sale. Sturgeon ( Acipenseriformes ) has long been coveted as a culinary delicacy, both for its meat and roe. Particularly popular are the roe from Beluga ( Huso huso ), Russian ( Acipenser gueldenstaedtii ), Stellate ( Acipenser stellatus ), and Ship ( Acipenser nudiventris ) sturgeons that can be found in the Caspian and Black Sea basins and whose international trade is restricted under CITES. Due to years of overfishing, illegal fishing, and a decline in the number of spawning sites due to habitat loss and degradation, wild populations of most species of sturgeon are projected to continue to decrease, some potentially resulting in extinction. The continued rarity of the most prized species of sturgeon, despite recent developments to foster aquacultures and captive breeding, contributes to the extremely high prices for certain types of caviar, which may retail for as much as $2,000 per kilogram. These prices in turn have provided poachers, often linked with organized criminal groups involved with the global caviar trade, with an incentive to continue overfishing and illegally fishing. According to the United Nations, "no sector of the illegal fauna or flora trade has been criminalized to the extent of that of sturgeon and caviar." Major export countries have historically included Eurasian countries that border the Caspian and Black Seas, including Russia, Kazakhstan, Turkmenistan, Iran, Azerbaijan, Georgia, Turkey, Bulgaria, Romania, and Ukraine. Most of the caviar business is reportedly controlled by Russian organized crime, while demand is mostly driven by consumers in Western Europe, North America, and East Asia. In 1998, the U.S. Fish and Wildlife Service (FWS) reported that an estimated 50% of the international trade in caviar was illegal; other estimates suggest Russian criminal groups' involvement in the caviar trade may have been higher. In the mid-2000s, FWS investigations into the U.S. caviar trade revealed that 7 of the 10 major importers on the East Coast had been illegally importing millions of dollars' worth of caviar annually. According to reports, a combination of factors appeared to have led to the criminalization of the global caviar trade in the mid-1990s, including increased prices, a surging demand that exceeded legal quotas for sturgeon exports, and the disruption of Soviet-era fishing regulations that created a governance and regulatory environment permissive to exploitation. Soon after the fall of the Soviet Union, criminal networks surrounding the caviar trade emerged, composed of fishermen, local middlemen, regional suppliers, and international distributors. Criminals would also repackage and falsely label inferior varieties of caviar to sell at higher prices. Highlighting the lucrative nature of the trade, criminal territoriality, and protection of trafficking routes, criminal actors involved occasionally responded to seizures with displays of violence, reportedly bombing the homes of a local detachment of Russia border guards near the Caspian Sea in 1996 and attacking a Russian coast guard station in 2001 to illegally retrieve their confiscated fishing boats and nets. Declining sturgeon stocks combined with heightened levels of suspected sturgeon poaching inspired the international community in 1998 to regulate international trade of sturgeon and sturgeon products, including caviar, through CITES. Legal exports are still permissible for most species of sturgeon, but only when accompanied by appropriate CITES documentation. Some countries have also since introduced unilateral fishing and import bans or stringent quotas on particularly prized species of sturgeon and sturgeon products. In the United States, for example, the FWS suspended in 2005 import of and foreign commerce in beluga sturgeon caviar and meat from the Black Sea basin. Shifts toward aquaculture and captive breeding programs have also alleviated some of the pressure on wild sturgeon. Bushmeat generally refers to the harvesting of wildlife for human consumption and its subsequent trafficking within or outside source countries. Bushmeat may include both common and internationally protected species, such as rodents, primates, antelopes, and pangolins. The hunting of such wildlife often takes place in contravention of domestic and international laws, including quarantine law and public health regulations. Many observers fear that the overhunting of such wildlife, particularly in parts of Africa, contributes to significant wildlife population declines, reductions in biodiversity, and dysfunctional ecosystems. According to FWS, unsustainable bushmeat hunting in Africa is considered the "single greatest threat to wildlife." It is often further exacerbated by the construction of new roads related in particular to logging and mining operations, which provides poachers with easy access to previously remote and undisturbed forests. Although the global volume of bushmeat consumption is not known, it is generally associated with consumption habits in Central and West Africa, where some 1 million metric tons of bushmeat are reportedly consumed on an annual basis. Bushmeat is also commonplace in parts of Latin America and Southeast Asia. It is the primary source of protein in the diets of some 5 to 8 million people located in predominantly rural areas worldwide. Bushmeat has also become a status symbol in certain urban and international markets as a cultural delicacy. The globalization of trade and transnational movement of individuals are among frequently referenced factors that drive bushmeat smuggling. Expatriate immigrant populations originating from those regions are reportedly fueling international demand for bushmeat, which is thriving as a multi-million dollar illegal enterprise. Although field research has been limited, public health experts have identified international bushmeat smuggling as a potential vector for the transmission of emerging infectious diseases, which has historically been linked to the intermingling of wildlife and humans. Some 75% of emerging infectious diseases in humans are reportedly of zoonotic origin, raising concerns that contact with and consumption of bushmeat could result in the transfer of potentially dangerous pathogens to humans. According to the results of a recent pilot project conducted at international airports in the United States from 2008 to 2010, confiscated bushmeat samples were found to contain pathogens including retroviruses (e.g., simian foamy virus) and herpesviruses (e.g., cytomegalovirus and lymphoncryptovirus). This study demonstrated for the first time that the illegal bushmeat trade may be a direct conduit for disease transmission to the United States. Despite ongoing international efforts to address illegal trade in wildlife, poaching of protected species and trafficking of their parts continues. Commonly cited challenges in responding to this persistent illicit activity include ongoing legal gaps, capacity and political will gaps, and continuing structural drivers. Legal gaps. Although CITES has been in effect for more than three decades, the implementation of CITES commitments by States Parties continues to be mixed. Moreover, substantial variations exist among countries regarding the regulation of domestic wildlife trade. This lack of consistency in the implementation of legal frameworks can be exploited by wildlife traffickers, who may actively seek out lax jurisdictions to traffic goods. Legal gaps may also indicate a lack of political will to correct and amend variations in the law. They may also highlight a lack of international policy consensus or prioritization on how, and how much, to curb wildlife trafficking. For example, there remains a lack of international consensus of approaches on how best to address elephant ivory trafficking. Ongoing debates have centered on whether to establish a universal trade ban against all ivory sales, including potentially domestic sales, and what to do with existing government-stored stocks, including the possibility of authorizing future CITES-led international sale to select countries in Asia. Capacity and political will gaps. Even in cases where there is political will to address the problem of wildlife trafficking, some governments suffer from capability gaps, including insufficient personnel, expertise, training, funding, and equipment. Anecdotal reports indicate that in some cases, to poachers possess far greater resources, capabilities, and firepower than park rangers who protect wildlife, sometimes unarmed. As a cross-cutting issue, some contend that responses to wildlife crime may require not only effective natural resource management practices, but specialized law enforcement and justice sector expertise to successfully investigate and prosecute wildlife crime cases. Moreover, regulating international wildlife trade has reportedly become more complex and resource intensive as the number of protected species has increased and as the criteria for identifying species have become more scientific, requiring in turn more resources for data gathering and reporting. Structural drivers. To a large degree, the illegal wildlife trade continues to flourish due to complex socioeconomic and political conditions that are often beyond the scope of targeted international programs and agreements. Such structural conditions include conflict, corruption, poverty and the absence of livelihood alternatives, persistent demand for illicit wildlife products and a lack of public awareness of the consequences of such demand, as well as other environmental pressures that contribute to wildlife population losses (e.g., environmental degradation, habitat loss, and ecological fragmentation). To address illicit trade in endangered wildlife, the international community has established a global policy framework to regulate and sometimes ban exports of selected species. Domestic, bilateral, regional, and global efforts are intended to support international goals of sustainable conservation, effective resource management, and enforcement of relevant laws and regulations. The flagship international mechanism to control wildlife trade is the 1975 Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Through CITES, approximately 5,000 species of animals and 29,000 species of plants are subject to varying levels of trade restrictions, depending on the extent to which they are at risk of extinction. Among other activities, the Secretariat makes periodic recommendations that trade be suspended with certain countries found to be in violation of CITES commitments. A total of 178 governments have committed to CITES, including the United States. Although the scope of international initiatives for environmental conservation is vast, there are several international or regional efforts that are specifically geared toward combating the criminal aspects of wildlife trafficking, sharing law enforcement information for the purpose of criminal investigations and prosecutions, and building capacity among wildlife enforcement officials to detect and prevent illegal trade in wildlife. Additionally, several high-level international statements have been adopted in recent years, including by the United Nations and Asia-Pacific Economic Cooperation (APEC), which identify the issue of wildlife trafficking as a key global concern. The United States addresses the international illegal wildlife trade through domestic enforcement and laws, as well as through foreign policy. U.S. efforts to prohibit aspects of wildlife trade originated with the Lacey Act of 1900 and have been enhanced through provisions in the Lacey Act Amendments of 1981, the Endangered Species Act of 1973, and other laws. Recently, increased awareness of wildlife trafficking as a potential problem has caused some observers and policymakers to question the efficacy of existing U.S. and international responses and consider new options for responding to such illicit activity. On July 1, 2013, President Barack Obama issued Executive Order 13648 on Combating Wildlife Trafficking. It identified wildlife trafficking as an escalating "international crisis" that it is in the national interest of the United States to address because of its role in "contributing to the illegal economy, fueling instability, and undermining security." The President outlined four core objectives in responding to wildlife trafficking: (1) when requested, assist foreign governments in anti-trafficking activities; (2) promote the development and enforcement of effective wildlife trafficking laws, including prosecuting traffickers; (3) collaborate with the international community and partner organizations; and (4) reduce demand for illegally traded wildlife, both domestically and overseas. The Executive Order also established a Presidential Task Force on Wildlife Trafficking, co-chaired by the Secretaries of State and Interior as well as the Attorney General. It directs the Task Force to meet within 60 days of the Executive Order's issuance and develop and implement a National Strategy for Combating Wildlife Trafficking within 180 days. The Executive Order further specifies that the Task Force should review and recommend whether wildlife trafficking should be included in the implementation of the Obama Administration's 2011 Strategy to Combat Transnational Organized Crime. Also within 180 days of issuance, the Executive Order requires that an Advisory Council on Wildlife Trafficking be established, composed of eight non-governmental members from the private and non-profit sectors. Coinciding with the Executive Order's release, the Obama Administration announced that the State Department would provide $10 million in anti-poaching training and technical assistance, including $3 million each to South Africa and Kenya, as well as $4 million for other countries in Sub-Saharan Africa. In November 2012, the State Department and U.S. Agency for International Development (USAID) announced a revitalized effort to combat international wildlife trafficking. Central to this renewed effort is a four-part strategy, unveiled by then-Secretary of State Hillary Clinton, to include: Enhanced diplomatic outreach to build foreign government support bilaterally and through multilateral mechanisms such as APEC, CITES, other UN bodies, INTERPOL, WCO, and the World Bank; Targeted public diplomacy campaigns to develop international awareness and, ultimately, reduce demand for illegal wildlife products; Continued international training, technical assistance, and cooperation to enhance wildlife law enforcement capabilities; and Expanded partnerships to connect governments, civil society, academia, and the private sector together in addressing wildlife crime issues. As part of the November 2012 strategy, Administration officials also announced that the U.S. intelligence community has been tasked with providing an intelligence assessment on the national security consequences of illegal wildlife crime. Under Secretary of State for Economic Growth, Energy, and the Environment Robert D. Hormats intimated that such an evaluation may help to clarify links between wildlife crime, political instability, drug trafficking, weapons smuggling, corruption, and illicit finance. An intelligence assessment may also clarify the potential role that other agencies, including the Departments of Defense and the Treasury, could play in combating illegal wildlife crime. Key implementing agencies for U.S. initiatives against wildlife trafficking include the Department of Interior's Fish and Wildlife Service (FWS) as well as the State Department and USAID. FWS has multiple domestic and international responsibilities related to combating wildlife crime. The State Department and the U.S. Agency for International Development (USAID) lead a variety of intergovernmental and public diplomacy initiatives related to wildlife trafficking, including contributions to international organizations; bilateral foreign assistance for biodiversity, conservation, and law enforcement purposes; and various non-governmental partnerships. In addition to FWS, other agencies are involved in border enforcement and federal prosecutions of wildlife crimes. See text box below. The Department of Interior and its U.S. Fish and Wildlife Service (FWS) has multiple domestic and international responsibilities related to combating wildlife crime. Under the Endangered Species Act, FWS is the designated Scientific and Management Authority for implementing CITES provisions in the United States (16 U.S.C. 1537a). Its Division of Educational Outreach also conducts wildlife trade demand reduction and consumer awareness campaigns. Through its Office of Law Enforcement, FWS maintains a cadre of special agents and wildlife inspectors as well as a forensics laboratory to support state, federal, and international wildlife crime investigations. As part of its efforts to respond to international wildlife trafficking, FWS has sought approval and funding to permanently deploy special agents to U.S. State Department embassy missions overseas in Asia, Africa, and South America. To this end, FWS anticipates the first such deployment of a special agent to Thailand to begin in FY2014; President Obama also announced in July 2013 that he will detail a FWS official to Tanzania to address wildlife trafficking. FWS also provides international technical assistance and capacity building to foreign countries through its Wildlife Without Borders program and administers several species-specific grants programs, or conservation funds, which have been variously authorized by Congress through a series of acts, collectively referred to as the Multinational Species Conservation Acts. These programs require host nation- or other partner-leveraged contributions, including cash funds and in-kind support. Such programs focus on African and Asian elephants, rhino, tigers, great apes, marine turtles, and other critically endangered animals, including amphibians. FWS also conducts regional initiatives focused on key regions or countries for environmental protection, including Africa, the Western Hemisphere, Mexico, Russia, and China. Although these Wildlife Without Borders initiatives are broadly aimed toward environmental conservation goals, many projects specifically address the issue of combating wildlife trafficking. For example, a Wildlife Without Borders project funded through the African Elephant Conservation Fund promotes cooperation between African and Southeast Asian wildlife and law enforcement agencies in order to detect and intercept illegally trafficked wildlife. Recent grants funded through the Asian Elephant Conservation Fund have supported, among other projects, law enforcement capacity building in Thailand and anti-poaching support in Indonesia. Through the Great Ape Conservation Fund and the Rhinoceros and Tiger Conservation Fund, Wildlife Without Borders has supported projects in Asia and Africa to combat the poaching of various species, such as orangutans, gibbons, and rhinos. With donor funding from USAID, the State Department, and the Millennium Challenge Corporation, as well as international organizations, the Department of Interior implements the International Technical Assistance Program, which can be used for programming on endangered species conservation and wildlife law enforcement. Congress additionally authorizes FWS to receive directly certain amounts of aid funds for the Central Africa Regional Program for the Environment (CARPE), which addresses biodiversity and conservation goals in the Congo Basin; CARPE funds are also appropriated to USAID. Among other projects, CARPE funds have supported wildlife authorities in Central Africa to investigate and prosecute wildlife crimes. The State Department supports a variety of intergovernmental and public diplomacy initiatives related to wildlife trafficking, including contributions to international organizations, such as CITES, UNODC, and the World Bank. The State Department also spearheads the Coalition Against Wildlife Trafficking (CAWT), which was initiated in 2005. CAWT is a voluntary partnership among governments and non-governmental entities to address wildlife trafficking issues. Linked to its overseas public awareness campaigns, the State Department administers a series of international rewards programs through which the U.S. government may provide financial incentives for tips and information that lead to the apprehension of major transnational criminal figures. Prior to 2013, this rewards program was limited to specific war criminals, narcotics kingpins, and terrorists. With the enactment of the Department of State Rewards Program Update and Technical Corrections Act of 2012 ( P.L. 112-283 ), the program was expanded to include transnational criminal figures—including potentially those involved in wildlife trafficking. Bilateral foreign assistance for biodiversity, conservation, and law enforcement purposes is administered by both the State Department and USAID. Aid funds are primarily provided through State Foreign Operations appropriations, typically through the Development Assistance (DA) and Economic Support Fund (ESF) accounts. Some additional funding is provided through the State Department's International Narcotics Control and Law Enforcement (INCLE) account for police training, especially through the State Department's International Law Enforcement Academies (ILEAs) in Bangkok and Gabarone; in early 2013, U.S. officials reportedly doubled the frequency of training programs held on wildlife crime issues—from once a year to twice a year in ILEA Gabarone. Through USAID's global health program subaccounts, some funding is also allocated for addressing the potential role of wildlife in the emergence and international spread of new pathogens. Significant aid initiatives have included USAID support to wildlife enforcement networks (WENs). Beginning in 2005, USAID's Regional Development Mission for Asia (USAID/RDMA) has provided support for the ASEAN Wildlife Enforcement Network (ASEAN-WEN). As of 2011, however, its efforts with ASEAN-WEN were consolidated into a broader program called ARREST (Asia's Regional Response to Endangered Species Trafficking). According to USAID, ARREST is intended to be a five-year, $8 million program that will continue its support for wildlife enforcement capacity building, while also seeking to reduce consumer demand and strengthen regional cooperation for anti-trafficking. U.S. aid funds have also supported wildlife conservation in Central America and the Dominican Republic, including funding for the Central American Wildlife Enforcement Network (CAWEN). As part of the State Department's November 2012 announcement of an enhanced wildlife crime strategy, then-Secretary of State Hillary Clinton called for the creation of a global system of regional WENs and pledged $100,000 to initiate such efforts. Concurrent with the State Department's 2012 wildlife crime strategy, USAID announced a new program focused on trans-regional wildlife trafficking called Wildlife Trafficking Response, Assessment, and Priority Setting (W-TRAPS). USAID also proposed the creation of a Technology Challenge on Wildlife Trafficking to engage scientists and entrepreneurs to develop novel technological solutions to combat wildlife trafficking. As part of USAID's broader biodiversity and conservation goals in the Congo Basin through its Central Africa Regional Mission (USAID/CAR), USAID conducts programs that address, in part, anti-poaching and anti-bushmeat goals through Central Africa Regional Program for the Environment (CARPE), co-administered with FWS (see above). The U.S. Congress has played a role in evaluating and shaping U.S. policy to combat international wildlife trafficking. Over time, Congress has enacted a wide range of laws to authorize conservation programs, appropriate domestic and international funding for wildlife protection and natural resource capacity building, and target and dismantle wildlife trafficking operations. In recent years, Congress has also held hearings and events that have addressed the growing problem of wildlife crimes and raised key questions for next steps. To this end, the 113 th Congress is involved in addressing the illegal wildlife trade through oversight and proposed legislation. Briefly, selected issues for Congress may include the following: Some contend that the illegal wildlife trade could be considered a national security issue because of connections to militant organizations and terrorists, while others question the scope and extent of anecdotal allegations. In her capacity as Secretary of State, Hillary Clinton requested in 2012 that the U.S. intelligence community conduct a threat assessment that would determine whether wildlife trafficking constitutes a threat to U.S. national security interests. Such an evaluation could play a role in determining what level and types of resources are most appropriate in responding to wildlife crimes—and under what situations. There are ongoing debates regarding the potential role of the U.S. military in combating wildlife crimes. Some have warned of inherent risks associated with militarizing conservation programs, while others are seeking new authorities for the U.S. military to support anti-poaching activities overseas. In June 2013, the issue was raised in the context of the National Defense Authorization Act for Fiscal Year 2014 ( H.R. 1960 ). Some observers have additionally recommended that Congress withhold U.S. military aid to governments found to be actively directing, facilitating, or benefitting from wildlife trafficking. In April 2013, the United States and Peru jointly introduced a resolution at the U.N. Commission on Crime Prevention and Criminal Justice (CCPCJ) to classify wildlife trafficking as a "serious crime," pursuant to the U.N. Convention on Transnational Organized Crime's (UNTOC's) definition. The resolution was adopted by the CCPCJ—and may translate into facilitating improved mutual legal assistance, asset seizure and forfeiture, and extraditions in response to wildlife crimes. In practice, however, many observers question whether governments consider wildlife trafficking a serious crime, which is defined by UNTOC as "an offence punishable by a maximum deprivation of liberty of at least four years or a more serious penalty." Both internationally and in the United States, wildlife trafficking convictions do not necessarily result in such penalties. In the past, the 1971 Pelly Amendment to the Fishermen's Protective Act of 1967 (22 U.S.C. 1978) has on occasion been used to identify and impose sanctions on countries directly or indirectly engaged in endangered species trade that undermines conservation goals. Some advocates have recently urged the U.S. government to designate Vietnam pursuant to the Pelly Amendment for trade in prohibited rhino products. The President, however, has imposed sanctions pursuant to the Pelly Amendment for egregious endangered species trade only once—in 1994 against Taiwan for trade in rhino horn and tiger parts and products—suggesting that the tool may be seen by some policymakers as too severe or otherwise impractical. Other observers, however, have urged for an expansion of punitive unilateral measures against non-cooperative foreign governments, such as restrictions on U.S. foreign assistance. Although environmental issues have been considered in the context of major U.S. trade agreements since the early 1990s, the monitoring and enforcement of relevant environmental provisions has historically been limited. The Office of the U.S. Trade Representative has sought to address prior criticisms through such mechanisms as the 2007 Bipartisan Trade Deal and the inclusion of heightened environmental commitments, particularly against illegal logging, in the U.S.-Peru Trade Promotion Agreement (TPA). Members of Congress may continue to monitor future environmental provisions in free trade negotiations, such as those currently ongoing for the Trans-Pacific Partnership and potentially with Europe, for their environmental provisions. Several financial policy tools are available to track stolen assets by foreign corrupt officials; freeze and block assets within U.S. jurisdiction of specially designated foreign nationals and entities; apply heightened regulatory measures to designated classes of international transactions, jurisdictions, or financial institutions; and take legal action to seize and forfeit criminal assets. Although several of these financial tools are specifically available to combat transnational organized crime (e.g., Executive Order 13581 and 31 U.S.C. 5318A), some observers indicate that they are rarely, if ever, used to combat wildlife trafficking. The Departments of State, Justice, and Defense, as well as FWS, manage rewards programs that offer financial incentives for the public to share tips and information that leads to the apprehension of wanted criminals and terrorists. One such program is the FWS-managed Lacey Act Rewards Account (16 U.S.C. 3375(d)), which, among other purposes, can be used to provide rewards for information leading to Lacey Act convictions. The newest addition to the U.S. government's rewards programs is the Transnational Organized Crime Rewards Program, which was created with the enactment of the Department of State Rewards Program Update and Technical Corrections Act of 2012 ( P.L. 112-283 ). As reported out of the Senate Foreign Relations Committee, Senators encouraged the State Department to apply the law to combat transnational criminal activities, including in particular to trafficking in illicit wildlife and wildlife parts. It is not clear, however, how extensively or effectively these programs have been used for convicting wildlife traffickers. Wildlife crime-related initiatives are often reported to Congress as bundled with funding data on broader environmental conservation and biodiversity projects. As a result it is often difficult to determine the amount of resources currently devoted to the problem as well as evaluate whether existing resources are appropriate, insufficient, or exaggerated. This may impede interagency coordination, donor coordination, and congressional oversight efforts. Further, news reports suggest that budgetary constraints have reduced the extent to which U.S. agencies can respond to wildlife crime issues. In its FY2014 congressional budget justification, FWS requested additional funding to hire five new senior special agent/attaché officer positions, to be located overseas at U.S. embassies. These new positions would coordinate complex investigations in range, transit, intermediary, and end-market countries as well as identify and address training deficiencies in wildlife crime enforcement through capacity building and advisory efforts. In the past, calls for posting FWS agents overseas have been challenged by a lack of priority, resources, as well as physical space at U.S. missions abroad. Early efforts in 2013 had been taken to post a FWS officer in Bangkok, Thailand, beginning in FY2014. When President Obama announced the July 2013 Executive Order on wildlife trafficking, he directed FWS to permanently station a representative in Tanzania. According to FWS, the number of CITES-protected species has increased by more than 75% in the last 20 years. Moreover, the 2008 Lacey Act amendments (16 U.S.C. 3372) exponentially expanded FWS mandate to cover not only CITES-protected plant species, but also any plant and plant products exported in violation of any foreign law. Some have questioned whether the increase in anti-trafficking laws and provisions, including in particular the requirement to enforce violations of foreign law, may overburden inspectors and investigators to the point of rendering such laws unenforceable. This report has explored the issue of international wildlife trafficking, including illustrative types of wildlife crime involving African elephants and rhinos, Eurasian sturgeon, and so-called bushmeat. It has also discussed a broad range of international and U.S. policy responses, including long-standing commitments through the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), as well as newer announcements, such as the Obama Administration's July 2013 Executive Order on Combating Wildlife Trafficking. Reports of escalating exploitation of protected wildlife, coupled with the emerging prominence of highly organized and well-equipped illicit actors in wildlife trafficking, suggest that policy challenges persist. Continuing questions for policymakers include whether existing policy responses are achieving sufficient progress or no longer fit the problem; whether available legal tools and authorities are over- or under-utilized to respond to wildlife trafficking; and whether new programs, resources, and authorities are warranted or feasible. | Global trade in illegal wildlife is a potentially vast illicit economy, estimated to be worth billions of dollars each year. Some of the most lucrative illicit wildlife commodities include elephant ivory, rhino horn, sturgeon caviar, and so-called "bushmeat." Wildlife smuggling may pose a transnational security threat as well as an environmental one. Numerous sources indicate that some organized criminal syndicates, insurgent groups, and foreign military units may be involved in various aspects of international wildlife trafficking. Limited anecdotal evidence also indicates that some terrorist groups may be engaged in wildlife crimes, particularly poaching, for monetary gain. Some observers claim that the participation of such actors in wildlife trafficking can therefore threaten the stability of countries, foster corruption, and encourage violence to protect the trade. Reports of escalating exploitation of protected wildlife, coupled with the emerging prominence of highly organized and well-equipped illicit actors in wildlife trafficking, suggests that policy challenges persist. Commonly cited challenges include legal loopholes that allow poachers and traffickers to operate with impunity, gaps in foreign government capabilities to address smuggling problems, and persistent structural drivers such as lack of alternative livelihoods in source countries and consumer demand. To address the illicit trade in endangered wildlife, the international community has established, through the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a global policy framework to regulate and sometimes ban exports of selected species. Domestic, bilateral, regional, and global efforts are intended to support international goals of sustainable conservation, effective resource management, and enforcement of relevant laws and regulations. Increased recognition of the potential consequences of wildlife trafficking has caused some observers and policymakers to question the efficacy of existing U.S. and international responses and consider new options for addressing the problem. In November 2012, for example, then-Secretary of State Hillary Clinton announced the beginning of a revitalized effort to combat international wildlife trafficking. In July 2013, President Barack Obama issued Executive Order 13648 on Combating Wildlife Trafficking. The Executive Order identified poaching of protected species and the illegal trade in wildlife and their derivative parts and products as an escalating international crisis that is in the national interest of the United States to combat. The U.S. Congress has played a role in responding to these ongoing challenges and evaluating U.S. policy to combat international wildlife trafficking. Over time, Congress has enacted a wide range of laws to authorize conservation programs, appropriate domestic and international funding for wildlife protection and natural resource capacity building, and target and dismantle wildlife trafficking operations. In recent years, Congress has also held hearings and events that have addressed the growing problem of wildlife crimes and raised key questions for next steps. Interest in wildlife crime may continue in the 113th Congress. Congressional activity may include evaluating the seriousness of the threat as a national security issue, as well as raising questions regarding the effectiveness of existing policies, ranging from biodiversity programs to anti-crime activities. |
With a campaign to significantly reduce the budget deficit, some in the 112 th Congress see foreign affairs funds, particularly for foreign aid programs, as expenditures that can be cut in order to reduce the deficit. Foreign affairs spending typically amounts to about 1% of the total budget. Others, including some Members of Congress in both political parties and former Secretary of Defense Robert Gates, view a robust foreign affairs budget as essential to promoting U.S. national security and foreign policy interests, perhaps even saving long-term spending by preventing the much costlier use of troops overseas. The 112 th Congress began formal consideration of the annual State Department, Foreign Operations and Related Agencies appropriations (State-Foreign Ops) legislation with a House subcommittee markup of draft legislation on July 27. The Senate full committee reported out its State-Foreign Ops bill on September 22. The Consolidated Appropriations Act, FY2012, was approved by Congress in December 2011 and signed into law on December 23, 2011. State-Foreign Operations appropriations for FY2012 were included as Division I of the act. The State-Foreign Ops appropriation funds most programs and activities within the international affairs budget account, known as Function 150, including foreign economic and security assistance, contributions to international organizations and multilateral financial institutions, State Department and U.S. Agency for International Development (USAID) operations, public diplomacy, and international broadcasting programs. The bill does not align perfectly with the international affairs budget, however. Food aid, which is appropriated through the Agriculture appropriations bill, and the International Trade Commission and Foreign Claims Settlement Commission, both funded through the Commerce-Science-Justice appropriation, are international affairs (Function 150) programs not funded through the State-Foreign Operations appropriations bill. Furthermore, a number of international commissions that are not part of Function 150, such as the International Boundary and Water Commission, are funded through the State-Foreign Operations bill. A chart illustrating the organizational structure of the State-Foreign Operations appropriations bill is provided in Appendix A . This report focuses on only the accounts funded through the State-Foreign Operations appropriations bill, but provides appropriations figures for the entire international affairs (Function 150) budget in Appendix E . Recent events and congressional activity related to the State-Foreign Operations appropriations include the following: Congress passed the Consolidated Appropriations Act, 2012 ( H.R. 2055 ), in mid-December 2011, and the President signed it into law ( P.L. 112-74 ) on December 23. The law provides a 10% increase over FY2011 in State Department, Foreign Operations and Related Program funds—a 12% increase for State Operations, 1% increase for International Broadcasting, and 9% increase for Foreign Operations. The enacted funding is 10% below the Administration's request. (See Appendix C and Appendix D for account-by-account details.) On November 21, 2011, the Joint Select Committee on Deficit Reduction announced it had failed to meet the deadline to produce a plan for reducing the security and nonsecurity budgets required by the Budget Control Act (BCA, P.L. 112-25 ). The next step identified by the BCA is sequestration (a trigger of defense and nondefense automatic budget cuts). Sequestration is to take effect January 2013. Congress passed and the President signed two continuing resolutions: H.J.Res. 94 ( P.L. 112-67 , signed December 16, 2011) continued funding through December 17, and H.J.Res. 95 ( P.L. 112-68 , signed December 17, 2011) continued funding through December 23. H.R. 2017 ( P.L. 112-33 , signed September 30, 2011) continued FY2011 government funding, reduced by 1.503% through October 4, 2011; H.R. 2608 ( P.L. 112-36 , signed October 5, 2011) continued the reduced FY2011 funding through November 18, 2011; and H.R. 2112 ( P.L. 112-55 , signed November 18, 2011) continues the reduced FY2011 funding through December 16, 2011. This law provides full-year FY2012 foreign food aid funding at $1,630.0 million. On September 22, the Senate Appropriations Committee reported out its State-Foreign Operations bill ( S. 1601 ; S.Rept. 112-85 ) with a total discretionary funding level of $45.1 billion plus $8.7 billion in OCO funding for a total of $53.8 billion in FY2012. (In addition, the Foreign Service Retirement Fund is mandatory spending amounting to $158.9 million in FY2012.) This is 14% more than the House funding level. (See below.) On September 7, the Senate Appropriations Committee voted for a $1.043 trillion government spending plan as called for in the Budget Control Act of 2011. Within this action, the Senate provided $44.6 billion in 302(b) allocations (excluding OCO funds) to State-Foreign Operations. Congress approved and the President signed into law the Budget Control Act of 2011 ( S. 365 / P.L. 112-25 ) on August 2, 2011, legislation to raise the debt ceiling. The measure requires specific funding reductions in security and nonsecurity discretionary spending through FY2013. Section 102 of the act defines all 150 budget accounts, including the Department of State and foreign operations accounts, as security spending, putting them in direct funding competition with the Departments of Defense, Homeland Security, and Veterans Affairs; the National Nuclear Security Administration; and the intelligence community. The law contains additional annual discretionary fund reductions through FY2021, without differentiating between security and nonsecurity categories. On July 27, 2011, the House Appropriations Subcommittee on State, Foreign Operations, and Related Programs marked up its FY2012 State-Foreign Operations appropriation, proposing a total discretionary appropriation of $39.7 billion base and $7.6 billion in OCO funds for a total of $47.3 billion. (In addition, the Foreign Service Retirement Fund is mandatory spending amounting to $158.9 million in FY2012.) The subcommittee total is $1.6 billion (3.4%) below the enacted FY2011 total and more than $12.3 billion (20.7%) below the President's FY2012 request. This bill remains unnumbered. The House Appropriations Committee announced on May 11, 2011, the subcommittee allocations, or "302(b)s," which set the State-Foreign Operations funding ceiling at $39.6 billion, 22% below the President's request of $50.95 billion. These figures exclude funds for overseas contingency operations, which do not count toward the 302(b) allocation. Earlier, on April 15, 2011, the House Budget Committee passed a budget resolution ( H.Con.Res. 34 ) recommending $36.6 billion in new budget authority for the International Affairs account, and an additional $8.7 billion in overseas contingency funds for State Department and foreign operations programs accounted for under a separate "Global War on Terrorism" budget function. At $45.3 billion, total budget authority approved under the resolution for International Affairs accounts would be 26% less than the Administration requested. On February 14, 2011, the Obama Administration submitted its FY2012 budget request to Congress. Hearings on various aspects of the international affairs budget request were held throughout March and April. On February 14, 2011, the Obama Administration sent its FY2012 budget request to Congress, with a total of $59.65 billion requested for the Department of State, Foreign Operations, and Related Programs. The budget, which the Administration was compiling a year before the 112 th Congress began focusing on reducing the deficit, represents an 8.2% increase from enacted FY2010 funding, including the FY2010 supplemental, and a 21.8% increase over the FY2011 enacted level. Figure 1 provides a breakout of the request by assistance type. Figure 1 shows the major categories of foreign affairs funding requested for FY2012 and what percentage of the total foreign affairs request each comprises. The Administration's priorities on foreign affairs funding for FY2012 as compared with those in FY2011 would have State Department Administration of Foreign Affairs funding increase from 22% in the FY2011 request to 25%, Bilateral Economic Aid funding decrease from 46% in the FY2011 request to 39%, and Security Aid funding increase from 12% in the FY2011 request to 19%. These three categories make up more than 80% of the total foreign affairs funding requested. For a full listing of funds requested for State, Foreign Operations and Related Agency accounts, see Appendix C and Appendix D . (For a description of all the accounts, see CRS Report R40482, State, Foreign Operations Appropriations: A Guide to Component Accounts , by [author name scrubbed].) The Administration's FY2012 budget request for the Department of State, international broadcasting, and related agencies is $19.52 billion, a nearly 10.8% increase over the FY2010 enacted level of $17.62 billion (which includes $1.52 billion in supplemental funds) and 22.4% more than the FY2011 enacted level of $15.95 billion. Of the $19.52 billion requested for FY2012, $4.39 billion is designated as extraordinary Overseas Contingency Operations (OCO) funding, with the remaining $15.14 billion considered to be the core budget request. The two largest State Department accounts make up 70% of the State Department operations request. They are Diplomatic and Consular Programs (D&CP), which funds salaries and expenses, certain public diplomacy activities, and some worldwide security upgrades; and Embassy Security, Construction, and Maintenance (ESCM), which covers costs related to embassy building, maintenance, land leasing, and worldwide security upgrades. D&CP would receive $11.89 billion, a nearly 36% increase over the FY2011 enacted funding level. The request for ESCM is $1.80 billion, or 11% more than the FY2011 enacted level. The FY2012 request also includes $767.1 million for International Broadcasting, 2.7% above the FY2011 enacted level and 2.4% above the FY2010 total. FY2012 funds requested for other related agencies include $1.6 billion for Contributions to International Organizations (CIO) including the United Nations (U.N.), $1.9 billion for U.N. Peacekeeping (CIPA), $120.8 million for funding International Commissions, and $42.7 million for the U.S. Institute for Peace. Also included are funding for The Asia Foundation ($14.9 million), the National Endowment for Democracy ($104.0 million), and educational and cultural exchange activities ($637.1 million) that help advance U.S. interests. (See Appendix C for funding levels of State Department, International Broadcasting, and Related Agency accounts.) The State Department's FY2012 request reflects similar priorities as in previous years, including funding for "frontline states" of Iraq, Afghanistan, and Pakistan; building Foreign and Civil Service capacity; and reduced funding to certain international organizations. For FY2012 short-term State Department activities in Iraq, the Administration is requesting $3.2 billion in OCO funds to cover the extraordinary costs associated with the transition from military to civilian leadership in Iraq, in addition to a core budget request of nearly $496 million to support ongoing operations there. The planned withdrawal of U.S. military forces from Iraq by December 31, 2011, in accordance with U.S.-Iraq bilateral agreements, will bring a dramatic shift in the U.S. government's presence in Iraq, with the State Department planning to take over the helm of U.S. engagement with a diplomatic presence—including an embassy, two consulates, and two temporary branch offices—that is unmatched in terms of its security considerations, size, and complexity. Some Members of Congress remain skeptical of the State Department's capacity to take over more than 300 activities that the U.S. military had been performing, from environmental cleanup to medical support, while pursuing a wide-ranging policy agenda. The Administration is requesting $757.5 million in OCO funds in FY2012 for short-term needs related to State Department operations in Afghanistan to support an increased civilian presence, security, and other operations. In addition, the budget request includes a core budget request of $31.9 million for ongoing operations in Afghanistan. For State Department operations in Pakistan, the Administration's request for FY2012 includes $89.4 million in OCO funds to support an increased diplomatic presence, plus $19.6 million for ongoing operations. The State Department's Human Resources Initiative is a multi-year initiative started under the George W. Bush Administration and continued by the Obama Administration to build civilian capacity through increased staffing to alleviate a chronic shortage, reduce reliance on contractors, and increase training, including for critical languages. Original plans called for increasing Foreign Service capacity by 25% over FY2008 levels by FY2014, but the Obama Administration's FY2012 budget request shifted the goal beyond 2014 by requesting fewer positions than originally planned. In each of the past three years, the Administration had requested funds to support 500-600 new positions. For FY2012, while acknowledging the need for a "tight budget for tight times," the Administration nonetheless asked for increased funding for the Diplomatic & Consular Programs account to continuing rebuilding the workforce at the State Department. The Administration is requesting $687.2 million to continue to build civilian capacity, including adding 197 new State Department positions at a cost of $66.7 million, including 130 (86 overseas, 44 domestic) Foreign Service and 67 Civil Service positions. The Administration proposed reductions in FY2012 funding in several State Department and related agency accounts, relative to the FY2010 funding levels that were in effect when the request was submitted. In some of these accounts, Congress made deeper cuts in the enacted FY2011 continuing resolution appropriated after the Administration's FY2012 budget submission; in other accounts, however, the Administration had requested lower levels for FY2012 funding than levels enacted by Congress for FY2011. The Administration requested $92.2 million in FY2012 for Conflict Stabilization Operations, formerly the Civilian Stabilization Initiative, which is designed to build civilian capability to prevent and respond to crises and conflicts. This is 23.2% less than in FY2010, but more than 4½ times greater than Congress appropriated in FY2011. The funds would support deployments of a Civilian Response Corps comprised of specialists from multiple federal agencies, as well as their training, oversight, and management. The FY2012 budget request also includes decreased funds, compared to FY2010 enacted levels for contributions to international organizations, including the United Nations, and for peacekeeping missions. The request, however, reflects some alternative sources of funding for some of these programs, including credits. Nevertheless, the Administration's FY2012 request still represents a 2.6% increase over the FY2011 enacted level for contributions to international organizations and 1.9% more than the FY2011 level for peacekeeping operations. These accounts primarily reflect the U.S. commitment to pay assessed contributions to most international organizations that have resulted from treaties and conventions the United States has signed and ratified. In addition, the Administration's FY2012 request proposed a cut of 13.2%, compared to FY2010 funding levels, for the U.S. Institute of Peace; however, the budget request of $42.7 million is 8.4% more than Congress appropriated for FY2011. Some of the deepest proposed cuts in FY2012 as compared with FY2011 enacted levels were for foundations and commissions, including The Asia Foundation, down 16.8%; the East-West Center, reduced by 48.6%; the National Endowment for Democracy, cut 13.3%; the Center for Middle East-West Dialogue, cut 11.1%; and the International Fisheries Commission, down 37.9%. The Foreign Operations budget comprises the majority of U.S. foreign assistance programs, both bilateral and multilateral. (See Appendix D for Foreign Operations accounts and funding levels.) The main exception is food assistance, which is appropriated through the Agriculture Appropriations bill. Foreign Operations accounts are managed primarily by USAID and the State Department, together with several smaller independent foreign assistance agencies such as the Millennium Challenge Corporation, the Peace Corps, and the Inter-American and African Development Foundations. The foreign operations budget also encompasses U.S. contributions to major multilateral financial institutions, such as the World Bank and U.N. entities, and includes funds for the Export-Import Bank and Overseas Private Investment Corporation, whose activities are regarded more as trade promotion than foreign aid. On occasion, the budget replenishes U.S. financial commitments to international financial institutions, such as the World Bank and the International Monetary Fund. The foreign operations budget request for FY2012 totals $40.13 billion, representing a 21.5% increase from the enacted FY2011 level of $33.02 billion. The request was released in February, before final FY2011 appropriations were enacted and before the current emphasis on budget reductions developed in Congress. At that time, foreign operations programs were being funded largely at the FY2010 funding level of $37.49 billion, compared to which the request was a 7% increase. In the FY2012 foreign operations request, the Administration focused on its key foreign assistance initiatives—the Global Health Initiative, Food Security Initiative, and the Global Climate Change Initiative—as well as the transition from military to civilian authority in front-line states and resources needed for reforming USAID operations. Since the request was released in February, events in the Middle East and widespread support for significant budget cuts have raised new questions about foreign assistance priorities. The following issues are likely to be among those at the center of congressional consideration of foreign operations appropriations for FY2012: With popular uprisings leading to the fall of governments in the Middle East when many in the 112 th Congress are pressing for drastic budget reductions, foreign assistance as a tool of democracy promotion is receiving significant scrutiny. Egypt, for example, has long been a top U.S. foreign aid recipient. The results of its political transition combined with congressional reaction to a more independent foreign policy course may shape future U.S. assistance. The form of assistance (which in recent years has been primarily military aid) is a key issue, with some lawmakers calling for debt cancellation, others for direct democracy promotion assistance, and still others suggesting that focusing aid on economic growth is the best way to foster a democratic future for Egypt. Similar considerations apply to Tunisia, for which the United States pledged $20 million in March through the Middle East Partnership Initiative for transition support, and legislation has been introduced in the Senate ( S. 618 ) to authorize Tunisia-United States and Egypt-United States enterprise funds. In Libya, the United States has suspended previously approved aid programs, approved $25 million in non-lethal assistance for Libyan opposition groups, and provided humanitarian assistance for refugees fleeing the country. As events evolve throughout the Middle East, U.S. efforts to respond with appropriate aid will likely be at the top of the foreign assistance agenda. The Department of Defense (DOD) greatly expanded its foreign aid activities in the wake of the Iraq and Afghanistan invasions, when high levels of security and economic aid flowed into those countries even while instability and relatively low personnel capacity limited the role of civilian aid agencies. As conditions on the ground have stabilized and both State and USAID have begun building their capacity in both countries, the Secretary of State and Secretary of Defense have expressed support for stronger civilian control of these activities. Congress, however, has not demonstrated support for Administration efforts to carry out such transitions. For example, the FY2011 foreign operations request called for funding in three foreign operations accounts―the Complex Crisis Fund (CCF), Pakistan Counterinsurgency Capability Fund (PCCF), and the International Narcotics Control and Law Enforcement (INCLE) account―to support activities such as police training that were previously funded through the Defense Appropriations bill. Congress, rather than providing additional funding for these activities, cut the CCF and INCLE account significantly in the FY2011 continuing resolution from FY2010 enacted levels and eliminated foreign operations funding for the PCCF, for which it instead provided $800 million through the Defense appropriation. While Secretary of State Clinton has claimed that a shift from military to civilian control will allow the Defense budget for Iraq to decrease by $16 billion, which may appeal to budget reduction advocates in Congress, the fate of the transition is in question, and FY2012 appropriations will be a strong indicator of Congress's position on this issue. For FY2012, the Administration has requested $75 million for the CCF, $1.1 billion for the PCCF, and $2.78 billion for INCLE programs. The Administration also requested, for the first time, $50 million for a Global Contingency Security Fund (with an additional $450 million requested through the DOD appropriation), to support a pilot program focused on joint civilian-military response to unforeseen events. As demonstrated in Table 5 , the Administration's FY2012 request would largely continue the flow of assistance to Afghanistan, Iraq, and Pakistan, countries of particular strategic interest in the fight against terrorism. However, Congress has expressed significant concerns over State and USAID accountability for the billions of U.S. assistance dollars that have flowed to these countries in recent years. The Commission on Wartime Contracting has reported that billions of dollars have been lost to waste, fraud, and abuse in Afghanistan and Iraq, often as a result of poor planning, limited competition in contracting, and insufficient oversight of contractors. Widely reported corruption at every level of the Afghanistan government and within Pakistan has bolstered concerns that U.S. funds are being channeled for the private use of elites, rather than for development purposes. In June 2010, then House State-Foreign Operations Appropriations Subcommittee Chairwoman Nita Lowey announced that her subcommittee would not consider the non-humanitarian part of the Administration's FY2011 aid request for Afghanistan until she was satisfied that the corruption issue had been resolved. The topic was also raised by several appropriators at hearings in early 2011 on the FY2012 request. The revelation that Osama Bin Laden was apparently living near a military academy in Pakistan for years before he was killed in May 2011 by U.S. military forces has led to doubts about the use of U.S. security assistance to Pakistan and calls by some for the suspension of all U.S. aid to Pakistan. In determining FY2012 aid funding, Congress will likely consider the risks associated with the continuation or reduction of assistance to these countries, or the additional funding that might be required in an effort to enhance oversight and lessen the risk of fraud and abuse. U.S. international family planning and abortion-related issues have generated contentious debate in Congress for over three decades, resulting in frequent clarification and modification of family planning laws and policies. Recent congressional debate centers around two key issues: (1) implementation of the "Mexico City policy" and (2) U.S. funding of the U.N. Population Fund (UNFPA). The Mexico City policy, issued by President Reagan in 1984, required foreign NGOs receiving USAID family planning assistance to certify that they would not perform or actively promote abortion as a method of family planning, even if such activities were undertaken with non-U.S. funds. The policy has been rescinded and reissued by past and current Administrations. It was most recently rescinded by President Obama in January 2009. Language reinstating the policy was included in the Foreign Relations Authorization Act for FY2012, approved by the House Foreign Affairs Committee on July 21, 2011, indicating that it may be a contentious issue during consideration of FY2012 foreign operations appropriations. Previous Administrations have also suspended grants to UNFPA due to evidence of coercive family planning practices in China, citing violations of the "Kemp-Kasten" amendment, which bans U.S. assistance to organizations that support or participate in the management of coercive family planning programs. Past and current Administrations have disagreed as to whether UNFPA engages in such activities. The George W. Bush Administration suspended U.S. contributions to UNFPA from FY2002 to FY2008 following a State Department investigation of family planning programs in China. President Obama resumed U.S. contributions to the organization in 2009. In recent years, Congress has enacted certain conditions for U.S. funding of UNFPA. For FY2012, the Administration requested a total of $769.105 million for bilateral and multilateral family planning and reproductive health assistance, including $47.5 million for UNFPA. The Administration has requested $8.72 billion through the Global Health and Child Survival Account to support State and USAID components of its Global Health Initiative (GHI) in FY2012. The request represents a 10% increase over FY2010 funding, including supplemental funds, and 11.3% over the FY2011 enacted level. GHI is intended to be a comprehensive approach to global health problems that builds on the previous Administration's focus on global HIV/AIDS, tuberculosis, and malaria, but prioritizes building strong and sustainable health systems through an emphasis on maternal and pediatric programs, as well as strategic coordination. The FY2012 request includes notable increases for nutrition programs and maternal and child health activities, while proposing a funding reduction only for pandemic influenza programs. The initiative was designed to last six years and invest $63 billion. However, with a total of about $18 billion appropriated for GHI in FY2009 and FY2010, Congress would need to provide $15 billion on average for FY2011 through FY2013 to meet that target, just as budget constraints make cuts more likely than increases. The 112 th Congress may face difficult questions in determining funding levels for GHI programs. The life-saving nature of many global health activities may give pause to some lawmakers looking for budget savings, while the significant resources needed just to maintain the health gains of the last decade, such as providing anti-retroviral drugs for HIV/AIDS patients, may appear to others to be unsustainable. Feed the Future (FtF), the Obama Administration's food security initiative announced in 2010, continues to be a priority for the Administration, which requested $1.56 billion through the State-Foreign Operations appropriation for related programs in the FY2012 budget, about 20% more than the enacted FY2010 level. FtF is the outgrowth of a pledge made by the President at a G-8 summit in 2009 to provide at least $3.5 billion over three years (FY2010-FY2012) to address root causes of global hunger, such as low agricultural productivity and poor nutrition. The initiative targets funding to countries with widespread hunger, an agriculture-based economy, and comprehensive strategies for food security already in place. The initiative also emphasizes the benefits of working multilaterally and in partnership with other stakeholders to leverage resources. The FY2012 request also includes $308 million for the multi-donor Global Agriculture and Food Security Program (GAFSP), managed by the World Bank. Congress has shown less support for this approach, appropriating just under $100 million for the GAFSP in FY2011 in response to a request for $408 million. In testimony before the Senate State-Foreign Operations Appropriations Subcommittee, USAID Administrator Rajiv Shah commented that newer initiatives, such as FtF, are particularly vulnerable to budget cuts in FY2012. The FY2012 request for programs supporting the Global Climate Change Initiative (GCCI) totals slightly over $1.3 billion, a 40% increase over the $946 million enacted in FY2010. (As with GHI and FtF, total GCCI funding for FY2011 is unclear because some relevant sub-account allocations have not been reported.) The funds would support activities relating to climate change, with an emphasis on adaptation, deployment of clean energy technologies, and reduction of greenhouse gas emissions through sustainable landscapes. A significant portion of this climate change funding would be channeled through international financial institutions. The emphasis on multilateral funding, both for climate change and food security, has been described by the Administration as a fiscally responsible approach intended to leverage commitments from other donors and increase the impact of U.S. funds. As with the multilateral approach to food security, however, Congress has not been fully supportive of the Administration's requests. The $400 million requested for the International Clean Technology Fund in FY2012 would be a 117% increase over the FY2011 funding, which was enacted after the FY2012 request was made. The request also includes $190 million for the International Strategic Climate Fund, a 281% increase over the FY2011 level. USAID Administrator Shah noted in congressional testimony earlier this year that his biggest frustrations in the job have related to the agency's complicated procurement process and a human resources management system that makes it difficult to reward leadership and risk-taking. He hopes to address these issues through USAID Forward, an initiative to change the way the agency does business through implementing reforms related to procurement, talent management, building policy capacity, monitoring and evaluation, budget management, use of science and technology, and innovation. While these reforms are intended to address aspects of USAID operations that Congress has often criticized, implementation will require additional funding at a time when Congress seeks to reduce spending. For FY2012, the Administration requests about $380 million for USAID Forward reforms through the USAID Operating Expenses account, primarily to hire 95 mid-career Foreign Service Officers, with an emphasis on Contract Officers and Controllers. The Administration has requested $358.4 million in funding through Treasury Department international programs for general capital increases (GCIs) at several multilateral financial institutions in FY2012―$117.4 million for the International Bank of Reconstruction and Development; $106.6 million for the Asian Development Bank; $102.0 million for the Inter-American Development Bank; and $32.4 million for the African Development Bank. Most of the funds requested represent just one of several annual installments toward a larger total GCI commitment. Multiple simultaneous GCIs are unusual but necessary, according to Treasury Secretary Timothy Geithner, because of high lending rates at the institutions, with U.S. encouragement, in response to the global financial crisis. Congressional appropriators, however, have suggested reluctance to appropriate such funds without prior consideration of authorization legislation stipulating reforms on which disbursement of the funds would be contingent. The Administration asserts that failure to provide the requested funding would diminish U.S. influence globally and potentially create an opportunity for other countries, such as China, to expand their global influence. U.S. national security, trade promotion, and humanitarian interests are rationales for most international affairs activities. During the Cold War, foreign aid and diplomatic programs had a primarily anti-communist focus, while concurrently pursuing other U.S. policy interests, such as promoting economic development, advancing U.S. trade, expanding access to basic education and health care, promoting human rights, and protecting the environment. After the early 1990s, with the Cold War ended, distinct policy objectives—including stopping nuclear weapons proliferation, curbing the production and trafficking of illegal drugs, expanding peace efforts in the Middle East, achieving regional stability, protecting religious freedom, and countering trafficking in persons—replaced the Cold War-influenced foreign policy objectives. A defining change in focus came following the 9/11 terrorist attacks in the United States. Since then, many U.S. foreign aid and diplomatic programs have emphasized national security objectives, frequently cast in terms of contributing to efforts to counter terrorism. In 2002, President Bush released a National Security Strategy that for the first time established global development as the third pillar of U.S. national security, along with defense and diplomacy. Development was again underscored in the Administration's 2006 and 2010 National Security Strategy. Also in 2002, foreign assistance budget justifications began to highlight the war on terrorism as the top foreign aid priority, emphasizing U.S. assistance to 28 "front-line" states—countries that cooperated with the United States in the war on terrorism or faced terrorist threats themselves. Large reconstruction programs in Afghanistan and Iraq exemplified the emphasis on using foreign aid to combat terrorism. State Department efforts focused extensively on diplomatic security and finding more effective ways of presenting American views and culture through public diplomacy, particularly in Muslim communities. The Obama Administration has carried forward many Bush foreign aid initiatives, including USAID's Development Leadership Initiative (DLI), the Millennium Challenge Corporation, and robust assistance to Iraq, Afghanistan, and Pakistan. The Obama Administration has also largely sustained Bush Administration investments in global health and HIV/AIDS treatment, though its Global Health Initiative shifts the emphasis away from a focus on discrete diseases and toward comprehensive health systems. In the FY2011 and FY2012 requests, the Administration further defined its international priorities, with an emphasis on building State Department and USAID capacity, supporting multilateral food security and global climate change initiatives, and shifting responsibility for assistance programs in Iraq and elsewhere from military to civilian authorities. Table 2 and Figure 2 show State-Foreign Operations appropriations for the past decade in both current and constant dollars. Table 3 and Figure 3 show appropriations for the State Department and related agencies over the past decade in both current and constant dollars. Table 4 and Figure 4 show appropriations for the State Department and related agencies over the past decade in both current and constant dollars. Prior to the wars in Afghanistan and Iraq, Israel and Egypt typically received the largest amounts of U.S. foreign aid every year since the Camp David Peace Accords in 1978. The reconstruction efforts in Iraq and Afghanistan moved those countries into the top five, though assistance to Iraq has declined significantly in the past couple of years, with the completion of many reconstruction activities. Meanwhile, a combination of security assistance and economic aid designed to limit the appeal of extremist organizations has moved Pakistan up the list in recent years. Funding for Iraq, Afghanistan, and Pakistan includes Overseas Contingency Operations (OCO) temporary appropriations. In the FY2012 request, Afghanistan tops the list at $3,213.4 million, including $1.2 billion in Economic Support Fund-OCO funds. Israel ranks second, with all of the $3,075 million requested for Foreign Military Financing (FMF). Pakistan ranks third at $2,965 million, 80% of which is for activities supported by the Economic Support Fund (ESF) and the Pakistan Counterinsurgency Capability Fund-OCO (PCCF). Iraq moves up from sixth in FY2010 to fourth in the FY2012 request. This is largely because of $1.0 billion for INCLE-OCO and $1.0 billion for FMF-OCO. Haiti, which was a top recipient in FY2010 as a result of supplemental funds for post-earthquake relief and reconstruction, would not be among the top 10 recipients in FY2012 under the Administration's proposal. As shown in Figure 5 , under the FY2012 budget request, Africa ($7.8 billion), Near East ($8.8 billion), and South Central Asia ($6.8 billion) would receive the most U.S. foreign assistance. Aid to Africa primarily supports HIV/AIDS and other health-related programs while 88% of the aid to South Central Asia is requested for Afghanistan and Pakistan. The Near East region continues to be dominated by assistance to Israel ($3.0 billion), Iraq ($2.4 billion), Egypt ($1.6 billion), and Jordan ($0.7 billion). The Western Hemisphere's projected relative decline in FY2012 is attributable mostly to the $1.4 billion in supplemental funds for Haiti's humanitarian crisis in 2010. Assistance to Europe and Eurasia would decline, according to the Administration, partly due to a reduction of funds in AEECA to reflect progress made by many countries in the region and other more pressing global priorities. Aid to East Asia and Pacific remains relatively low and consistent with past years' levels. Over the years, Congress has expressed interest in various discrete aid sectors, such as education, building trade capacity, maternal and child health, and biodiversity, that are funded across multiple accounts and/or agencies. Administrations have begun presenting their respective budget requests with a section showing what portion of the request would address some of these "key interest areas." Unlike the account funding tables in the budget request, however, the key interest area breakout does not show prior year allocations, limiting year-to-year comparison to requested funds rather than actual funding. This provides an indication of the Administration's interests and priorities, but not necessarily those of congressional appropriators. Table 6 compares the FY2011 and FY2012 budget requests for key interest areas identified by the Administration. The Administration requested less for most sectors than it did in FY2011. Perhaps surprisingly, two of the Administration's major initiatives—Food Security and Global Climate Change―show declines in the FY2012 request , as does the request for Microenterprise and Microfinance, Trade Capacity Building, Pandemic Influenza, and Other Public Health Threats. Sectors with increased funding include Family Planning, Maternal and Child Health, and Water. The Administration emphasized two new focus areas, adding Gender Funding and Science, Technology, and Innovation to the key interests list. Appendix A. Structure of State-Foreign Operations Appropriations Appendix B. Abbreviations Appendix C. State Department and Related Agencies Appropriations Appendix D. Foreign Operations Appropriations Appendix E. International Affairs (150) Budget Account | Some in the 112th Congress view the foreign affairs budget as a place to cut funds in order to reduce the budget deficit. Foreign affairs expenditures typically amount to about 1% of the annual budget. Others, including Members of Congress of both political parties, view a robust foreign affairs budget as essential for America's national security and foreign policy interests. The State Department, Foreign Operations, and Related Agencies appropriations bills, in addition to funding U.S. diplomatic and foreign aid activities, have been the primary legislative vehicle through which Congress reviews the U.S. international affairs budget and influences executive branch foreign policy making in recent years. (Congress has not amended foreign policy issues through a complete authorization process for State Department diplomatic activities since 2003 and for foreign aid programs since 1985.) After a period of general decline in the late 1980s and 1990s, funding for State Department operations, international broadcasting, and foreign aid rose steadily from FY2002 to FY2010, largely because of ongoing assistance to Iraq and Afghanistan, new global health programs, and increasing assistance to Pakistan. It declined again in FY2011 when Congress passed a continuing resolution (P.L. 112-10) significantly reducing U.S. government-wide expenditures, including foreign affairs. On February 14, 2011, the Obama Administration submitted its FY2012 budget proposal before enactment of the final FY2011 appropriations and the current congressional emphasis on budget reductions. The FY2012 request sought $61.5 billion for the international affairs budget, including a core State-Foreign Operations budget of $59.65 billion plus $8.70 billion for extraordinary Overseas Contingency Operations in frontline states. The total request represented an increase of 21.8% over the enacted FY2011 funding level for State Department and Foreign Operations accounts and sought significant increases for State Department's administration of foreign affairs accounts, security assistance, and various multilateral environmental accounts. Funding for international affairs programs was expected by many to decline in FY2012 as the 112th Congress focuses on budget reduction measures to meet objectives in the Budget Control Act of 2011 (P.L. 112-25). The House subcommittee mark of the FY2012 State-Foreign Operations appropriation recommended $47.58 billion in total funding, and the Senate committee-passed bill (S. 1601) recommended $53.97 billion. The enacted total funding level of $53.88 billion is nearly 10% less than the Administration's request, but is 10% more than the enacted total for FY2011. However, $11.20 billion of the FY2012 enacted total is designated for Overseas Contingency Operations (more than the $8.70 billion requested by the Administration) and does not count toward enacted discretionary spending caps. This report analyzes the FY2012 request and congressional action related to FY2012 State-Foreign Operations legislation. The Summary, "Introduction" and "Recent Developments" sections, and appendix tables in this version of the report have been updated to reflect enactment of P.L. 112-74, the Consolidated Appropriations Act, FY2012. |
The Senate imposes some general procedural requirements and prohibitions on its committees, but, in general, the Senate's rules allow each of its standing committees to decide how to conduct business. Most of the chamber's requirements for committees are found in Senate Rule XXVI. Because the committees are agents of the Senate, they are obligated to comply with all Senate directives that apply to them. This report identifies and summarizes the provisions of the Senate's standing rules, standing orders, precedents, and other directives that relate to legislative activity in the Senate's standing committees. The report covers four main issues: committee organization, committee meetings, hearings, and reporting. The coverage of this report is limited to requirements and prohibitions that are of direct and general applicability to most or all Senate committees, as they consider most legislative matters. This report may not capture every nuance and detail of the rules themselves. For that purpose, the text of the appropriate rule or other document should be consulted. Adoption of committee rules ; Rule XXVI, paragraph 2 Each committee is required to adopt written rules to govern its proceedings. Committee rules must not be inconsistent with the rules of the Senate, but the Standing Rules do not elaborate on what this means in practice. Publication of committee rules ; Rule XXVI, paragraph 2 The rules adopted by each committee are to be published in the Congressional Record by March 1 of the first session of each two-year Congress. If the Senate should create a committee on or after February 1, the committee must adopt its rules and publish them in the Record within 60 days. If a committee later adopts an amendment to its rules, that amendment becomes effective only after it is published in the Record . Committee records ; Rule XXVI, paragraph 7(b) Each committee, except for the Appropriations Committee, is to keep a record of its actions, including rollcall votes taken. Authority to meet ; Rule XXVI, paragraph 1 A standing committee and its subcommittees are authorized to meet and to hold hearings when the Senate is in session as well as during its recesses or adjournments. Committees do not have unlimited authority to meet when the Senate is also meeting. Meetings during Senate sessions ; Rule XXVI, paragraph 5(a) A committee may not meet (or continue a meeting in progress) on any day (1) after the Senate has been in session for two hours, or (2) after 2:00 p.m. when the Senate is in session. This prohibition does not apply to the Appropriations and Budget Committees. The rule allows the majority and minority leaders (or their designees) to jointly waive the requirement for other committees, but in practice the Senate instead waives it by unanimous consent on the floor if no Senator objects. Regular meeting day ; Rule XXVI, paragraph 3 Each committee must designate a regular day on which to meet weekly, biweekly, or monthly. This requirement does not apply to the Appropriations Committee. In practice, committees do not always convene on the specified meeting date. Many committees meet at more frequent intervals than specified in their rules. Additional committee meetings ; Rule XXVI, paragraph 3 The chair of a committee may call additional meetings at his or her discretion. In addition, three members of a committee can make a written request to the chair to call a special meeting. The chair then has three calendar days within which to schedule the meeting, which is to take place within the next seven calendar days. If the chair fails to do so, a majority of the committee members can file a written motion to hold the meeting at a certain date and hour. This is a rarely used device. However, the expectation that Senators are prepared to invoke it may encourage committee chairs to schedule meetings sought by other committee members. Scheduling meetings ; Standing Orders of the Senate; Section 401 of S.Res. 4 , 95 th Congress When a committee or subcommittee schedules or cancels a meeting, it is to provide that information—including the time, place, and purpose of the meeting—for inclusion in the Senate's computerized schedule information system. (See Public Announcement , below.) Open meetings ; Rule XXVI, paragraph 5(b) In general, committee and subcommittee meetings, including hearings, are open to the public. For any committee or subcommittee meeting (or a series of meetings on the same subject that may extend up to 14 calendar days), the committee or subcommittee is authorized to vote to close a meeting if it (1) involves national security information, (2) concerns committee personnel or staff management or procedure, (3) could invade personal privacy or damage someone's reputation or professional standing, (4) could reveal identities or damage operations relating to law enforcement activities, (5) could disclose certain kinds of confidential financial or commercial information, or (6) could divulge information that some law or regulation requires to be kept confidential. By agreeing, in open session, to a motion made (and seconded) to close the meeting to the public, the committee can go into closed session only to determine whether the subject of the meeting or the testimony at the hearing falls into any of the six specified categories. If it determines that this is the case, the committee can then decide by a second rollcall vote in open session to close the remainder of the meeting. Presiding at committee meetings ; Rule XXVI, paragraph 3 In the absence of the committee chair at any committee meeting, the next ranking member of the majority party shall preside. Quorum at meeting ; Rule XXVI, paragraph 7(a)(1) A committee or subcommittee may set its own quorum requirement for transacting business at meetings so long as the quorum is not less than one-third of the membership. A committee can set a lesser quorum requirement for hearings, but a majority must be physically present to order a measure or matter reported; see Quorum at hearing and Quorum for reporting , below. Also, proxies cannot be used to constitute a quorum; see Proxy votin g , below. Maintaining order ; Rule XXVI, paragraph 5(d) The committee chair is responsible for maintaining order at committee meetings and may close a meeting for that purpose until order is restored. Proxy voting ; Rule XXVI, paragraphs 7(a)(3) and 7(c)(1) A committee may adopt rules permitting proxy voting (see Proxy votes on reporting , below). However, a committee may not permit a proxy vote to be cast unless the absent Senator has been notified about the question to be decided and has requested that his or her vote be cast by proxy. Proxies may not be counted for the purpose of constituting a quorum. Records of committee meetings ; Rule XXVI, paragraph 5(e) Each committee shall maintain a transcript or recording of each committee meeting, whether it is open or closed to the public. This requirement can be waived by majority vote. Unless the meeting is closed, a transcript or a video or audio recording must be posted on the Internet no later than 21 business days after the meeting and remain posted until the end of the Congress after the meeting; this requirement may be waived by the Rules and Administration Committee in cases of technical barriers to compliance. Authority to hold hearings ; see Authority to meet , above. Investigative authority ; Rule XXVI, paragraph 1 Each standing committee, including any of its subcommittees, is empowered to investigate matters within its jurisdiction. Subpoena power ; Rule XXVI, paragraph 1 Each standing committee, including any of its subcommittees, is empowered to issue subpoenas for persons and documents. Public announcement ; Rule XXVI, paragraph 4(a) A committee is to announce the date, place, and subject of each hearing at least one week in advance, though any committee may waive this requirement for "good cause." (See Scheduling m eetings , above.) This requirement does not apply to the Appropriations and Budget Committees. Quorum at a hearing ; Rule XXVI, paragraph 7(a)(2) A committee or subcommittee may set its own quorum requirement of less than one-third of the members "for the purpose of taking sworn testimony." The Senate standing rules do not set a minimum quorum for this purpose. Several committee rules allow sworn testimony to be taken with just one member in attendance. (See Quorum at a meeting and Quorum for r eporting , below.) Statements of witnesses ; Rule XXVI, paragraph 4(b) Each committee is to require each witness to file a written statement at least one day before his or her appearance, though the chair and ranking minority member may waive this requirement. This provision does not apply to the Appropriations Committee. Staff summaries of testimony ; Rule XXVI, paragraphs 4(b) and 4(c) The committee may direct its staff to prepare daily digests of the statements that witnesses propose to present and then to prepare daily summaries of the testimony that the committee actually received. With the approval of the chair and ranking minority member, the committee may include the latter summaries in any published hearings. Witnesses selected by the minority ; Rule XXVI, paragraph 4(d) During hearings on any measure or matter, the minority shall be allowed to select witnesses to testify on at least one day if the chair receives such a request from a majority of the minority party members prior to the end of the hearing. This provision does not apply to the Appropriations Committee. Open hearings ; see Open meetings , above. Broadcasting hearings ; Rule XXVI, paragraph 5(c) Any hearing that is open to the public also may be open to radio and television broadcasting. 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However, if a written report is filed, Senate rules and statutes specify certain items that must be included: Other views ; Rule XXVI, paragraph 10(c) A committee member is entitled to have his or her supplemental, minority, or additional views included in the committee's report on a measure or matter if the committee member (1) gives notice, at the time the committee orders the measure or matter reported, of his or her intent to submit such views, and (2) files those views in writing within three calendar days of the committee vote. This provision does not apply to the Appropriations Committee. Rollcall votes taken ; Rule XXVI, paragraphs 7(b) and (c) A committee report on a measure shall contain the results of any rollcall votes taken on the measure and amendments to it and on the motion to order it reported, including the names of Senators voting in support or against. This requirement does not apply if the results have been "previously announced by the committee." 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Tax law complexity analysis ; Sections 4022(b) of the Internal Revenue Service Reform and Restructuring Act of 1998 ( P.L. 105-206 ) For measures reported by the Senate Finance Committee (or a conference committee) that include any provision that "would directly or indirectly amend the Internal Revenue Code of 1986 and which has widespread applicability to individuals or small businesses," the Joint Committee on Taxation (in consultation with the Internal Revenue Service and the Treasury Department) must provide in the committee report a tax complexity analysis (or instead provide such analysis to members of the reporting committee). Re port on jointly referred measure ; Rule XVII, paragraph 3(b) There may be only one report on a bill that was referred jointly to two or more committees. The report may be printed in several numbered parts prepared by different committees. 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Second, the written report on the measure or matter (if there is a written report) is to be available to Senators for two calendar days (excluding Sundays and legal holidays) before the Senate begins considering the measure or matter. The two-calendar-day requirement may be waived jointly by the majority and minority leaders and does not apply to congressional declarations of war or national emergency or to joint resolutions of disapproval that are effective only if enacted within statutory deadlines. | The Senate imposes some general procedural requirements and prohibitions on its committees, but, in general, the Senate's rules allow each of its standing committees to decide how to conduct business. Most of the chamber's requirements for committees are found in Senate Rule XXVI. Because the committees are agents of the Senate, they are obligated to comply with all Senate directives that apply to them. This report identifies and summarizes the provisions of the Senate's standing rules, standing orders, precedents, and other directives that relate to legislative activity in the Senate's standing committees. The report covers four main issues: committee organization, committee meetings, hearings, and reporting. The coverage of this report is limited to requirements and prohibitions that are of direct and general applicability to most or all Senate committees as they consider most legislative matters. The report does not cover any special provisions contained in Senate resolutions concerning the Select Committee on Ethics, the Select Committee on Intelligence, or the Special Committee on Aging. 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Proposed FY2016 defense authorization and appropriations legislation under consideration in Congress as of June 2015 ( H.R. 2685 , H.R. 1735 , S. 1376 ) would not dramatically change the scope, scale, purposes, resources, or terms of the Syria Train and Equip program as it was originally authorized by Congress and as it is currently being implemented by the Administration. Nevertheless, Congress is considering FY2016 proposals that would extend and/or amend existing authorities, modify reporting requirements, and appropriate new funds in ways that illustrate several key policy issues related to the program and to broader debates about U.S. foreign policy and strategy toward the conflict in Syria. For example: Proposed reporting and certification requirements in the House and Senate versions of the FY2016 National Defense Authorization Act (NDAA, H.R. 1735 , S. 1376 ) would require the Administration to report to Congress on the potential provision of U.S. support and protection to program participants upon their return to Syria from training locations outside of the country. Some supporters of the program and advocates of a more robust anti-Asad strategy for the United States argue that the United States should be prepared and willing to protect U.S. trainees from potential attacks from pro-Asad forces and extremist groups through defensive fire, air cover, intelligence and/or resupply. Critics of deeper U.S. involvement in the Syria conflict argue that such protection may entail confrontation and armed conflict between U.S. forces and the Syrian government or other actors, with unpredictable consequences. Proposed restrictions in the House-enrolled FY2016 NDAA ( H.R. 1735 ) on the provision of U.S. assistance to those found to have misused U.S. assistance reflect some Members' concerns for ensuring that U.S. assistance supports only those purposes that Congress set out for the program in FY2015 legislation. Specifically, some Members of Congress seek to ensure that U.S. assistance is used by U.S.- trained Syrians to combat the Islamic State and not to overthrow the government of Bashar al Asad or for other purposes. Administration officials insist that trainees and beneficiaries are receiving assistance to enable them first and foremost to protect civilians, opposition-held areas, and themselves from the forces of the Islamic State. Administration officials have said that forces misusing or redirecting U.S. assistance for their own purposes would not receive further U.S. support. Nevertheless, some ambiguity exists in the relationship between the stated purposes of authorized U.S. assistance and Syrian trainees' intentions toward Asad, raising questions among some Members of Congress about how U.S. assistance might ultimately be used by recipients. Proposed new reporting requirements in the House-enrolled FY2016 NDAA would require the Administration to report on the feasibility and potential costs of operations to establish so-called safe zones or no-fly zones in areas of Syria. This proposed change, while not involving the train and equip program directly, may reflect preferences expressed by some Syrian opposition activists and their U.S. supporters—including some Members of Congress—for a broader scope and scale of U.S. assistance under the train and equip program and/or for parallel U.S. military intervention to protect Syrian civilians. However, other Syrian groups and U.S. observers may reject deeper U.S. involvement. The potential effects of various FY2016 proposals are analyzed in more detail below in sections corresponding to current policy questions. Table 1 below reproduces the language enacted in the FY2015 NDAA ( P.L. 113-291 ) and the Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ) alongside FY2016 defense legislative proposals under congressional consideration as of June 2015 ( H.R. 2685 , H.R. 1735 , S. 1376 ). Table A-1 in the Appendix reproduces enacted FY2015 NDAA and appropriations language alongside the President's evolving 2014 requests for authority and funds for the program. Congress and the President have debated proposals for the provision of U.S. assistance to the Syrian opposition since the outbreak of the Syrian uprising in 2011. Members of Congress have articulated varying views on the potential purposes, scope, risks, and rewards of such assistance. The executive branch, with the support of Congress, has provided overt non-lethal assistance to unarmed and armed groups in Syria, in addition to providing humanitarian assistance in Syria and in neighboring countries. U.S. assistance and weaponry also reportedly was provided to select Syrian opposition groups under covert action authorities. Through mid-2014, President Obama and some Members of Congress opposed the overt provision of U.S. military training or equipment to opposition forces reportedly in part because of concerns about its effectiveness and possible unintended consequences. Some Members have opposed the new train and equip program since that time for these reasons. The President's stance was altered by the failure in early 2014 of United Nations-backed negotiations aimed at ending the Syrian civil war and the mid-2014 offensive in Iraq by the extremist group known as the Islamic State (IS, also known as ISIL or ISIS). In the Administration's June 2014 amended request for war funding, President Obama requested authority and funding from Congress to begin an overt "train and equip" program for vetted Syrians for the following purposes: defending the Syrian people from attacks by the Syrian regime, facilitating the provision of essential services, and stabilizing territory controlled by the opposition; defending the United States, its friends and allies, and the Syrian people from the threats posed by terrorists in Syria; and, promoting the conditions for a negotiated settlement to end the conflict in Syria. The President amended the request in September 2014 to reflect additional goals for combatting the Islamic State. The FY2015 Continuing Resolution ( P.L. 113-164 , "the FY2015 CR") contained temporary authorization for the training and equipping of vetted Syrians that differed from the Administration's requests and expired on December 11, 2014. The FY2015 NDAA (Sections 1209, 1510, and 1534 of Division A of P.L. 113-291 ) and the Consolidated and Further Continuing Appropriations Act, 2015 ('Counterterrorism Partnership Fund' and Section 9016 of P.L. 113-235 ) provided further authority and funding guidance for the program. Like the FY2015 CR, these acts authorized the provision of U.S. assistance to vetted Syrians by the Department of Defense (DOD) in coordination with the State Department for the following purposes: 1) Defending the Syrian people from attacks by the Islamic State of Iraq and the Levant (ISIL), and securing territory controlled by the Syrian opposition. (2) Protecting the United States, its friends and allies, and the Syrian people from the threats posed by terrorists in Syria. (3) Promoting the conditions for a negotiated settlement to end the conflict in Syria. In setting these conditions, Congress rejected the Administration's request for explicit authority to train and equip Syrians to defend Syrian civilians from Syrian government forces. Authority for training for such defensive action may be implied by the phrases referring to "securing territory" and promoting conditions for a negotiated settlement to the wider conflict. Relative to the authority enacted in the FY2015 CR, the FY2015 full-year appropriations and NDAA: Expanded the types of assistance to be provided from training and equipment to include stipends and construction of training and other facilities. Added vetting requirements for program participants to include commitment to human rights, rule of law, and "a peaceful and democratic Syria." Required 15-day advance notifications of a detailed plan before funds can be obligated, and continued to require approval by the four congressional defense committees of individual reprogramming requests. Added criteria to notification and progress reporting requirements to provide further metrics for program evaluation. Authorized assistance to third countries for program-related purposes. Stated that while the Syrian program may draw on FY2015 CTPF funds that are available for two years, during execution, FY2015 funds are to be transferred to individual Operation and Maintenance (O&M) accounts that are available for one-year. Ended (provided for the "sunset" of) the authority on December 31, 2016, and limited related funds to FY2015 monies and reprogramming requests to OCO-designated Defense funds available from October 1, 2014, through September 30, 2016. Permitted the President to waive any other provisions of law that would otherwise restrict the provision of assistance authorized for the Syria program, provided that the President notifies Congress 30-days in advance. As of June 2015, several hundred U.S. military training personnel and a similar number of support personnel have deployed in support of the Syria Train and Equip Program. According to Administration officials, the program intends to field a force of approximately 3,000 vetted Syrians in 2015 and 5,400 others per year in 2016 and, if authorized, in 2017. Congressional defense committees approved initial funding for the program in late 2014, and approved related transfers and further funding in early 2015. According to U.S. officials, program implementers have engaged with different Syrian groups in order to identify potential recruits for the program and worked with partner governments for assistance in vetting participants (see "Vetting Definitions" in Table 1 below). Press reports citing unnamed U.S. officials suggested that fighting in Syria and uncertainties among Syrian opposition members and their regional backers about the program's purpose and about the general level of U.S. support for anti-Asad efforts delayed the program to some extent. Nevertheless, as of late March 2015, U.S. officials reportedly had identified more than 2,000 planned participants and vetted 400 of them. Training began for the first batch of 90 recruits in early May. U.S. officials have declined to publicly identify locations where training may take place, but Turkish officials have stated that training activities related to the program are underway in Turkey. Various press reports also claim that Jordan, Saudi Arabia, and Qatar have agreed to host program activities. The United Kingdom has announced its intention to support the U.S. training program by sending 75 training personnel to participate. The Administration's FY2016 defense appropriations request seeks $600 million in additional U.S. funding for the program. The House and Senate versions of the FY2016 National Defense Authorization Act ( H.R. 1735 and S. 1376 ) would authorize that level of funding on different terms (see "Funding Source" in Table 1 ), and would create new reporting and certification requirements relative to the provision of U.S. support to U.S.-trained fighters in the event of their attack by pro-Asad or Islamic State forces (see " What degree of post-training support or protection should the U.S. government provide to Syrian trainees and on what terms? " below). As noted above, some Members of Congress seek to ensure that the Administration clearly determines and communicates the types of support it is prepared to provide to program participants after their return to Syria. The State Department has sought new and used existing authorities to provide nonlethal assistance, including to armed groups, notwithstanding other provisions of law restricting the provision of U.S. assistance in Syria and to Syrians. As of March 2015, the United States had allocated "nearly $400 million in assistance that supports the Syrian opposition since the start of the revolution." This total includes more than $30 million in assistance reprogrammed in March 2015 in order to provide non-lethal equipment, vehicles, and supplies to "moderate" armed Syrian opposition forces in Syria in parallel to the DOD-led train and equip program. Vetting procedures for these transfers have not been publicly described in detail by State Department officials and it is unclear how or whether they differ from vetting used for the DOD train and equip program. Section 7041(i) of Division K of the FY2014 Consolidated Appropriations Act ( P.L. 113-76 ) significantly expanded the Administration's authority to provide nonlethal assistance in Syria for certain purposes using the Economic Support Fund (ESF) account. Section 7041(h) of Division J of the FY2015 appropriations act ( P.L. 113-235 ) extends this notwithstanding authority to FY2015 ESF funds, subject to an update of a required strategy document. Such assistance had been restricted by a series of preexisting provisions of law (including some terrorism-related provisions) that required the President to assert emergency and contingency authorities to provide such assistance to the Syrian opposition and communities in Syria. Such restrictions continue to limit the provision of certain types of non-lethal assistance to armed opposition groups from foreign assistance accounts. As of June 9, the draft House Appropriations Committee version of the FY2016 State and Foreign Operations Appropriations Act would again extend the notwithstanding authority to FY2016 ESF funds. The Administration sought a broad expansion of the limited notwithstanding authority granted in the FY2014 appropriations act as part of its amended November 2014 request for OCO funds to combat the Islamic State organization. That request was not granted, possibly signaling some congressional desire to maintain limitations on the ease of providing U.S. assistance in Syria or to Syrians without specific congressional approval or oversight. Legislation enacted by Congress to date does not explicitly authorize the provision of U.S. assistance for this purpose and explicitly identifies the Islamic State organization rather than the Syrian government as the entity from which Syrians should be trained and equipped to protect themselves. U.S. assistance may aid vetted Syrians in providing for the defense of territory under opposition control from unspecified adversaries and in "promoting the conditions for a negotiated settlement to end the conflict in Syria." Most observers assume a negotiated settlement to the conflict would include some changes to the leadership or structure of the Syrian government. Developments in the conflict in Syria, including the continued use of indiscriminate aerial attacks by pro-Asad forces on opposition-held areas and allegations of attacks by pro-Asad forces using chemicals as a weapon of war, have shaped congressional debate over the purposes and scope of the train and equip program since early 2015. During this period, some Syrian opposition activists and their U.S. supporters—including some Members of Congress—have stated their preference for a broader scope of U.S. assistance and/or U.S. military intervention to protect civilians or establish so-called safe zones or no-fly zones. However, other Syrian groups may reject deeper U.S. involvement or prefer that the United States focus any assistance on toppling the Asad government rather than pursuing counterterrorism, humanitarian, security, or regional stability concerns. Looking ahead, political-military conditions in Syria may continue to pose challenges for U.S. efforts to train and equip vetted Syrians for U.S.-defined purposes. Most armed opposition groups have sought U.S. and other third-party assistance since the outbreak of conflict for the expressed purpose of toppling the government of Bashar al Asad and replacing it with various Islamist or secular alternatives. However, as of June 2015, Congress has not directly authorized U.S. assistance to support offensive, regime-change oriented anti-Asad operations by U.S.-trained forces. The FY2016 defense authorization and appropriations legislation under congressional consideration as of June 2015 would not further define "conditions for a negotiated settlement," nor would it modify the purposes of U.S. assistance that were stated in enacted FY2015 legislation. Specifically, the FY2016 proposals would not expand or restrict the stated purposes of U.S. assistance (see below) with regard to training Syrians for offensive anti-Asad operations or explicitly authorize such operations by U.S. military forces. The following sections review legislative and policy developments related to the purposes of Syria Train and Equip Program assistance stated in enacted FY2015 legislation. The Administration's September 2014 request for authority envisioned a broader protection purpose for U.S. assistance relative to the purposes defined in enacted FY2015 legislation. The purposes stated in the enacted FY2015 legislation authorize assistance to assist vetted Syrians in defending against attacks by the Islamic State organization and do not mention the Asad government in this context. They also do not specify the types of attacks Syrians are to be assisted in defending against. President Obama and Administration officials have indicated that U.S. assistance will be provided in line with a so-called "ISIL-first strategy," but also will permit program participants to defend against attacks by pro-Asad forces. Overall, press reports citing unnamed U.S. officials indicate that defensive rather than offensive training and equipment is to be provided under the program. Section 1228 of the House-enrolled FY2016 NDAA ( H.R. 1735 ) would require the President to report to Congress to assess the potential effectiveness of and requirements for the establishment of safe zones or a no-fly zone in Syria. In March 2015, Chairman of the Joint Chiefs of Staff General Martin Dempsey told the Senate Foreign Relations Committee that U.S. officials had held "two rounds of discussion with our Turkish counterparts" about these types of proposals and that DOD and military planners were "continuing to develop that option, should it be asked for." Enacted FY2015 legislation states a more limited purpose for U.S. assistance with regard to opposition-controlled territory in Syria than the Administration's original requests. Contrary to the President's proposals, Congress did not authorize assistance to "stabilize" opposition-held territory or to facilitate the provision of essential services. Instead Congress authorized assistance for "securing territory controlled by the opposition." Both "stabilizing" territory and facilitating the provision of services in opposition-held areas could be interpreted as longer-term, costlier, and more involved commitments than "securing" territory. It is possible that the Administration may seek to use State Department funds to achieve stabilization objectives in parallel with the DOD-led train and equip program. Enacted FY2015 legislation identifies promoting conditions for a negotiated settlement to end the conflict in Syria as a purpose of U.S. assistance but does not define or specify such conditions. As noted above, proposed FY2016 legislation under consideration as of June 2015 also would not further define such conditions or explicitly authorize new related U.S. policy steps. In broad terms, the Administration argues that pressure must be brought to bear on the government of Bashar al Asad in order to convince its leaders to negotiate a settlement to the conflict that might or might not result in their departure from office. Administration officials have not publicly described the precise nature of any such pressure that the United States intends to use, the specific terms of its potential application, or how Congress and the public might measure the potential success of such pressure in achieving related strategic ends. The Administration's requests for the Syria Train and Equip Program and enacted FY2015 legislation ( P.L. 113-291 and P.L. 113-235) do not explicitly state that the departure of Bashar al Asad or members of his government is an essential condition for a negotiated settlement to the conflict in Syria. Proposed FY2016 legislation under consideration as of June 2015 also does not state such a condition. On March 26, 2015, U.S. Central Command (CENTCOM) Commander General Lloyd Austin told the Senate Armed Services Committee that "we will discontinue providing support to those forces if they vector off and do things that we haven't designed them to do initially and asked them to focus on initially." House and Senate versions of FY2016 defense authorization legislation would require specific Administration reporting on the requirements for and provision of support and/or protection to U.S. trained Syrians upon their return to Syria. In general, enacted FY2015 legislation provided for the delivery of such support to U.S. trainees and required regular reporting on the amounts and types of support delivered. Proposed FY2016 changes to FY2015 provisions would require the Administration to be more specific about what support or protection may be required and will be provided to trainees upon their return to Syria. Section 1208 of the Senate Armed Services Committee-reported version of the FY2016 NDAA ( S. 1376 ) would require a report "setting forth a detailed description of the military support the Secretary considers it necessary to provide to recipients of assistance under" the program "upon their return to Syria." According to the proposed bill, "Covered potential support may include: (1) Logistical support; (2) Defensive supportive fire; (3) Intelligence; (4) Medical support; and, (5) Any other support the Secretary considers appropriate for purposes of the report." Section 1225 (C) of the of the House-enrolled FY2016 NDAA ( H.R. 1735 ) would amend the underlying program authority in Section 1209 of the FY2015 NDAA to make approval of future program funding contingent on a new certification that: a required amount of support, including support provided by United States Armed Forces and enablers, has been or will be provided by the United States to the elements of the Syrian opposition that are to be trained and equipped under this section to ensure that such elements are able to defend themselves from attacks by ISIL and Government of Syria forces consistent with the purposes [of the program] Defense Department officials have stated that the main focus of U.S. efforts to combat the Islamic State remains on operations in Iraq, and they have acknowledged ongoing consideration of what types of post-training support to provide Syrian participants in the train and equip program. On May 7, Secretary of Defense Carter said, that if trainees "are contested by regime forces, again, we would have some responsibility to help them. We have not decided yet in detail how we would exercise that responsibility, but we have acknowledged that we have that responsibility." Some advocates of a more broadly confrontational U.S. posture toward the Asad government and other supporters of the train and equip program argue that the United States should be prepared to provide substantial direct assistance to U.S. trainees upon their return to Syria, including protection in the event that trainees are attacked by pro-Asad forces, Islamic State forces, or other extremists. Some critics of the program suggest that the use of U.S. assistance for operations against forces other than the Islamic State in Syria would constitute misuse of U.S. assistance, and one proposed FY2016 provision would prohibit the delivery of future assistance to entities found guilty of misuse. In March 2015, Chairman of the Joint Chiefs of Staff General Martin Dempsey said that providing some protective support to U.S. trainees made practical sense, because, in his view, "it is key to the success of the new Syrian forces that they will have a degree of protection," and "we're not going to be able to recruit men into that force unless we agree to support them at some level." U.S. Central Command (CENTCOM) Commander General Lloyd Austin also has said in congressional testimony that he has recommended certain types of U.S. support during Administration policy discussions. Proposed FY2016 legislation under consideration as of June 2015 would not modify the vetting requirements or criteria established by enacted FY2015 legislation for the Syria Train and Equip Program. The proposed House defense appropriations act ( H.R. 2685 ) would restate the FY2015 vetting requirements and criteria (see "Vetting Definitions" in Table 1 below). The House proposed FY2016 defense appropriations act ( H.R. 2685 ) includes an identical prohibition to that included in the FY2015 NDAA ( P.L. 113-235 ) that prohibits the use of funds made available in the act for the procurement or transfer of man-portable air defense systems (MANPADS) as part of the Syria train and equip program. This restriction reflects concerns that these systems could fall into the hands of other parties and threaten civilian aircraft, allied military aircraft, and U.S. aircraft conducting air strikes in support of Syrian opposition groups. Other proposals introduced and considered in the 113 th Congress also sought to define the types of assistance that could be provided and to place conditions or restrictions on the transfer of certain weapons systems to Syrians ( S. 960 , H.R. 1327 ). As noted above, one FY2016 proposal seeks to ensure that U.S. assistance is used only in support of congressionally endorsed purposes. Section 1504 (b) of the House-enrolled FY2016 NDAA ( H.R. 1735 ) would state that funds authorized for the program "may not be provided to any recipient that the Secretary of Defense has reported, pursuant to a quarterly progress report submitted pursuant to Section 1209 of the National Defense Authorization Act for Fiscal Year 2015 ( P.L. 113-291 ; 128 Stat. 3541), as having misused provided training and equipment." Section 1209(d) of P.L. 113-291 requires DOD to report on "any misuse or loss of provided training and equipment and how such misuse or loss is being mitigated." The term "misuse" is not defined in enacted FY2015 legislation or in FY2016 proposals under consideration as of June 2015. The Administration has not publicly defined what it would consider misuse of U.S. training or equipment beyond the use of such assistance for attacks on civilians, human rights abuses, or engagement in terrorism. Relative to the enacted FY2015 legislation, the proposed FY2016 legislation would modify some of the existing notification and reporting requirements related to the program and would require reporting on related policy issues such as the protection of U.S. trainees and the potential establishment of so-called safe zones or no-fly zones in areas of Syria. As noted above and in Table 1 below, proposed FY2016 legislation includes, inter alia: Section 1208 of the Senate Armed Services Committee-reported version of the FY2016 NDAA ( S. 1376 ) would require a new report "setting forth a detailed description of the military support the Secretary considers it necessary to provide to recipients of assistance under" the program "upon their return to Syria." According to the proposed bill, "Covered potential support may include: (1) Logistical support; (2) Defensive supportive fire; (3) Intelligence; (4) Medical support; and, (5) Any other support the Secretary considers appropriate for purposes of the report." Section 1225 (C) of the of the House-enrolled FY2016 NDAA ( H.R. 1735 ) would amend the underlying program authority in Section 1209 of the FY2015 NDAA to make approval of future program funding newly contingent on certification that: a required amount of support, including support provided by United States Armed Forces and enablers, has been or will be provided by the United States to the elements of the Syrian opposition that are to be trained and equipped under this section to ensure that such elements are able to defend themselves from attacks by ISIL and Government of Syria forces consistent with the purposes [of the program] Section 1228 of the House-enrolled FY2016 NDAA ( H.R. 1735 ) would require the President to provide a new report to Congress assessing the potential effectiveness of and requirements for the establishment of safe zones or a no-fly zone in Syria. Section 1225 of the House-enrolled FY2016 NDAA ( H.R. 1735 ) would amend Section 1209 (f) of the FY2015 NDAA ( P.L. 113-291 ) to require reprogramming requests for obligation of FY2016 funds. Enacted FY2015 legislation requires 15-day advance notice of the intended provision of authorized assistance and the submission of implementation plans and an overarching strategy describing how the assistance program relates to other U.S. objectives and activities. The four congressional defense committees receive reprogramming requests for FY2015 funds in advance that must be approved according to DOD regulations. P.L. 113-291 added additional criteria to notification and progress reporting requirements. It requires reporting on sustainment and support activities in the context of the overall Syria strategy as well as progress reporting on the command and control of supported individuals and groups, descriptions of sustainment and construction activities, periodic and aggregate spending totals by authorized purpose, and assessments of the effectiveness of trained personnel and activities relative to authorized purposes and required plans and notifications to Congress. Enacted FY2015 legislation required the Administration to report to Congress on procedures and criteria for vetting at least 15 days prior to the first provision of authorized assistance. It further requires reporting every 90 days on the progress of authorized assistance, to include any changes in program operations (which presumably would include changes to vetting procedures) and any misuse of U.S. assistance. Under P.L. 113-291 , the House and Senate Committees on Armed Services, Foreign Affairs/Relations, Intelligence, and Appropriations receive the implementation plan, presidential strategy, and progress reports. Proposed FY2016 legislation would include different "sunset" dates for authorized and appropriated funds. The proposed House and Senate FY2016 NDAAs would authorize the appropriation to a Syria Train and Equip Fund account of OCO-designated O&M funds that would remain available until September 30, 2016. The proposed House defense authorization act ( H.R. 2685 ) would appropriate OCO-designated O&M funds to a Syria Train and Equip Fund account that would remain available through September 30, 2017. The FY2015 NDAA ( P.L. 113-291 ) includes a "sunset" date of December 31, 2016 for the underlying Syria Train and Equip Program authorities. While the program authority contained in the FY2015 Consolidated and Continuing Appropriations Act ( P.L. 113-235 ) sunsets at an earlier date—September 30, 2015—FY2015 funds for the program drawn from the CTPF are available for two years (Section 1510, P.L. 113-291 ). The relative length of the authorization and availability of funds could be interpreted as a signal of relative congressional support for the Administration's plan to train vetted Syrians over a period of three years. The Administration originally requested a sunset date of December 31, 2018 for the program. Members of Congress have considered several basic policy and oversight questions in relation to the creation, modification, and funding of the Syria Train and Equip Program. These include: For what purposes, if any, should the United States train and equip Syrians? How might the short and long term goals of the United States and those of Syrians align or conflict? With what implications for the potential success of any U.S. support program? Who should receive such U.S. training and assistance? Who should not? Why? With what implications for U.S. policy goals in Syria or more broadly? What vetting process has been established that complies with the criteria in the law? How effective is this process? How much and what types of training and equipment will be sufficient to accomplish stated U.S. objectives or achieve the stated purposes of authorizing language? What support or protection, if any, should the United States provide to trainees upon their return to Syria? On what terms, on what authority, at what cost, and with what potential implications for U.S. policy toward Syria and more broadly? How might the "train and equip" mission expand in size, geographic scope, depending on different scenarios? What risks might such expansion pose? How much might this level of effort cost and how long might it take to reach these goals? How should such a program be funded? Through base budget funding or overseas contingency operations funding-designated (OCO) funds not subject to budget caps? How long should authority for such a program be available and on what terms? What reporting or notification requirements should apply? How might this program affect other defense or foreign assistance priorities? Is there sufficient public support for a potentially long-standing commitment? Will DOD exercise its waiver authority to exempt this program from terrorism, human rights, and other constraints in U.S. law? Under what circumstances might waivers of such legislation be necessary? How might the executive branch's use of any waiver provisions provided affect perceptions of U.S. foreign policy abroad or the effectiveness of U.S. assistance in Syria and in other places? What assistance should be provided to third countries in relation to a Syria train and equip program if any? What contributions should be expected or required of foreign partners if any? What conditions might potential partners and trainees place on participation and support for the program? With what implications for its potential success and for U.S. policy toward Syria? How effective have other "train and equip" programs been in other contexts? What lessons learned from those efforts should be applied to a Syria-related effort? How should success in the Syria case be defined and assessed? Programs designed to achieve different purposes may present different potential policy risks and rewards and may entail different material and financial costs. Members of Congress, Administration officials, Syrians, and other observers continue to debate the purposes, scope, scale, costs, and implications of the currently authorized Syria Train and Equip Program and proposals for its modification. Proposals that call for Syrians civilians and trainees to be defended from attack or for U.S. assist in the stabilization of and provision of essential services in territory under opposition control may be of much broader scope, cost, or duration than the currently authorized program. As events in Syria during 2015 have illustrated, the scope of opposition-held territory may conceivably expand or contract to include more or less of Syria than at present, with follow-on effects for potential costs, benefits, risks, or rewards for the United States. Reporting requirements included in P.L. 113-291 require DOD to report on program spending totals by authorized purpose and to provide assessments of the effectiveness of trained personnel and activities relative to authorized purposes. Modifications proposed in the House-enrolled FY2016 NDAA H.R. 1735 would require updated reporting on U.S. strategy, new reporting on the integration of U.S. strategy in Iraq and Syria, and the identification of requirements established to ensure that assistance provided in the Syria Train and Equip Program achieves the purposes set out in the FY2015 NDAA. As in past cases involving the provision of U.S. security assistance, different observers may define "success" and "effectiveness" differently based on their perspectives and priorities about the proper purposes and scope of assistance. For example, in the current Syria case, observers differ over whether a training program should train and equip vetted fighters to offensively attack Islamic State forces or pro-Asad forces or whether it should focus on enabling Syrians to better defend against Islamic State or government attacks. Other observers differ over whether U.S. assistance and training, if provided without a guarantee of force protection after the fact, can effectively achieve U.S. objectives. There are no direct recent analogues to the type of overt and broadly defined "train and equip" program for vetted Syrians authorized by Congress. Most "train and equip" authorities have been far more limited in scope and funding, and targeted to government security forces. The train and equip authorities granted in P.L. 113-291 and P.L. 113-235 are unique because, in the view of the Obama Administration and some in Congress, there were no other existing legal authorities that allowed such overt "train and equip" assistance to be provided to non-government actors in Syria in the prevailing context. Pre-existing Department of Defense (DOD) authorities to provide overt security assistance to U.S. partners abroad required that such assistance be provided on a government-to-government basis. U.S. sanctions on Syria and restrictions on U.S. engagement with terrorist-designated entities fighting in Syria also limited the executive branch's ability to provide such assistance. Independent evaluations of some recent U.S. security assistance programs suggest that even when measured against broadly stated purposes and objectives, these types of programs can face significant difficulties in implementation or show questionable results, including the far larger and longer-lasting efforts to train Iraq and Afghan security forces over the past decade. Programs with some partial similarities in context and content to the Syria program include the following: Congress debated and imposed limits on the purposes and scope of covert U.S. assistance programs to so-called resistance movements in Angola, Afghanistan, Cambodia, and Nicaragua during the 1980s and early 1990s. While these efforts occurred in similarly complex conflict settings, they were perceived to be part of a global U.S.-Soviet confrontation of the Cold War. Their relative successes and failures remain the subject of ongoing study and debate. In 1998, Congress authorized the drawdown of Department of Defense goods and services for Iraqi opposition groups, but did not authorize sustained or direct U.S. training or the transfer of weaponry. A subsequent Department of Defense training program for so-called Free Iraqi Forces in early 2003 trained a small number of recruits to facilitate U.S. civil-military operations in Iraq. The Sudan Peace Act ( P.L. 107-245 , October 21, 2002) authorized President George W. Bush "to provide increased assistance to the areas of Sudan that are not controlled by the Government of Sudan to prepare the population for peace and democratic governance, including support for civil administration, communications infrastructure, education, health, and agriculture." In support of these purposes, the act authorized to be appropriated $100 million in fiscal years 2003, 2004, and 2005 "to remain available until expended." Some recipients of U.S. assistance authorized by the act held both civilian and military leadership positions in the South Sudanese opposition. The U.S. government has provided overt training and equipment to Palestinian security forces for strictly defined purposes using foreign affairs authorities and funds, but participants in those programs are members of official Palestinian Authority security bodies rather than individuals unaffiliated or not currently affiliated with official government institutions. The Obama Administration notified Congress of a drawdown of up to $25 million in U.S. government goods and services for Libyan forces in 2011, but Congress did not act to expressly authorize U.S. military engagement in a "train and equip" program for Libyan opposition members. The provision of overt assistance to non-governmental groups poses particular challenges. Members of Congress may wish to consider some of the policy questions that were debated during consideration of these efforts when conducting oversight of the train and equip assistance program for vetted Syrians. In particular, Members of Congress may wish to consider: the net effects of the introduction of outside arms and training in previous cases on the prospects for conflict settlement, the duration and intensity of violence, U.S. national security goals, and humanitarian conditions; the potential tradeoffs and dilemmas associated with the pursuit of specific short-term security or counterterrorism objectives alongside longer term political goals and the promotion of human rights and democratic governance; the relative roles and responsibilities of the Department of Defense, the Department of State, and other U.S. government agencies in carrying out different programs; the challenges U.S. policymakers have faced in ensuring the reliability and integrity of recipients of U.S. assistance in past cases and the implications of those challenges for efforts to design vetting and oversight measures; the contributions of past cases to debates about the roles and responsibilities of the executive branch and Congress in defining the purposes, terms, scope, and duration of U.S. security assistance abroad; and, the regional security and global strategic implications of the provision, modulation, and termination of U.S. training and equipment in analogous cases. Debate over the potential provision of support and/or protection to U.S. forces in Syria should they come under attack by pro-Asad or other forces has raised new questions about U.S. policy and the authorities under which such support or protection might be authorized. In testimony before the Senate Foreign Relations Committee in March 2015, Secretary of Defense Carter stated that the Administration had not made its own legal determination as to whether it believes it has authority to use military force against the Syrian government in furtherance of the authorized purposes of the Syria Train and Equip Program. In response to a question from Senator Bob Corker, Secretary Carter said that he shared the Senator's understanding that neither the Administration's Islamic State AUMF proposal nor the 2001 AUMF would provide "clear-cut authority" for such a use of force. The Obama Administration argues that it already has constitutional and statutory authority for the use of force in Iraq and Syria for certain purposes (e.g., the President's commander in chief and foreign affairs powers under the Constitution, and the 2001 and 2002 Authorizations for the Use of Military Force against Al Qaeda and in Iraq, or AUMFs), but it has committed to engaging Congress for additional authorization for the use of force in support of military operations against the Islamic State organization in those countries. The 113 th Congress considered some proposals to authorize or restrict the use of military force against the Islamic State, and, in early 2015, the Obama Administration submitted proposed Islamic State AUMF language to the 114 th Congress for its consideration. Enacted FY2015 legislation relating to the Syria Train and Equip Program ( P.L. 113-291 and P.L. 113-235) states that nothing in its terms should be construed to constitute a statutory authorization for the introduction of U.S. Armed Forces into "hostilities" or circumstances that could be considered "hostilities" as defined pursuant to the War Powers Resolution. Some of the proposed FY2016 defense authorization and appropriations legislation under consideration in Congress as of June 2015 would make similar statements relative to Syria (see "Statements re: Authorization for the Use of Military Force in Syria" in Table 1 ). For further analysis of proposals related to the Authorization for the Use of Military Force relative to the Islamic State, see CRS Report R43760, A New Authorization for Use of Military Force Against the Islamic State: Issues and Current Proposals in Brief , by [author name scrubbed]. The Administration requested authority from Congress in September 2014 "to provide assistance, including the provision of defense articles and defense services, to appropriately vetted elements of the Syrian opposition and other appropriately vetted Syrian groups or individuals." The enacted FY2015 defense authorization and appropriation acts authorize DOD in coordination with the State Department to provide "assistance, including training, equipment, supplies, stipends, construction of training and associated facilities, and sustainment, to appropriately vetted elements of the Syrian opposition and other appropriately vetted Syrian groups and individuals." The following table compares the Administration's 2014 requests for authority and funding with enacted FY2015 legislation. | In 2014, Congress for the first time provided the President with authority and funds to overtly train and lethally equip vetted members of the Syrian opposition for select purposes. These purposes include supporting U.S. efforts to combat the Islamic State and other terrorist organizations in Syria and setting the conditions for a negotiated settlement to Syria's civil war. The FY2015 National Defense Authorization Act (NDAA, P.L. 113-291) and the FY2015 Consolidated and Further Continuing Appropriations Act, 2015 (P.L. 113-235) provided that up to $500 million could be transferred from the newly-established Counterterrorism Partnerships Fund (CTPF) to train and equip such Syrian forces. Additional funding could be provided from other sources for the Syrian Train and Equip Program, including from foreign contributions, subject to the approval of the congressional defense committees. As of June 2015, the defense committees have approved the transfer of $500 million in FY2015 CTPF funds for the program and an additional $80 million in Defense Working Capital Funds for related U.S. government operations. Several hundred U.S. military training personnel and a similar number of support personnel have deployed in support of the program. According to Administration officials, the intention is for the program to field a force of approximately 3,000 vetted Syrians in 2015 and 5,400 others per year in 2016 and, if authorized, in 2017. The authority provided in the FY2015 NDAA expires after December 31, 2016. In FY2016, the Administration is requesting $600 million in a new, separate Syria Train and Equip account that, if authorized and appropriated as requested, would not require advance notification and approval by the four defense committees. Current debate over the program—as expressed in congressional consideration of proposed FY2016 defense authorization and appropriations legislation (H.R. 2685, H.R. 1735, S. 1376) centers on: The amounts, alignment, and terms associated with FY2016 funding for the program. The extent and type of U.S. support or protection, if any, that may be provided to Syrian trainees upon their return to Syria, especially in the event of attack by pro-Asad or other forces in Syria. The size, scope, and effectiveness of the Syria Train and Equip Program as currently implemented; its purposes relative to overarching U.S. strategy toward Syria; and its integration with U.S.-led coalition efforts to combat the Islamic State organization. The content and scope of requested strategy and reporting requirements. For more information on the Islamic State crisis and U.S. policy, see CRS Report R43612, The "Islamic State" Crisis and U.S. Policy, by [author name scrubbed] et al., and CRS Report RL33487, Armed Conflict in Syria: Overview and U.S. Response, coordinated by [author name scrubbed]. For analysis of proposals related to the Authorization for the Use of Military Force relative to the Islamic State, see CRS Report R43760, A New Authorization for Use of Military Force Against the Islamic State: Issues and Current Proposals in Brief, by [author name scrubbed]. |
In its most simple form, an annuity can be thought of as the opposite of life insurance. In a basic life insurance contract, a person pays an insurer a small sum for many years, and then upon the insured's death, a large payment is made to a beneficiary. In the simplest form of annuity, a large sum is paid to the insurer and then a smaller sum is paid out to the insured over his or her lifetime. More formally, an annuity can be defined as "a contract that provides an income for a specified period of time, such as a number of years, or for life." As with life insurance, annuities can be more complex, with insurers offering a wide variety of both insurance and investment features in the annuity contracts that they sell. Annuities can be classified as follows: Immediate versus Deferred —Under an immediate annuity, an individual pays an insurance company a sum of money and the insurance company begins making regular monthly payments to the individual immediately. Under a deferred annuity, an individual pays the insurance company a sum of money and the insurance company begins making regular monthly payments at some designated time after purchase. For example, an individual at age 45 might buy a 20-year deferred annuity that would start making monthly payments when the individual reaches age 65. Deferred annuities may also be funded over time, with a person making periodic payments into the annuity, as they might with a 401(k) account or other savings vehicle. After this "accumulation phase" is finished, the annuity would then make periodic payments based on the value of the final contributed amount. Fixed versus Variable —A fixed annuity pays a flat monthly amount for the life of the annuitant whereas a variable annuity pays a monthly payment amount tied to the performance of an investment portfolio containing assets such as corporate stocks or bonds. Under a variable annuity, the annuitant bears the risk that the monthly annuity payment could go down. Level Payment versus Graded Payment —In a level payment annuity, the monthly payments remain the same, whereas in a graded annuity the monthly payments increase each year. Depending on the terms of the annuity contract, the payments may increase at a specified rate, such as 2% per year, or may increase at the rate of inflation. Single-Life versus Joint-and-Survivor —A single-life annuity makes regular monthly payments for the life of one person. A joint-and-survivor annuity makes regular monthly payments for the lives of two people, the primary annuitant and a secondary annuitant, typically the spouse of the primary annuitant. Annuities as a class are a wide-ranging financial product: some annuities are relatively simple products designed to pay a set amount per month; some are complex products that may base payments on a variety of other investments combined with different forms of financial guarantees. Indexed annuities are a relatively recent invention combining elements of fixed annuities, which offer returns based on a fixed interest rate, and variable annuities, which offer returns through investment holdings chosen by the annuitant. Indexed annuities have tended to be complex products with features that sometimes may be difficult to value. Specifically, a common form of indexed annuity offers an investment return based on the level of a specific securities index combined with a guaranteed minimum return should the securities market fall, limiting the downside risk to the purchaser. Unlike variable annuities in which the actual securities investments are held in segregated accounts, indexed annuities credit the annuity holder with a return based on a securities index, but the actual securities may or may not be held by the insurance company. The indexed annuity investment return typically does not include dividends that would have accrued had this amount been actually invested in the particular securities index. In addition, there are often insurance options, such as some death benefit upon the death of the annuitant, or a survivor benefit to base payment on the death of the second person in a couple rather than on one person. The various options available in indexed annuities, or other annuities, are often paid for through charges based on a percentage of the account value. There are also typically significant surrender charges should a purchaser wish to cancel the annuity contract early. Annuities in general have been somewhat controversial, with opinions varying widely as to their suitability for many investors. Complaints about annuities include high fees on the investment funds, a lack of liquidity due to high surrender charges, and deceptive sales practices, particularly with regard to sales to senior citizens. These complaints, it should be noted, are not limited to indexed annuities, but include the variable annuity products that have been regarded as securities products under the Securities and Exchange Commission (SEC) regulation for decades. Defenders of annuity products point out that annuities can play an important role in retirement planning. They offer tax-deferred growth for investments and are the only product that can offer a lifetime guaranteed income. One of the primary advantages of annuities compared to other financial products, such as mutual funds or certificates of deposit, is the deferral of tax on the investment earnings of the annuity contract. These earnings are taxed only when the annuitant actually receives the annuity payments, according to formulas specified in the law and in IRS regulations. Internal Revenue Code Section 72 provides that the taxable income from an annuity contract in a given year is the total amount received under the contract that year less that year's prorated share of the cost of (or investment in) the contract. This allows the investment income to compound tax-free for potentially several years before any tax is due. On the other hand, the tax due on annuity investment income is calculated at ordinary income rates, as with interest from savings accounts and certificates of deposits, rather than at the reduced rates that currently apply to capital gains and dividends. Ordinary income tax rates are as high as 35%, while most long-term capital gains and dividends end up being taxed at 15%, although capital gains rates can be as low as 0%. This potentially higher tax rate for annuity investment income can have a significant impact on the economic rationale prompting a consumer to purchase an annuity, and thus makes the annuity market, and the insurers offering annuities, very sensitive to tax proposals that might change rates on investment income. As insurance products, all annuities are regulated by the individual states following the 1945 McCarran-Ferguson Act, which identifies the states as the primary regulators of insurance. This state oversight generally includes regulation of insurer solvency, regulation of the content of insurance products, and regulation of the market conduct of insurers and those selling insurance products. Annuities, particularly variable annuities, have attracted attention for allegedly abusive sales tactics. States coordinate regulation of insurance through the National Association of Insurance Commissioners (NAIC), which has promulgated model laws and regulations on insurance. In order to be effective, however, NAIC models must be adopted by the individual states, which are free to adopt them "as is" or with modifications. This has led to variation among the states in the precise regulations applied to annuities and other insurance products. Insurance products are primarily regulated at the state level, whereas securities products are generally regulated at the federal level, primarily by the SEC. SEC securities regulation related to annuities is typically less extensive than state insurance regulation. Companies that sell securities to the public are required to register with the SEC, as are brokers and others selling securities. In addition to SEC registration, securities brokers are required to be members of the Financial Industry Regulatory Authority (FINRA), a non-governmental self-regulatory organization for the securities industry. Much of the direct oversight of securities dealers occurs through FINRA rather than through the SEC, though the SEC retains authority over FINRA and may require it to adopt, or not adopt, certain policies or rules. There is little SEC oversight equivalent to state solvency requirements for insurers. Federal securities regulations only apply to those financial products that are considered securities under the federal securities laws. For a number of years after the introduction of the variable annuity, some controversy existed as to whether or not these products are securities. The Supreme Court decided in 1959, however, that variable annuities were to be considered securities under federal law. Following that decision, variable annuities have been generally subject to SEC and FINRA requirements, while other types of annuities are not. Both state and federal regulators have concluded that annuities in general present consumer protection issues and need particular regulatory attention. In proposing Rule 151A, the SEC cited the need to protect investors, particularly older investors, from fraudulent and abusive practices related to the sale of indexed annuities. Annuity sales practices have drawn complaints from consumers and various regulatory actions from state regulators and the SEC/FINRA over many years. The complexity of annuity products can allow unscrupulous sellers to take advantage of unsophisticated buyers, while high commissions on some annuities may give sellers a substantial financial incentive to sell these products. The alleged sales abuses seem to particularly affect older consumers. For example, a joint "Investor Alert" by the SEC, FINRA, and the North American Securities Administrators Association (NASAA) cites variable annuities as one of a number of products that are commonly used to defraud senior citizens. State regulators have also taken particular actions to protect consumers from abuses in annuity products. To help harmonize states' oversight efforts, the NAIC's model laws and regulations include an "Annuities Disclosure Model Regulation" and a "Suitability in Annuity Transactions Model Regulation." The NAIC Model Suitability language requires insurance companies to give objective financial information to potential purchasers, and it requires agents to use a standardized form to determine whether an annuity would be suitable for the potential purchaser. Some state laws ban the use of professional designations or titles—such as Senior Financial Advisor—that might mislead senior consumers into thinking that the advisor has special financial expertise related to the needs of older consumers. The NAIC Annuity Disclosure Model Regulation requires certain information to be disclosed, including information about premiums and how they are charged, a summary of the options and restrictions for accessing money, and an outline of fees. NAIC models, however, must be adopted by the individual states before they can take effect. According to the NAIC, 32 states have adopted the NAIC model on annuity suitability and 16 have adopted the model on annuity disclosure in "a uniform and substantially similar manner." In addition to the model laws and regulations, the NAIC addressed perceived abuses in annuity marketing with a "Buyer's Guide" for prospective purchasers of annuities. This guide includes a specific section on indexed annuities. As insurance products, all annuities are regulated at the state level. Some annuity products, however, are also considered securities products and are regulated by the SEC. On June 26, 2008, the SEC announced a proposed rule regarding indexed annuities. This rule was finalized on January 8, 2009. Specifically, Rule 151A removes an annuity contract from the insurance exemption in the Securities Act of 1933 if "the amounts payable by the insurer under the contract are more likely than not to exceed the amounts guaranteed under the contract." The same proposal also added Rule 12h-7, exempting state-regulated insurance companies from the requirements under the Securities Exchange Act of 1934 to file reports on such annuity contracts. The effective date of the rule is to be January 12, 2011. The primary impact of this rule change is that many, if not most, of the practices related to the sale of indexed annuities of those companies and individuals selling indexed annuities will be regulated by both the SEC and the states. This rule generated controversy, with several thousand comments to the SEC opposing it, including several written by Members of Congress. The SEC extended its comment period before promulgating its final Rule 151A. In its final rule, the SEC stated that the nature of the investment risk posed by indexed annuities means that they should be regulated as securities, rather than solely as insurance products, as long as more than half the time the expected return of the indexed annuities is more likely than not greater than the minimum guaranteed return. In this case, the SEC stated, it is the purchaser of the annuity, rather than the insurance company, who would bear most of the investment risk. As a result, such purchasers should be entitled to the disclosure requirements, selling restrictions, and antifraud provisions of the federal securities laws, the SEC reasoned. The rule also cited a need to protect investors from fraudulent and abusive practices related to the sale of equity-indexed annuities. The SEC received numerous public comments on the proposed rule, with most of them being either opposed to its adoption or requesting an extension of the time limit for filing comments. Two complaints frequently made by those opposed to the rule were (1) equity-indexed annuities are fundamentally not securities, and thus should not be regulated as such; and (2) state regulation of insurance products is superior to SEC regulation of securities products, so the proposal would add a layer of complexity and duplicative regulation for little benefit. Eighteen Members of Congress, led by Representative Gregory Meeks, sent a letter to the SEC calling for an extension of the comment period for an additional 90 days. The authors observed that the proposed rule would have a significant impact, imposing a layer of federal regulation on top of state regulation, and expressed concern that stakeholders, including state insurance regulators and the insurance industry, were not consulted in the development of the rule. Several other Members of Congress wrote similar individual letters. Such concerns, and the request for delay, were also echoed in letters from various state insurance regulators and state legislators, as well as by individual comments made to the SEC. In response to "numerous letters" requesting that the comment period be extended from its original September 10, 2008, closure, the SEC announced on October 10, 2008, that it was reopening the comment period for an additional 30 days. The official extension announcement was published in the Federal Register on October 17, 2008, and the comment period closed on November 17, 2008. According to the SEC, more than 4,800 letters were received by the end of the second comment period. On December 17, 2008, the SEC approved the previously proposed rule, with one commissioner dissenting. Prior to adoption, the language of the final rule was modified somewhat, particularly to address concerns that the types of annuities affected by it might be broader than intended by the SEC. It also extended the effective date from one year after adoption to approximately two years (January 12, 2011). The majority of the language in the final rule was, however, unchanged from that proposed in June 2008. Some congressional concern was expressed over the SEC action at the time. To meet the requirements of SEC Rule 151A, companies offering indexed annuities will have to file registration statements with the SEC, prepare and distribute prospectuses to prospective purchasers, and comply with the anti-fraud provisions of the federal securities laws, such as Section 10(b) of the Securities Exchange Act of 1934 ("the 1934 Act"). Becoming subject to the anti-fraud provisions of the federal securities laws means, among other things, that companies selling indexed annuities could be subject to liability—either via private lawsuits from purchasers of the annuities, or civil liability through the SEC's enforcement powers—under the Securities Act of 1933 ("the 1933 Act") for any material misstatements or omissions in the prospectuses they distribute to purchasers. The registration statements that insurance companies offering these products will have to file with the SEC must include a description of the securities to be offered for sale, information about the management of the issuer, information about the securities, and financial statements certified by independent accountants. In addition, under the new SEC rule, individual sellers of registered indexed annuities will be required to be registered broker-dealers and will become subject to oversight by FINRA. Alternatively, sellers of indexed annuities could become associated persons of an established broker-dealer through a networking arrangement. This provision will likely entail new compliance requirements for some firms selling indexed annuities, although it will offer some additional protection to buyers. Broker-dealers selling indexed annuities after Rule 151A's effective date of January 12, 2011, for instance, will fall under an obligation to make only suitable recommendations for the prospective buyer, and to comply with specific books and records, and supervisory and compliance requirements under the federal securities laws. This may arguably result in greater standardization of selling practices, which are currently subject to individual state oversight. Under the terms of Rule 151A's companion Rule 12h-7, companies would be exempt from the regular reporting requirements to the SEC mandated by the 1934 Act, which many other registered companies face, as long as the issuer of indexed annuities is already subject to state insurance regulation. The issuer must also file annual statements of its financial condition with its state regulator to qualify for this reporting exemption. Finally, to be exempt from reporting requirements, the insurance company selling the indexed annuities must also take steps to ensure that a secondary trading market for its indexed annuities does not emerge, since the provisions of the 1934 Act are aimed at issues surrounding the trading of securities. Thus, while bringing companies offering indexed annuities under federal regulation, the SEC has at the same time chosen not to require additional regulatory updates such as the quarterly 10-Q and annual 10-K filings that other registered companies must submit to the SEC. The reasoning for this, according to the SEC in its final rule, is that, though the indexed annuities will be considered securities under the new rule, they will not be traded in a secondary market, and activities of the insurance companies issuing them, including the seller's assets and income, are already monitored and regulated at the state level. The SEC argues that this exemption from reporting requirements will lessen the burden and costs on the industry of implementing Rule 151A. However, critics of the rule have responded that the SEC has underestimated the costs and burden of implementing Rule 151A, and that the SEC has overstepped its statutory authority in attempting to regulate this product. Only indexed annuities issued on or after the effective date of the rule—January 12, 2011—will need to register with the SEC and distribute prospectuses. Those issued and existing prior to January 12, 2011, would not be affected by the SEC's Rule 151A. One focus of critics' arguments has thus been on any potential future dampening effect on prospective competition or the offering of new indexed annuities products after that date. The SEC Rule 151A would not automatically apply to all indexed annuities. Instead, indexed annuities will only be considered securities and thus be forced to register with the SEC if the expected payout of the annuity is more likely than not to exceed the minimum guaranteed amount under the annuity contract. The SEC would consider the payout to be more likely than not in excess of the minimum if that were the expected outcome more than half the time. However, it is up to the seller of the indexed annuities to analyze the expected outcomes under various scenarios, and to make that determination. Arguably, a buyer of annuities might infer that an unregistered annuity would fail that outcomes test—although some believe this would depend upon the sophistication of the prospective buyer. There is no particular disclosure requirement for sellers of indexed annuities who determine that their products are not more likely than not to pay more than the minimum outcome more than half the time, because such annuities would not be considered securities under Rule 151A. In its proposed rulemaking, the SEC offered a cost estimate of complying with the rule. This drew a number of comments, particularly from industry groups, arguing that the costs of implementing the registration requirement would exceed the SEC estimate. The SEC estimated that the total cost savings to insurance companies that will be spared having to otherwise file regular quarterly and annual reports as a result of Rule 151A's companion Rule 12h-7—the voluntary exemption from 1934 Act reporting requirements—would be $15,414,600. This calculation was based on the SEC's analysis that approximately 24 insurance companies currently offer products with "market-value adjustment" features and other types of guaranteed benefits in connection with assets held in an investor's account, and those insurance companies currently file regular reports such as the annual Form 10-K, quarterly 10-Q, and Form 8-K. However, these companies would be entitled to the 12h-7 exemption, according to the SEC. The SEC calculated its $15,414,600 cost savings based on the number of filings it receives from the 24 insurance companies offering these products; a total of 49,994 burden hours for preparing the reports; and an hourly rate of $175 for the work of preparation by in-house staff, with 16,664 hours at $400 per hour for the work of preparation by outside professionals. The SEC then estimated the total cost of preparing the new registration statements that would be required under Rule 151A for insurance companies at $82,500,000, based on 60,000 burden hours estimated of in-house work at $175 per hour and an additional $72,000,000 cost estimate for outside professionals' work. Several commentators disagreed with the SEC's cost estimates. Some stated that consumers would face added costs, because the costs of preparing prospectuses and registering as broker-dealers would be passed along to the consumer; others stated the new rule would place a disproportionate burden on small insurance distributors. Others wrote that the hourly rates used by the SEC in its estimations were too low. On the day the SEC published its final Rule 151A, a coalition of insurance companies and insurance trade groups filed a Petition for Review in the U.S. Court of Appeals for the District of Columbia Circuit challenging the rule. The petitioners challenging the rule included American Equity Life Insurance Co. and the National Association of Insurance Commissioners. The Association of American Retired Persons provided briefs supporting the SEC rule. The petitioners made two arguments: (1) The SEC unreasonably interpreted the term "annuity contract" not to include fixed indexed annuities (FIAs), and (2) the SEC did not fulfill its statutory duty under Section 2(b) of the 1933 Act to consider the effect of the rule upon efficiency, competition, and capital formation. On July 21, 2009, the United States Court of Appeals for the District of Columbia decided the case. The court, after a thorough analysis of whether the SEC's Rule 151A was reasonable under the two-step test set forth in Chevron U.S.A. Inc. v. Natural Resources Defense Coun ci l, Inc. (Chevron) , held that the rule's interpretation of "annuity contract" was reasonable and therefore that FIAs could be treated as securities rather than insurance products. However, the court also held that the Commission did not adequately consider the effect of the rule upon efficiency, competition, and capital formation. The court therefore remanded the rule for reconsideration and a more complete analysis of the impact of the rule upon competition, efficiency, and capital formation. Petitioners first argued that the SEC improperly excluded FIAs from the Section 3(a)(8) exemption of the 1933 Act and that this argument could be supported by the text of the exemption; by two Supreme Court decisions, Securities and Exchange Commission v. Variable Annuity Life Insurance Company of America (VALIC) and Securities and Exchange Commission v. United Benefit Life Insurance Company (United Benefit) ; and by the language of the SEC's earlier rule, Rule 151. The court began its analysis with a discussion of the two-step process for reviewing the authority of an agency's interpretation of a statute as set forth in Chevron . The first step under Chevron is to determine whether the statute being interpreted is ambiguous. The court found that Chevron Step One is satisfied because the 1933 Act is ambiguous or at least silent concerning whether "annuity contract" includes every form of contract that may be described as an annuity. The court buttressed this analysis by referring to the Supreme Court decisions in VALIC and United Benefit . In VALIC , the Supreme Court decided that a variable annuity did not fall within the Section 3(a)(8) exemption because it places all of the investment risks upon the purchaser and no risks upon the insurance company. In United Benefit , the Court found that a flexible fund annuity did not fall within the Section 3(a)(8) exemption because the flexible fund appealed to a purchaser primarily for the possibility of growth and not significantly for the qualities of stability and security associated with insurance. The second step under Chevron is whether an agency's interpretation of a statute is permissible. The court discussed the United Benefit case in describing that one may reasonably believe that risk based upon the prospect of growth attaches to the purchase of a fixed indexed annuity. The court went on to state that, as in securities, there can be a wide variation in a purchaser's return on a fixed indexed annuity, resulting in risk to a purchaser. Because of this and other characteristics of FIAs, the court found that the Commission's interpretation that an FIA is not an annuity contract under Section 3(a)(8) of the 1933 Act was reasonable. As for petitioners' argument that the language of the SEC's earlier Rule 151 supported its position and that Rules 151 and 151A were inconsistent, the court responded that the SEC was consistent in its position on investment risk. The earlier rule provided a safe harbor under Section 3(a)(8) for some annuity contracts based upon an investment index. However, only those products with index-based interest rates calculated in advance were allowed the safe harbor. In the instant case, involving FIAs, the interest rate was determined only at the end of the investment year, resulting in significant risk to a purchaser. Based upon all of these reasons, the court held that the Commission's interpretation of "annuity contract" was reasonable and that the second step as set forth in Chevron was also satisfied. In its second argument, petitioners stated that the SEC did not meet the requirements of Section 2(b) of the 1933 Act because it did not adequately consider the effects of Rule 151A upon efficiency, competition, and capital formation. The court first rejected the SEC's argument that it was not required by the 1933 Act to perform a Section 2(b) analysis. Because the SEC did in fact conduct a Section 2(b) analysis, the SEC, according to the court, was required to defend the basis of the analysis that it used. In discussing the merits of the SEC's analysis, the court stated that the Administrative Procedure Act requires a court to set aside an agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." The court held that the SEC's consideration of the effects of Rule 151A upon efficiency, competition, and capital formation was arbitrary and capricious. The court went on to state that the competition analysis failed because the SEC did not make any finding on the level of marketplace competition under state law. In addition, the court, for a variety of reasons, found that the Commission's efficiency analysis and capital formation analysis were arbitrary and capricious. The court therefore remanded the rule to the SEC to address the deficiencies of the section 2(b) analysis. On July 12, 2010, the United States Court of Appeals for the District of Columbia Circuit ordered that Rule 151A be vacated and that its 2009 decision be amended accordingly. H.R. 2733 was introduced in the House on June 4, 2009, by Representative Gregory Meeks along with 21 cosponsors. It was referred to the House Financial Services Committee. Senator Benjamin Nelson introduced an identical bill, S. 1389 , in the Senate on June 25, 2009. It was referred to the Senate Banking, Housing, and Urban Affairs Committee. Neither committee has held hearing or markup on the legislation. H.R. 2733 / S. 1389 would amend the Securities Act of 1933 to specify that this act's exemption from the definition of a securities product would include "any insurance or endowment policy or annuity contract or optional annuity contract (a) the value of which does not vary according to the performance of a separate account, and (b) which satisfies standard nonforfeiture laws or similar requirements." The bill would also specifically annul Rule 151A as promulgated by the SEC. This bill would have the effect of returning the regulation of indexed annuities to the status quo before the SEC's promulgation of Rule 151A; namely, indexed annuities would be exempted from SEC regulation and solely subject to regulation by the state insurance regulators. Many opponents of the rule, who would presumably support the legislation, see the extra SEC regulatory layer as unnecessarily duplicative of the existing state insurance regulation. They may point out, for example, that the SEC has had authority over variable annuity products for many years, yet consumer complaints regarding these products continue to be heard. The SEC registration requirements that would be annulled by the legislation involve some cost. Because of the increasing cost for those offering indexed annuities, opponents of Rule 151A argue, some companies might choose to discontinue these products, or individual agents or brokers might choose to stop selling them. This could reduce the supply of what some see as an important retirement product. The SEC and supporters of Rule 151A, who would presumably oppose the legislation, do not see the additional regulation for the indexed annuity market as duplicative. Rather, they characterize Rule 151A as providing necessary protection for consumers. The SEC also argues that because indexed annuities expose consumers to investment risk, these annuities should be treated as securities products, and consumers should have the same protections when they purchase indexed annuities as when they purchase securities. They agree that this regulation has some costs, and argue the costs are offset by consumer benefits such as enhanced disclosure and standardization of selling practices. The continued existence of abuses in variable annuities, despite both SEC and state regulation, may also be an argument for supporting additional oversight for indexed annuities, which share some similar characteristics. H.R. 4173 and S. 3217 are broad bills reforming the financial regulatory system in the United States. As introduced, neither directly addressed SEC Rule 151A or the issue of SEC oversight of annuities. During floor consideration of S. 3217 , Senator Tom Harkin submitted the language of S. 1389 as an amendment ( S.Amdt. 3920 ), but this amendment was not called up or voted on prior to the Senate finishing consideration of S. 3217 . The Senate substituted the amended text of S. 3217 into H.R. 4173 and passed this amended bill on May 20, 2010. During the conference committee reconciling the differences between the House and Senate versions of H.R. 4173 , Senator Harkin offered another annuities amendment, which was ultimately adopted as Section 989J of the conference report. Although not specifically addressing SEC Rule 151A, the section requires the SEC to treat certain annuities and insurance contracts as exempt securities. The requirements for this treatment include two conditions similar to H.R. 2733 / S. 1389 , namely that the value of the contract does not vary according to the performance of a separate account and that non-forfeiture standards are in place. In addition, Section 989J requires that consumer protections meeting or exceeding the requirements of the NAIC's Suitability in Annuity Transactions Model Regulation are in place either through state regulations or through implementation by the company itself. During conference debate on Section 989J and after its passage, this language was generally interpreted as returning regulation of fixed index annuities to the status quo prior to SEC Rule 151A. Because the language does not directly nullify the rule, as H.R. 2733 / S. 1389 would have done, additional regulation or litigation may occur, particularly with regard to the consumer protection requirements. As of January 2010, five states and the District of Columbia have taken no action with regard to the NAIC model regulation and 12 states have taken action on the issue but "have not adopted the NAIC model in a uniform and substantially similar manner" according to the NAIC. The House agreed to the H.R. 4173 conference report on June 30, 2010 by a vote of 237-192. The Senate agreed to the conference report on July 15, 2010 by a vote of 60-39. President Obama signed the bill into law as P.L. 111-203 on July 21, 2010. | In January 2011, a new rule from the Securities and Exchange Commission (SEC), Rule 151A, entitled "Indexed Annuities and Certain Other Insurance Contracts," is slated to go into effect. This rule would effectively reclassify indexed annuities as both security products and insurance products. Since insurance products generally are regulated solely by the states, this rule will expand federal authority over indexed annuities, putting them in a similar classification as variable annuities, which are already regulated by both the SEC and the individual states. The SEC has cited as a primary reason for increased federal oversight numerous problems with improper marketing and sales of these annuity products. This proposal has been controversial, with nearly 5,000 comments received by the SEC. The SEC's final rule was adopted on December 17, 2008, and was published in the Federal Register on January 16, 2009. Although some changes were made from the initial proposed rule, the final rule retained the majority of the original language. The U.S. Court of Appeals considered a legal challenge to the SEC's rule, in American Equity Investment Life Insurance Co. vs. SEC. In July 2009, the court found that the SEC was not unreasonable in classifying indexed annuities as securities, but remanded the rule to the SEC for the SEC to provide a more thorough analysis of the effects of the rule upon competition, efficiency, and capital formation. More recently, on July 12, 2010, the United States Court of Appeals for the District of Columbia Circuit ordered that Rule 151A be vacated and that its 2009 decision be amended accordingly. On June 4, 2009, Representative Gregory Meeks introduced the Fixed Indexed Annuities and Insurance Products Classification Act of 2009 (H.R. 2733). Senator Benjamin Nelson introduced an identical bill, S. 1389, in the Senate on June 25, 2009. The bills would specifically nullify SEC Rule 151A and return to the states sole regulatory authority over indexed annuities. Neither individual bill has been brought up for consideration by relevant committees. During the conference committee on the Wall Street Reform and Consumer Protection Act (H.R. 4173), Senator Harkin offered an amendment, ultimately adopted as Section 989J, that directs the SEC to treat as exempt securities annuities that meet a number of conditions. This language has been generally interpreted as preventing SEC oversight of indexed annuities, although its precise impact may be clarified by future court or regulatory decisions. The House agreed to the H.R. 4173 conference report on June 30, 2010, by a vote of 237-192 and the Senate agreed to the conference report on July 15, 2010, by a vote of 60-39. President Obama signed the bill into law as P.L. 111-203 on July 21, 2010. This report explains the different types of annuities, the taxation of annuities, and disentangles the federal and state roles in the regulation of annuities. It outlines the SEC rule, including practical considerations for implementation. It also discusses legal and congressional action in response to the SEC rule. The report will be updated as legislative or regulatory events warrant. |
There are two tax provisions that subsidize the child and dependent care expenses of working parents: the child and dependent care tax credit (CDCTC) and the exclusion for employer-sponsored child and dependent care. This report provides a general overview of these two tax benefits, focusing on eligibility requirements and benefit calculation. The report also includes some summary data on these benefits which highlight some of the characteristics of claimants. The child and dependent care tax credit is a nonrefundable tax credit that reduces a taxpayer's federal income tax liability based on child and dependent care expenses incurred so the taxpayer can work or look for work. Since the credit (sometimes referred to as the child care credit or the CDCTC) is nonrefundable, the amount of the credit cannot exceed a taxpayer's federal income tax liability. Taxpayers with little or no federal income tax liability—including many low-income taxpayers—generally receive little if any benefit from nonrefundable credits like the CDCTC. To claim the child and dependent care credit, a taxpayer must meet a variety of eligibility criteria. The taxpayer must have qualifying expenses for a qualifying individual, have earned income, and file taxes with an allowable filing status. These are defined briefly below. Qualifying expenses: Qualifying expenses are generally defined as expenses incurred for the care of a qualifying individual so that a taxpayer (and their spouse, if filing jointly) can work or look for work. Payments made to a relative for child and dependent care may be eligible for the credit, unless the relative is the taxpayer's dependent, child under 19 years old, spouse, or the parent of a qualifying child. Taxpayers claiming the CDCTC generally must provide the name, address, and taxpayer identification number of any person or organization that provides care for a qualifying individual. Q ualifying individual: A qualifying individual for the CDCTC is either (1) the taxpayer's dependent child under 13 years of age, or (2) the taxpayer's spouse or dependent who is incapable of caring for himself or herself. Earned income : A taxpayer must have earned income to claim the credit. The amount of qualifying expenses claimed for the credit cannot be greater than the taxpayer's earned income for the year (or the earned income of the lower-earning spouse in the case of married taxpayers). For married couples filing jointly, both spouses must have earnings unless one is either a student or incapable of self-care. T axes filed with an allowable filing sta tus: Taxpayers are generally ineligible for the CDCTC if they file their taxes as "married filing separately." Qualifying expenses for the credit are generally defined as expenses for the care of a qualifying individual so that a taxpayer (and their spouse, if filing jointly) can work or look for work. An expense is not considered work-related merely because a taxpayer paid or incurred the expense while working or looking for work. The purpose of the expense must be to enable the taxpayer to work or look for work. Whether an expense has such a purpose is dependent on the facts and circumstances of each particular case. These expenses can include those for providing care for a qualifying individual or individuals both in and outside the taxpayer's home. In-home care expenses include costs of care provided in the taxpayer's home such as the cost of a nanny to look after a child or a housekeeper to look after an elderly parent. The payroll taxes associated with these services, as well as meals and lodging provided to the caregiver as part of their employment, may be qualifying expenses. For household services that are in part for the care of qualifying individuals and in part for other purposes, generally only the portion for the care of a qualifying individual can be applied to the credit. There are different types of care provided outside the taxpayer's home that may be considered qualifying expenses for the purposes of the credit. To qualify, the care must be provided to the taxpayer's dependent child under age 13 or another qualifying person who regularly spends at least eight hours each day in the taxpayer's home (in other words, a nonchild dependent must generally live with the taxpayer even if that dependent spends the day at a care facility). This means, for example, that care provided at a live-in nursing home for a taxpayer's parent or spouse is not a qualifying expense. Common types of qualifying out-of-home care expenses include the following: Dependent care center: Care provided at a "dependent care center" can be considered a qualifying expense only if the center complies with all state and local regulations. A dependent care center is defined as a facility that provides care for more than six people (other than those who may reside at the facility) and receives a payment or grant for providing care services. Pre-K e ducation /Before- and a fter - s chool c are: Expenses for education below the kindergarten level (e.g., nursery school or preschool) may be qualifying expenses for the credit. Treasury regulations provide that expenses for education at the kindergarten level or higher do not qualify for the credit, and neither does summer school or tutoring expenses. However, before- or after-school care of a child in kindergarten or higher grades may be a qualifying expense. Day camp : Day camp may be a qualifying expense. However, overnight camp is not a qualifying expense. Transportation: Transportation by a care provider (i.e., not the taxpayer) to take a qualifying individual to or from a place where care is provided may be a qualifying expense. For example, the cost of a nanny driving a child to a day care center may be considered a qualifying expense. Payments made to a relative for child and dependent care are generally eligible for the credit. However, payments made to the following types of relatives would not be eligible for the CDCTC. Taxpayer's dependent: the relative is the taxpayer's dependent (i.e., the taxpayer or spouse is eligible to claim the relative for the dependent exemption). Child under 19 years old: the relative is the taxpayer's child and under 19 years old (irrespective of whether they are the taxpayer's dependent). Spouse: the relative is the taxpayer's spouse at any time during the year. Parent of a qualifying child: The relative is the parent of the qualifying child for whom the expenses are incurred. Taxpayers claiming the CDCTC generally must provide the name, address, and taxpayer identification number of any individual or entity that provides care for a qualifying individual or the IRS may deny the taxpayer's claim for the credit. Taxpayer identification numbers for individuals are either Social Security numbers (SSNs) or individual taxpayer identification numbers (ITINs). Entities' taxpayer identification numbers are generally employer identification numbers (EINs). Taxpayers are only required to provide the name and address (i.e., not the ITIN) of a care provider that is a tax-exempt 501(c)(3) organization. If a care provider refuses to provide information (e.g., an individual does not wish to provide the taxpayer with their SSN), the taxpayer can generally still claim the credit if they exercise due diligence in attempting to obtain the information and keep a record of their attempt to secure this information. For the purposes of the child and dependent care credit, a qualifying individual is a Young child : The taxpayer's dependent child under 13 years of age. Specifically, the child must be the taxpayer's "qualifying child" for purposes of claiming the personal exemption with the additional requirement that the child be 12 years or younger when the qualifying expenses were paid or incurred. (For more information on what a "qualifying child" is for the personal exemption, see the Appendix . Note that while the personal exemption is zero dollars from 2018 through 2025, the definition of a "qualifying child" for the personal exemption is still in effect. ) Spouse i ncapable of c aring for t hemselves: The taxpayer's spouse who is physically or mentally incapable of self-care and has lived with the taxpayer for more than half the year. Incapable of self-care means that the individual cannot care for their own hygiene or nutritional needs or requires full-time attention for their own safety or the safety of others. Other d ependent s i ncapable of c aring for t hemselves: An individual who is physically or mentally incapable of self-care (as defined above), lived with the taxpayer for more than half of the year, and is either a. The taxpayer's dependent (i.e., the taxpayer could claim a personal exemption for the individual); or is b. An individual who the taxpayer could have claimed as a dependent (for the personal exemption) except that i. He or she has gross income that equals or exceeds the personal exemption amount, ii. He or she files a joint return, or iii. The taxpayer (or their spouse, if filing jointly) could be claimed as a dependent on another taxpayer's return. Examples of individuals who may fall into this category include adult children who cannot care for themselves, as well as elderly relatives who live with the taxpayer. The taxpayer must provide the taxpayer identification number—either a Social Security number (SSN), individual taxpayer identification number (ITIN), or adoption taxpayer identification number (ATIN)—of each qualifying individual for whom they claim the CDCTC. Failure to do so can result in the denial of the credit. In order to claim the credit, a taxpayer (and if married, their spouse) must have earned income during the year. For taxpayers who do not work as a result of the taxpayer (or if married, their spouse) being incapable of self-care or a full-time student, special rules apply in calculating their annual earned income (see " Deemed Income in Cases Where an Individual is Incapable of Self-Care or a Full-Time Student. "). Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. In general only earned income that is taxable (i.e., wages, salaries, and tip income) is considered for this test. Hence nontaxable compensation like foreign earned income and Medicaid waiver payments does not count as earned income. However, taxpayers can elect to include nontaxable combat pay as earned income when claiming the credit. Generally taxpayers who file their federal income taxes as single, head of household, or married filing jointly are eligible to claim the credit, while those who file using the status "married filing separately" are ineligible for the credit. However, in certain cases, taxpayers who use the filing status "married filing separately" may be eligible for the credit if they live apart from their spouse for more than half the year and care for a qualifying individual. (Spouses who are legally separated are generally not considered married for tax purposes.) The amount of the CDCTC is calculated by multiplying the amount of qualifying expenses, after applying the dollar limits and earned income limits (discussed below), by the appropriate credit rate. Since the credit is nonrefundable, the actual amount of the credit claimed cannot exceed the taxpayer's income tax liability. The credit rate used to calculate the credit is based on the taxpayer's adjusted gross income (AGI). The credit rate is set at a maximum of 35% for taxpayers with AGI under $15,000. The credit rate then declines by one percentage point for each $2,000 (or fraction thereof) above $15,000 of AGI, until the credit rate reaches its statutory minimum of 20% for taxpayers with AGI over $43,000. This credit rate schedule is illustrated in Table 2 . The AGI brackets associated with each credit rate are not adjusted annually for inflation. The maximum amount of expenses that can be multiplied by the credit rate is $3,000 if the taxpayer has one qualifying individual and $6,000 if the taxpayer has two or more qualifying individuals. These amounts are not adjusted annually for inflation. For taxpayers with two or more qualifying individuals, the maximum expense threshold is per taxpayer irrespective of actual child and dependent care expenses of each qualifying individual. Hence, if a taxpayer has two qualifying individuals, and they have incurred no qualifying expenses for one individual and $6,000 for the other, they can claim a credit for up to $6,000 of qualifying expenses. Even though the credit formula—due to the higher credit rate—is more generous toward lower-income taxpayers, many receive little or no credit since the credit is nonrefundable, as illustrated in Figure 1 . In addition to the maximum dollar amount of qualifying expenses, as previously discussed, there are additional limits on the amount of annual work-related expenses used to calculate the credit. Specifically, qualifying expenses used to claim the credit cannot be more than the taxpayer's earned income for the year (for unmarried taxpayers) or the lower-earning spouse's earned income for the year (for married taxpayers). For example, if an unmarried taxpayer had two qualifying individuals and $6,000 of qualifying expenses but $4,000 of earned income, the maximum amount of expenses that could be applied toward the credit would be $4,000. If an individual (either an unmarried taxpayer or each spouse among married taxpayers) does not have earnings for each month of a calendar year , they can calculate their total earned income for the year by summing up their earnings for those months in which they do have earned income. (Among married taxpayers, both spouses may need to calculate their earned income for the year to determine which spouse is the lower-earning spouse. Total expenses cannot be more than the earned income of the lower-earning spouse. ) For example, if an unmarried taxpayer (or the lower-earning spouse of a two-earner couple) earned $500 for three months of the year, and did not work the remaining nine months of the year, their earned income for the purposes of the earned income limitation would be $1,500 and they could not use more than $1,500 of child and dependent care when calculating the credit. If an individual (either an unmarried taxpayer or one spouse among married taxpayers) has little or no earnings for each month of a calendar year because they are incapable of self-care or are a full-time student, they will calculate their earned income differently. For months in which an individual does not have earnings and is also incapable of self-care or a full-time student, their earned income for that month equals a "deemed" amount (instead of equaling zero). Specifically, their earned income is "deemed" to be $250 per month if they have one qualifying individual or $500 per month if they have two or more qualifying individuals. If an individual—either an unmarried taxpayer, or if married, the lower-earning spouse of a two-earner couple—is either a full-time student or not able to care for themselves for the entire year , they may be eligible (depending on their actual expenses) to apply the maximum amount of expenses when calculating the credit. Specifically, $250 and $500 multiplied by 12 months will result in an annual amount of earned income of $3,000 if they have one qualifying individual or $6,000 if they have two or more qualifying individuals—the statutory maximum amount of qualifying expenses for the credit. Among a married couple, only one spouse in any given month can be "deemed" to have earned income ($250 per month for one qualifying individual or $500 per month for two or more qualifying individuals) as a result of being incapable of self-care or being a full-time student. This implies that if both spouses are incapable of self-care or full-time students simultaneously for every month in a year, the couple will ultimately be ineligible for the credit. In this scenario only one spouse would be considered as having earned income, and hence the couple would be ineligible for the credit. In addition to the CDCTC, workers can exclude from their wages up to $5,000 of employer-sponsored child and dependent care benefits. Since the value of these benefits is excluded from wages, it is not subject to income or payroll taxes. Employer-sponsored child and dependent care benefits can be provided in various forms, including direct payments by an employer to a child care or adult day care provider, on-site child or dependent care offered by an employer, employer reimbursement of employee child care costs, and flexible spending accounts (FSAs) that allow employees to set aside a portion of their salary on a pretax basis (i.e., under a "cafeteria plan") to be used for qualifying expenses. The eligibility rules and definitions of the exclusion are similar to those of the credit. However, there is one key difference. Specifically, the $5,000 limit applies irrespective of the number of qualifying individuals. For example, a family with one qualifying child or two qualifying children can both set aside a maximum $5,000 on a pretax basis for child care. With the child and dependent care credit there are separate limits based on the number of qualifying individuals ($3,000 for one qualifying individual, $6,000 for two or more qualifying individuals). In addition, married taxpayers who file their returns as married filing separately are eligible to benefit from this exclusion, while they are ineligible for the credit. Taxpayers can claim both the exclusion and the tax credit but not for the same out-of-pocket child and dependent care expenses. For every pretax (i.e., excluded) dollar of employer-sponsored child and dependent care, the taxpayer must reduce the maximum amount of qualifying expenses for the credit (up to $3,000 for one child, $6,000 for two or more children). For example, if a family had one child, $10,000 in annual child care expenses, and contributed $5,000 annually to their employer's FSA, the family could not claim the CDCTC. The amount of pretax dollars in the FSA ($5,000) would eliminate the maximum amount of expenses that could be applied to the credit ($3,000). If in the same year, the family had a second child, and all else remained the same, they could claim $5,000 tax-free through their FSA and claim the remaining allowable expense of $1,000 ($6,000 max for two or more children minus $5,000 in the FSA) for the CDCTC. The aggregate data for the child and dependent care credit indicate several key aspects of this tax benefit. Income l evel of CDCTC c laimants: Middle- and upper-middle-income taxpayers claim the majority of tax credit dollars. Average c redit a mount: At most income levels the average credit amount is between $500 and $600. Lower-income taxpayers receive less than the average amount. Average c redit a mount o ver t ime: Over the past 30 years, the average real (i.e., adjusted for inflation) credit amount per taxpayer has steadily declined and lost about one-third of its value. Types of q ualifying i ndividuals c laimed for the c redit: While the credit is available for the care expenses of nonchild dependents (disabled family members or elderly parents), the credit is used almost exclusively for the care of children under 13 years old. Percentage of t axpayers with c hildren that c laim the CDCTC: While the credit is claimed almost exclusively for the care of children, on average 13% of taxpayers with children claim the credit. This participation rate is significantly lower for lower-income taxpayers. The CDCTC tends to be claimed by middle- and upper-middle-income taxpayers. Comparatively few claimants are low-income or very high-income, as illustrated in Table 3 . For most taxpayers, the average credit amount is between $500 and $600, although low-income taxpayers that do claim the CDCTC tend to receive a smaller tax credit. Few lower-income taxpayers benefit from the CDCTC, since the credit is nonrefundable. As previously discussed, a nonrefundable credit is limited to the taxpayer's income tax liability. Hence, taxpayers with little to no income tax liability—including low-income taxpayers—receive little to no benefit from nonrefundable credits like the CDCTC. For some taxpayers, especially higher-income taxpayers, the amount of their CDCTC will be affected by the amount of tax-free employer-sponsored child care they receive. If a taxpayer's marginal tax rate is greater than the applicable credit rate, the taxpayer will receive a larger tax savings from claiming the exclusion rather than the credit (in addition, the exclusion lowers their payroll taxes). For example, $100 of employer-sponsored child care saved in an FSA would lower a taxpayer's income tax bill by $35 if they were in the 35% tax bracket. The tax savings associated with applying that $100 to the CDCTC would, by contrast, be $20. Hence, if employer-sponsored child care is offered by their employer, a taxpayer may claim this benefit first and apply any remaining eligible expenses (if applicable) toward the credit, lowering their credit amount in comparison to if the exclusion was not available. The CDCTC was enacted in 1976. Subsequent legislative changes increased the size of the credit by increasing the maximum amount of allowable expenses and the credit rate (see " A Brief Overview of Major Legislative Changes to the CDCTC "). Between 1976 and 1988, the average credit amount and aggregate amount of the credit steadily increased, as illustrated in Figure 2 . Beginning in 1989, both the average and aggregate credit amount began to decline, with a sharp drop in the aggregate amount claimed. This decline over such a short time period may be due to measures adopted by the IRS to reduce improper claims of tax benefits, as well as legislative changes. First, beginning in 1987, taxpayers were required to provide the Social Security numbers (SSNs) of dependents on their federal income tax returns. Second, beginning in 1989, taxpayers had to provide the caregiver's taxpayer ID number (generally for individuals, their SSNs). According to one IRS researcher, "What probably happened in most cases is that people were paying their babysitter off the books, and their babysitter would not provide their Social Security numbers or go on the books, so the family had to choose between finding a new babysitter, or giving up the credit." Finally, in 1988, Congress enacted a provision as part of P.L. 100-485 (see " A Brief Overview of Major Legislative Changes to the CDCTC ") that required taxpayers to reduce the amount of expenses applied to the credit by amounts received under the exclusion. This may have resulted in a substantial reduction in the amount of expenses many taxpayers applied toward the credit, and hence a smaller credit. Since 1988, the real average value of the CDCTC has steadily fallen (see Figure 2 ). This may be driven by several factors. First, as previously discussed, the parameters of the credit, including the maximum amount of qualifying expenses and income brackets for each applicable credit rate (see Table 2 ) are not indexed for inflation. The last time the credit rate and maximum level of expenses was increased was in 2001 as part of the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA; P.L. 107-16 ). Before EGTRRA the parameters of the credit had not been increased since 1981 (see " A Brief Overview of Major Legislative Changes to the CDCTC "). If the credit as enacted in 1976 had been adjusted annually for inflation, the $800 maximum credit amount in 1976 would have equaled more than $3,300 in 2015. Hence, inflation has eroded a substantial amount of the value of the credit. Administrative data from the Internal Revenue Service, summarized in Table 4 , indicate that the CDCTC is used primarily for the care expenses of children under 13 years old. Few taxpayers claim the CDCTC for older dependents. This may be a result of several factors. First, most dependents are children. For example, in 2015, over 83 million dependent exemptions were claimed for children, while approximately 13 million were claimed for older dependents (including parents). Second, the definition of qualifying expenses excludes many expenses incurred for older dependents. For example, if older dependents are being cared for by a stay-at-home taxpayer, any expenses incurred for their care will not be considered qualifying expenses (since the caregiver is not considered to be working or looking for work). In addition, eldercare expenses, like nursing home expenses, are not considered qualifying expenses for the CDCTC since the individual being cared for is not living with the taxpayer for at least eight hours each day (see " Qualifying Expenses "). Data from the Tax Policy Center (TPC) indicate that on average about 13% of taxpayers with children claim the child and dependent care credit, as illustrated in Figure 3 . A greater proportion of higher-income taxpayers with children claim the credit than lower-income taxpayers. One possible explanation for why relatively few families with children claim the credit is that they do not have childcare expenses (perhaps because their children are older). Another possible explanation is that care expenses that are incurred are not considered qualifying expenses for the credit. For example, families with a stay-at-home parent would generally be ineligible for the CDCTC. In addition, families that pay an older child to look after a younger child after school would not be considered qualifying expenses. Finally, families eligible for the exclusion and with only one child may benefit more from the exclusion and simply not claim the credit. Fewer lower-income families with children benefit from the CDCTC, since the credit is nonrefundable. A nonrefundable credit is limited to the taxpayer's income tax liability. Taxpayers with little to no income tax liability, including low-income taxpayers, hence receive little to no benefit from nonrefundable credits. Administrative data from the IRS on the exclusion of employer-sponsored child and dependent care—comparable to the data on CDCTC—are unavailable. However, survey data from the Bureau of Labor Statistics indicate that about 41% of employees have access to child and dependent care flexible spending accounts, while 11% have access to employer-sponsored childcare. (Access means that these accounts are available to workers for their use. However, actual use of these accounts may be lower than these access rates.) The survey also found that availability of these benefits differed based on a variety of factors including the average wage paid to the employee and size of employer, as summarized in Table 5 . Overall, the data indicate that these benefits are more widely available to more highly compensated employees at larger establishments. Prior to enactment of P.L. 115-97 , taxpayers could subtract from their adjusted gross income (AGI) the standard deduction or sum of their itemized deductions (whichever is greater) and the appropriate number of personal exemptions for themselves, their spouse (if married), and their dependents. For 2017, the personal exemption amount was $4,050 per person. Under P.L. 115-97 , the personal exemption amount was reduced to zero from 2018 through the end of 2025. While the personal exemption is not in effect from 2018 through 2025, the definition of dependent for the exemption was retained and other provisions in the tax code still refer to this definition. A dependent is either (1) a qualifying child or (2) a qualifying relative. There are several tests to determine whether an individual is a taxpayer's qualifying child or relative, outlined in Table A-1 . | Two tax provisions subsidize the child and dependent care expenses of working parents: the child and dependent care tax credit (CDCTC) and the exclusion for employer-sponsored child and dependent care. (Note these provisions were not changed by P.L. 115-97.) The child and dependent care tax credit is a nonrefundable tax credit that reduces a taxpayer's federal income tax liability based on child and dependent care expenses incurred. The policy objective is to assist taxpayers who work or who are looking for work. A taxpayer must meet a variety of eligibility criteria including incurring qualifying child and dependent care expenses for a qualifying individual and have earned income. These three terms are defined below: Qualifying expenses: Qualifying expenses for the credit are generally defined as expenses incurred for the care of a qualifying individual so that a taxpayer (and their spouse, if filing jointly) can work or look for work. (Married taxpayers who do not file a joint return are ineligible for the credit). Qualifying individual: A qualifying individual for the CDCTC is either (1) the taxpayer's dependent child under 13 years of age for the entire year or (2) the taxpayer's spouse or dependent who is incapable of caring for himself or herself. Earned income: A taxpayer must have earned income to claim the credit. For married couples, both spouses must have earnings unless one is a student or incapable of self-care. The CDCTC is calculated by multiplying the amount of qualifying expenses—a maximum of $3,000 if the taxpayer has one qualifying individual, and up to $6,000 if the taxpayer has two or more qualifying individuals—by the appropriate credit rate. The credit rate depends on the taxpayer's adjusted gross income (AGI), with a maximum credit rate of 35% declining, as AGI increases, to 20% for taxpayers with AGI above $43,000. Even though the credit formula—due to the higher credit rate—is more generous toward lower-income taxpayers, many lower-income taxpayers receive little or no credit since the credit is nonrefundable. In addition to the CDCTC, taxpayers can exclude from their income up to $5,000 of employer-sponsored child and dependent care benefits, often as a flexible spending account (FSA). Eligibility rules and definitions of the exclusion are virtually identical to those of the credit. However, this is one major difference—the $5,000 limit applies irrespective of the number of qualifying individuals. Taxpayers can claim both the exclusion and the tax credit but not for the same out of pocket child and dependent care expenses. In addition, for every dollar of employer-sponsored child and dependent care excluded from income, the taxpayer must reduce the maximum amount of qualifying expenses claimed for the CDCTC. The aggregate data for the CDCTC indicate several key aspects of this tax benefit. First, middle- and upper-middle-income taxpayers claim the majority of tax credit dollars. Second, at most income levels the average credit amount is between $500 and $600. Lower-income taxpayers receive less than the average amount. Third, the credit is used almost exclusively for the care of children under 13 years old (as opposed to older dependents). On average 13% of taxpayers with children claim the credit. This participation rate is significantly lower for lower-income taxpayers. Data from the Bureau of Labor Statistics indicate that about 40% of employees have access to a child and dependent care flexible spending account, while 11% have access to other types of employer-sponsored childcare. Overall, these data indicate that these benefits are more widely available to higher-compensated employees at larger establishments. |
With the November 2010 signing by Secretary of State Hillary Clinton and New Zealand Foreign Minister Murray McCully of the Wellington Declaration, which affirms a new strategic partnership between the U.S. and New Zealand, the U.S.-New Zealand relationship has been restored to one that is once again largely defined by the many areas of bilateral cooperation between the two nations rather than past differences. Past differences over New Zealand's nuclear policy, which prevents nuclear armed or powered ships from entering New Zealand ports, had hindered the relationship despite deep common interests. At the time of the signing, Clinton and McCully discussed "shared interests in the Pacific, security interests including Afghanistan, the trade agenda, and U.S. engagement with the region." New Zealand Prime Minister John Key noted at the signing of the Declaration that the relationship is "the best it's been for 25 years." Secretary of State Hillary Clinton echoed this sentiment and stated that the initiative was part of a "concerted effort to restore America's rightful place as an engaged Pacific nation." This initiative, begun under the Bush Administration, sets aside most all residual areas of policy difference that date back to the mid-1980s. The Declaration is viewed as a tangible symbol of the restoration of the relationship which reportedly followed a 2007 U.S. decision to accept New Zealand's nuclear policy as permanent. In this way, the Declaration recasts the strategic partnership between the U.S. and New Zealand to enable the two states to continue to work together and expand their cooperation as they meet shared challenges in the Asia-Pacific region and beyond. A continuing New Zealand ban on nuclear ship visits to New Zealand ports appears to be the only major remaining significant policy difference. The fourth U.S.-New Zealand Partnership Forum was held in Christchurch, New Zealand, from February 20 to 22, 2011. The first Partnership Forum was held in 2006. The Partnership Forum is a non-partisan, non-governmental forum which brings together key government, industry, and other leaders from both countries for off-the-record discussions which have reportedly acted as a catalyst for positive developments in bilateral relations. A large Congressional Delegation attended the 2011 Forum meeting. The 2011 meeting was organized by the U.S.-New Zealand Council and its counterpart the New Zealand-U.S. Council with the theme of "The Power of Partnering: Global Challenges and the Role of the U.S.-New Zealand Partnership." The meeting reportedly considered issues such as the TPP, food safety, sustainability, climate change, economic growth, security cooperation, and Antarctica. The findings of a joint Center for Strategic and International Studies and New Zealand Institute of International Affairs report "Pacific Partners: The future of U.S.-New Zealand Relations were also considered by the Forum. (See below for more discussion of this report.) On February 22, New Zealand's second largest city, Christchurch, which is located on the south island of New Zealand, suffered a powerful earthquake that killed 163 persons and left an estimated 200 missing. The quake, registering 6.3 on the Richter scale and occurring at a depth of only 3.1 miles below the surface, devastated the city center as well as much of the city's infrastructure. A previous 7.1 magnitude earthquake in September 2010 caused $3 billion in damages but left no fatalities due to its epicenter being at a greater distance from the city centre and deeper below the earth's surface. U.S. Ambassador David Huebner responded to New Zealand's request for assistance and helped coordinate approximately $1 million in U.S. Agency for International Development (USAID) Office of Foreign Disaster Assistance (OFDA) assistance. U.S. assistance also included USAID Disaster Assistance Response Team (DART) and a 74-member team from the Los Angeles County Fire Department. This quake occurred just after a meeting in Christchurch of the U.S.-New Zealand Partnership Forum, attended by a number of Members of Congress. On March 7, Representative Donald Manzullo cosponsored H.Res. 139 , Expressing Condolences to the People of New Zealand in the Aftermath of the Christchurch Earthquake. President Obama also called Prime Minister Key to express his deep condolences over the devastation wrought by the earthquake. New Zealand's population of just over four million has many shared values with the United States that stem from common historical roots as settler societies of the British empire. New Zealand, also known as Aotearoa or "the land of the long white cloud," was first settled by the Polynesian-Maori people around the tenth century. Dutch navigator Abel Tasman discovered the western coast of New Zealand in 1642 but it was English Captain James Cook who, over three expeditions in 1769, 1773, and 1777, circumnavigated and mapped the islands. The 1840 Treaty of Waitangi, between the British Crown and Maori Chiefs, serves as the basis for defining relations between the Maori and Pakeha (European) communities. Subsequent conflict over land led to the New Zealand Wars between colonial forces and Maori fighters. New Zealanders are over 80% urban and the nation has a 99% literacy rate. New Zealand has a land area of 103,733 square miles, which is about the size of Colorado. It is 28% forested, 50% in pasture, and 9% under cultivation. New Zealand's principal exports are agriculturally based. New Zealand was a part of the British Empire until 1907 when it shifted from colonial to Dominion Status. New Zealand's demographic makeup defines it as an increasingly Pacific nation that is still largely European in national origin though with an increasing Asian population as well. New Zealand's Pacific identity stems from both its indigenous Maori population and other more recent Pacific island immigrants from Polynesia and Melanesia. Maori represent 14.9% of the population while Pacific Islanders comprise 7.2%. Together these largely Polynesian people account for 22.1% of the population. New Zealanders of European and Asian origin account for 76.8% and 9.7% of the population respectively. Auckland, New Zealand's largest city, is also the world's largest Polynesian city. The British Monarch, Queen Elizabeth II, is the constitutional head of state of New Zealand. Her representative, the Governor General, acts on the advice of the New Zealand Prime Minister's Cabinet. In 1893, New Zealand gave women the right to vote. This made New Zealand the first country to do so. New Zealand gained full political independence from Britain under the Statute of Westminster Adoption Act of 1947 after attaining Dominion Status in 1907. New Zealand is a unicameral, mixed-member-proportional (MMP), parliamentary democracy. MMP was introduced in New Zealand in 1996. There are generally just over 120 seats in parliament of which 70 are electorate member seats including seven seats reserved for Maori candidates. The results of the 2008 election brought the total number of seats to 122. Fifty seats are selected from party lists. Each voter gets to cast both an electorate vote and a party vote. Under MMP a political party that wins at least one electorate seat or 5% of the party vote gets a share of the seats in parliament. This generally leads to the need for coalition government. The center-right National Party led by Prime Minister John Key and the opposition center-left Labour Party led by Phil Goff are the two main political parties in New Zealand. New Zealand's Mixed Member Proportional system gives smaller parties a key role in forming coalition government. The other political parties of New Zealand are: ACT New Zealand; Green Party; Maori Party; New Zealand First Party or NZ First; the Progressive Party; and United Future New Zealand. On February 2, 2011, Prime Minister Key announced elections for November 26, 2011. Prime Minister Key's performance in dealing with the aftermath of the 2011 earthquake will likely be a key issue in the election. The opposition will also likely focus on unemployment, cuts to social services and low wage growth. Key's handling of the earthquake and his pledge to rebuild Christchurch have maintained his popularity. Voters will be asked two referendum questions in addition to selecting a government. These questions are whether to keep the Mixed Member Proportional (MMP) system or change to another voting system and if so, which of four other voting systems they would choose. If more than half of voters want to change, parliament will decide if there will be another referendum in 2014 to choose between MMP and the most popular alternative in the 2011 referendum. The four alternative systems put forward are First Past the Post, Preferential Voting, Single Transferable Vote, and Supplementary Member. New Zealand has sought to become an influential voice in the international climate change debate. Former Prime Minister Helen Clark sought to push New Zealand to become a carbon-neutral nation and set an example for the world on climate change. Clark used the Prime Minister's Statement to Parliament on March 13, 2007, to declare her government's intention to make New Zealand the world's first truly carbon-neutral country, adding that "the pride we take in our quest for sustainability and carbon neutrality will define our nation." Clark stated that "traditional patterns of development and fast growing populations have put an intolerable strain on the planet. The future economic costs of doing nothing are dire." Clark pointed to renewable energy as a key component along with the importance of forestry to climate change mitigation as key to lowering New Zealand's carbon footprint. Renewable energy sources, such as hydroelectric and wind power, account for between 60% and 70% of total electricity output. New Zealand has undertaken a commitment to have 90% of its energy drawn from renewable sources by 2025. The New Zealand government has been keen to brand New Zealand as a "green producer" as it has already encountered difficulty with food exports over the "food miles" issue in Great Britain. New Zealand has made its case that though energy is expended in transporting New Zealand food to distant markets, its meat and dairy is free-range and grass fed, and hence relatively carbon-emissions friendly when compared with Concentrated Animal Feeding Operations (CAFO), which feed energy intensive grain, that are more common in the United States and Europe. Two studies from Lincoln University in Christchurch have found that there is greater energy efficiency in New Zealand for the production of lamb, apples, and dairy products when compared with British products. These studies took into account transportation costs from New Zealand to the United Kingdom as well as other aspects of production. New Zealand's approach to climate change is under review. The Climate Change Response Act of 2002 requires a review of New Zealand's Emissions Trading Scheme (ETS) by the end of 2011. Climate Change Minister Nick Smith announced the independent review in December 2010. The panel is to make recommendations to government on how the ETS should evolve beyond 2012. Uncertainty over the outcome of international efforts to address climate change may influence this process. New Zealand ratified the Kyoto Protocol on Climate Change in 2002. New Zealand seeks "an environmentally effective and economically efficient long-term global agreement to meet the objective of the UN Framework Convention on Climate Change." New Zealand also seeks "appropriate and effective mitigation action by all developed countries and by major emitting and advanced developing countries." New Zealand is a trade-dependant nation. As such, it is a strong advocate of free trade. New Zealand's principal exports are dairy products, meat, timber, fish, fruit, wool, and manufactured products. New Zealand has approximately 33 million sheep, 4 million cattle, and 4.2 million people. New Zealand has been pursuing free trade agreements with India and South Korea as well as seeking to promote the Trans Pacific Partnership (TPP) agreement with Singapore, Chile, Brunei, Australia, Peru, Malaysia, the United States, and Vietnam. New Zealand supports liberalized trade through the WTO process but is also seeking alternative comprehensive free trade relationships in both bilateral and regional fora. New Zealand views the TPP as a way to add momentum to trade liberalization among Asia-Pacific Economic Cooperation (APEC) member countries. New Zealand has signed Free Trade Agreements (FTA) with Australia, Singapore, Brunei, Chile, Thailand, the Association of Southeast Asian Nations (ASEAN), and China. New Zealand trade with ASEAN has increased by approximately 17% per year in recent years. (For more details on the TPP see CRS Report R40502, The Trans-Pacific Partnership Agreement , by [author name scrubbed] and [author name scrubbed].) The 2011 earthquake which struck Christchurch and caused widespread damage to the city centre has had a strong negative affect on the economy. New Zealand will as a result likely continue to focus government expenditure on reconstruction and aid efforts in the near term. It has been estimated that the economy would have grown by an additional 1.5% without the economic disruption caused by the quake. The economy is forecast to grow by 2.8% in the year ahead from April 2011. The New Zealand dollar is forecast to fall from NZ$1.39:U.S.$1 in 2010 to NZ$1.51:US$1 in 2015. The total cost of the two earthquakes in 2010 and 2011 is estimated at NZ$15 billion or 8% of GNP. Real GDP growth in the fourth quarter of 2010 was very weak or non-existent. New Zealand's government is seeking ways to boost economic growth and increase its competitiveness with Australia, with which it is closely linked through the Closer Economic Relations (CER) agreement. In October 2010, personal and corporate taxes were cut, with corporate taxes now 2% below rates in Australia. Throughout its history New Zealand has been an active participant in support of its allies and has fought alongside the United Kingdom and the United States in most of their major conflicts. New Zealand contributed troops in support of the British in the Boer War, World War I, World War II, the Malayan Emergency 1947-1960, the Korean War, and the Indonesian-Malaysia Confrontation 1962-1966. New Zealand sent combat troops in support of the U.S. in Vietnam and has a Provincial Reconstruction Team in Bamiyan Province Afghanistan. New Zealand also sent support troops to Iraq. New Zealand Defense Forces have also participated in numerous United Nations Peace Operations, many of them far from New Zealand shores. New Zealand supports a rules-based international order with safe and secure trade routes. Prime Minister Key campaigned in 2008 on the need for a major review of defense. The Defence White Paper of 2010 sought to undertake this review. This was the first Defence White Paper issued in 13 years, and it is intended to have a 25-year scope. New Zealand Minister for Defence Wayne Mapp has identified three reasons why the review was undertaken. First was the need to "more clearly understand how defence contributed to our security." Second was the need to more closely match defense capabilities with strategic interests, and third was the need to better configure the defense establishment to achieve greater "value for money" in defense expenditures. Minster of Defence Mapp perceives New Zealand's strategic environment as "far from benign" despite concluding that a direct military threat to New Zealand territory is unlikely in the foreseeable future. Mapp has described New Zealand security interests in terms of concentric circles with New Zealand itself constituting the first circle of strategic importance, Australia and the South Pacific comprising the second circle, and Southeast Asia and the larger Asia-Pacific making up the third. The White Paper identifies several areas where the use of military force by New Zealand would be appropriate. These include in response to a direct threat to New Zealand, its territories or Australia; as part of a collective action in support of a Pacific Islands Forum member; as part of New Zealand's contribution to the Five Power Defence Arrangements (FPDA); or if requested or mandated by the United Nations "especially in support of peace and security in the Asia-Pacific region." The White Paper's strategic outlook focuses on trans-boundary issues including increased pressure on maritime resources and illegal immigration, and views the South Pacific as a region of fragility. It makes the observation that "conflict within fragile, failing, or failed states is in any event likely to remain the most common form of conflict in the period covered by the White Paper." It views Australia as New Zealand's most important security partner and asserts that "we will continue to play a leadership role in the [South Pacific] region." The paper also observes that security structures in the Asia-Pacific will continue to evolve. The White Paper stresses the importance of strong international linkages for New Zealand particularly with Australia, the United States, the United Kingdom, and Canada. The White Paper takes the view that the United States will likely remain the "pre-eminent military power for the next 25 years, but its relative technological and military edge will diminish" as the economic base of other countries such as China grow. It observes that China's and other countries' expanding economies will enable them to allocate more resources to military spending. It makes the observation on security relations with the United States that "our security also benefits from New Zealand being an engaged, active, and stalwart partner of the U.S." The White Paper supports a continuing U.S. security presence in the Asia-Pacific and notes the United States' role as a contributor to regional stability. The contribution of military forces to Afghanistan has been New Zealand's most visible contribution to international security undertaken in tandem with the United States in recent years. That said, there have been other significant developments in bilateral security cooperation. It was notable that Prime Minister John Key was the only leader present at President Obama's Nuclear Summit from a state that did not possess nuclear weapons, nuclear power, or nuclear materials. Other recent notable developments in the bilateral relations include joint surveillance between the U.S. Coast Guard and New Zealand to curb illegal fishing in the South Pacific and reports that Prime Minister Key will visit the White House in the summer of 2011. U.S. Director of National Intelligence Jim Clapper met with Prime Minister John Key in New Zealand in March 2011. The New Zealand Naval Ship HMNZS Canterbury participated in joint naval exercises with the USS Cleveland in April 2011. It was also announced that New Zealand will participate in the large-scale Rimpac naval exercise in 2012 which includes naval forces from Australia, Japan, Chile, Peru, Canada, Malaysia, Singapore, and Thailand. New Zealand has not participated in such naval exercises with the United States since the mid 1980s. The December 2010 Memoranda of Understanding on Emergency Management Collaboration and the Arrangement for Cooperation on Nonproliferation Assistance signed in April 2009 also demonstrate recent diplomatic cooperation. U.S. relations with New Zealand became increasingly close in 2007. U.S. Ambassador William McCormick in 2007 described the bilateral relationship with New Zealand as an "already strong relationship" that has "stepped up a gear to become even stronger." In her remarks with then-Prime Minister Helen Clark during a visit to New Zealand in July 2008, then-Secretary of State Condoleezza Rice described New Zealand as a "friend and an ally" and pointed out that the relationship had "moved beyond a whole host of problems." She added that the relationship was now structured for cooperation to "meet the post September 11 th challenges" and stated that New Zealand is one of the "strongest and most active members" in its participation in the Proliferation Security Initiative (PSI). At that time she also pointed to New Zealand's contribution in promoting adherence to International Atomic Energy Association (IAEA) and the United Nations Security Council, the South Pacific, counterterrorism cooperation, maritime security, disaster relief, and support in Afghanistan. New Zealand's participation in PSI has also led to increased participation in military exercises with the United States. In Congressional testimony in March 2008, Admiral Timothy Keating, Commander U.S. Pacific Command, pointed to New Zealand's participation in PSI activities, including a planned PSI exercise to be hosted by New Zealand in September 2008, and stated that "... we support New Zealand Defense Force participation in approved multilateral events that advance our mutual security interests." The extent to which the bilateral relationship has grown in recent years is also demonstrated by the various areas of collaboration between the two nations ranging from security cooperation in Afghanistan, to trade negotiations, to dealing with climate change. In summary, the key areas of cooperation are as follows: Security cooperation in Afghanistan Regional cooperation and security in the South Pacific Bilateral trade and investment ties Cooperation in multilateral strategic and economic architectures such as TPP Science, technology, and education including cooperation on climate change mitigation and adaptation Non-proliferation and the Nuclear Security Summit Other transnational challenges Antarctic cooperation Socio-cultural and academic exchanges Intelligence cooperation Many of these areas of cooperation are discussed in detail in the joint Center for Strategic and International Studies and New Zealand Institute of International Affairs report Pacific P artners: The Future of U.S.- New Zealand Relations , which found a clear consensus in both the United States and New Zealand that now is the time to take the bilateral relationship to a higher level of engagement. Assistant Secretary of State Kurt Campbell described the report as "unbelievably timely" and offered that the report can be a "vision document, it can be a roadmap." The report examined five pillars of the relationship. These are (1) security and political cooperation, (2) trade and investment ties, (3) science and technology collaboration, (4) people-to-people connections, and (5) alignment on transnational issues. The report also contains a detailed list of recommendations to enhance the bilateral relationship in these areas that includes recommendations to conclude a high quality TPP trade agreement, and to initiate a bilateral strategic dialogue while expanding military-to-military engagement and increasing cooperation on nuclear non-proliferation. New Zealand also plays a leading role in maintaining stability in the Southwest Pacific in places such as Timor-Leste, the Solomon Islands, and Bougainville, Papua New Guinea, which are discussed in greater detail below. The U.S. and New Zealand have identified combating transnational crime and sustainable development as areas for collaboration in the South Pacific. It has also been reported that the intelligence-sharing relationship has fully resumed. New Zealand seeks to keep the United States engaged in the Asia-Pacific and as a result is an advocate of trans-Pacific architectures that include the United States rather than Asia-centric groups that would exclude the United States. ([For further information on the TPP and regional economic architectures of the Asia-Pacific, see CRS Report R40502, The Trans-Pacific Partnership Agreement , by [author name scrubbed] and [author name scrubbed].) New Zealand, which has a Free Trade Agreement with China, welcomes China's economic rise but there are signs that China's security linkages to Southwest Pacific states may be of concern to New Zealand. An estimated 40% of New Zealand's exports by value go to East Asian markets. Where once nuclear issues exclusively defined difference between New Zealand and the United States the subject is now also an area of shared interest. President Obama invited Prime Minister John Key to attend the Nuclear Summit in April 2010 and stated that New Zealand had "well and truly earned a place at the table." New Zealand was the only non-nuclear state invited to the conference. One of the longest standing areas of collaboration between the United States and New Zealand is cooperation in Antarctica. U.S. Antarctic operations are supported from Christchurch. In recent years, the National Science Foundation and the U.S. Antarctic Program have modeled potential affects of climate change on the West Antarctic Ice Sheet. New Zealand's military commitment in support of Western efforts in Afghanistan has been a clear demonstration of New Zealand's desire to do its share to contribute to international security despite the conflict being far from New Zealand shores. New Zealand has supported a Provincial Reconstruction Team in Bamiyan Province and also has rotating deployments of Special Forces deployed in Afghanistan. In February 2011, Prime Minister Key confirmed the extension of New Zealand's Special Air Service (SAS) contingent in Afghanistan for another year. In March 2011, Defence Minister Mapp was reported to state that New Zealand forces full departure from Afghanistan was expected to take two years but that a total withdrawal process could take longer. Opposition Labour Party Leader Phil Goff observed that the death of Osama bin Laden makes a pull out from Afghanistan "more appropriate." New Zealand forces have been in Afghanistan since October 2001. There are several organizations and groups that help promote bilateral ties between the United States and New Zealand including the United States-New Zealand Council in Washington, DC, and its counterpart, the New Zealand-United States Council in Wellington; the Friends of New Zealand Congressional Caucus and its New Zealand parliamentary counterpart; and the more recent Partnership Forum. The US-NZ Council was established in 1986 to promote cooperation between the two countries and works with government agencies and business groups to this end. The Friends of New Zealand Congressional Caucus was launched by former Representatives Jim Kolbe and Ellen Tauscher in February 2005 and has been supportive of the proposed TPP agreement which would include New Zealand. Representative Kevin Brady has since replaced Kolbe as the Republican co-chair of the caucus. The Democrat Co-chair Representative Rick Larsen replaced Ellen Tauscher when she left the House. Members of the Caucus sent a letter to U.S. Trade Representative Susan Schwab to "support the Administration's decision to enter negotiations on financial services and investment with P4 including New Zealand." The first Partnership Forum was held in April 2006 and, according to its chairman, former Prime Minister of New Zealand Jim Bolger, it "has been credited with helping develop a new forward momentum in the relationship." The bipartisan Friends of New Zealand Congressional Caucus comprises approximately 63 Members of Congress. When launching the initiative, Representative Kolbe stated "In order for the United States to continue being a world leader in free trade, we must work toward a free trade agreement with New Zealand, as New Zealand will help open the door to markets around the world." The FTA is also supported by the American Chamber of Commerce and the U.S. National Association of Manufacturers. The Caucus has been described as a "bipartisan working group that will strengthen and promote closer economic, political, and social links between the U.S. and New Zealand." Other key institutions include the New Zealand Institute of International Affairs of Wellington which has collaborated with the Center for Strategic and International Studies of Washington on a major review of the bilateral relationship in the above-mentioned Pacific Partners . The South Pacific has been described as New Zealand's "near abroad" and is an area of particular interest to New Zealand. New Zealand government priorities for the Pacific include developing enhanced governance and political stability, developing renewable energy, and better monitoring of fisheries resources. New Zealand also shares Pacific Island states' concerns over climate change and related issues. New Zealand's Pacific identity as well as its historical relationship with the South Pacific leads it to play a constructive role in the region. New Zealand works closely with Pacific Island states on a bilateral and multilateral basis through the Pacific Islands Forum, which is based in Fiji. The Forum has supported the South Pacific Nuclear Free Weapons Zone, regional security, and efforts to promote sustainable use of fisheries resources. An estimated $2 billion worth of fish is taken from the waters of the 14 Pacific Island Forum countries with an additional $400 million worth of fish thought to be taken illegally each year. New Zealand works with regional states to help them monitor their fisheries resources. New Zealand has demonstrated its resolve to help maintain peace and stability in its region through participation in operations such as the Australia and New Zealand led Regional Assistance Mission to the Solomon Islands (RAMSI). RAMSI was first undertaken in 2003 under a Pacific Islands Forum mandate to address civil unrest and lawlessness by restoring civil order, stabilizing governance, and promoting economic recovery. Differences between people of Guadalcanal and Malaita over land, natural resources, and the movement of people within the country are viewed as some of the underlying causes of the conflict in the Solomon Islands. New Zealand, along with Australia, has played a critical role in helping to stabilize the new nation of Timor-Leste, which gained its independence from Indonesia following a referendum which turned violent in 1999. The law and order situation deteriorated once again in 2006 leading the Timorese government to call for international assistance to which New Zealand responded. New Zealand Defence Force personnel continue to serve along side their Australian counterparts as part of the International Stabilization Force in Timor-Leste. Australian Defence Minister Stephen Smith announced in April 2011 that Australia would likely start drawing down its military presence in Timor-Leste following the election to be held there in 2012. Others have speculated that a foreign security presence in Timor-Leste may be necessary for a longer period. New Zealand implemented a limited range of sanctions on Fiji following the December 6, 2006 takeover by Commodore Bainimarama and Republic of Fiji Military Forces. Fiji expelled New Zealand's High Commissioner in 2007. New Zealand sanctions seek to urge Fiji to return to democracy and the rule of law and include restrictions on contact with the military and the regime, travel bans, and a refocusing of development assistance. New Zealand has not implemented sanctions on trade, investment, or tourism. New Zealand played a key role in helping to facilitate peace between the Government of Papua New Guinea and rebels on the island of Bougainville in 1997. Secessionist sentiment and conflict over the Panguna copper mine on Bougainville from 1988 to 1997 led to a nine-year low-intensity conflict between the Bougainville Revolutionary Army and Papua New Guinea Defense Force that ultimately claimed an estimated 10,000 lives. New Zealand intervened to bring key disputants together at the Burnham military camp in New Zealand in July 1997. Evidently the "powhiri, the Maoiri culture which the delegates witnessed in the camp [Maori are well represented in the New Zealand Defence Force] and beyond, and New Zealand's bicultural nature, appeared to have a near-transcendent effect" on the disputants. The result was the Burnham Declaration of July 18, 1997, in which disputant agreed to reconcile and establish processes for negotiations. This began a process that ultimately led to peace. New Zealand has a set of relationships with South Pacific island groups that is similar to the relationships that the United States has with various island groupings in the Western Pacific. New Zealand has had colonial and trusteeship relationships with the Cook Islands, Niue, Western Samoa, and Tokelau. Samoa became independent in 1962, while the Cook Islands and Niue became self governing in 1965 and 1974 in "free association" with New Zealand. New Zealand remains engaged with the islands through disaster relief, development assistance, and security stabilization efforts. These islands are concerned with the impact of projected sea level rise due to global warming. New Zealand has traditionally had particularly close ties with the United Kingdom and Australia and is a member of the Commonwealth and the Five Power Defence Arrangements (FPDA). (See below.) It has also had a close association with Singapore and Malaysia through the FPDA of 1971. In recent years, New Zealand has sought to expand its traditionally close relationships by reaching out to develop closer ties, particularly through expanded trade, with Asian states. New Zealand's closest external relationship is with Australia, while its most enduring relationship is with the United Kingdom. The closeness with Australia stems from their common origins as British colonies and includes a strong rivalry in rugby, which is New Zealand's most popular sport. Relations between New Zealand and Australia are formalized in the Closer Economic Relations (CER) and Closer Defense Relations (CDR) agreements. With a common labor market, an estimated 400,000 New Zealanders now reside in Australia out of a total estimated population of 4.2 million. On a cultural level, shared national lore, such as the Australia-New Zealand Army Corps (ANZAC) experience, which was largely forged at the battle of Gallipoli in WWI, serves to reinforce ties between New Zealand and Australia. New Zealanders' affinities for the United Kingdom (U.K.) remain strong despite the U.K.'s decision to sever its preferential trade relationship with New Zealand, as well as the rest of the British Commonwealth, in order to join the European Community in 1972. The United Kingdom purchased two thirds of New Zealand's exports in 1950. In more recent years, the U.K. has dropped to New Zealand's fourth or fifth largest destination for exports. This has made the search for new foreign markets a key aspect of New Zealand's foreign policy. New Zealand's proactive and successful policy of export diversification has expanded New Zealand's markets to include Japan, China, the European Union, Australia, and the United States. New Zealand remains a member of the Five Power Defence Arrangement (FPDA) that includes The United Kingdom and four of its former colonies: Australia, New Zealand, Malaysia, and Singapore. The FPDA was initially undertaken in 1971 following the British decision to remove ground troops east of the Suez after 1971. The FPDA was also established in the period following the Indonesian Konfrontasi of 1963 to 1966. | New Zealand is increasingly viewed as a stalwart partner of the United States that welcomes U.S. presence in its region. New Zealand and the United States enjoy very close bilateral ties across the spectrum of relations between the two countries. These ties are based on shared cultural traditions and values as well as on common interests. New Zealand is a stable and active democracy with a focus on liberalizing trade in the Asia-Pacific region. New Zealand also has a history of fighting alongside the United States in most of its major conflicts including World War I, World War II, Korea, and Vietnam. New Zealand is a regular contributor to international peace and stability operations and has contributed troops to the struggle against militant Islamists in Afghanistan, where it has a Provincial Reconstruction Team (PRT) in Bamiyan Province. The bilateral relationship between the United States and New Zealand was strengthened significantly through the signing of the Wellington Declaration in November 2010. At that time, Secretary of State Hillary Clinton and New Zealand Prime Minister John Key signaled that past differences over nuclear policy have been set aside as the two described the relationship as the strongest and most productive it has been in 25 years. In the mid-1980s New Zealand adopted a still-in-effect policy of not allowing nuclear armed or nuclear powered ships to visit New Zealand ports. In a mark of how the relationship has been changing in recent years, New Zealand's nuclear stance earned Prime Minister John Key an invitation to President Obama's nuclear summit in April 2010. The Congressional Friends of New Zealand Caucus and the ongoing Partnership Forum between the two countries, which includes Congressional participation, have played a key role in deepening relations between the two nations. New Zealand favors an open and inclusive strategic and economic architecture in the Asia-Pacific region. New Zealand also continues to seek closer strategic and economic relations and continued U.S. engagement in the Asia Pacific through U.S. participation in the Trans Pacific Partnership (TPP), a Asia-Pacific regional free trade initiative, as well as through U.S. membership in the East Asia Summit (EAS). New Zealand is a member of both the TPP group and the EAS. New Zealand's main export products include dairy products, meat, and wood products. New Zealand also plays an important role in promoting regional stability in the Southwest Pacific and in archipelagic Southeast Asia. New Zealand's commitment to such operations is demonstrated by its leading role in helping to resolve conflict on Bougainville, Papua New Guinea, and its participation in peace operations in East Timor, and through its contribution of troops to security operations related to the Regional Assistance Mission in the Solomon Islands (RAMSI). New Zealand has also contributed to peace operations in places such as Bosnia, Sierra Leone, and Kosovo outside its region. The National and Labour Parties have traditionally been the leading political parties in New Zealand. Prime Minister John Key of the National Party has faced a daunting challenge of dealing with the aftermath of a February 22, 2011 earthquake that devastated Christchurch, New Zealand's second largest city. Elections in New Zealand are to be held in November 2011. At that time, New Zealand voters will also be asked to vote on their preference for retaining the Mixed Member Proportional (MMP) system. |
Problems for patients associated with dramatic increases in the cost of prescription medications have generated a great deal of interest among the media, interest groups, and legislators alike. Although no broad consensus exists regarding the causes of—and thus solutions to—the rapid increase in many pharmaceutical prices, policymakers have explored a number of options, including the recycling of unadulterated surplus drugs. Currently, many health care institutions, especially long-term care facilities (LTCFs), routinely dispose of medications that otherwise have a useful life. This practice typically occurs when drugs are dispensed to patients but remain unused because the patient switches medication, is discharged, or dies. Studies have estimated that more than one billion dollars worth of drugs are discarded each year in the United States. One way to counter this costly practice is to recycle the unused medications. However, the ability to implement recycling programs may be constrained by federal and/or state law. Current regulation of pharmaceuticals and those who dispense them consists of a complex system of federal and state laws. There are three federal laws discussed below that may impede the practice of recycling medications. At the state level, state controlled substances laws, pharmacy laws, and other rules promulgated by state boards of pharmacy govern practices relating to the manufacture, distribution, and possession of medicines. Nevertheless, state legislatures that have implemented drug recycling programs appear to tailor them to conform to existing regulations. State laws vary greatly regarding who may return and accept the medications, which medications may be recycled, and the procedures in place to safeguard against adulteration or unlawful possession of the medications. Federal laws regulating pharmaceuticals pose potential obstacles to the implementation of drug recycling programs. Specifically, many of the medications covered by recycling programs are considered controlled substances and thus are subject to the requirements of the Controlled Substances Act (CSA). Furthermore, most, if not all, of the drugs in question also require a prescription in order to be dispensed, and therefore are regulated by the Federal Food, Drug, and Cosmetics Act (FFDCA) —thus adding another layer of federal statutory regulations. Additionally, programs to recycle medications may also encounter logistical problems relating to billing under the Health Insurance Accountability and Portability Act (HIPAA). One potential impediment to drug recycling programs is the CSA. Enacted in 1970 with the main objectives of combating drug abuse and controlling traffic in controlled substances, the CSA created a regulatory regime criminalizing the unauthorized manufacture, distribution, dispensation, and possession of the substances covered by the act. Enforced by the federal Drug Enforcement Agency (DEA), the CSA establishes civil as well as criminal sanctions for its violation. The CSA is relevant to drug recycling programs because most, if not all, of the costly medications the programs seek to recycle are considered controlled substances under the CSA. Practitioners who dispense or administer controlled substances listed on Schedules II through V, including substances that may not require a prescription, must register with the DEA. Entities that apply for federal registration to handle controlled substances and those so registered must provide effective controls and procedures to guard against theft and diversion of controlled substances in accordance with security requirements. These requirements vary depending on the type of activity and the substances. However, unlike hospitals and pharmacies, most long-term care facilities (LTCFs) are not registrants. Due to the stringent safety standards imposed on registrants, registration may not be feasible or cost-effective for many facilities to implement. Because of the prohibition against handling or possessing controlled substances without DEA registration, the CSA seems to preclude LTCFs—or any entity not registered with the DEA—from effectively participating in a drug recycling program. As a result, the DEA distribution system, which is designed to prevent diversion by establishing a closed distribution loop among registrants for purposes of tracking all entities that handle controlled substances prior to dispensing, often prevents LTCFs from returning such drugs to pharmacy stock and forces them to destroy any unused controlled substances. An alternative to recycling programs that LTCFs may wish to pursue is the installation of automated dispensing systems (ADS). Similar to a vending machine, an ADS is stocked with drugs by a pharmacy, which controls the device remotely and programs it to dispense drugs on a single-dose basis. The DEA recently promulgated a rule to allow this practice as a way to "mitigate the problem of excess stocks and disposal." Using this system, the drugs are not deemed to be dispensed until provided by the ADS, so any unused drugs remain in pharmacy stock. Recycling programs must also comply with statutes that regulate the safety and efficacy of prescription drugs. Federally, this regulation occurs under the FFDCA. One of the purposes of the FFDCA is to ensure drug safety by prohibiting the introduction of adulterated or misbranded foods, drugs, or cosmetics into interstate commerce. Therefore, programs to recycle unused prescription drugs may encounter barriers if such recycling could lead to drug adulteration or misbranding. The federal Food and Drug Administration's (FDA) policy guidance reflects these concerns. In guidance that dates back to 1980, the agency states, "[a] pharmacist should not return drug products to his stock once they have been out of his possession. It could be a dangerous practice for pharmacists to accept and return to stock the unused portions of prescriptions that are returned by patrons, because he would no longer have any assurance of the strength, quality, purity, or identity of the articles." However, the FDA has no specific regulations regarding drug recycling programs and leaves these programs to the discretion of the state so long as state legislation does not offend applicable regulations relating to the safety and efficacy of prescription medications. A smaller administrative obstacle to the effective implementation of drug recycling programs is the billing requirements under HIPAA. This law requires electronic transactions for operations conducted by pharmacies—the entities that are responsible for accepting unused medications in many recycling programs. Every transaction that occurs within a pharmacy must be part of the HIPAA Transactions Code Set. However, there is currently no code for returning an unused drug to stock for credit. Without this code, such transactions cannot be properly documented and accounted for, posing an obstacle for pharmacists and doctors who would participate in drug recycling programs. In recent years, several states have attempted to combat waste associated with discarding unused medications by creating drug recycling programs. These programs aren't "as simple as returning 'leftovers.'" Rather, most state legislation typically specifies who may return the unused medication, who may accept the medication, what types of medications may be returned, and to whom the medications may be redistributed. This section provides examples of current practices regarding such recycling programs. Most laws specify who may return, who may accept, and/or who may receive unused medications. Some states allow patients to donate, while others restrict the practice to pharmacies, doctors and wholesale distribution centers. Iowa, which falls in the former category, allows any person to donate unused medications. In contrast, California law allows donations only from drug manufacturers, licensed health care facilities, and pharmacies. Some states do not place restrictions on the drugs included in their recycling program, while others specify the types they will accept. For example, Nebraska restricts its drug repository program to cancer drugs. Wisconsin began its recycling program as a cancer drug repository, but later expanded it to include prescription drugs and supplies for all other chronic diseases such as diabetes. States also impose restrictions to ensure that the medications are safe. Safety requirements are fairly uniform across most states. They typically require that medications be in their original, unopened sealed packaging or in single unit doses that are individually contained in unopened, tamper-evident packaging. Most states also prohibit the return of medications that will expire within six months or appear to be adulterated or misbranded in any way. Despite the precautions states have attempted to build into their recycling programs, some people remain unconvinced that these programs are completely safe. Critics argue that insufficient safety controls may lead to adulterated, dangerous medicines, and drugs that land in the wrong hands. They also argue that the actual process of repackaging medications can pose safety hazards. Nevertheless, states seem intent on continuing to tailor their legislation in order to conform to existing law, while simultaneously acting as laboratories to test new cost-effective measures. | In recent years, the rising costs of prescription drugs have motivated various policymakers to implement cost-saving measures. In some cases, states have pursued programs to collect and redistribute unused medications that would otherwise be discarded. However, the ability to implement these so-called drug recycling programs may be constrained by federal or state law or both. For example, medications classified as controlled substances are regulated by the Controlled Substances Act (CSA). Furthermore, drugs that require prescriptions, as many controlled substances do, are regulated by the Federal Food, Drug, and Cosmetics Act (FFDCA). Additionally, programs may encounter logistical problems related to billing under the Health Insurance Portability and Accountability Act (HIPAA), which is not designed to accommodate drug recycling. Despite these hurdles, states have begun to implement drug recycling programs. Although the details of the laws vary among states, most contain strict rules to ensure the safety of the medications. This report provides an overview of the federal laws that may affect state drug recycling programs, as well as examples of these state programs. |
The Budget Control Act of 2011 (BCA; P.L. 112-25 ) provided for automatic reductions to most federal discretionary spending if no agreement on deficit reduction was reached by the Joint Select Committee on Deficit Reduction. Such reductions, referred to as sequestration, went into effect on March 1, 2013, which was the extended deadline for a deficit reduction agreement established under the American Taxpayer Relief Act of 2012 (ATRA; P.L. 112-240 ). In general, sequestration requires agencies to reduce spending for certain suballocations of funds—programs, projects, and activities—within nondefense discretionary accounts by 5.3% in FY2013. To implement the sequester-related reductions, the Federal Aviation Administration (FAA) began to furlough personnel, including air traffic controllers, on April 21, 2013. In the wake of concerns about the adverse effects of furloughs on air travel, the Senate passed S. 853 , the Reducing Flight Delays Act of 2013 (RFDA), on April 25, 2013, by unanimous consent. The bill provided new authority to the Secretary of Transportation to transfer up to $253 million to FAA's "operations" account from other FAA accounts, including discretionary grants-in-aid for airports. The next day, the House agreed to H.R. 1765 under suspension of the rules. Under agreement, H.R. 1765 , being identical in content to S. 853 , was presented to the President on April 30, 2013, and was enacted on May 1, 2013, becoming P.L. 113-9 . FAA halted furlough actions even before the bill was signed by President Obama. This report provides a brief overview of FAA's implementation of the sequester in April 2013, as it relates to air traffic control operations and staff furloughs. It then considers the congressional response, including the potential impact of the funds transfers authorized under P.L. 113-9 on FAA's Airport Improvement Program (AIP). The sequester cuts reduced FAA spending for FY2013 by about $636 million below the amount specified in the FY2013 continuing budget resolution. The portion of funding designated for staff salaries and benefits varies considerably by major FAA funding account. FAA's operations account, which includes air traffic operations and aviation safety functions, is the most labor-intensive, with about 71% of outlays going to employee salaries and benefits. This is by far the largest FAA budget account. The facilities and equipment account, on the other hand, is spent largely for facility construction and technology acquisition and maintenance, and only 15% of spending is devoted to salaries and benefits. Similarly, Grants-in-Aid for Airports, also known as the Airport Improvement Program (AIP), has a very low percentage (roughly 3%) of its total devoted to salaries and benefits, as most funds designated for this account are passed on to airport authorities for carrying out construction and maintenance projects. The research, engineering, and development account mainly performs its functions through university research grants and industry contracts, with 23% of its budget going to salaries and benefits. As operations, including both air traffic services and safety-related functions, require the most internal labor resources from FAA, these functions are most heavily impacted by agency-wide furlough actions (see Table 1 ). FAA operations face a sequester reduction of roughly $486 million. P.L. 113-9 gives FAA authority to transfer up to $253 million to operations using available moneys from unspent airport funds, which were not subject to sequestration, and from other available sources. While the focus of legislative debate on P.L. 113-9 was the reduction or elimination of air traffic controller furloughs in order to avoid disruption of airline service, the effects of the legislation will hinge on FAA's specific budgetary actions under this authority. Sequestration under the American Taxpayer Relief Act of 2012 did not affect all Federal Aviation Administration (FAA) functions. FAA's grants for airport improvements, which are subject to obligation limitations, are statutorily exempt from the sequester cuts. FAA's other functions faced significant spending reductions. FAA interpreted the law as requiring it to reduce spending proportionately in all accounts other than airport grants. In response, FAA implemented agency-wide furloughs of employees, including air traffic controllers, beginning April 21, 2013. FAA employees were told they would be required to take 11 furlough days through the remainder of FY2013. FAA employs about 45,000 people in a variety of functions. Different FAA components implemented various approaches to designating furlough days. FAA's Air Traffic Organization, which includes both air traffic controllers and the technicians and engineers who maintain the air traffic control system, implemented rolling furloughs among its 33,000 employees to minimize staffing impacts to flight operations. Following negotiations with the union representing controllers, FAA agreed that all air traffic controllers nationwide would be required to take one unpaid furlough day in each two-week pay period, irrespective of the workload or potential impact of reduced staffing at a particular facility. FAA implemented various air traffic management initiatives to mitigate impacts of the reduced staffing due to furloughs, including increased aircraft spacing, which reduces the number of flights an airport can handle in a given period. These measures led to delays during the first week of reduced staffing, most noticeably in the New York City area and at Dallas-Fort Worth, Las Vegas, Chicago, and Tampa airports. In total, delays related to staffing reductions appear to have affected about 3%-4% of flights, with some acute delay impacts occurring in congested airspace, particularly in the New York City area. Airlines warned that prolonged furloughs and associated delays could impact revenues, but this could be offset somewhat by lower fuel prices. Also, in response to the furlough delays, airline advocacy groups sought exemption from the Department of Transportation's tarmac delay rules, which generally require airlines to allow passengers to disembark from aircraft delayed more than three hours and carry fines for airlines that fail to comply. On April 27, 2013, following House and Senate passage of legislation to allow it to transfer $253 million from other accounts to its operations account, FAA announced that it had suspended all employee furloughs and that air traffic facilities would resume operations under normal staffing levels. It is not certain that these steps will avert all furloughs of FAA employees in FY2013. As explained below, FAA may be unable to transfer the entire $253 million from AIP to its operations account without triggering reductions in many airports' entitlements under AIP. One way for FAA to avoid this problem would be for it to transfer some of the funds from programs other than AIP. This would necessitate spending reductions in those programs, which could potentially include employee furloughs. FAA previously furloughed employees in the summer of 2011. Its furlough actions in April 2013 had significantly different impacts due to the fact that they had a different legal basis from those in 2011. The 2011 furloughs resulted from the effective temporary shutdown of the Airport Improvement Program (AIP) and a lapse in revenue collection authority for the Airport and Airways Trust Fund (AATF), which provides major funding for FAA programs. When short-term extensions of FAA authority under the Airport and Airway Extension Act of 2011, Part III ( P.L. 112-21 ), expired on July 22, 2011, employees working for FAA's office of airports and funded under AIP were immediately furloughed. Other employees paid from the facilities and equipment and research, engineering, and development accounts were also furloughed, as the sole funding source for those FAA programs, the AATF, could no longer collect revenue. Certain employees funded from the facilities and equipment account who inspected FAA navigation and communications equipment were ordered to stay on the job without pay because they were deemed to be essential to the safety of the air traffic system. About 4,000 FAA employees in total, roughly 9% of FAA's total workforce, were affected. As general fund moneys were available to continue paying employees, including any air traffic controllers paid out of the FAA's operations account, these employees were not immediately furloughed. A subsequent short-term extension of AIP expenditure authority and AATF revenue collection authority ( P.L. 112-27 ) was enacted on August 5, 2011, ending the furloughs for affected FAA employees and eliminating the need for possible additional furloughs of other employees paid through the operations account. Although additional legislation (e.g., H.R. 2814 , 112 th Congress) sought to compensate FAA employees for lost wages under the August 2011 furlough, the legislation was determined to be unnecessary, and employees were subsequently granted back pay for furloughed days under existing Department of Transportation authority. The term "furlough" refers to placement of an employee in temporary nonduty, nonpay status because of lack of work or funds, or other nondisciplinary reasons, but with continued benefits under certain conditions, such as health insurance. There are two types of furloughs: "shutdown furloughs" (also called "emergency furloughs") and "administrative furloughs." This distinction explains why, during FAA's April 2013 implementation of the sequester, federal civil service employees such as air traffic controllers were treated differently in comparison with the 2011 shutdown of certain FAA activities in response to a lapse in budget authority. Under a shutdown, an agency suddenly may lack authority to obligate and spend certain funds due to a lapse in annual appropriations, or, alternatively, due to expiration of an authorizing act that provides access to certain funds. In these situations, it is generally understood that the lapse (or expiration) is temporary, due to an impasse in negotiations within Congress or between Congress and the President, and not intended by policymakers to be a permanent change in law. Some employees who are paid from affected funds are "excepted" by law from a specific kind of furlough ("shutdown furlough"). In the context of a shutdown, for example, employees whose duties involve the safety of human life or the protection of property may be told by an agency to come to work during the period of time in which funds are lapsed or an authorizing statute is expired. In other words, they are excepted from furlough. Other employees whose duties do not fit that criterion, however, may be placed on shutdown furlough and told to not come to work during this time period. The so-called Antideficiency Act, in particular, generally prohibits agencies from accepting voluntary services and employing personal services exceeding that authorized by law, "except for emergencies involving the safety of human life or the protection of property" (31 U.S.C. §1342). The statute elaborates that "the term 'emergencies involving the safety of human life or the protection of property' does not include ongoing, regular functions of government the suspension of which would not imminently threaten the safety of human life or the protection of property." Two legal opinions from former Attorney General Benjamin R. Civiletti, written in 1980 and 1981, have strongly influenced activities in the executive branch related to shutdowns. The opinions and subsequent guidance from the Office of Management and Budget (OMB) and Office of Personnel Management (OPM) direct agencies in interpreting the Antideficiency Act and the exceptions from the act that are authorized by law, including the exception related to safety of human life and protection of property. These interpretations generally tell agencies which groups of employees may be directed to come to work in the absence of appropriations (i.e., which employees are excepted from shutdown furlough). The interpretations do not require agencies to make exceptions for all employees whose activities involve the safety of human life or the protection of property. However, it is possible that agencies may interpret law and guidance as generally communicating an expectation that all or many of these employees should (or shall) be excepted from furlough. Affected excepted employees and nonexcepted employees do not receive pay during a shutdown, due to lack of available budget authority. Arguably, there is a legal obligation for an agency to pay excepted employees for their work during the lapse period, once funding resumes, however. In historical practice, subsequent law has provided for both excepted and nonexcepted personnel to be paid for the work days that pass during a shutdown period. Under the process known as sequestration, a sequester—such as the one associated with the Budget Control Act of 2011 (BCA; P.L. 112-25 )—provides for the automatic cancellation of previously enacted spending, making largely across-the-board reductions to nonexempt programs, activities, and accounts. In this situation, certain percentage reductions are applied across major categories of spending. For each category, a uniform percentage reduction of nonexempt budgetary resources is determined. The reduction then is applied to each program, project, and activity (PPA) within each budget account that falls within the category. Ultimately, sequestration could be characterized as an elaborate process for making a policy decision to reduce the budgets for certain federal activities. As such, Congress and the President may, through law, reduce the budgets of activities that involve the safety of human life or the protection of property. When agencies face these across-the-board reductions at the account level and the PPA level, they may adjust the incidence of the reductions for a given account or PPA through any available authorities to transfer funds from one account to another and reprogram funds from one PPA to another within the same account. A transfer or reprogramming may cushion some activities from across-the-board reductions, but this may increase the extent of reductions elsewhere. One way in which an agency may cope with budget cuts is to use administrative furloughs. These furloughs reduce an agency's personnel costs, because employees are not required to be paid for furlough days and, in practice, are not paid for these days. Agencies generally have considerable discretion to choose which employees are subject to administrative furlough. OPM's guidance says that "[a]gencies are responsible for identifying the employees affected by administrative furloughs based on budget conditions, funding sources, mission priorities (including the need to perform emergency work involving the safety of human life or protection of property), and other mission-related factors." In the context of sequestration related to BCA, OMB has offered similar guidance to agencies to implement sequestration-related reductions—including any transfers or reprogramming—in a way that mitigates operational risks and negative impacts on an agency's core mission. Although OMB and OPM both make reference to work involving the safety of human life or protection of property, budget reductions may affect and reduce the extent of this work that an agency undertakes, which in some cases may make administrative furloughs unavoidable. RFDA provides FAA with the authority to transfer up to $253 million of FAA funds from other uses to operations. Although worded broadly, the transfer authority is meant primarily to counteract the impact of sequestration on the air traffic control system. The act allows FAA to transfer funds from two sources. Amounts made available for obligation under the Airport Improvement Program (AIP) in FY2013 for discretionary grants derived from apportioned funds not required in FY2013, pursuant to 49 U.S.C. 47117(f), can be transferred to other uses. Further, the act allows for transfers from "any other program or account" of FAA. The transferred amounts are to be available immediately for obligation and expenditure as directly appropriated budget authority. The Airport Improvement Program provides federal grants to airports for airport development and planning. The 3,355 airports eligible for AIP grants range from major international hubs to county general aviation airports that have no commercial service. There are two forms of grant distribution to these airports: entitlement and discretionary. The entitlement funds (also called apportionments) are based on formulas that determine the amount that each eligible airport is entitled to for a fiscal year. Airports do not need to compete with one another for these funds. Once the entitlements are fulfilled, the remaining funds are distributed as discretionary funds by FAA. The distribution is conditioned by certain set-asides and is based on project priority and other selection criteria. The federal share under AIP varies from 75% for projects at large and medium hub airports to 90% for most small airports. The local match is generally paid for by the airport. Entitlements are available to recipient airports for either three or four years, depending on the type of airport. If an airport has not obligated its entitlement funds within the allowed period, the amounts are reclassified as discretionary funds and remain available for FAA to distribute until expended. AIP spending authority is based on contract authority, which is a kind of spending authority that allows obligations to be incurred in advance of appropriations. Because of this characteristic, AIP spending is controlled through a limitation on obligations. The annual limitation on obligations is usually set in appropriations legislation and restricts the amount of AIP contract authority that can be obligated (i.e., awarded) in a particular year. Controlling the rate of the annual obligation of funds allows Congress to control the rate of eventual outlays. Section 2(a)(1) of RFDA allows FAA to transfer any apportioned entitlement funds that airports have elected not to use in the year that the funds are apportioned, for use as discretionary funds. These sums historically were referred to as "carryover" funds, but FAA now uses the term "protected entitlement funds." These entitlement funds are "protected" in the sense that airports have the right to use them in later years of their eligibility. This movement of funds from entitlement to discretionary (carryover) status and back to restored entitlement status is done because of the multiyear nature of the entitlements and the desire to obligate the entire obligation limitation level each year. In recent years, the balance of protected entitlement funds (i.e., carryover funds) has grown. This could have occurred for a number of reasons. Some airports, especially small ones, sometimes let the funds build up so that they draw on two or more years' entitlements at once to fund larger projects. In some cases, the sequence of a project's construction schedule requires entitlement funds to be held for a period before being spent. Some airports in recent years have had difficulty raising their local matching shares. Also, prior to the enactment of the FAA Modernization and Reform Act of 2012 ( P.L. 112-95 ), FAA funding underwent 23 short-term extensions that made systematic planning difficult for some airports. These factors have caused some airports to defer the obligation of their apportionments to the later years of their eligibility, and the "carryover" balance has reportedly grown to roughly $700 million. It is important to understand that the use of the terms "carryover funds" or "unused entitlement funds" does not mean that these are idle surplus funds with no intended use. The transfer of these funds to other parts of FAA under RFDA will reduce eventual AIP discretionary outlays by a like amount. Airports of all sizes benefit from the discretionary grants, but unlike entitlement funds, not every airport receives funding every year. In general, small airports depend on AIP funds for airport improvements more than large airports, because small airports are less likely to be able to finance improvements by selling bonds or imposing passenger facility charges. Section 2(b)(2) of the act appears to require the amount transferred to be considered an obligation for grants-in-aid airports, effectively reducing the spending authority made available for such purposes. In effect, the act appears to reduce the obligation limitation for FY2013. Should this be the case, there would be two major implications. Because the transferred amounts reduce the FY2013 obligation limitation by a like amount (pursuant to Section 2 (b)(2)), FAA might have to refrain from making additional awards or reduce the rate of award-making of discretionary grants from now until the end of FY2013 to keep AIP within its reduced obligation limitation. This reduction of obligational authority for AIP discretionary funding will eventually lead to reductions in outlays for airport improvements unless Congress decides to restore the funding in the future. Under the Wendell H. Ford Aviation Investment and Reform Act for the 21 st Century ( P.L. 106-181 ; codified under 49 U.S.C. 47114), a threshold of at least $3.2 billion must be made available for airport planning and development under Section 48103 in order for FAA to implement certain "special rules" that provide for more generous entitlements. Consequently, if the transfers authorized by RFDA reduce the $3.343 billion made available for FY2013 below $3.2 billion, most airports' entitlements could be reduced for the remainder of FY2013. The $3.2 billion threshold has been met every year for the last 10 fiscal years, and airports have become accustomed to the larger entitlement distributions. To prevent reductions in entitlements, FAA would have to forgo transferring from AIP roughly $100 million to $110 million of the $253 million it is authorized to transfer under RFDA. If FAA determines that it needs the entire $253 million amount to avoid controller furloughs, then, to avoid breaching the threshold, it appears that it would have to transfer roughly $100 million to $110 million from FAA accounts other than AIP unless Congress were to provide some other legislative solution. | In response to across-the-board funding reductions in federal programs through the budget sequestration process implemented in FY2013, the Federal Aviation Administration (FAA) began to furlough personnel, including air traffic controllers, on April 21, 2013. In conjunction with air traffic controller furloughs, FAA implemented various air traffic management initiatives to mitigate impacts of the reduced staffing on controller workload. This resulted in some delays affecting about 3%-4% of flights, with some acute delay impacts occurring in congested airspace, particularly in the New York City area. Amid concerns over the impacts of air traffic controller furloughs, Congress passed the Reducing Flight Delays Act of 2013 (P.L. 113-9). The act authorized FAA to transfer up to $253 million from funding available for airport grants or other FAA programs and accounts to the FAA operations account for necessary costs to prevent reduced operations and staffing and ensure a safe and efficient air transportation system. Following passage of this legislation in Congress, FAA suspended all employee furloughs and resumed air traffic control operations under normal procedures and full staffing levels. Prior to the April 2013 furloughs, FAA furloughed employees in the summer of 2011. However, the FAA furlough actions associated with sequestration had a different legal basis and were consequently implemented quite differently. The summer 2011 furloughs arose as a result of a lapse in authority to collect Airport and Airways Trust Fund (AATF) revenues, the sole funding source for FAA's facilities and equipment (F&E) account, the Airport Improvement Program (AIP), and research, engineering, and development activities. Expenditure authority for AIP also expired in the summer of 2011. The expiration of these authorities resulted in immediate furloughs for most employees funded from these accounts. Some employees funded through the F&E account responsible for ensuring the safety and reliability of navigation and communications equipment were ordered to stay on the job. Employees paid through FAA's operations account, including air traffic controllers, were not furloughed in 2011. Certain AIP grants-in-aid funds for airport development and planning are now subject to provisions of the Reducing Flight Delays Act of 2013. It appears that the transfer of the designated AIP discretionary funds to air traffic operations reduces the amount made available to airports under 49 U.S.C. 48103. This has implications for both the eventual spending of AIP discretionary funds and the calculation of the amount of AIP entitlement funding available for distribution. Unless Congress takes further action, the transferred funds will eventually lead to real reductions in AIP discretionary spending. FAA may need to stop or reduce its AIP discretionary grant making for the remainder of FY2013 to comply with the act. Individual airports' formula "entitlements" could be reduced for the remainder of the fiscal year if FAA transfers most or all of the $253 million allowed under the act. |
RS21404 -- U.S. Occupation of Iraq? Issues Raised by Experiences in Japan and Germany January 30, 2003 Planning, Duration, Force Size. (1) Planning for both occupations, which began asearly as 1942, was marked by sharp disagreements within the Roosevelt administration that continued into the earlyphases of theoccupations. The first of many documents discussing the post-war political configuration of Japan , in particular the status of theemperor and the possibilities and particulars of democratization, was issued in March 1943. The final directives,which provided theparticulars of political reform, were issued by the inter-agency State, War, and Navy departments' coordinatingcommittee (SWNCC)after the Japanese surrender. For Germany , initial moderate plans of the State Department andthe Army were replaced by morepunitive measures that would hold the economy to subsistence level through severe deindustrialization, as reflectedin a January 1945revision of what became the occupation blueprint, the Joint Chief of Staff Document 1067 (JCS 1067). In the end,it was the leadingU.S. official of each occupation who proved a major voice in redirecting early punitive policies. It was presumed that both military occupations would be relatively short. For Japan , the Supreme Commander of the Allied Powers(SCAP) Gen. Douglas MacArthur judged the occupation would last no more than three years. (2) It lasted six years and eight months(August 1945-April 1952). For Germany , the first Military Governor of the U.S. sector, Gen.Dwight D. Eisenhower, anticipated thatthe U.S. military would "provide a garrison, not a government, except for a few weeks." (3) Instead, direct military government lastedfour years, the important first phase of the occupation (May 1945 - May 1949). (Some analysts believe the U.S.military occupationof Germany was prolonged by problems in establishing self-government because of differences with the otheroccupying powers:Great Britain, France, and the Soviet Union, each of which controlled its own sector.) In both cases, a substantial drawdown of U.S. occupation forces occurred after the first year, as there was virtually no armedresistance. In Japan , a peak level of 385,649 was reached by November 1945, but dropped to160,000 by the end of May 1946. In Germany , the 1.6 million troops in Germany in May 1945, dropped to 277,584 in 1946, 119,367in 1947, and 79,370 by 1950. (4) In Japan , most major reforms had been accomplished within four years and six months. In Germany , the U.S. occupation wasphased out in two stages. Germans in the U.S., British, and French sectors jointly gained control of most domesticaffairs in May 1949with the ratification of a new constitution, dubbed the Basic Law, establishing a parliamentary democracy, theFederal Republic ofGermany or 'West Germany." Until 1955, these occupying countries retained emergency powers, a veto over lawsinconsistent withoccupation policy, and authority over such matters as foreign relations, foreign trade, the level of industrialproduction, and militarysecurity. In its zone, the Soviet Union created an authoritarian Soviet-style state, the German Democratic Republicor "EastGermany." (The "West" and "East" entities persisted until reunification in 1990.) Objectives. The objectives of the U.S. occupations of both countries have beensummed up in two lists of four "d"s. In both Japan and Germany , the primary objective was demilitarization . All U.S. plannersagreed that the ability of both countries to wage war in the future should be destroyed. This included destroyingelements of militarypower, including the economic apparatus that fueled war, and punishing war criminals. In Japan ,the next goals were the disarmament and decentralization of the economic apparatus, the latter through thedismantling of the large industrial and bankinggroups. In Germany , they were denazification and deindustrialization . Regarding the fourth "d", democratization , many U.S.policymakers and occupation planners doubted that the Japanese and Germans had the cultural background andpsychologicaldisposition necessary to function in a democracy. After the occupations began, democratization assumed greaterweight in bothexperiences, as those forces who had argued that the inhabitants of those countries were capable of establishingdemocracies gainedcredibility, and as the start of the Cold War fostered the concept of a community of democracies as a counterweightto the SovietUnion. Humanitarian Situation. The occupations commenced amidst a grave humanitarian situation, with large parts of the population homeless, and on subsistence diets or below. In Japan , according to onesource, the war had produced 1.8 million military and civilian casualties, and destroyed 25% of Japan's nationalwealth. Air attacks had destroyed 20% of the country's housing (and a greater amount in some cities), and 30% of its industrialcapacity. (5) In Germany ,between a quarter to a half of housing and transport had been destroyed, leaving some 20 million homeless in theWestern zones. (6) Although the United States provided humanitarian aid at the outset to ward off mass hunger and starvation,occupation authorities andoversight officials soon worried that the U.S. will to continue such relief efforts would flag well before the needfor aid diminished. This trepidation was one consideration reorienting economic policies. In 1949, under pressure from Congress,Military GovernorLucius D. Clay abandoned a central feature of occupation policy in Germany (with which he hadoriginally agreed): the punitivedismantling of what was left of Germany's industrial base to make Germans pay for waging war. (7) Instead, he actively promotedGermany's economic revival. In Japan , the inter-agency SWNCC approved in January 1948 aneconomic recovery program"intended to make Japan self-sufficient through the 'early revival of the Japanese economy'" and encouragingindustrial growth andforeign trade to enable Japan to "make its 'proper contribution to the economic rehabilitation of the worldeconomy.....'" (8) Accomplishments. In both countries, the occupations are credited with the construction of functioning democracies. In Germany , the direct occupation period ended in theWest with the 1949 establishmentof the Federal Republic of Germany, a parliamentary system built on improvements in the constitution andinstitutions of Germany'smajor experience with democracy, the 1919-1933 Weimar Republic. In Japan , the SCAPrevamped the laws, institutions, and moresof the country's "divine right" monarchy. The key reform was a new constitution, largely drafted by the SCAP staff,which transferredsovereignty from the Emperor to the people (while retaining the Emperor in a largely symbolic role) and banneda military, arms, andparticipation in war. It also dismantled the feudalistic structure, creating a more decentralized and representativegovernment throughreforms in the Japanese legislature (the Diet), local governments, and the civil code, among other measures. (9) Other political changesin Japan included the separation of church and state, the enfranchisement of women, the promotion of a free press,and theliberalization of education. Important economic changes, including the dismantling of the large, family-run industrialand bankinggroups, and a wide-scale agrarian reform, are seen as essential to the creation of a functioning democracy, becausethey broke thepower of economic and military elites. Recent assessments of the importance of the occupation governments in establishing these democracies give much greater weight totheir contribution in Japan than in Germany. Indeed, one academic believes that while the United States wasimportant to ademocratic outcome in Japan, "by contrast the strength of democratic forces in West Germany was such that theAmericancontribution appears relatively marginal." (10) Some historians have noted that unique preconditions and circumstances contributed to the success of these occupations, particularlyin Japan. Four crucial points of convergence often cited as important to the success of those occupations inestablishing democracies,raise questions concerning the applicability of these models to a U.S. occupation of Iraq. Although there ispredictably disagreementover their relevance, these issues provide a backdrop for post-Saddam planning. Populations' Acceptance of U.S. Occupations and Democratization Objective Occupation. Occupation by U.S. forces, and democratic reforms, were widely accepted by the JapaneseandGermans themselves, who came to blame their own leaders for the war. Indeed, although historically much iscredited to the UnitedStates for remaking these democracies, many analysts believe that the high degree of cooperation from post-warJapanese and Germanleaders was also crucial to their success. Analysts writing during the occupation of Japan attributed success there "largely...to the wholehearted cooperation of the averageJapanese citizen," (12) a conclusion whichsubsequent research supports. This cooperation has been attributed to several factors,including Emperor Hirohito's plea, before the landing of U.S. forces that the population cooperate fully withoccupation directives. This ensured not only the cooperation of the average citizen, but more importantly of Japan's powerful bureaucracy. Moreover, thegreat majority of Japanese rejected the old political system and military leadership, and were receptive to change.In the early 20thcentury, Western-style democratic political institutions had begun to develop, with increasing influence exercisedby political partiesand greater democratization of parliamentary practices, culminating in 1920 - 1932. (13) In Germany, U.S. occupation officials quickly became convinced that most Germans thoroughly rejected Nazi Fascism, and desiredpolitical change to a successful democracy in line with democratic developments before Adolf Hitler took power. Germany hadexperience with a limited democracy and the rule of law, within an authoritarian culture and political context, duringthe "SecondReich" (or the German Empire) of 1871-1918, even before its experience with democracy during the WeimarRepublic. Manydemocratic leaders of the Weimar Republic had remained in Germany, and were eager to work towards therestoration of democracy. Prospects for democracy may have been further enhanced because the areas of U.S. occupation had more of ademocratic ethos, incontrast to the legacy of Prussian authoritarianism in the Soviet occupation zone. To what extent would a model of Western democracy be acceptable to the Iraqis? Even if Iraqis accepted such a model, mightproblems arise from Iraq's lack of experience with democracy? If such a model is not acceptable to Iraqis, to whatextent do theyshare a common purpose of unifying their country around a political model acceptable to the United States? Giventhe history ofWestern colonialism in the Middle East, U.S. support for Israel, and the drastic effects of current U.S. backedeconomic sanctionsagainst Iraq, would the United States have the nearly unanimous backing of the Iraqi population for an occupation,as it did in Japanand Germany? If not, would a U.N. force enjoy greater support? What difficulties could arise from the lack ofgeneral consent? Homogeneity of Occupied Populations. Although politically diverse, the Japaneseand the German populations as of 1945 were each ethnically homogeneous, and largely without religiousanimosities. To what extent will ethnic and sectarian differences among Iraqis impede effective government by a U.S. occupation force? Giventhose differences, will Iraqis be able to govern themselves within a short period of time? If not, what arrangements(such asco-government, as exists in Afghanistan) might be desirable to promote effective government? What likelihoodis there that such agovernment would succeed? Ability to Manage Their Own Affairs Largely Using Existing Institutions. Although the U.S. military governments held power and issued orders, most of the functions of government werecarried out byJapanese and German institutions. This delegation of functions was the decision of the two dominant figures in theoccupationgovernments, MacArthur in Japan and Clay (14) inGermany. The decision was based in their assessments of the willingness and abilityof Japanese and German citizens to perform these duties, and the scarcity of suitable Americans to do so. In Japan, MacArthur retained and worked through Japan's existing, and centralized, governmental institutions, issuing orders thatwere then carried out by the Japanese government. (15) (He also insisted on autonomy from U.S. agencies to interpret instructions as hesaw fit.) Military government teams, usually of military and civilian personnel, and local liaison offices were alsoestablished at theprefecture (i.e., state) level, and charged with observing, investigating and reporting on compliance. However,according to oneauthor, the "lack of an established policy for local military government activity" resulted in abuses, and a"patchwork of wide localvariations developed." (16) MacArthur entrustedthe Japanese government with demobilizing its forces. In the U.S. sector of Germany, the Office of the Military Government, United States (OMGUS) proceeded immediately to reconstructGerman government institutions to administer occupation laws and policies, even before all U.S. officials wereconvinced thatGermans were ready for it. With the German defeat, the Nazi government collapsed, leaving the allies to replaceofficials andstructures. From the beginning, Clay sought to turn government over to Germans as quickly as possible, starting atthe local level. Insome cases, the OMGUS appointed former German government officials from the pre-1933 period. As early asOctober 1945, Clayissued an order that limited local OMGUS military activities to observing government activities at the city, countyand state level, andreporting problems to higher headquarters. Elections for village officials were held in January 1946, followed bycounty officials inMarch and city officials in May. Clay then pushed for the drafting of state constitutions and establishment of stategovernments. To what extent would Iraqi existing institutions continue to function? What governmental functions would U.S. or other militaryforces have to assume, and for how long? What new institutions would have to be created? To what extent mightgrievances of thosedisplaced from existing institutions, or of those removed and punished for crimes related to participation in theHussein regime, beviewed as legitimate by other Iraqis, and other Middle Eastern governments and populations? To what extent couldsuch sympathiesundermine effective administration by occupation forces? How much autonomy would a U.S. or U.N.administration have to adapt tolocal conditions? International Legitimacy and Support. The U.S. occupations in Japan andGermany were viewed by other countries as morally and legally legitimate, and there was widespread support forthem. Thisinternational consensus meant that U.S. policy could be developed relatively free of competing foreign policyinterests. This wasespecially true in the case of Japan. For Germany, however, the development of economic policy was complicatedby considerationsregarding other European economies. If the United States were to invade Iraq without the full backing of the international community, to whatextent would this lack ofconsensus or agreement undermine the basis of U.S. international legitimacy or support? What U.S. interests wouldbe affected bythe presence of a U.S. occupation force in Iraq? Should the United States expect significant opposition to a U.S.occupation amongthe leaders or populations of neighboring countries? To what extent would its short-term success be judged by itsability to meethumanitarian needs? | This report provides background on the U.S. occupation experiences in Japan andGermany after World War II, and discusses four sets of factors from this period that could be relevant to a U.S.occupation of Iraq. These are: (1) acceptance of U.S. goals, (2) homogeneity of the occupied populations, (3) ability to manage theirown affairs, and (4)international legitimacy and support. This report will not be updated |
Almost every conversation about surface transportation finance begins with a two-part question: What are the "needs" of the national transportation system, and how does the nation pay for them? This report is aimed almost entirely at d iscussing the "how to pay for them" question. Since 1956, federal surface transportation programs have been funded largely by taxes on motor fuels that flow into the Highway Trust Fund (HTF). A steady increase in the revenues flowing into the HTF due to increased motor vehicle use and occasional increases in fuel tax rates accommodated growth in surface transportation spending over several decades. In 2001, though, trust fund revenues stopped growing faster than spending. In 2008 Congress began providing Treasury general fund transfers to keep the HTF solvent. Every year since 2008, there has been a gap between the dedicated tax revenues flowing into the HTF and the cost of the surface transportation spending Congress has authorized. Congress has filled these shortfalls by transfers, largely from the general fund, that have shifted a total of $143.6 billion to the HTF (roughly 22% of outlays). The last $70 billion of these transfers were authorized in the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94 ), which was signed by President Barack Obama on December 4, 2015. The FAST Act funds federal surface transportation programs from FY2016 through FY2020. When the act expires the de facto policy of relying on general fund transfers to sustain the HTF will be 12 years old. Congressional Budget Office (CBO) projections indicate that the imbalance between motor fuel tax receipts and HTF expenditures will persist beyond FY2020. In consequence, funding and financing surface transportation is expected to continue to be a major issue for Congress. The HTF has two separate accounts—highways and mass transit. The primary revenue sources for these accounts are an 18.3-cent-per-gallon federal tax on gasoline and a 24.3-cent-per-gallon federal tax on diesel fuel. Although the HTF has other sources of revenue, such as truck registration fees and a truck tire tax, and is also credited with interest paid on the fund balances held by the Treasury, fuel taxes in most years provide 85% to 90% of the amounts paid into the fund by highway users. The transit account receives 2.86 cents per gallon of fuel taxes, with the remainder of the tax revenue flowing into the highway account. An additional 0.1-cent-per-gallon fuel tax is reserved for the Leaking Underground Storage Tank (LUST) Fund, which is not part of the transportation program. Since the trust fund was created in 1956, Congress has increased federal motor fuel taxes four times: in 1959, 1982, 1990, and 1993. Since the 1993 increase, additional changes to the taxation structure have modestly boosted trust fund revenues. However, since 2001, revenue flowing into the HTF has not met expectations in most years. The American Jobs Creation Act of 2004 ( P.L. 108-357 ), for example, provided the trust fund with increased future income by changing elements of federal "gasohol" taxation. In 2005, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users ( P.L. 109-59 ; SAFETEA) sought to bolster the trust fund by addressing tax fraud. SAFETEA also provided for the transfer of some general fund revenue associated with transportation-related activities to the trust fund. It was believed at the time of SAFETEA's passage that the tax changes, a $12.5 billion unexpended balance in the trust fund, and higher fuel tax revenue due to expected economic growth would be sufficient to finance the surface transportation program through FY2009. This prediction proved to be incorrect. Trust fund revenue has generally lagged inflation since FY2007. The shortfalls resulting from the overly optimistic forecasts associated with SAFETEA were rectified by Treasury general fund contributions. In September 2008, Congress enacted a bill that transferred $8 billion from the general fund to shore up the HTF. Other transfers followed (see Table 1 ). When the HTF was conceived, annual vehicle miles traveled (VMT), and therefore motor fuel tax revenue, were rising rapidly. That is no longer the case. The Federal Highway Administration (FHWA) projects that VMT will grow at an average of roughly 1.2% per year over the next 20 years. Meanwhile, other policy changes are weakening the link between driving activity and motor fuel tax revenues. Under rules issued in 2012, new passenger cars and light trucks are expected to attain an average fuel economy of 41.0 miles per gallon in model year 2021 and 49.7 miles per gallon in model year 2025. Improved fuel economy is slowly reducing the average amount of fuel used per mile of travel. The expanding fleets of hybrid and electric vehicles, respectively, pay less or nothing by way of fuel taxes, raising equity issues that are likely to become more prominent as the electric/hybrid vehicle fleet expands. On April 2, 2018, the Trump Administration announced its intent to revise the Corporate Average Fuel Economy (CAFE) standards for the model years 2022-2025. This change could slow the increase in the average fuel economy of the motor vehicle fleet. An increase in the existing fuel tax rates would provide immediate relief to the trust fund. As a rule of thumb, adding a penny to federal motor fuel taxes provides the trust fund with roughly $1.5 billion to $1.7 billion per year. The prospect of reduced motor fuel consumption, however, casts doubt on the ability of the motor fuel taxes to support increased surface transportation spending beyond the next decade, even with significant increases in tax rates. CBO projects that from FY2021 to FY2026 the gap between dedicated surface transportation revenues and spending will average $19 billion annually ( Table 2 ). In 2020, as Congress considers surface transportation reauthorization, it could again face a choice between finding new sources of income for the surface transportation program and settling for a smaller program, which might look very different from the one currently in place. Figure 1 shows the impact of the general fund transfers within the context of the underlying imbalance between HTF revenues and projected spending for FY2018-FY2026. Table 2 provides projections of the gap between HTF receipts and outlays following the expiration of the FAST Act at the end of FY2020. In recent decades, Congress has typically sought to reauthorize surface transportation programs for periods of five or six years. As the table indicates, a five-year reauthorization beginning in FY2021 faces a projected gap between revenues and outlays of roughly $94 billion. A six-year reauthorization would face a gap of almost $117 billion. These projections assume that spending on federal highway and public transportation programs would remain as it is today, adjusted for anticipated inflation. When the FAST Act expires at the end of FY2020, the balance in the HTF is expected to be $14 billion—an amount equal to almost three months of outlays. CBO projects that this balance, plus incoming revenue, will allow the Federal Highway Administration (FHWA) and the Federal Transit Administration (FTA) to pay their obligations to states and transit agencies until sometime in FY2021. However, without a reduction in the size of the surface transportation programs, an increase in revenues, or further general fund transfers, the balance in the HTF is projected to be close to zero near the end of FY2021 (see Table 3 ). At that point, both FHWA and FTA would likely have to delay payments for completed work. Based strictly on projected income and expenses, the HTF would move from a positive balance of $14 billion at the start of FY2021 to a negative balance of $85 billion at the end of FY2025. However, current law does not allow the HTF to incur negative balances. Unless this is changed, $85 billion represents the minimum amount the House Ways and Means Committee and the Senate Committee on Finance would need to find over the FY2021-FY2025 period in some combination of additional revenue and budget offsets for general fund transfers, should Congress choose to continue funding surface transportation at the current, or "baseline," level, adjusted for inflation. Because the HTF currently provides all but about $2 billion of annual spending authorized for the highway and transit programs (the main exception being the FTA Capital Investment Grants Program), these numbers have implications for the size of the program Congress may approve to follow the FAST Act. Highway and transit spending based solely on the revenue projected to flow into the HTF under current law would be limited to roughly $41 billion in FY2021, significantly less than the "baseline" FY2021 outlays of roughly $58 billion. The projected stagnation and eventual FY2026 decline in HTF revenue implies that once expected inflation is factored in, FHWA and FTA would have less contract authority in each year to spend on projects through FY2026. Reducing expenditures would not provide immediate relief from the demands on the HTF. Because transportation projects can take years to complete, both the highway and public transportation programs must make payments in future years pursuant to commitments that have already been incurred. As of FY2019, obligated but unspent contract authority for highway projects in progress is projected to be roughly $62 billion. This does not count another $22 billion in available but unobligated contract authority. For public transportation programs the equivalent figures for FY2019 are projected to be almost $18 billion in unpaid obligations and another $11 billion in unobligated contract authority. The obligated amounts represent legal obligations of the U.S. government and must be paid out of future years' HTF receipts. On February 9, 2018, President Trump signed the Bipartisan Budget Act of 2018 ( P.L. 115-123 ), which raised the ceilings on non-defense discretionary spending for FY2018 and FY2019 by $63.3 billion and $67.5 billion, respectively. House and Senate leaders agreed to work with the appropriators to ensure that at least $10 billion per year of these additional outlays would be provided for infrastructure, including surface transportation. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), provided additional infrastructure funding from the general fund in accordance with the Bipartisan Budget Act, including $2.834 billion for programs normally funded from the HTF. These funds were not credited to the HTF, however, and have no impact on HTF solvency. The first federal tax on gasoline (1 cent per gallon) was imposed in 1932, during the Hoover Administration, as a deficit-reduction measure following the depression-induced fall in general revenues. The rate was raised to help pay for World War II (to 1.5 cents per gallon) and raised again during the Korean War (to 2 cents per gallon). The Highway Revenue Act of 1956 (P.L. 84-627) established the HTF and raised the rate to 3 cents per gallon to pay for the construction of the Interstate Highway System. The Federal-Aid Highway Act of 1959 (P.L. 86-342) raised the rate to 4 cents per gallon. The gasoline tax remained at 4 cents from October 1, 1959, until March 31, 1983. During this period, revenues grew automatically from year to year as fuel consumption grew along with increases in vehicle miles traveled. Since 1983 lawmakers have passed legislation raising the tax rates on highway fuel use three times. Although infrequent, these rate increases were quite large in a proportional sense. The gasoline tax was raised on April 1, 1983, from 4 to 9 cents per gallon, a 125% increase; on September 1, 1990, from 9 to 14 cents (not counting the additional 0.1 cent for LUST), or 55%; and on October 1, 1993, from 14 to 18.3 cents, or 31%. Increasing the rate of the fuel taxes has never been popular. The last three increases were accomplished with difficulty and were influenced by the broader budgetary environment and the politics of the time. The increase in the fuel tax rate under the Surface Transportation Assistance Act of 1982 (STAA; P.L. 97-424 , Title V) occurred in the lame-duck session of the 97 th Congress. In the "Great Compromise," supporters of increased highway spending had come to an agreement with transit supporters (mostly from the Northeast) that a penny of a proposed 5-cents-per-gallon increase would be dedicated to a new mass transit account within the HTF. This meant that support for the bill during the lame-duck session was widespread and bipartisan. President Reagan's opposition to an increase in the "gas tax" softened during the lame-duck session. On November 23, 1982, he announced that he would support passage of STAA because "Our country's outstanding highway system was built on the user fee principle—that those who benefit from a use should share in its cost." Nonetheless, the bill faced a series of filibusters in the Senate, which were eventually overcome by four cloture votes. The conference report was again filibustered, and President Reagan helped secure the votes needed for cloture. President Reagan signed STAA into law on January 6, 1983, more than doubling the highway fuel tax to 9 cents per gallon. The Omnibus Budget Reconciliation Act of 1990 (OBRA90; P.L. 101-508 ), enacted November 5, 1990, was passed under the pressure of impending final FY1991 sequestration orders issued by President George H. W. Bush under Title II of P.L. 99-177 , the Balanced Budget and Emergency Deficit Control Act of 1985, also known as the Gramm-Rudman-Hollings Act (GRH). OBRA90 included budget cuts, tax changes, and the Budget Enforcement Act ( P.L. 101-508 ), which rescinded the FY1991 sequestration orders. OBRA90 also raised the tax on gasoline by 5 cents per gallon, to 14 cents. Half the increase went to the HTF (2 cents to the highway account and 0.5 cents to the mass transit account), with the other 2.5 cents per gallon to be deposited in the general fund for deficit reduction. This was the first time since 1957 the motor fuel tax had been used as a source of general revenue. Section 9001 expressed the sense of Congress that all motor fuel taxes should be directed to the HTF as soon as possible. The Omnibus Budget Reconciliation Act of 1993 (OBRA93; P.L. 103-66 ) Section 13241(a) made further changes in regard to fuel taxes: The 2.5-cents-per-gallon fuel tax dedicated to deficit reduction in OBRA90 was redirected to the HTF beginning October 1, 1995, and its authorization was extended to September 30, 1999. The highway account received 2 cents per gallon and the mass transit account 0.5 cents per gallon of the rededicated amount. An additional permanent 4.3-cents-per-gallon fuel tax took effect in October 1993 and was dedicated to deficit reduction. This brought the gasoline tax to 18.3 cents per gallon, although for two years (October 1, 1993, to October 1, 1995) 6.8 cents per gallon of this was deposited in the general fund. On October 1, 1995, the amount going to the general fund dropped to 4.3 cents per gallon, and the amount dedicated to the HTF increased to 14 cents per gallon. Subsequently, under the Taxpayer Relief Act of 1997 ( P.L. 105-34 ), all motor fuel tax revenue was redirected to the HTF. (The LUST fund continues to receive the revenue from an additional 0.1 cents-per-gallon tax.) The political difficulty of increasing motor fuel taxes has led to interest in alternative approaches for supporting the HTF. Among options that have been proposed are the following: A differently designed gas tax might be indexed to both inflation (either inflation generally or highway construction cost inflation) and fuel-efficiency improvements. This new design could be imposed after raising the current gas tax rate to compensate for the loss in purchasing power since the last rate increase in 1993. If the motor fuel taxes for gasoline and diesel had been adjusted in 2017 to keep pace with the change in the Bureau of Labor Statistics' consumer price index since 1993, the 18.3-cents-per-gallon gasoline tax would now be 31.7 cents per gallon, and the 24.3-cents-per-gallon diesel tax would be 42.1 cents per gallon. Consequently, the first step in implementing this method of "fixing" the gas tax would be to raise the base tax rate for gasoline by roughly 13.4 cents per gallon and to raise the rate for diesel by roughly 17.8 cents per gallon. Future adjustments would depend on the inflation rate in future years. Tax-rate adjustments to make up for revenue lost due to greater fuel efficiency could be determined by dividing miles driven by vehicle category by the total amount of fuel consumed by that category and comparing the quotient to the previous year. Although fuel-economy standards for new vehicles are to rise over the next few years, the average efficiency of the entire vehicle fleet will rise slowly because of the large number of older vehicles on the road. Under the sales tax concept, the federal motor fuel taxes would be assessed as a percentage of the retail price of fuel rather than as a fixed amount per gallon. Some states already levy taxes on motor fuels in this way, either alongside or in place of fixed cents-per-gallon taxes on motor fuel purchases. If fuel prices rise in the future, sales tax revenues could rise from year to year even if consumption does not increase. Conversely, however, a decline in motor fuel prices could lead to a drop in sales tax revenue. Many states that tied fuel taxes to prices after the price shocks of the 1970s encountered revenue shortfalls in the 1980s, when fuel prices fell dramatically. Over a 20-year period, most of these variable state fuel taxes disappeared. In 2013, Virginia eliminated its cents-per-gallon fuel taxes in favor of a sales tax on fuel and a general sales tax increase that was dedicated to transportation purposes. The Virginia law mandates that the tax be imposed on the average wholesale price (calculated twice each year) but sets price floors; if prices of motor fuels fall beneath those floors, the amount of fuel tax charged per gallon is not reduced further. A federal sales tax on motor fuel would likely be at best an interim solution to the long-term problem of financing transportation infrastructure because, as with the current motor fuel tax, it relies on fuel consumption to fund transportation programs. To the extent that improved vehicle efficiency or adoption of hybrid or electric vehicles leads to long-term declines in fuel usage, a sales tax on fuel may not lead to increases in trust fund revenues. Economists have long favored mileage-based user charges as an alternative source of highway funding. Under the user charge concept, motorists would pay fees based on distance driven and, perhaps, on other costs of road use, such as wear and tear on roads, traffic congestion, and air pollution. The funds collected would be spent for surface transportation purposes. The concept is not new: federal motor fuel taxes are a form of indirect road user charge insofar as road use is loosely related to fuel consumption. Some states have charged trucks by the mile for many years, and toll roads charge drivers based on miles traveled and the number of axles on a vehicle, which is used as a proxy for weight. Recent technological developments, as well as the evident shortcomings of motor fuel taxes, have led to renewed interest in the user charge concept, including funding for pilot programs included in the FAST Act. VMT charges, also referred to as mileage-based road user charges, could range from a flat cent-per-mile charge based on a simple odometer reading to a variable charge based on vehicle movements tracked by Global Positioning System (GPS). Other proposals envision VMT charges that would mimic the way Americans now pay their fuel taxes by collecting the charge at the pump, but a different method would be required to obtain payment from electric vehicle users. Implementation of a VMT charge would have to overcome a number of potential disadvantages relative to the motor fuel tax, including public concern about personal privacy; higher collection and enforcement costs (estimates range from 5% to 13% of collections); the administrative challenge of collecting the charge from roughly 265 million vehicles; and the setting and adjusting of VMT rates, which would likely be as controversial as increasing motor fuel taxes. Another issue is how to collect the charge from drivers who have no bank accounts or credit/debit cards. A nationwide VMT charge would be analogous to a national toll. This raises the prospect that vehicles using toll roads might be charged twice, although this effectively happens now in that toll-road users also pay tax on the motor fuel they consume while using the toll road. Technically, it would be possible for a VMT charge to replace an existing toll, but this could cause complications with respect to the servicing of bonds funded by toll-road revenue. Since 1982, the HTF has financed most federal public transportation programs as well as highway programs. If a VMT charge were to be used strictly for highway purposes, it might reasonably be characterized as a user fee even if the amount paid by each individual driver does not correspond precisely to the social cost (such as pollution and traffic congestion costs) of that user's driving. A VMT charge that funded both highways and public transportation might arguably be seen more as a tax than a user fee. This distinction raises a number of legal issues. Any legislation establishing a VMT charge would, at a minimum, have to clearly identify what the charge would be spent on. If the existing HTF were to be retained, legislation would have to specify what share of the revenue would be credited to the separate highway and mass transit accounts within the fund. A carbon tax would be assessed on emissions of carbon dioxide and other greenhouse gases. Its scope might include manufacturing facilities, power plants, and transportation. A share of revenues from a carbon tax could be dedicated to federal transportation programs, either directly or via existing transportation trust funds such as the HTF or the Airport and Airway Trust Fund. The revenues could either replace or supplement current transportation taxes such as the motor fuel taxes. In December 2016, CBO estimated that a carbon tax of $25 per metric ton would increase federal revenues by $977 billion between 2017 and 2026 after adjusting for tax revenue losses related to increased business costs. The projection assumed the tax would increase at an annual rate of 2%, indexed for inflation. CBO estimated that the tax would reduce cumulative emissions from the taxed sources by roughly 9%. The effect of a carbon tax on the HTF would depend on the design of the tax and the use of the revenue it generates. Since electric vehicles do not burn taxed motor fuels, their wider use could further weaken the sustainability of the HTF. In the near term, however, the impact of electric vehicles on HTF revenue is expected to be modest. In 2017 plug-in vehicles accounted for 1.1% of U.S. light vehicle sales, and the roughly 982,000 plug-in vehicles sold in the United States since their 2010 introduction comprise roughly 0.9% of registered automobiles. If each electric vehicle is assumed to replace a light duty vehicle that consumes 475 gallons of petroleum-based fuel per year, roughly $85 million in annual revenue is lost to the HTF. Even if electric vehicle sales grow rapidly, a significant impact on HTF revenues is likely to be roughly five to seven years away. As of 2017, 18 states had some form of tax or fee on electric vehicles. In most cases, the revenue from such fees is dedicated to transportation. Although sales and mileage fees have been considered, the most common form of tax is a flat fee paid annually at registration. Congress could consider imposing a similar federal fee. However, if Congress structures a federal registration fee in a way that mandates the states to implement the federal program, unrelated to the provision of federal funds, the fee might be challenged in court on constitutional grounds. A wide range of additional proposals has been suggested to generate revenue for the HTF. These proposals largely originated from the work of two commissions established pursuant to SAFETEA and of groups such as the American Association of State Highway and Transportation Officials (AASHTO) and the Transportation Research Board (TRB). For example, AASHTO's "Matrix of Illustrative Surface Transportation Revenue Options" lists 33 potential HTF revenue options with yield estimates in tabular form. Many of these options involve taxes on freight movements or energy. It should be emphasized that the revenue estimates from these exercises are merely suggestive; the revenue obtained from any given measure would depend on changes in the price of motor fuels, growth in the number of annual auto registrations, and other factors. The HTF was set up as a temporary device that was supposed to disappear when the Interstate System was finished. It has endured, and its breadth of financing has expanded well beyond the Interstates, most significantly with the 1982 creation of the mass transit account within the HTF to support public transportation spending. But the HTF is not essential to a federal role in transportation funding. Congress routinely funds large infrastructure projects, such as those constructed by the Army Corps of Engineers, from general fund appropriations. Before 1956, it funded highway projects using annual appropriations. As recently as the 1990s, significant highway programs such as the Appalachian Development Highway System were funded from the general fund. If Congress chooses not to impose new taxes and fees dedicated to the HTF, it could still maintain or expand the surface transportation program with general fund monies. Any of the revenues from the HTF financing options discussed above could also be deposited into the general fund rather than the HTF if Congress considers alternatives to the trust fund financing model. Possible alternatives include the following: E liminate the T rust F und . This would do away with the complicated budget framework of contract authority, obligations, and apportionments. Surface transportation would be forced to compete with other federal programs for funding each year, possibly affecting the level of funding provided for transportation. There could be advantages to moving away from trust fund financing of surface transportation. Until recently, one of the most intractable arguments in reauthorization debates concerned which states were "donors" to transportation programs and which were "donees." Donor states were states whose highway users were estimated to pay more to the highway account of the HTF than they received. Donee states received more than they paid. The donor-donee dispute was unique to the federal highway program, and occurred largely because of the ability to track federal fuel tax revenues by state. This issue has faded as HTF shortfalls have been resolved with injections of general fund transfers to the fund. These general fund monies transferred into the HTF have nothing to do with highway tax revenues, but have made nearly all states donees. The donor-donee issue would likely disappear entirely if transportation-related taxes were deposited into the general fund instead of the trust fund. This would provide Congress with greater flexibility to allocate funding among various transportation modes and between transportation and nontransportation uses. However, treating fuel taxes as just another source of federal revenue would weaken the long-standing link between road user charges and program spending. Most trust-fund outlays take the form of formula grants over which states have a great deal of spending discretion. While there are numerous federal requirements attached to trust fund expenditures, there have been until recently relatively few performance-oriented goals that the states are required to meet in selecting projects to be undertaken with federal monies. Performance measures might be easier to implement without formula programs that automatically apportion funding to the states. However, this may not be the case; performance measures in recent years have been imposed on the Federal-Aid highway programs as they are currently structured, although implementation has been slow. Eliminating the trust fund might also allow for creativity in thinking about the provision of transportation infrastructure across the modal boundaries that now define much of federal transportation spending. Historically, important parts of U.S. transportation infrastructure, such as the transcontinental railroads and the Panama Canal, were authorized by specific congressional enactments rather than grant programs. Reconsidering the trust fund structure might reopen discussion of this approach. Devote HTF R evenues E xclusively to H ighways . This option would leave transit and other surface transportation programs to be funded entirely by annual appropriations of general funds or devolved to the states. Such a change would have political implications. Since the early 1990s, public transportation and cycling advocates, environmentalists, and a wide range of other groups have become full-fledged supporters of the surface transportation program. They might be less enthusiastic about supporting a program that does not address their interests. " D evolve" S urface T ransportation P rograms to the S tates . The federal government could devolve most federal responsibility for highways and public transportation to the states. Under devolution proposals, the federal taxes that now support surface transportation programs, mostly fuel taxes, would be reduced accordingly, leaving individual states to raise their own taxes to pay for highway and transit projects as they see fit. A small program, funded by much-reduced motor fuel taxes, would remain in place at the federal level to maintain roads on federal lands, fund highway safety efforts, and support other programs Congress decides not to devolve. By enacting the FAST Act, Congress chose to support the current funding model by transferring funds into the HTF, mostly from the Treasury general fund. Whether such general fund support should continue is likely to become a major point of contention when Congress debates reauthorizing surface transportation programs beyond FY2020. By FY2020, the last year of the FAST Act, federal highway programs will have been funded for 12 years under a de facto policy of providing a Treasury general fund share. Congress could address the inadequacy of motor fuel taxes to meet surface transportation needs by making the general fund share permanent. The public transportation titles of surface transportation bills already fund the Capital Investment Grants program through appropriations from the general fund. The Federal Aviation Administration (FAA) budget is also supported by a combination of trust funds and general funds; the general fund amount is supposed to approximate the value of the airways system to military and other government users and to "societal" nonusers (people who do not fly but, for example, benefit from the delivery of freight via aircraft). A similar argument could be made regarding the public good benefits of a well-functioning highway system to justify an annual general fund appropriation to support spending on roads. Should Congress agree on a future policy of providing an annual general fund share for federal highway funding, the financing structure of the federal-aid highways program could change. Congress would have the choice of appropriating the general fund share to the HTF and maintaining the programmatic status quo, or it could fund some programs from the trust fund and fund others via appropriations. Congress could also consider a two-pronged approach to authorization. It could authorize the trust funded programs separately from the appropriated programs. This would give Congress the option of approving a very long authorization for trust-funded projects that typically take many years to plan and complete. The long-term authorization could be paired with a series of short-term bills funded with appropriated general funds for programs whose projects are more likely to be completed quickly. Toll roads have a long history in the United States, going back to the early days of the republic. During the 18 th century, most were local roads or bridges that could not be built or improved with local government tax revenue alone. However, beginning with the Federal Aid Road Act of 1916 (39 Stat. 355), federal law has included a prohibition on the tolling of roads that benefited from federal funds. During the late 1940s and early 1950s, the prospect of toll revenues allowed states to build thousands of miles of limited-access highways without federal aid and much sooner than would have been the case with traditional funding. Despite this, the tolling prohibition was reiterated in the Federal-Aid Highway Act and Highway Revenue Act of 1956 (70 Stat. 374), which authorized funds for the Interstate System, created the HTF, and raised the fuel taxes to pay for their construction. Over the last three decades the prohibition has been moderated so that exceptions to the general ban on tolling now cover the vast majority of federal-aid roads and bridges. There remains a ban on the tolling of existing Interstate System highway surface lane capacity. While new toll facilities have opened in several states, some of those projects have struggled financially. Generally, there are several levels of restrictions on tolling of federal-aid highways. Non-Interstate System highways and bridges may be converted to toll roads but only after reconstruction or replacement. Existing Interstate System surface lane capacity may not be converted to toll roads except under the auspices of two small pilot programs. Interstate System bridges and tunnels may be converted if they are reconstructed or replaced. New capacity on the federal-aid highway system, including Interstate Highways, generally may be tolled. There are no federal restrictions on tolling of roads that are not part of the federal-aid system. Highway toll revenue nationwide came to $14.457 billion in FY2016, 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, ranging from roughly 5% to 7%. On average, facility owners collected $2.41 million per mile of toll road or bridge in FY2016, 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 E xtent of T oll R oads. FHWA statistics identify 6,001 tolled miles of roads, bridges, and tunnels as of January 1, 2017, a net increase of 1,280 miles, or 27%, over 1990. Toll-road mileage comprises 0.6% of the 1,022,815 miles of public roads eligible for federal highway aid. While there may be many existing roads on which tolling would be financially feasible, the vast majority of mileage on the federal-aid system probably has too little traffic to make toll collection economically viable. Increase the A verage T oll per M ile. Raising tolls can be politically challenging, especially when 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. 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 nontolled routes, thereby reducing their revenue-raising potential. Increase T oll- R oad U sage. To a great extent, increasing toll road usage is dependent on policies that effectively increase the number of miles tolled and establish toll rates that maximize revenues without discouraging use. However, toll road use is also determined by broad economic and social trends. The financing of many of the toll roads constructed in the 20 th century was based on the assumption that the new roads would lead to increased vehicle usage. Although vehicle miles traveled declined in the wake of the recession that began in 2007, vehicle use has been rising again since 2014. If this trend continues it bodes well for toll revenues, which would rise with increasing traffic. On the other hand, if demographic trends and social changes eventually lead to slower growth in personal motor vehicle use, then toll revenues may be constrained in the longer term. The constraints on these means of increasing revenue from tolling suggest that imposing tolls on individual transportation facilities is likely to be of only limited use in supporting the overall level of highway capital spending. Furthermore, some states, particularly those with low population densities, may have few or no facilities suitable for tolling. Toll collection itself can be costly; collection costs on many existing toll roads exceed 10% of revenues. For these reasons, while 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—they would likely be less effective in providing broad financial support for surface transportation programs. Value capture represents an attempt to cover part or all of the cost of transportation improvements from landowners or developers who benefit from the resulting increase in the value of real property. Value capture revenue mechanisms include tax increment financing, special assessments, development impact fees, negotiated exactions, and joint development. The federal role in value capture strategies may be limited, as the Government Accountability Office (GAO) has noted, but it is worth describing these strategies to provide a fuller picture of the ways in which they might supplement or supplant more commonly used funding and financing mechanisms. Value capture is not a new idea. Land developers built and operated streetcar systems in the late 19 th century as a way to sell houses on the urban fringe, for example. Much of the recent experience with value capture has been associated with public transit. GAO found that the most widely used mechanism is joint development, in which a real estate project at or near a transit station is pursued cooperatively between the public and private sectors. An example might involve a transit agency leasing the unused space over a station, its "air rights," to a developer in exchange for a regular payment. Joint development has generated relatively small amounts of money for transit agencies. For example, the Washington Metropolitan Area Transit Authority received about $10 million from joint development in FY2016, about 1% of its operating revenue. However, less widely used strategies, such as special assessment districts, are estimated to generate significant amounts of funding for specific projects. In a special assessment district, properties within a defined area are assessed a special tax for a specific purpose. A special assessment district in Seattle produced $25 million of the $53 million (47%) needed to fund the South Lake Union streetcar project. There has been less use of value capture in highway projects, but this appears to be changing. Texas, for example, has authorized the use of tax increment financing through the creation of transportation reinvestment zones to help fund highway projects. Special assessment districts also have been set up in several states, including Florida and Virginia, to fund highway projects. In Virginia a special assessment district was used to help fund the expansion of Route 28 near Washington Dulles International Airport beginning in the late 1980s. Growing demands on the transportation system and constraints on public resources have led to calls for more private-sector involvement in the provision of highway and transit infrastructure through public-private partnerships (P3s), which can be designed to lessen demands on public-sector funding. Private involvement can take a variety of forms, including design-build and design-build-finance-operate agreements. Typically, the "public" in public-private partnerships refers to a state government, local government, or transit agency. The federal government, nevertheless, exerts influence over the prevalence and structure of P3s through its transportation programs, funding, and regulatory oversight. To be viable, P3s involving private financing typically require an anticipated project-related revenue stream from a source such as vehicle tolls, freight container fees, or, in the case of transit station development, building rents. Private-sector resources may come from an initial payment to lease an existing asset in exchange for future revenue, as with the Indiana Toll Road and Chicago Skyway, or they may arise from a newly developed asset that creates a new revenue stream. Either way, a facility user fee, such as a toll, is often the key to unlocking private-sector participation and resources. In some cases, private-sector financing is backed by "availability payments," regular payments made by government to the private entity based on negotiated quality and performance standards of the facility. Aversion in the private sector to the risk that too few users will be willing to pay for use of a new facility, known as demand risk, has made availability payment P3s more common over the past few years. As a result, state and local governments are retaining demand risk more often. It is frequently asserted that hundreds of billions of dollars of private funds are available globally for infrastructure investment. To date, however, the number of transportation P3s in the United States is relatively small, as is the amount of long-term private financing provided. According to one source, from 1993 through September 2017 there were 30 surface transportation P3s involving long-term financing, with total project costs totaling $39 billion. This includes the 99-year lease of the Chicago Skyway; the I-595 managed lanes project in Florida; and the Purple Line light rail transit project in Maryland. P3s and private investment in infrastructure, including surface transportation, are relatively larger in many other countries, including Canada, Australia, and the United Kingdom. While private investment may grow in the future, many impediments remain. Some of the major ones include the relative attractiveness of the tax-exempt financing available to state and local government, political opposition to tolling and privatization, and difficulties associated with project development. Private-sector financing generated through P3s might best be seen as a supplement to traditional public-sector funding rather than as a substitute. In addition to attracting private capital, P3s may generate new resources for highway and transit infrastructure in at least two ways. First, P3s may improve efficiency through better management and innovation in construction, maintenance, and operation—in effect providing more infrastructure for the same price. Private companies may be more able to examine the full life-cycle cost of investments, whereas public agency decisions are often tied to short-term budget cycles. Such cost reductions may not materialize, however, if the public sector has to spend a substantial amount of time on procurement, oversight, dispute resolution, and litigation. Second, P3s may reduce government agencies' costs by transferring the financial risks of building, maintaining, and operating infrastructure to private investors. These risks include construction delays, unexpectedly high maintenance costs, and the possibility that demand will be less than forecast. There is a danger, however, that this transfer of risk may prove illusory if major miscalculations force the public agency to renegotiate contracts or provide financial guarantees. Moreover, as GAO points out, not all the risks can or should be shifted to the private sector. For instance, private investors are unlikely to accept the risk of higher construction costs due to delays in the environmental review process. Asset recycling is the sale or lease to the private sector of government-owned infrastructure assets and the investment of the proceeds in new infrastructure. For a few years, the national government of Australia had a policy of making 15% incentive payments to state and territory governments if they agreed to sell or lease assets to the private sector and then "recycle" these payments to other infrastructure projects. Over the roughly three-year period the asset recycling initiative was in effect, the national government entered into four agreements with incentive payments totaling A$3.175 billion (approximately US$2.4 billion). One of the agreements involved the lease of 49% of the electricity network businesses owned by the State of New South Wales and the investment of the proceeds in the Sydney Metro, Parramatta Light Rail, and several road projects. A similar program for the United States was proposed in a draft bill on infrastructure investment circulated by House Transportation and Infrastructure Committee Chairman Bill Shuster in 2018. The draft bill proposed to provide a federal payment of 15% of the assessed value of a leased infrastructure asset to eligible project sponsors, allotting $3 billion for this purpose from FY2019 through FY2023. No similar proposal has been introduced as legislation. Infrastructure assets that qualify for recycling in the draft bill include highways, public transit, airports, ports and port terminals, publicly owned railroads, intercity bus facilities, intermodal transportation facilities, and drinking and wastewater facilities. Municipal bonds, debt instruments used by states and all types of local government, are a major source of financing for transportation infrastructure. The interest on municipal bonds is generally exempt from federal income tax; consequently, an investor will usually accept a lower interest rate than on a non-tax-exempt bond, and the borrower can finance a project at a lower cost. The forgone tax revenue is the federal government's contribution to a project financed with municipal bonds. CBO estimates that the cost to the federal government of tax-exempt bonds in state and local transportation and water infrastructure investment is 26 cents per dollar financed. Private activity bonds (PABs) are a type of municipal bond in which a state or local government acts as a financial intermediary for a business or individual. PABs are not eligible for federal tax exemption unless Congress grants an exception for a certain purpose and other requirements are met. Congress has approved limited use of tax-exempt private activity bonds for airports, docks and wharves, mass commuting facilities, high-speed intercity rail facilities, and qualified highway or surface freight transfer facilities (26 U.S.C. §142). In the case of qualified highway or surface freight transfer facilities, the Secretary of Transportation must approve the issuance of PABs, and the aggregate amount allocated must not exceed $15 billion (26 U.S.C. §142(m)(2)). The authorization for the sale of qualified highway or surface freight transfer facilities was a provision in SAFETEA, enacted in 2005. As of August 1, 2018, $8.38 billion of the $15 billion had been issued to finance 23 projects, and another $2.63 billion had been allocated to five other projects. There have been proposals to increase the bond issuance cap so that PABs, which are seen as an important support for P3 deals, can continue to be issued in the future. While municipal bonds are a popular financing method, there are a number of potential disadvantages to their use. Because they are issued by state and local governments, the federal government has less control over the types of projects supported and the amount of the federal contribution than it does with grant and loan programs. Tax-exempt bonds, moreover, can be an inefficient way to subsidize state and local debt because borrowing costs are reduced by less than the forgone federal revenue. As CBO notes, "the remainder of that tax expenditure accrues to bond buyers in the highest income tax brackets." Also, tax-exempt bonds are unattractive to investors that do not have a federal tax liability, such as pension funds and foreign individuals and organizations, shrinking the potential funds available to state and local governments. Tax credit bonds, an alternative type of tax-preferred municipal bond, might help to overcome some of these limitations. Tax credit bonds typically do not pay interest. Instead, the investor receives a tax credit, an amount that is the same for investors in different tax brackets. Tax credit bonds, therefore, are more efficient than tax-exempt bonds because the revenue forgone by the federal government equals the reduction in borrowing costs that state and local governments receive. Unused tax credits may be carried forward to another year or sold to another entity with tax liability. With some types of tax credit bonds known as issuer credit or direct pay bonds, the credit is paid to the issuer (a state or local government) by the Treasury, and the investor gets interest similar to taxable securities. Consequently, tax credit bonds can be attractive to investors with no federal tax liability. Federal authority exists for state and local governments to issue some types of tax credit bonds, but under current authority none can be used to finance transportation projects. Tax credit bonds authorized by the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ), known as Build America Bonds, were used to finance a wide range of projects including transportation. The authorization to issue these bonds expired December 31, 2010. An existing federal mechanism for providing credit assistance to relatively large transportation infrastructure projects is the Transportation Infrastructure Finance and Innovation Act (TIFIA) program, enacted in 1998. TIFIA provides federal credit assistance in the form of secured loans, loan guarantees, and lines of credit. Federal credit assistance reduces borrowers' costs and lowers project risk, thereby helping to secure other financing at rates lower than would otherwise be possible. Another purpose of TIFIA funding is to leverage nonfederal funding, including investment from the private sector. Loans must be repaid with a dedicated revenue stream, typically a project-related user fee, such as a toll, but sometimes dedicated tax revenue. As of September 2018, according to DOT, TIFIA had provided assistance of about $30 billion to more than 70 projects. The overall cost of the projects supported is estimated to be nearly $110 billion. The FAST Act ( P.L. 112-141 ) authorized $275 million for TIFIA in both FY2016 and FY2017, $285 million in FY2018, and $300 million in both FY2019 and FY2020. Because the government expects its loans to be repaid, an appropriation need cover only administrative costs and the subsidy cost of credit assistance. According to the Federal Credit Reform Act of 1990, the subsidy cost is "the estimated long-term cost to the government of a direct loan or a loan guarantee, calculated on a net present value basis, excluding administrative costs." According to DOT, $1 in TIFIA funding historically has provided about $10 in credit assistance, a 10% subsidy cost, although in recent years each dollar has provided closer to $14. The FAST Act also allowed states to use funds they receive from two other highway programs to pay for the subsidy and administrative costs of credit assistance. These two programs are the Nationally Significant Freight and Highway Projects Program (NSFHPP), authorized at $950 million in FY2019, and the National Highway Performance Program (NHPP), authorized at $23.7 billion in FY2019. If states decide to use their formula funding in this way, the potential amount of loans and other credit assistance may be much greater than would be possible using the $275 million direct authorization alone. The Better Utilizing Investments to Leverage Development (BUILD) Transportation Discretionary Grants program (formerly TIGER program), funded by general fund appropriations, also can be used by grant recipients to pay the subsidy and administrative costs of a TIFIA loan. Several changes to the TIFIA program in the FAST Act were aimed at making it easier to finance smaller projects, particularly those in rural areas. These provisions included providing authority for a TIFIA loan to a state infrastructure bank (SIB) to capitalize a "rural project fund"; adding transit-oriented development (TOD) infrastructure as an eligible project (TOD infrastructure is a "project to improve or construct public infrastructure that is located within walking distance of, and accessible to, a fixed guideway transit facility, passenger rail station, intercity bus station, or intermodal facility"); allowing up to $2 million of TIFIA budget authority each fiscal year to pay the application fees for projects costing $75 million or less instead of requiring payment by the project sponsor; modifying or setting the minimum project cost thresholds for credit assistance at $10 million for TOD projects, the capitalization of a rural project fund, and local government infrastructure projects; and providing for a streamlined application process for loans of $100 million or less. In addition, the FAST Act authorized the creation of a new National Surface Transportation and Innovative Finance Bureau within DOT to administer federal transportation financing programs, specifically the TIFIA program, the SIB program, the Railroad Rehabilitation and Improvement Financing (RRIF) Program, and the allocation of authority to issue private activity bonds for qualified highway or surface freight transfer facilities. To fulfill this mandate, DOT established the Build America Bureau in July 2016. The bureau also will be responsible for establishing and promoting best practices for innovative financing and P3s, and for providing advice and technical expertise in these areas. The bureau will administer the discretionary Nationally Significant Freight and Highway Projects grant program, known as INFRA grants, and will have responsibilities related to procurement and project environmental review and permitting. Congress has considered several proposals to create a national infrastructure bank to help finance infrastructure projects. One purported advantage of a national infrastructure bank over other loan programs, such as TIFIA, is that it would have more independence in its operation, such as in project selection, and have greater expertise at its disposal. Additionally, a national infrastructure bank would likely be set up to help a much wider range of infrastructure projects, including water, energy, and telecommunications infrastructure. Proponents claim that the best projects, or at least those that are the most financially viable, would be selected from across these sectors. In many formulations, capitalization of a national infrastructure bank comes from an appropriation, but in others the bank is authorized to raise its own capital through bond issuance. By issuing securities that are not tax exempt, it could tap pools of private capital that do not invest in tax-exempt bonds, such as pension funds and foreign citizens, the traditional source of much project finance. Tax-exempt municipal securities are unattractive to some investors, either because individual issues are too small to interest them or because the investors do not benefit from the tax preference. Taxable bonds with long maturities might be attractive to some of these investors. An infrastructure bank also might also choose to reduce the federal government's share of project costs, putting greater reliance on nonfederal capital and user fees. Most infrastructure bank proposals assume the bank would improve the allocation of public resources by funding projects with the highest economic returns regardless of infrastructure system or type. Selection of the projects with the highest returns, however, might conflict with the traditional desire of Congress to ensure funding for various purposes. In the extreme case, major transportation projects might not be funded if the bank were to exhaust its lending authority on water or energy projects offering higher returns. Limitations of a national infrastructure bank include its duplication of existing programs like TIFIA and the Wastewater and Drinking Water State Revolving Funds. An infrastructure bank may not be the lowest-cost means of increasing infrastructure spending. CBO has pointed out that a special entity that issues its own debt would not be able to match the lower interest and issuance costs of the U.S. Treasury. In some formulations, a national infrastructure bank exposes the federal government to the risk of default. State infrastructure banks (SIBs) already exist in many states. In 32 states and Puerto Rico, SIBs were created pursuant to a federal program originally established in surface transportation law in 1995 ( P.L. 104-59 ). Several other states, among them California, Florida, Georgia, Kansas, Ohio, and Virginia, have state investment banks that are unconnected to the federal program. Local governments have also begun to embrace the idea. The City of Chicago has established a nonprofit organization, the Chicago Infrastructure Trust, as a way to attract private investment for public works projects, and Dauphin County, PA, has established an infrastructure bank funded from a state tax on liquid fuels to make loans to the 40 municipalities and private project sponsors within its borders. One of the biggest stumbling blocks to federally authorized SIBs has been capitalization. States can capitalize the banks using some of their apportioned and allocated highway and transit funds, and any amount of rail program funds. Under the FAST Act, capitalization of a rural project fund may now be made by a loan from the TIFIA program. Federal funds have to be matched with state funds, generally on an 80% federal, 20% state basis. | For many years, federal surface transportation programs were funded almost entirely from taxes on motor fuels deposited in the Highway Trust Fund. The tax rates, which are fixed in terms of cents per gallon, have not been increased at the federal level since 1993. Meanwhile, motor fuel consumption is projected to decline due to improved fuel efficiency, increased use of electric vehicles, and slow growth in vehicle miles traveled. In consequence, revenue flowing into the Highway Trust Fund has been insufficient to support the surface transportation program authorized by Congress since 2008. Congress has yet to address the surface transportation program's fundamental revenue issues, and has given limited consideration to raising fuel taxes in recent years. Instead, since 2008 Congress has supported the federal surface transportation program by supplementing fuel tax revenues with transfers from the U.S. Treasury general fund. The most recent reauthorization act, the Fixing America's Surface Transportation Act (FAST Act; P.L. 114-94), authorized spending on federal highway and public transportation programs through September 30, 2020. The act provided $70 billion in general fund transfers to the Highway Trust Fund from FY2016 through FY2020. This use of general fund transfers to supplement the Highway Trust Fund will have been the de facto funding policy for 12 years when the FAST Act expires. Congressional Budget Office (CBO) projections indicate that the Highway Trust Fund insufficiency relative to spending will reemerge following expiration of the FAST Act. The projections indicate a shortfall of $85 billion over the first five years following the FAST Act, and $109 billion over the first six years. As the September 2020 expiration of the FAST Act approaches, Congress may again examine adjustments to the funding and financing of the federal role in surface transportation. Raising motor fuel taxes could provide the Highway Trust Fund with sufficient revenue to fully fund the program in the near term, but may not be a viable long-term solution due to expected declines in fuel consumption. It would also not address the equity issue arising from the increasing number of personal and commercial vehicles that are powered electrically and therefore do not pay motor fuel taxes. Replacing motor fuel taxes with a mileage-based road user charge would need to overcome a variety of financial, administrative, and privacy barriers, but could be a solution in the longer term. Treasury general fund transfers could continue to be used to make up for the Highway Trust Fund's projected shortfalls but could require budget offsets of an equal amount. The political difficulty of adequately funding the Highway Trust Fund could lead Congress to consider altering the trust fund system or eliminating it altogether. This might involve a reallocation of responsibilities and obligations among federal, state, and local governments. Some surface transportation needs can be met by private investment, including public-private partnerships, and federal loans from the Transportation Infrastructure Finance and Innovation Act (TIFIA) program. If it desires to promote private investment in transportation infrastructure, Congress could consider asset recycling incentive grants to state and local governments for the sale or lease of government-owned infrastructure if the proceeds are committed to new infrastructure. Tolling may be an effective way to finance specific roads, bridges, or tunnels that are likely to have heavy use and are located such that the tolls are difficult to evade. 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. Tolls and private investment are unlikely to provide broad financial support for surface transportation needs, and many projects are not well suited to alternative financing. |
In the midst of national concern over the opioid epidemic and the large number of prescription opioid overdose deaths in the United States, federal and state officials are paying greater attention to the manner in which opioids are prescribed. Prescription opioid-related overdose deaths dramatically increased from 1999 to 2010 in the United States in conjunction with increased opioid prescribing, and overdose deaths involving prescription opioids were five times higher in 2016 than in 1999. Over the last year, the Trump Administration, Congress, state governments, and the private sector have all taken action to address prescription drug abuse. Initiatives range from state and private health care initiatives, such as limiting the number of pills in a prescription, to major legislation, such as the Comprehensive Addiction and Recovery Act (CARA; P.L. 114-198 ), which included many provisions to address prescription drug abuse. In 2016, an estimated 11.8 million individuals aged 12 or older (4.4% of this population) misused opioids in the past year, including 11.5 million pain reliever misusers and 948,000 heroin users. Prescription painkillers—natural and semisynthetic opioids (e.g., oxycodone, hydrocodone, and morphine) are involved in more overdose deaths than any other opioid. Of the individuals who used prescription painkillers non-medically in 2016, more than half (53.0%) received the drugs from a friend or relative either for free, by purchase, or by stealing. Aside from prescription painkillers such as oxycodone, other commonly abused prescription medications include benzodiazepines and amphetamine-like drugs. Some academic and government experts link the crackdown on prescription drug abuse and the comparatively higher cost of prescription pain relievers on the black market to the uptick in heroin abuse. The number of individuals aged 12 or older currently using heroin (475,000 in 2016) has nearly tripled since 2002. Like many prescription pain relievers, heroin is an opioid. Unlike prescription pain relievers, however, heroin is a Schedule I controlled substance under the Controlled Substances Act and has no accepted medical use in the United States. Most prescription drugs that are misused are originally prescribed by a physician (rather than, for example, being stolen from pharmacies); therefore, attention has been directed toward preventing the diversion of prescription drugs after the prescriptions are dispensed. Prescription drug monitoring programs (PDMPs) maintain statewide electronic databases of dispensed prescriptions for controlled substances. PDMP information can aid medical professionals and those in law enforcement in identifying patterns of prescribing, dispensing, or receiving controlled substances that may indicate abuse. For over a decade, the federal government has provided financial support for state-level PDMPs. In 2002, Congress established the Harold Rogers PDMP grant, administered by the Department of Justice (DOJ), to help law enforcement, regulatory entities, and public health officials analyze data on prescriptions for controlled substances. Three years later, Congress and the President enacted the National All Schedules Prescription Electronic Reporting Act of 2005 (NASPER) requiring the Secretary of Health and Human Services (HHS) to award grants to states to establish or improve PDMPs. In 2016, CARA authorized PDMP activity under two grant programs administered by DOJ and HHS. Congress has demonstrated a particular interest in facilitating interoperability among state-level PDMPs, as well as in establishing national programs. Policymakers have focused on enhancing state-level databases and interstate information sharing, and some have suggested establishing a national system. Related issues that policymakers may consider are whether PDMPs and their interstate information-sharing platforms adequately protect personally identifiable and related health information, and whether they can ensure that patients with legitimate medical needs have access to prescriptions. Congress may also exercise oversight with respect to the role of PDMPs in the Administration's efforts to combat the prescription drug epidemic; policymakers may assess the extent to which the relevant departments and agencies have taken steps to accomplish these PDMP-related goals. This report provides an overview of PDMPs, including their operation, enforcement mechanisms, costs, and financing. It also examines the effectiveness of PDMPs and outlines federal grants supporting PDMPs. Finally, this report discusses relevant considerations for policymakers including interstate data sharing, interoperability, protection of health information, and the possible link between the crackdown on prescription drug abuse and rise in heroin abuse. PDMPs maintain statewide electronic databases of designated information on specified prescription drugs dispensed within the states. Data are made available to individuals or organizations as authorized under state law; these may include prescribers, law enforcement officials, licensing boards, or others. Possible uses of PDMPs include identifying or preventing drug abuse and diversion; facilitating the identification of prescription drug-addicted individuals and appropriate intervention and treatment; outlining use and abuse trends to inform public health initiatives; and educating individuals about prescription drug use, abuse, and diversion. In addition to uses of PDMPs aimed at drug abuse and diversion, an explicit goal of PDMPs is supporting access to controlled substances for legitimate medical use. This may best be understood by viewing PDMPs in comparison to earlier, paper-based programs called multiple-copy prescription programs. For example, in 1914 a New York state law required physicians to use state-issued, serialized, duplicate prescription forms for certain drugs. Similarly, California began a multiple-copy prescription program using triplicate forms for specified narcotics in 1939; it expanded to monitor all schedule II narcotics in 1972 and schedule II non-narcotics in 1981. Studies of multiple-copy prescription programs found that many prescribers did not order the required prescription forms, rendering them unable to prescribe specified controlled substances even when medically appropriate. In addition, the ability to check a patient's prescription history using an electronic PDMP might give prescribers more confidence when considering the use of drugs with high risk of abuse and prevent the prescribing of contraindicated medications. As of February 2018, 50 states, the District of Columbia, and two territories (Guam and Puerto Rico) had operational PDMPs within their borders. The entity responsible for administering the PDMP varies by state and may be a pharmacy board, department of health, professional licensing agency, law enforcement agency, substance abuse agency, or consumer protection agency. Of the authorized state PDMPs (including the District of Columbia), most (40) are administered by either pharmacy boards or health departments. State laws determine which schedules of controlled substances are monitored under each program (see text box for a brief explanation of schedules), what information is to be submitted, the means by which dispensers or dispensaries submit the required information, and the time frame in which information must be submitted. Each state also determines which entities dispensing prescriptions for controlled substances are required to submit data to the PDMP. Most states require retail pharmacies and dispensing practitioners (e.g., physicians and/or veterinarians) to submit data to the PDMP. Some states also have statutory authority to require out-of-state, mail order, and Internet pharmacies to submit data to the PDMP regarding prescription or controlled drugs dispensed to residents of the state. For instance, if a patient in Alabama receives a prescription for a monitored drug from an out-of-state mail order pharmacy, the mail order pharmacy must report the prescription to the Alabama PDMP. Of note, information on medications (e.g., methadone or buprenorphine) dispensed at federally assisted drug treatment programs generally may not be reported to PDMPs without patient consent under federal privacy regulations (42 C.F.R. Part 2). These regulations place strict limitations on the disclosure, and redisclosure, of patient information created and maintained by such programs that identifies the individual patient as a drug abuser, or links the individual to the program. Access to information contained in the PDMP database is determined by state law and varies by state. The majority of states allow pharmacists and practitioners to access information related to their patients, and some also allow other entities—law enforcement, licensing and regulatory boards, state Medicaid Programs, state medical examiners, and research organizations—to access the information under certain circumstances. State laws outline the procedures by which information from the PDMP may be accessed. With respect to how the states identify and investigate cases of potential prescription drug diversion or abuse, PDMPs may be classified as reactive or proactive . In essence, "[s]tates with [r]eactive PDMPs ... generate solicited reports only in response to a specific inquiry made by a prescriber, dispenser, or other party with appropriate authority" while "[s]tates with [p]roactive PDMPs ... identify and investigate cases, generating unsolicited reports whenever suspicious behavior is detected." State PDMPs vary widely with respect to whether or how information contained in the database is shared with other states. While some states do not have measures in place allowing interstate sharing of information, others have specific policies that govern sharing of information across state lines. These policies may be based on factors such as agreed-upon reciprocity between states, or whether a request stems from an ongoing investigation. As of September 20, 2017, 43 states were engaged in interstate data sharing while 5 states were still implementing interstate data sharing. Researchers provided states with guidance in creating memoranda of understanding (MOUs) for interstate data exchange. Questions that states may consider when drafting an MOU include the following: How is the information to be reported? How will the information be used by the relevant states? What are the guidelines on data retention? What are the state responsibilities in the event of a data breach? Are there measures in place for conflict resolution? What are the consequences of potential data misuse? In addition, the Council of State Governments highlighted four areas as central to the success of interstate compacts regarding PDMPs and data sharing: Education —responsibility of providers, data integrity, training requirements (start up versus ongoing)[;] Funding —state funding, costs of data sharing, costs of operation[;] Security and Access —authorized users, authentication, audit trails, Internet access, vendor security, reporting, privacy, confidentiality, use of data[; and] Technology —data transfer and exchange, uniformity and standards, cost reduction, compatibility, quality/error correction[.] Without funding, data sharing, and knowledgeable users actively participating in PDMPs, these programs cannot be effective. Efforts are ongoing to facilitate information sharing using prescription monitoring information exchange (PMIX) architecture—an information exchange standard/nationwide framework that applies to PDMP systems, data sharing "hubs", such as RxCheck, and other exchange partners or intermediaries. The PMIX program is intended to enable the interstate exchange of PDMP information, providing information on an individual's prescription drug history to states participating in the information exchange. This information can help identify potential prescription drug abuse or diversion, and can help inform stakeholders such as law enforcement, health and human services, health practitioners, and public regulatory agencies. A state can participate in the PMIX program if it has legislation allowing it to share patient information with other states in real time, identified at least one other state as a partner in the information exchange, and either (1) established an MOU with their identified partner(s) in the information exchange or (2) ratified the Prescription Monitoring Interstate Compact. The infrastructure of the PMIX program is based on the National Information Exchange Model (NIEM), which is a "common vocabulary" used by the public and private sector to exchange information. To facilitate information security and data privacy, data are encrypted while passing through "hubs," and no data are actually stored on these hubs. PMIX allows for hubs to exist at the state and national levels, and it allows for hub-to-hub information exchange. With pharmaceutical industry support, the National Association of Boards of Pharmacy (NABP) developed a technology platform to facilitate interstate sharing of PDMP data, called InterConnect, which NABP committed to make compliant with PMIX architecture. Although there are no federal requirements for state PDMP interoperability and information sharing, Congress and the President enacted legislation that authorized the HHS Secretary, consulting with the Attorney General as appropriate, to "facilitate … the development of recommendations on interoperability standards" for interstate information exchange by states receiving specified federal grants to support their PDMPs; required the HHS Secretary, in so doing, to consider the PMIX standards; and required the HHS Secretary to submit "a report on enhancing the interoperability of [state PDMPs] with other technologies and databases used for detecting and reducing fraud, diversion, and abuse of prescription drugs." In 2013, HHS submitted its report to Congress on PDMP interoperability standards. In addressing legal and policy challenges, HHS recommended that states ensure that PDMPs do not restrict access to PDMP data for health care providers and enact laws and policies to increase use of PDMPs by health care providers, among other recommendations. In addressing interoperability and technology issues, HHS recommended that state PDMPs implement interoperability standards "that best support the information's use upon its exchange," among other recommendations. HHS stressed the importance of unsolicited reports from PDMPs to providers, licensing boards, regulatory and law enforcement agencies, and public and private insurers and pharmacy benefit managers. The report also reviews literature on PDMP effectiveness and health provider use of PDMPs. Over the past several years, federal grant funds have gone toward improving interoperability and information sharing between states, and there are reports of successful initiation and expansion of interstate information sharing. For example, SAMHSA funded PDMP integration and interoperability projects in nine states from FY2012 to FY2016 and released a report outlining challenges and successes. In ensuring that a given state's PDMP reflects comprehensive data from all relevant pharmacies, physicians, and other dispensaries, one principal concern is how to ensure that they are reporting prescription data to the program. The laws or rules governing consequences for failure to report data are determined by each state. For example, one consequence may be disciplinary action by the appropriate licensing board or commission. Another may be that failure to report information could trigger the PDMP program office to report the lapse in compliance to the PDMP governing agency, which may then refer the information to law enforcement. PDMP expenses involve startup costs, funds needed to operate and maintain the programs, and any monies used to enhance program operation and interoperability. Overall program costs can entail hardware such as servers; software to run the PDMP database and ensure information security; connectivity such that pharmacies and dispensaries can enter data, and prescribers and/or law enforcement officials can request and access data; staff to administer the PDMP and provide technical assistance; and overhead fees. A 2009 evaluation by the Maryland Advisory Council on Prescription Drug Monitoring assessed existing state PDMPs on a range of factors including the costs associated with establishing and maintaining the programs. The overarching finding was that costs vary widely, with program startup costs ranging from $450,000 to over $1.5 million. Further, based on available data from six operational PDMPs, the Maryland Advisory Council's evaluation indicates that annual operating costs range from $125,000 to nearly $1.0 million, with an average annual cost of about $500,000. The Maryland Advisory Council reported that [c]ost variations are affected by the frequency of data collection (e.g., daily, weekly, bi-weekly, monthly), the use of third party vendors for data collection and analysis, the number of prescriptions written and filled in the state, the number of drug schedules (II-V) and drugs of interest collected, and the use of official forms or other required collection and submission mechanisms. A 2002 Government Accountability Office (GAO) evaluation of PDMP costs in Kentucky, Nevada, and Utah revealed findings similar to those presented by the Maryland Advisory Council. GAO noted a number of PDMP design and operational factors driving variations in state costs for running PDMPs. Specifically, these involved "differences in the PDMP systems implemented, the number of pharmacies reporting drug dispensing data, and the number of practitioners and law enforcement agencies seeking information from the systems." States finance the startup and operation of PDMPs through a variety of channels. PDMP financing often involves monies from the state general fund, prescriber and pharmacy licensing fees, state controlled substance registration fees, health insurers' fees, direct-support organizations, state or federal grants, or a combination thereof. Guidelines for how states may fund PDMPs are outlined in each state's PDMP authorizing legislation. For example, Oregon's PDMP has a fund within the state treasury. This fund receives monies, in part, from a proportion of medical provider fees. These fees are paid to the appropriate medical board, and the board in turn transmits a portion of these fees to the PDMP fund. The Oregon Department of Human Services, which administers the PDMP, may also accept and deposit into the fund money from a variety of additional sources, including grants and donations. Some states prohibit the use of certain sources of funding, thus limiting the potential range of funding mechanisms. For instance, Florida law specifically prohibits the use of state funds or funds received—directly or indirectly—from prescription drug manufacturers to support the PDMP. As such, the program receives funding from three sources: the Florida PDMP Foundation, Inc., an organization established in Florida law for the purpose of funding the PDMP; federal grants; and private grants. The available evidence suggests that PDMPs are effective in some ways for both law enforcement and health care purposes; however, research on the effectiveness of PDMPs is limited, especially in the area of law enforcement. Experts suggest that PDMPs have the potential to be more effective. Research on PDMP effectiveness suggests that they have an impact on both law enforcement and health care. A 2002 GAO study found that "the time and effort required by law enforcement and regulatory investigators to explore leads and the merits of possible drug diversion cases" declined after PDMP implementation. The study found that investigations of alleged doctor shoppers by Kentucky officials took an average of 156 days prior to PDMP implementation and 16 days after PDMP implementation (a 90% decrease). Nevada and Utah also reported decreases in investigation time of 83% and 80%, respectively. It is important to note that decreases in investigation time do not necessarily translate into less prescription drug abuse. A 2012 review article summarized all peer-reviewed research articles about PDMPs published between 2001 and 2011, which amounted to 11 articles (not all of which addressed effectiveness). The author concluded that PDMPs reduce "doctor shopping," change prescribing behavior, and reduce prescription drug abuse. For example, a 2006 federally funded study (included in the 2012 review article) found that PDMPs—especially ones that issue reports proactively—change prescriber behavior in a way that reduces the per capita supply of prescription pain relievers and stimulants, which in turn reduces the likelihood of abuse. Another study published in 2012 (and therefore not included in the review article) found that while opioid abuse was increasing over time, the rate of increase was slower in states with PDMPs than in states without PDMPs. A 2014 briefing document from the Prescription Drug Monitoring Program Center of Excellence at Brandeis University (now called the PDMP Training and Technical Assistance Center) suggests that evidence shows PDMPs are "effective in improving clinical decision-making, reducing doctor shopping and diversion of controlled substances, and assisting in other efforts to curb the prescription drug abuse epidemic." In 2015, the University of Kentucky Institute for Pharmaceutical Outcomes and Policy examined the effectiveness of mandatory enrollment of prescribers and dispensers in PDMPs in Kentucky and cited closures of non-physician-owned pain management facilities and a decrease (over 50%) in the number of individuals doctor shopping as two of several positive outcomes from mandatory reporting in Kentucky. Several more recently published articles reported positive results for prescription drug monitoring programs. In one article, researchers found that implementation of state PDMPs, in particular those with "robust characteristics," was associated with a modest reduction in opioid-related overdose deaths. Another study found that states with prescription drug monitoring mandates were associated with a 9% to 10% reduction in population-adjusted numbers of Schedule II opioid prescriptions received by Medicaid enrollees and similar reductions in Medicaid spending on these prescriptions. A third study reported no associations between PDMP implementation and nonmedical initiation/abuse of opioids, but did report a significant association between PDMP implementation and a reduction in "doctor shopping." Research shows that PDMPs may have positive effects beyond their intended purpose. For example, when accessing information from a PDMP, a prescriber or dispenser may identify a patient who is receiving legitimate prescriptions for multiple controlled substances and who is therefore at risk of harmful drug interactions. PDMPs may also enable prescribers to monitor their own U.S. Drug Enforcement Administration (DEA) number to determine whether someone else is using it to forge prescriptions. Research regarding PDMP effectiveness is limited, at least in part, by the difficulties inherent in conducting such research. Challenges in conducting high-quality research on PDMP effectiveness include (but are not limited to) (1) defining effectiveness, (2) accounting for differences among PDMPs, and (3) considering potential confounding factors. To study effectiveness, researchers must first define effectiveness in a way that can be systematically measured as a study outcome. Almost all PDMPs are statewide programs; thus, researchers look for outcome measures for which statewide data are available. Some outcomes that have been measured in research on PDMP effectiveness are shipments and sales of controlled substances, benzodiazepine use in a Medicaid population, opioid consumption, substance abuse treatment admissions, drug overdose mortality, and multiple provider episodes (i.e., doctor shopping). One drawback of using opioid consumption as an outcome measure is that it includes both nonmedical use of opioids and medically appropriate use of opioids to manage pain. A limitation of using a count of substance abuse treatment admissions is that it fails to capture substance abuse that goes untreated. Each of these measures presents only a portion of the picture of prescription drug diversion and abuse. Studies that compared states with and without PDMPs and/or before and after implementation of a PDMP vary in the degree to which they account for differences among PDMPs. For example, despite evidence that proactive PDMPs are more effective than reactive PDMPs, most studies do not distinguish between proactive and reactive PDMPs. Another difference that may influence PDMP effectiveness is which drugs are required to be reported to the PDMP, ranging from only those prescription drugs with the highest potential for abuse to all prescription controlled substances plus other drugs of concern. Research generally focuses on those controlled substances that are included in all of the PDMPs being examined. Differences in PDMPs over time may also influence effectiveness. For example, some states have transitioned from paper-based systems for monitoring prescriptions for controlled substances to the electronic PDMPs used today. Effectiveness studies have generally not accounted for such transitions over time, classifying two different systems as the same PDMP. Accounting for these and other differences between PDMPs may shed light on factors that influence effectiveness. Researchers also contend with factors that may confound study results, both when comparing outcomes across states and when comparing outcomes over time. For example, the baseline rate of prescription drug abuse may vary across states. The authors of a previously referenced study noted that the likelihood of abuse was actually higher in states with PDMPs than in states without PDMPs, but that proactive PDMPs inhibited the rate of increase in prescription drug abuse. A PDMP may be part of a larger effort to reduce prescription drug diversion and abuse, in which case other initiatives may be responsible for any change in the outcome. A seemingly unrelated event, such as an economic downturn or upturn, may also affect the outcome. These considerations, among many others, impede the ability of researchers—and therefore policymakers—to draw conclusions about the effectiveness of PDMPs. PDMPs may have unintended consequences beyond reducing prescription drug diversion and abuse. Prescribers may hesitate to prescribe medications monitored by the PDMP—even for appropriate medical use—if they are concerned about potentially coming under scrutiny from law enforcement or licensing authorities. Studies of paper-based prescription monitoring programs that preceded the electronic PDMPs found that many prescribers did not order the required prescription forms, rendering them unable to prescribe specified controlled substances. Their concerns may lead prescribers to replace medications that are monitored by the PDMP with medications that are not monitored by the PDMP, even if the unmonitored medications are inferior in terms of effectiveness or side effects. Like prescribers, patients may fear coming under scrutiny from law enforcement if they use medications monitored by the PDMP, even if they have a legitimate medical need for the medications. Patients may worry about changes in prescribing behavior, which may limit their access to needed medications. Patients may worry about the additional cost of more frequent office visits if prescribers become more cautious about writing prescriptions with refills. Patients may also have concerns about the privacy and security of their prescription information if it is submitted to a PDMP. Another potential unintended consequence of a state PDMP is that it may push drug diversion activities over the border into a neighboring state. A GAO study, completed in 2002, identified evidence of this spillover across state lines. This concern is one of the reasons interstate data sharing and interoperability have become priorities. Similarly, a PDMP may push drug diversion activities into a neighboring state with a PDMP that does not monitor as many medications. In any of these cases, the effectiveness of the PDMP may be offset by unintended consequences. An additional possible unintended consequence of state PDMP activity may be an uptick in the abuse of nonprescription opioids such as heroin and illicit fentanyl. As mentioned, some academic and government experts link the comparatively higher cost of prescription drugs and the crackdown on prescription drug abuse to the recent rise in heroin abuse. A PDMP may also have positive unintended consequences. For example, when accessing information from a PDMP, a prescriber or dispenser may identify a patient who is receiving legitimate prescriptions for multiple controlled substances and who is therefore at risk of harmful drug interactions. PDMPs may also enable prescribers to monitor their own U.S. Drug Enforcement Administration (DEA) number to determine whether someone else is using it to forge prescriptions. In 2012, the PDMP Center of Excellence at Brandeis University (now called the PDMP Training and Technical Assistance Center) published PDMP best practices and evaluated the quality of evidence supporting each best practice candidate. Most of the best-practice candidates were supported by the weakest of five possible levels of evidence: 1. randomized controlled trial or meta-analysis (0 best-practice candidates) 2. observational study with comparison groups (2 best-practice candidates) 3. observational study without comparison group (6 best-practice candidates) 4. case study or written documentation of expert opinion (6 best-practice candidates) 5. accumulated experience and/or key stakeholder perceptions (21 best-practice candidates) A PDMP is essentially a source of information; its effectiveness depends largely on the quality of the information and how the information is used. The quality of PDMP information depends on its timeliness, completeness, accuracy, and consistency. Expert recommendations to enhance data quality include collecting data at the point of sale (in real time); monitoring all prescribed controlled substances and other drugs of concern; integrating electronic prescribing technology; sharing data between states; standardizing the content across states; identifying the person picking up the prescription (which may be someone other than the patient, such as a family member); and linking prescription records for an individual (to avoid confusion if, for example, an address changes or a name is spelled differently). For PDMP information to be well used, it must be accessible. A survey of prescribers found that the most common reason given for not using a PDMP was the time required to access it (73%); two other reasons—difficulty navigating the web portal (29%) and forgetting the password (28%)—may contribute to the amount of time required to access PDMP information. More than a third of survey respondents (39%) felt that accessing PDMP information would not change their prescribing practices for their patients, although research suggests PDMP information changes prescribing behavior. Relatively small numbers of respondents reported that lack of computer availability (9%) or never having applied for access (11%) were barriers to using a PDMP. Expert recommendations to enhance data use include providing easy online access; issuing automated, unsolicited reports; and increasing participation through education and promotional campaigns. Experts recommend making PDMP information available for research and public health purposes, which would require permitting access by designated nonprescribers (e.g., researchers and medical examiners). An example of a public health use of PDMP information is to identify patients for enrollment in special programs: Washington state used its PDMP to select Medicaid enrollees for a Patient Review Coordination Program, which decreased emergency department visits, physician visits, and prescriptions (resulting in an average savings of $6,000 per patient per year). PDMP data may also be analyzed to identify geographic areas where interventions (such as increased law enforcement attention or establishment of a substance abuse clinic) are most needed. Carefully controlled access to de-identified data for research and public health purposes may yield other uses. The federal government supports state PDMPs through programs at the Departments of Justice (DOJ) and Health and Human Services (HHS). Since FY2002, DOJ has administered the Harold Rogers Prescription Drug Monitoring Program, and in FY2017, DOJ incorporated this grant program into the new Comprehensive Opioid Abuse Program. HHS programs include the National All Schedules Prescription Electronic Reporting (NASPER), State Demonstration Grants for Comprehensive Opioid Abuse Response, Opioid Prevention in States grants, and various pilots and initiatives under the Office of the National Coordinator for Health Information Technology (ONC). From FY2002 to FY2016, the Harold Rogers PDMP was a discretionary, competitive grant program administered by the U.S. Department of Justice (DOJ), Office of Justice Programs (OJP), Bureau of Justice Assistance (BJA). It was created to help law enforcement, regulatory entities, and public health officials analyze data on prescriptions for controlled substances. In FY2017, DOJ incorporated the Harold Rogers PDMP into the new Comprehensive Opioid Abuse Grant Program, which was created under Section 201 of the Comprehensive Addiction and Recovery Act (CARA; P.L. 114-198 ). Prescription drug monitoring activities were authorized as a purpose area of the program. The program assists states (including U.S. territories and federally recognized tribal governments) in the planning, implementation, and enhancement of their PDMPs. This involves facilitating the exchange of information among states using technical solutions compliant with PMIX architecture; developing a training program for system users; assessing the efficiency and effectiveness of existing PDMPs and related initiatives; enhancing collaboration between law enforcement, prosecutors, treatment professionals, medical community members, and pharmacies to create a comprehensive PDMP strategy; and other authorized activities under the Comprehensive Opioid Abuse Grant Program. The Comprehensive Opioid Abuse Grant Program also offers training and technical assistance grants to promote the use of PDMPs. The Harold Rogers PDMP began receiving federal funding in FY2002 through the Departments of Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriations Act, 2002 ( P.L. 107-77 ). While the program itself has never been authorized in statute, funding for the program was provided to DOJ each year through the annual appropriations process. Annual appropriations information is listed in Table 1 . In FY2017, DOJ incorporated the Harold Rogers PDMP into the new Comprehensive Opioid Abuse Grant Program, and $14 million was appropriated for prescription drug monitoring as part of the broader DOJ "Opioids Initiative." In FY2018, the Consolidated Appropriations Act, 2018 ( P.L. 115-141 ) more than doubled the amount for prescription drug monitoring and provided $30 million for this purpose. The NASPER PDMP grant was a formula grant administered by HHS, Substance Abuse and Mental Health Services Administration (SAMHSA), Center for Substance Abuse Treatment (CSAT). NASPER grants were last funded in FY2010. NASPER was first authorized by the National All Schedules Prescription Electronic Reporting Act of 2005 ( P.L. 109-60 , NASPER), which amended the Public Health Service Act to require the Secretary of HHS to award grants to states to establish or improve PDMPs. It was amended and reauthorized under Section 109 of the Comprehensive Addiction and Recovery Act of 2016 (CARA, P.L. 114-198 ). Since FY2010, funds have not been specifically appropriated for this program. The two objectives of NASPER are to (1) foster the establishment of state-administered PDMPs that providers can access for the early identification of patients at risk for addiction in order to initiate appropriate interventions, and (2) establish a set of best practices for new PDMPs and improvement of existing PDMPs. The NASPER Act of 2005 authorized appropriations for NASPER for FY2006-FY2010. The program was funded in FY2009 and FY2010. The final continuing resolution for FY2011 ( P.L. 112-10 ) specifically prohibited the funding of NASPER. Section 109 of CARA authorized appropriations for NASPER for FY2017-FY2021; however, no funds have been appropriated for the program. In FY2018, while no funds were specifically appropriated for NASPER, Congress directed the Centers for Disease Control and Prevention (CDC) to promote the use of PDMPs, including implementation of activities described in NASPER as part of its opioid prescription drug overdose (PDO) prevention activity. Annual authorizations of appropriations and actual appropriations are listed in Table 2 . To be eligible for NASPER grant funding, states must meet certain requirements, such as having legal authority to implement PDMPs. All states that submit applications and meet the requirements receive grants noncompetitively. The amount awarded to each state is defined by a two-part formula: 1. Each state receives a base amount of 1% of the total funding (i.e., $20,000 in FY2010). 2. The remaining amount is distributed according to the ratio of the number of pharmacies in the individual state to the number of pharmacies in all states with approved applications. The HHS Secretary may adjust a state's allotment after taking into consideration the budget cost estimate for its PDMP. Thirteen states received grants under NASPER in FY2010, the last year of funding. Although NASPER is not currently funded, HHS continues to support state PDMPs through other programs. For example, since 2015, the CDC has awarded funding to some states for PDO prevention activities, including efforts to improve access to PDMPs and the timeliness of PDMP data. Table 3 provides an overview and comparison of the Harold Rogers PDMP and the NASPER PDMP. Basic information is provided on program legislation, administering agencies, program objectives, grant types, authorization of appropriations, and actual appropriations. Other federal programs that are explicitly used to support PDMPs include Opioid Prevention in States, PDMPs and Health Information Technology (IT), State Demonstration Grants for Comprehensive Opioid Abuse Response, and State Targeted Response to the Opioid Crisis Grants—all of which are administered by HHS. Opioid Prevention in States (OPIS) is the umbrella term for all opioid grants administered by CDC. The OPIS grants fall under CDC's Center for Injury Prevention and Control. Among the OPIS grant programs, two require states to use funds for PDMPs: the Prevention for States (PfS) grants and the Data-Driven Prevention Initiative (DDPI). Since 2015, CDC has awarded PfS funding to some states for prescription drug overdose prevention activities, including efforts to improve access to PDMPs and the timeliness of PDMP data. Since 2016, CDC has awarded DDPI funding to some states and the District of Columbia to help them with opioid-related data collection and analysis; strategies to change behaviors driving prescription opioid abuse; and overdose prevention programs. These individual grant programs are not explicitly authorized in statute. The CDC Center for Injury Control and Prevention conducts activities authorized under numerous provisions, including general public health authorities of the HHS Secretary. The most directly relevant is Public Health Service Act (PHSA) Section 392, which broadly authorizes CDC to provide assistance to states and localities for injury prevention and control, but does not include an explicit authorization of appropriations. According to CDC's FY2019 budget request, the PfS and DDPI grant awards together were funded at $72 million in both FY2017 and FY2018. The Office of the National Coordinator for Health Information Technology (ONC) has undertaken efforts to support the integration of PDMPs with health IT and to enhance clinician access to PDMP information using health IT. These efforts included a series of pilots, in collaboration with SAMHSA, from 2011 to 2013 to test different approaches to increasing provider access to PDMP information through health IT. In addition, ONC has undertaken an initiative to develop approaches to the challenge of a lack of uniform standards for sharing PDMP data with health IT systems such as electronic health records (EHRs) and health information exchanges. Although ONC has directed funding to support these efforts beginning as early as 2011, they are not specifically authorized in statute and instead appear to be carried out under general statutory authorities for ONC in Title XXX of the PHSA. Both the FY2016 and the FY2017 ONC Congressional Budget Justifications requested $5 million in each of those years for efforts to support PDMP and Health IT integration under the broader budget category of Policy Development and Coordination. These funds were to be used for activities including technical assistance for state PDMPs with HIT integration; challenge awards to design and use HIT to access PDMPs in clinical settings; and further adoption of electronic prescribing of controlled substances. The FY2018 and FY2019 ONC Congressional Budget Justifications do not specifically mention anything about efforts related to PDMPs. The State Demonstration Grants for Comprehensive Opioid Abuse Response were newly authorized for FY2017 by the Comprehensive Addiction and Recovery Act of 2016 (CARA, P.L. 114-198 ). CARA amended the PHSA by adding a new Section 548 requiring the HHS Secretary to "award grants to States, and combinations of States, to implement an integrated opioid abuse response initiative." A state's response initiative may include "establishing, maintaining, or improving" a PDMP, as well as other elements such as efforts to provide education, and prevent and treat opioid abuse. PHSA Section 548 specifies that the HHS Secretary, in awarding these grants, shall give priority to a state meeting certain conditions, including several related to PDMPs (e.g., a state that ensures the capability of sharing PDMP data with other states). PHSA Section 548 authorizes to be appropriated $5 million for the state demonstration grants for each of FY2017-FY2021. The state demonstration grants were not funded in FY2017 and FY2018. SAMHSA's State Targeted Response to the Opioid Crisis Grants were newly authorized by the 21 st Century Cures Act (Division A of P.L. 114-255 ; see Section 1003). One of several authorized purpose areas is improving state prescription drug monitoring programs. In FY2018, $1 billion was provided to SAMHSA for this grant program. In 2011, in response to the "epidemic" of prescription drug abuse, the Obama Administration released an action plan. This plan, from the Office of National Drug Control Policy (ONDCP), outlined four primary areas that may reduce the abuse of prescription drugs: educating individuals on the safe use of prescription drugs and risks involved in abusing them; implementing prescription drug monitoring programs (PDMPs) in the states and encouraging information sharing; developing programs for proper drug disposal; and providing law enforcement with tools to enforce proper prescribing practices and disband "pill mills." As part of this plan, the Administration outlined actions to improve the functioning of state PDMPs and increase interstate PDMP operability and communications. Specific actions offered included working with states to establish effective PDMPs by encouraging research on PDMP effectiveness and means to improve PDMP effectiveness; supporting the NASPER reauthorization; ensuring that the Department of Veterans Affairs (VA) and the Department of Defense (DOD) are authorized to share patient information with state PDMPs; encouraging federally funded health care programs to provide controlled substance prescription information to the state PDMPs (in states where they operate health care facilities or pharmacies); exploring the feasibility of reimbursing prescribers for checking PDMPs before writing controlled substance prescriptions to patients covered under insurance plans; evaluating programs that require certain doctor shoppers or drug abusing individuals to use one doctor and one pharmacy; evaluating the potential for state PDMPs to reduce Medicare and Medicaid fraud; issuing a final rule from DEA on electronic prescribing of controlled substances; increasing the use of "Screening, Brief Intervention, and Referral to Treatment" programs to identify and prevent prescription drug abuse; identifying how health information technologies can enhance prescription drug information; testing the usefulness of the Centers for Disease Control and Prevention's surveillance system to generate measures of prescription drug abuse; assessing the use of the Drug Abuse Warning Network to better understand prescription drug abuse at the community level; expanding DOJ's efforts to enhance interstate PDMP interoperability, particularly though the PMIX program; and evaluating existing databases with information on prescription drug access, use, misuse, and toxicity to improve their utility and as new sources of data. While this plan was never updated, the Obama Administration released a fact sheet in October 2015 outlining its public and private sector efforts to address both prescription drug abuse and heroin use. This fact sheet noted that President Obama had issued a memorandum to federal departments and agencies directing two essential elements in combating this problem: prescriber training and improving access to treatment. It went on to describe private sector efforts, which included the National Association of Boards of Pharmacy enhancing access to PDMP data to thousands more physicians and pharmacists in Arizona, Delaware, Kentucky, and North Dakota in 2016. It also went on to describe public sector efforts, which included the federal government expanding access to PDMP data throughout federal agencies. In 2017, President Trump established the President's Commission on Combating Drug Addiction and the Opioid Crisis, which has issued a report outlining recommendations to combat the opioid crisis. Among its recommendations, the commission issued two that were specific to PDMPs: 12. The Commission recommends the Administration's support of the Prescription Drug Monitoring (PDMP) Act to mandate states that receive grant funds to comply with PDMP requirements, including data sharing. This Act directs DOJ to fund the establishment and maintenance of a data-sharing hub. 13. The Commission recommends federal agencies mandate PDMP checks, and consider amending requirements under the Emergency Medical Treatment and Labor Act (EMTALA), which requires hospitals to screen and stabilize patients in an emergency department, regardless of insurance status or ability to pay. In regard to Recommendation #12, the Prescription Drug Monitoring Act of 2017 ( H.R. 1854 ; S. 778 ) would, if enacted, require states receiving PDMP grant funds from DOJ or HHS to comply with specified requirements, including a requirement to share their PDMP data with other states. Under the proposed legislation, DOJ and HHS may withhold grant funds from states that fail to comply. It also would direct DOJ to award a grant under the new Comprehensive Opioid Abuse Grant Program to establish and maintain an interstate data-sharing hub. Supporting PDMPs is just one component in the overall federal effort against prescription drug abuse. Research on PDMP effectiveness has yielded sometimes inconclusive results on a number of desired outcomes, though research findings suggest that PDMPs may contribute to reduced doctor shopping and prescription drug abuse. As such, policymakers may want to assess the extent to which federal agencies' PDMP-related efforts have accomplished the Administration's goals to reduce illicit prescribing activities and prescription drug abuse. While establishment and enhancement of PDMPs (such as interstate data sharing and real-time data access) enjoy broad support, some stakeholders express concerns about health care versus law enforcement uses of PDMP data, particularly with regard to protection of personally identifiable health information. Research has demonstrated that PDMPs save law enforcement officials time in investigations, if law enforcement officials have access to PDMP information . Concerns about potential law enforcement uses of PDMP data have been expressed by stakeholder organizations representing prescribers. The American Medical Association (AMA), a professional association of more than 200,000 physicians, supports the use of PDMPs and recommended that PDMPs be housed in health-related agencies (rather than law enforcement agencies). AMA further recommends that information from PDMPs "be used first for education of the specific physicians involved prior to any civil action against these physicians." The American Society of Addiction Medicine (ASAM), one of several national medical specialty societies under the AMA umbrella, likewise expresses concern about the use of PDMP data for purposes other than health care: "[L]aw enforcement, the judiciary, corrections professionals, employers, and others outside of the health care system should not be granted access to PDMP data except via the means available to them to secure access to other personally identifiable health information." The fact that PDMPs contain personally identifiable health information raises concerns about privacy and data security. Both AMA and ASAM stress the need to subject PDMP information to the same standards applied to other patient records. In recent years, to investigate violations of the federal Controlled Substances Act (CSA), the DEA has demanded access to certain PDMP data without a court order or search warrant, a practice that has caused some controversy and been subject to court challenge. The CSA contains a provision, 21 U.S.C. §876, that authorizes the DEA to issue administrative subpoenas (without prior court approval) to obtain documents that the agency finds are "relevant or material" to an investigation involving controlled substances. The DEA may also seek judicial enforcement of such subpoenas "to compel compliance" with the requests for evidence. In 2012, the Oregon Department of Justice filed a lawsuit against the DEA in federal court seeking a declaratory judgment that, pursuant to state law, the DEA must obtain "a valid court order" in order to access patient and physician records contained in the Oregon PDMP. The DEA argued that the CSA's administrative subpoena provision preempts Oregon's statutory requirement. Agreeing with the DEA, the U.S. Court of Appeals for the Ninth Circuit held that the CSA preempted the Oregon law because the provisions are in "positive conflict ... so that the two cannot consistently stand together." In another federal case, a Utah district court upheld the DEA's exercise of its administrative subpoena power to access the state's PDMP database, despite a Utah state law requirement that law enforcement officers may obtain such information only "pursuant to a valid search warrant." Though the court first observed that the Supremacy Clause resolves the conflict between the conflicting federal and state laws at issue, Utah asserted that the DEA's use of the CSA's administrative subpoena provision is not a "valid exercise of national power" because the Fourth Amendment's protections against unreasonable search and seizure require a search warrant to access the PDMP data. The court disagreed with the state, ruling that the DEA's subpoena authority is a valid exercise of national power "that does not offend the Fourth Amendment" because the pharmaceutical industry is a highly regulated one in which "physicians and patients have no reasonable expectation of privacy from the DEA" in the records stored in Utah's PDMP. PDMPs have elicited numerous concerns about patient privacy, including issues around the scope and breadth of authorized access to collected health information as well as the potential for unauthorized access or breaches. While PDMPs are seen as a valuable source of information in the effort to address improper prescribing of controlled substances, concerns exist about the potential deterrent effect on timely access to needed medication due to fears that sensitive health information will be shared with PDMPs, and may be subsequently legally disclosed or accessed through a breach. PDMPs have varying requirements with respect to the security and authorized use and disclosure of their stored information. These uses and disclosures are regulated by state law. PDMPs also receive protected health information (PHI) from pharmacists and other health care providers (HIPAA covered entities) who are subject to the federal HIPAA Privacy Rule. In addition, individually identifiable health information that is generated pursuant to treatment at substance abuse facilities is subject to stricter privacy requirements established by the "Part 2" rule. The HIPAA Privacy Rule governs covered entities' (health care plans, providers and clearinghouses) and their business associates' use and disclosure of PHI. The rule describes multiple situations in which covered entities may use or disclose PHI, while all uses and disclosures of PHI by covered entities or business associates that are not expressly permitted under the rule require the individual's prior written authorization. Generally, covered entities may share PHI between and among themselves for the purposes of treatment, payment or healthcare operations, with few restrictions (and specifically, without out the individual's authorization). Certain other uses and disclosures (e.g., sharing PHI with family members and friends) are permitted, but require the covered entity to give the individual the opportunity to object or agree to the PHI's use or disclosure. The HIPAA Privacy Rule also recognizes that PHI may be useful in other circumstances aside from health care treatment and payment for a given individual. For this reason, the rule lists a number of "national priority purposes" for which covered entities may disclose PHI without an individual's authorization or opportunity to agree or object. PDMPs can receive PHI from covered entities under authority of one or more of these exceptions. Relevant exceptions include disclosures required by law—in this case, state PDMP laws; disclosures for public health activities; or disclosures for health oversight activities. A PDMP is not a HIPAA covered entity, nor is it generally a business associate as defined by HIPAA, and in these cases the HIPAA requirements and standards for maintaining the security and privacy of the PHI—or for its re-disclosure—that apply to HIPAA covered entities would not apply to PDMPs. Although HIPAA may not apply, privacy and security requirements for PDMPs are still enumerated under state law. Stricter privacy requirements—commonly known as the "Part 2" rule—apply at the federal level to individually identifiable patient information received or acquired by federally assisted substance abuse programs. The "Part 2" rule allows such programs to disclose information with patient consent or pursuant to exceptions in regulation; however, in the case of PDMPs, it prohibits re-disclosure of information without patient consent. The requirement for consent may be a logistical deterrent to the submission of this information to PDMPs. In addition, since PDMPs are designed to share information with registered users, the "Part 2" rule's prohibition on re-disclosure without patient consent discourages federally assisted substance abuse programs from contributing to PDMPs' information about controlled substances dispensed for the treatment of opioid addiction (i.e., methadone or buprenorphine) due to concerns that authorized re-disclosures of the data could not be prevented. Federal policymakers have repeatedly emphasized the importance of enhancing interstate information sharing and the interoperability of state systems. The PDMP component of the Obama Administration's 2011 action plan to counter prescription drug abuse included efforts to improve the functioning of state PDMPs and increase interstate PDMP operability and communications. In 2013, HHS published a congressionally mandated report on PDMP interoperability standards for interstate exchange of PDMP information. In November 2017, a presidential commission recommended, among other things, that the Trump Administration support legislation to require DOJ to fund a "data-sharing hub" and require states receiving federal grant funds to share PDMP data. In 2014, then-A ttorney General Holder called the rise in heroin abuse "a sad but not unpredictable symptom of the significant increase in prescription drug abuse we've seen over the past decade." While then-Attorney General Holder did not cite increased monitoring of prescription opioids and enforcement activities as a reason for the rise in heroin abuse, others have stated that the crackdown on prescription drug abuse may have led users to turn to heroin, a cheaper alternative to prescription drugs that may be more easily accessible to some who are seeking an opioid high. Policymakers may debate whether increased scrutiny and monitoring of prescription drug activity has unintentionally contributed to the increase in heroin abuse; and if this is the case, how might the government address this issue, if at all. | In the midst of national concern over the opioid epidemic, federal and state officials are paying greater attention to the manner in which opioids are prescribed. Nearly all prescription drugs involved in overdoses are originally prescribed by a physician (rather than, for example, being stolen from pharmacies). Thus, attention has been directed toward better understanding how opioids are being prescribed and preventing the diversion of prescription drugs after the prescriptions are dispensed. Prescription drug monitoring programs (PDMPs) maintain statewide electronic databases of prescriptions dispensed for controlled substances (i.e., prescription drugs with a potential for abuse that are subject to stricter government regulation). Information collected by PDMPs may be used to educate and inform prescribers, pharmacists, and the public; identify or prevent drug abuse and diversion; facilitate the identification of prescription drug-addicted individuals and enable intervention and treatment; outline drug use and abuse trends to inform public health initiatives; or educate individuals about prescription drug use, abuse, diversion, and PDMPs themselves. As of February 2018, 50 states, the District of Columbia, and two territories (Guam and Puerto Rico) had operational PDMPs within their borders. How PDMPs are organized and operated varies among states. Each state determines which agency houses the PDMP; which controlled substances must be reported; which types of dispensers (e.g., pharmacies) are required to submit data; how often data are collected; who may access information in the PDMP database (e.g., prescribers, dispensers, or law enforcement); the circumstances under which the information may (or must) be accessed; and what enforcement mechanisms are in place for noncompliance. PDMP costs may vary widely, with startup costs that can range as high as $450,000 to over $1.5 million and annual operating costs ranging from $125,000 to nearly $1.0 million. States finance PDMPs using monies from a variety of sources including the state general fund, prescriber and pharmacy licensing fees, state controlled substance registration fees, health insurers' fees, direct-support organizations, state grants, and/or federal grants. The federal government supports state PDMPs through programs at the Departments of Justice (DOJ) and Health and Human Services (HHS). Since FY2002, DOJ has administered the Harold Rogers Prescription Drug Monitoring Program, and in FY2017, DOJ incorporated this grant program into the new Comprehensive Opioid Abuse Program. HHS programs include National All Schedules Prescription Electronic Reporting (NASPER), State Demonstration Grants for Comprehensive Opioid Abuse Response, Opioid Prevention in States grants, State Targeted Response to the Opioid Crisis Grants, and various pilots and initiatives under the Office of the National Coordinator for Health Information Technology (ONC). Of note, NASPER last received appropriations (of $2.0 million) in FY2010. State PDMPs vary with respect to whether or how information contained in the database is shared with other states. Federal policymakers have repeatedly emphasized the importance of enhancing interstate information sharing and the interoperability of state PDMPs. In 2011, the Obama Administration included efforts to increase interstate data sharing in its action plan to counter prescription drug abuse. In 2017, a presidential commission recommended, among other things, that the Trump Administration support legislation to require DOJ to fund a "data-sharing hub" and require states receiving federal grant funds to share PDMP data. The available evidence suggests that PDMPs can be effective in reducing the time required for drug diversion investigations, changing prescribing behavior, reducing "doctor shopping," and reducing prescription drug abuse. Assessments of effectiveness should also take into consideration potential unintended consequences of PDMPs, such as limiting access to medications for legitimate use or pushing drug diversion activities over the border into a neighboring state. Experts suggest that PDMP effectiveness might be improved by increasing the timeliness, completeness, consistency, and accessibility of the data. Policy issues that might come before Congress include the role of state PDMPs in federal efforts to combat prescription drug abuse, the role of the federal government in interstate data-sharing and interoperability, and the possible link between the crackdown on prescription drug abuse and the uptick in illicit opioid (e.g., heroin and illicit fentanyl) abuse. While establishment and enhancement of PDMPs enjoy relatively broad support, stakeholders express concerns about health care versus law enforcement uses of PDMP data (particularly with regard to protection of personally identifiable health information). |
Pollution from excessive levels of phosphorus and other nutrients has long been recognized as a major contributor to the environmental degradation of the Florida Everglades ecosystem. In 1988, the federal government sued the State of Florida and two of its state agencies, alleging that water released onto federal lands from agricultural sources contained elevated levels of phosphorus and other nutrients in violation of state water quality standards. Based on a 1992 Consent Decree settling this lawsuit, Florida enacted the Everglades Forever Act in 1994. This act required the state to establish a numeric limit for phosphorus by December 2003 (i.e., phosphorus criterion) and required actions to comply with this limit by December 2006. Several Everglades-related lawsuits have since been filed by environmental, agricultural, and tribal stakeholders. In spring 2003, Florida amended the 1994 Act to create significant flexibility in deadlines for phosphorus mitigation, and in July 2003, Florida issued a rule establishing a limit for phosphorus and methods to measure compliance with that limit. These new laws and the rule have generated controversy among several stakeholders in the restoration effort underway in the Everglades and caused concern among some Members of Congress that the state may not meet the 2006 deadline for mitigating phosphorus. This concern is reflected in the FY2004 Energy and Water Development Appropriations Act ( P.L. 108-137 , signed into law December 1, 2003) and the FY2004 Interior and Related Agencies Appropriations Act ( P.L. 108-108 , signed into law November 10, 2003). These laws condition FY2004 Everglades funding based on Florida meeting phosphorus mitigation and water quality standards by the 2006 deadline (as specified in the Consent Decree and the EFA) and require federal agencies to determine whether Florida is meeting the deadline. If not, the laws state that Congress may disapprove FY2004 funding for Everglades restoration projects. The FY2004 Energy and Water Development Appropriations Act ( P.L. 108-137 ), and FY2004 Interior and Related Agencies Appropriations Act ( P.L. 108-108 ), both include provisions related to phosphorus mitigation and water quality in the Everglades. Both condition funding for Everglades restoration on one or more reports that determine whether certain Everglades waters meet water quality requirements as specified in the legislation. deadline. The provisions require federal agencies to determine whether Florida is meeting the deadline, and if not, the provisions state that Congress may disapprove FY2004 funding for some Everglades restoration projects. The FY2004 Interior and Related Agencies Appropriations Act conditions funds for two items related to restoration in the Everglades: (1) the Modified Water Deliveries Project and (2) Florida land acquisitions near the Everglades. The House Appropriations committee report ( H.Rept. 108-195 ) contained several pages of language stating committee members' strong disapproval of Florida's new legislation and its potential effects on Everglades restoration, including members' concern that the new Florida laws could delay the restoration and protection of LNWR and ENP and hinder implementation of the shared $7.8 billion federal-state Comprehensive Everglades Restoration Project (CERP). P.L. 108-108 states that both FY2004 funds and funds appropriated in prior years for the Modified Water Deliveries project should be available unless an annual report filed by the Secretaries of the Interior and the Army, the Attorney General, and the U.S. Environmental Protection Agency (EPA) finds that Florida is not meeting state water quality standards, and the state numeric phosphorus criteria and water quality requirements set forth in the 1992 Consent Decree in Arthur R. Marshall Loxahatchee National Wildlife Refuge (LNWR) and Everglades National Park (ENP). This report must be submitted to five Congressional committees: The House and Senate Appropriations Committees; the House Transportation and Infrastructure Committee; the House Resources Committee; and the Senate Environment and Public Works Committee. For funding to be disapproved, an unfavorable report must be submitted and both House and Senate Appropriations Committees must disapprove funding for the project in writing. This report is due 90 days after the date of enactment of the bill, which is February 8, 2004, and every year thereafter through 2006. P.L. 108-108 directs the Interior Department to reallocate unused funds originally intended to help Florida purchase lands near the Everglades. These funds are estimated at $32 million. Funds are to be reallocated to other agencies, including the U.S. Fish and Wildlife Service (FWS) and the U.S. Army Corps of Engineers (Corps), to improve water quality in LWNR. H.Rept. 108-195 has provisions that direct the Administrator of the Environmental Protection Agency to report on three issues: (1) whether Florida's recent amendments to its 1994 Everglades Forever Act (EFA) are consistent with the federal Clean Water Act, (2) whether EPA has approved Florida's numeric phosphorus criterion, and (3) whether the phosphorus criterion will protect LNWR and ENP consistent with the requirements of the 1992 Consent Decree. The House report does not specify a due date for the EPA reports. The FY2004 Energy and Water Development Appropriations Act provides that $137 million appropriated for restoring the Everglades (including funding for the Central and Southern Florida project, the Everglades and South Florida Ecosystem Restoration project, and the Kissimmee River Restoration project) will be available unless: (1) the Secretary of the Army files an unfavorable report with the House and Senate Appropriations Committees and the State of Florida on whether Florida is meeting water quality requirements in the 1992 Consent Decree, within 30 days of enactment of the bill (December 31, 2003); (2) Florida fails to submit a plan to comply within 45 days of the report; (3) the Secretary files a report confirming that Florida has not delivered the plan; and (4) either the House or Senate Committee on Appropriations issues a written notice disapproving further expenditure of the funds. The conference report left intact both House and Senate committee report language regarding the Everglades. House committee report language accompanying the bill states that the Committee may divert the restoration funds to other uses if Florida does not meet its responsibilities under the Consent Decree ( H.Rept. 108-212 ). In addition, S.Rept. 108-105 states that water entering LNWR and ENP must meet state water quality standards and the phosphorus criterion throughout LNWR and ENP, as well as the Consent Decree requirements. This report also directs the EPA Administrator to send a report on these issues to the House and Senate Appropriations Committees, the House Transportation and Infrastructure Committee, and the Senate Environment and Public Works Committee. Provisions in these acts indicate that Congress has strong concerns about whether the State of Florida will meet the 2006 deadline to reduce phosphorus pollution in the Everglades. These laws may cause some to question the viability of the federal-state partnership which has guided Everglades restoration over the last decade. This view was supported in H.Rept. 108-212 , which stated that "The Committee is concerned that recent changes to the State of Florida's 1994 Everglades Forever Act represent a departure from the commitments and obligations of the State to improve the quality of the water entering the Everglades by December 31, 2006...." Some may also view these provisions as evidence of the federal government establishing oversight mechanisms to monitor state actions related to restoration. This could be interpreted as a departure from the status quo of federal-state cooperation to restore the Everglades. These provisions could also be significant for other large-scale ecosystem restoration projects that use the Everglades as a model, including similar federal-state cooperation, such as the CALFED Bay-Delta Program in California. The Appropriations Acts passed place conditions on different amounts of funding. The FY2004 Interior Appropriations affects FY2004 funding for the Modified Water Deliveries project as well as unobligated funds for that project, and $32 million in land acquisition funds. The Energy and Water legislation could affect $137.5 million in funding for the Central and Southern Florida Project, the Everglades and South Florida Ecosystem Restoration Project (also known as "Critical Projects"), the Kissimmee River Restoration, and CERP. While the Energy and Water legislation requires water entering LNWR and ENP to meet Consent Decree standards, the Interior legislation is broader, requiring water entering and water throughout LNWR and ENP to meet Florida water quality standards, Florida phosphorus criterion standards, and Consent Decree requirements. (Although Florida's phosphorus rule specifies that methodology laid out in the Consent Decree will be used to measure phosphorus in LNWR and ENP, it leaves the decision to Florida as to whether the criterion was violated.) The Interior legislation requires the waters to meet a broader set of standards, as state water quality standards will include limits on several substances besides phosphorus. Where water is measured (e.g., entering the land or throughout the land) may be significant as phosphorus levels can vary greatly depending on the point of measurement. Further, given the uncertainty surrounding nutrient measurements in the Everglades, it is uncertain if all state water quality standards can be measured and reported annually to comply with reporting requirements. Some stakeholders are concerned that delays or changes to related projects or CERP components may jeopardize CERP's feasibility. This concern was illustrated when land acquisitions for the Modified Water Deliveries Project were stalled due to litigation and protest over the use of eminent domain. According to the CERP authorization, without the completion of the Modified Water Deliveries Project, portions of CERP could not be funded according to federal law. Similarly, the delay or loss of funding, as provided in these appropriations bills for non-compliance with water quality standards, could also lead to delays in the overall restoration process. This Florida State Law, Chapter 2003-12, as amended (hereafter referred to as the Amended EFA) changes the Everglades Forever Act of 1994 (EFA; Florida Statutes §373.4592) by authorizing a new plan to mitigate phosphorus pollution in the Everglades, known as the "Everglades Protection Area Tributary Basins Conceptual Plan for Achieving Long-Term Water Quality Goals Final Report" or Long-Term Plan. This report provides for a planning process to ensure that discharges of water into the Everglades will comply with state water quality standards and that phosphorus levels in these waters will not alter the native Everglades ecosystem. In contrast to the EFA, the new law contains provisions that appear to create flexibility in this goal. For example, the Long-Term Plan is to be implemented from 2003 to 2016 and is expected to "provide the best available phosphorus reduction technology"(§3(b)). Further, the new law allows the Long-Term Plan to be changed through adaptive management, which may lead to changes in the implementation of phosphorus reduction activities and an extension of any compliance deadlines. The amended EFA does contain provisions that suggest the December 2006 deadline for meeting the phosphorus criterion is expected to be met. For example, the bill states that "by December 31, 2006, the department and the district shall take such action as may be necessary to implement the pre-2006 projects and strategies of the Long-Term Plan so that water delivered to the Everglades Protection Area achieves in all parts of the Everglades Protection Area state water quality standards, including the phosphorus criterion and moderating provisions" (§3(b)). Note that this provision requires the implementation of projects and strategies by December 2006 to achieve the phosphorus criterion, but does not require the phosphorus criterion be met by 2006. The new law does not specify a particular date by which the phosphorus criterion must be met. The Long-Term Plan also specifies that a second 10-year phase (2017-2026) to reduce phosphorus may be necessary to achieve the Plan objective. The objective in the Plan is to obtain, to the maximum extent practicable, a long-term geometric average phosphorus concentration in waters discharged to the Everglades that is within the upper annual concentration limit of the criterion as calculated in the 2003 Everglades Consolidated Report . This mean has been defined by the Florida Department of Environmental Protection as 10 ppb over a 5-year period, with no single year going beyond 15 ppb. The Amended EFA has generated criticism from some stakeholders in the Everglades restoration effort. Some Members of Congress, environmentalists, the Miccosukee Tribe, and others argue that the bill allows phosphorus mitigation to extend far beyond a compliance deadline of December 2006 set by the EFA and the Consent Decree. Some critics also argue that if phosphorus mitigation is delayed, it may compromise the state and federal governments' efforts to restore the Everglades, as well as jeopardize federal appropriations for CERP. In a joint statement issued by six U.S. Representatives, five criticisms of the Amended EFA were listed: (1) there is an uncertain period for compliance with water quality standards; (2) there is uncertainty over the water quality standard for phosphorus discharge; (3) because of delays in phosphorus mitigation, discharges of phosphorus-polluted water may enter federal lands such as Everglades National Park; (4) this bill provides for discharges of phosphorus-polluted water in unpolluted dry areas; and (5) this bill does not reflect the state's intent to fully fund water quality improvements in the Everglades and may shift some of the cost to the federal government. Proponents of the new law, which include the Florida legislature and agricultural interests in the Everglades, claim that it provides a realistic opportunity for mitigating phosphorus pollution in the Everglades. Some claim that lowering the phosphorus concentration in the Everglades by December 2006 to 10 ppb may not be feasible considering the technology and implementation of restoration projects to date. Indeed, they argue that it is more cost-effective and productive to implement a substitute plan for the plan provided in the original EFA, as (1) some of the more expensive projects are aimed at waters which contribute relatively little phosphorus to the Everglades and (2) CERP projects incorporate water quality standards and call for diverting water away from the Everglades anyway. Under this new plan, they argue, CERP and state efforts to lower phosphorus will work together more efficiently, and that the 1994 law did not foresee the creation of CERP. They support a new plan for restoring water quality that incorporates adaptive management and the best technology available to reduce phosphorus. Further, some proponents argue that the new law will lead to fewer lawsuits and will allow restoration projects to proceed without delays from an excessive number of lawsuits. In response to critics of the amendments, a second set of amendments (Chapter 2003-394) was passed in June 2003 amending the EFA a second time. This second set of amendments deleted phrases that implied that phosphorus pollution was expected to be mitigated to the "maximum extent practicable," and included provisions that emphasized that projects planned for implementation prior to 2006 not be delayed. This amendment did not explicitly set a 2006 deadline, or any deadline, for phosphorus mitigation. Instead, this law provided for flexibility in the plan to mitigate phosphorus through an adaptive management process. The second set of amendments changed relatively few of the new provisions, and many of the same arguments criticizing and supporting the law remain. Phosphorus is one of the primary water pollutants in the Everglades and is generally thought to be caused by natural leaching, urban runoff, and agricultural runoff from sugar plantations, vegetable farms, and livestock operations (e.g., from animal waste). Some researchers have also attributed phosphorus in the Everglades to atmospheric deposition, but measurement techniques and values for this are highly uncertain. The 2003 Everglades Consolidated Report documents total phosphorus concentrations as being highest in the northern Everglades (waters flowing into LNWR and Water Conservation Areas; see Figure 1 ), and lowest in the southern Everglades, where ENP is located. The report states that this is indicative of phosphorus-rich water in the canals that carry water from the Everglades Agricultural Area, although urban runoff has also been identified as contributing phosphorus to the Everglades. In the Everglades, as in other ecosystems, excessive levels of phosphorus and other nutrients lead to eutrophication . Eutrophication is a natural process that occurs when bodies of water experience an increase in the inflow of nutrients, including phosphorus, leading to an increase in organic matter (e.g., plants in the case of the Everglades). When plants begin to die and decompose, they consume dissolved oxygen from the water. A rapid inflow of excessive nutrients can speed this process to an unnatural pace. If dissolved oxygen levels fall substantially and rapidly, fish and aquatic plant populations will suffer. Eutrophication also favors plants that can use high levels of nutrients. For example, excessive levels of phosphorus in the Everglades is thought to be the primary factor behind the conversion of native sawgrass marshes and sloughs to vegetation stands dominated by cattails. This shift in vegetation has resulted in less habitat for wading birds and other wildlife and reduced populations of several native plant species. Further, the rapid growth of cattails is partly responsible for clogging waterways and altering the hydrology in parts of the Everglades. The beginning of excessive phosphorus input into the Everglades can be traced back to the 1940s, when several thousand acres of land were cleared and converted to agricultural production. This clearing exposed soils, which began to erode and leach phosphorus into waterways that connected to the Everglades. Production intensified after the Cuban revolution in 1959, as Cuban exiles fled to Florida and established sugar plantations. By the mid-1960s, Florida sugar production had increased four-fold. Today, sugarcane production contributes two-thirds of the economic production of Everglades agriculture, and uses nearly 80% of the crop land in the Everglades Agricultural Area (EAA). (See Figure 1 .) Sugar production contributes phosphorus to the ecosystem primarily through fertilizers and to a lesser extent through decomposition of plants. Fertilizers and plant decomposition are also the main causes of phosphorus leaching from vegetable production. By the 1980s, the problem with phosphorus had gained visibility. In 1988, the federal government sued the South Florida Water Management District (SFWMD) and the Florida Department of Environmental Regulation, alleging that these agencies were not enforcing state water quality standards in ENP and the LNWR. State water quality standards at the time included a narrative criterion stating that nutrient concentrations in water should not cause an imbalance in natural populations of aquatic flora and fauna. After nearly three years of litigation, the parties reached a settlement in 1991 acknowledging that water entering LNWR did cause such an imbalance in violation of state water quality standards, and that water entering ENP from the state Water Conservation Areas also contained harmful levels of phosphorus. The settlement outlined the steps Florida would take to restore and maintain water quality, including: achieving specified interim phosphorus limits by 1997 and specified long-term phosphorus limits by 2002 (later extended to 2006) in the ENP and LNWR; establishing Stormwater Treatment Areas (STAs), which are large filtration marshes that would filter agricultural runoff from the EAA; and establishing a regulatory permit program requiring farmers to use Best Management Practices (BMPs) to reduce agricultural run-off (including phosphorus) from the EAA. The phosphorus limits established were different for LNWR and ENP. For example, by July 2002, water in the Shark River Slough in eastern ENP was supposed to meet phosphorus limits of less than 8 ppb (in a wet year) to less than 13 ppb (in a dry year). Water in LNWR was expected to meet phosphorus limits of 7 ppb (in a wet year) to 17 ppb (in a dry year) by July 2002. As part of the phosphorus reduction strategy, STAs and BMPs were expected to limit phosphorus in waters flowing from the EAA into LNWR to a long-term average of 50 ppb. This settlement agreement was entered as part of a Consent Decree in United States v. South Florida Water Management District (847 F. Supp. 1567) in 1992. Litigation ensued after the Consent Decree was reached. In 1994, Florida passed its EFA in an attempt to end lawsuits and administrative appeals generated from the settlement agreement. This Act provided the current framework for restoration efforts in Florida regarding water quality and phosphorus pollution. It differed from the Consent Decree in two important ways: (1) it covered state Everglades lands in addition to federal Everglades lands, and (2) it established a deadline for meeting state water quality requirements by December 31, 2006. The EFA also acknowledged that waters entering the Everglades contained an excessive level of phosphorus and provided for: (1) implementation of the Everglades Construction Project through the construction of six STAs; (2) monitoring and research programs in the EAA; (3) a mandate for the Florida Department of Environmental Protection (DEP) to propose a numerical phosphorus criterion and adopt a rule by December 31, 2003, with a default criterion of 10 ppb if this is not achieved; (4) creation of an agricultural privilege tax in the C-139 basin (agricultural area) and EAA; (5) the right of the SFWMD, to use funds from Florida's Preservation 2000 program to construct STAs; and (6) by December 31, 2006, the DEP and the SFWMD must take the necessary actions to ensure that water delivered to the EAA achieves state water quality standards and the phosphorus criterion. It also specified that the agricultural sector use BMPs to lower phosphorus runoff. Phosphorus mitigation by agriculture in the Everglades seems to be working. Some stakeholders point to this to justify added flexibility in reaching phosphorus mitigation goals. Due to BMPs and STAs, phosphorus loads in the Everglades have been decreasing. The 2004 Draft Everglades Consolidated Report by SFWMD states that the BMPs and STAs have reduced average total phosphorus discharges from the stormwater treatment areas to about 35 ppb of phosphorus (with a potential range of 25-45 ppb), compared to the interim goal of 50 ppb established by the 1994 Act. The report also states that these practices removed more than 1,400 tons of phosphorus that otherwise would have entered the Everglades. In 2003, the SFWMD Governing Board determined that meeting the deadlines in the original EFA (without integrating CERP projects with SFWMD projects) would require actions in addition to the STAs and BMPs, many of which would be costlyâapproximately $700 millionâand possibly unnecessary once CERP components are in place. The board decided instead to recommend flexibility in achieving the phosphorus criterion to allow SFWMD projects to be integrated with CERP projects. Based on these concerns and a review of the reduced phosphorus levels in water discharged into the Everglades Protection Area, the board endorsed the Everglades Protection Area Tributary Basins Conceptual Plan for Achieving Long-Term Water Quality Goals Final Report or Long-Term Plan. This plan recommends an initial phase from 2003-2016 for achieving the 10 ppb threshold for phosphorus and a second phase of 2017-2023 if needed. The plan has three primary components, including (1) the implementation of structural and operational modifications to projects that aim to lower phosphorus levels in the Everglades (e.g., STAs) by December 2006; (2) optimization of water quality performance and integration with CERP by December 2006; and (3) adaptive management and resulting modifications and improvements to enhance water quality after December 2006. This plan formed the basis for Florida's amendments to the EFA in May 2003. The preceding history provides some context for the FY2004 appropriations provisions that restrict federal funding for Everglades restoration based on compliance with water quality standards. The following appendices provide further context in the form of (1) a historical timeline of efforts to address Everglades phosphorus pollution and (2) a side-by-side analysis of pending appropriations legislation. Appendix A. Timeline of Phosphorus Mitigation in Florida Appendix B. Comparison of Pending Legislation | Provisions in the FY2004 Energy and Water Development Appropriations Act ( P.L. 108-137 ) and the FY2004 Interior and Related Agencies Appropriations Act ( P.L. 108-108 ) restrict funding for restoration activities in the Florida Everglades if Florida does not achieve certain phosphorus mitigation and water quality standards in Everglades waters by 2006. The provisions also require several federal agencies to report whether Florida is meeting the deadline. If not, some provisions state that Congress may disapprove funding for some Everglades restoration projects, including some projects in the $7.8 billion Comprehensive Everglades Restoration Plan (CERP). (For more information, see CRS Report RS20702, South Florida Ecosystem Restoration and the Comprehensive Everglades Restoration Plan , by [author name scrubbed] and [author name scrubbed].) These provisions may represent a turning point in the 10-year federal-state partnership to restore the Everglades. Since 1993, the federal, state, tribal and local governments have generally worked together towards restoration. Congress has not previously conditioned federal Everglades funding on Florida taking specific actions towards restoration, both because of this partnership and because a federal Consent Decree and a state law (the Everglades Forever Act) set a deadline of 2006 for phosphorus mitigation. However, in spring 2003, the Florida legislature amended the Everglades Forever Act to extend the deadline until at least 2016. Phosphorus pollution has been a concern in the Everglades for many years. Excess phosphorus can cause imbalances in vegetation and habitat and alter native ecosystems. Much of this phosphorus is discharged in water from the Everglades Agricultural Area (EAA), which is located north of the Arthur R. Marshall Loxahatchee National Wildlife Refuge and the Everglades National Park. The EAA has been used intensively for farming, particularly sugar cane, since the 1950s. In 1988, the federal government sued the State of Florida and two of its agencies, alleging that water released onto federal lands from agricultural sources contained elevated levels of phosphorus and other nutrients in violation of state water quality standards. Based on a 1992 Consent Decree settling this lawsuit, Florida enacted the Everglades Forever Act in 1994. This act required the state to establish a numeric limit for phosphorus by December 2003 and required actions to comply with this limit by December 2006. The federal judge overseeing the Consent Decree later adopted the December 2006 deadline. In spring 2003, Florida amended the 1994 Act to create flexibility in meeting deadlines for phosphorus mitigation to 2016 or later, and in July 2003, Florida issued a rule establishing a limit for phosphorus of 10 parts per billion and methods to measure compliance with that limit. This report discusses the FY2004 appropriations provisions that condition federal funding for Everglades restoration on compliance with water quality standards, provides a side-by-side analysis of pending appropriations legislation, and provides background and a timeline of efforts to address Everglades phosphorus pollution. This report will be updated as events warrant. |
The U.S. Coast Guard is the nation's principal law enforcement authority on U.S. waters. Its missions include maritime safety and security, marine environmental protection, search and rescue, drug and migrant interdiction, fisheries enforcement, and defense readiness. The Coast Guard's responsibilities are specified in legislation establishing the agency as well as authorization bills typically passed by Congress every one to two years and in Department of Homeland Security appropriations acts. This report discusses selected issues related to the agency's mission safeguarding maritime transportation, particularly those that have arisen in recent Coast Guard authorization or appropriations legislation or hearings. H.R. 2518 , reported by the House Transportation and Infrastructure Committee, and S. 1129 , reported by the Senate Commerce Committee, authorize appropriations for the Coast Guard for FY2018 and FY2019 and have provisions related to the agency's safety mission, as discussed in this report. To carry out its safety mission, the Coast Guard interacts with key maritime safety institutions: harbor pilots, vessel traffic services and marine exchanges, classification societies (independent third-party inspectors), the International Maritime Organization (IMO), and ship flag registries. The Appendix provides background information on these institutions. In 2004, Congress directed the Coast Guard to establish an inspection regime for towing vessels—the tugs or towboats that push or pull barges—similar to that which exists for ships (The Coast Guard and Maritime Transportation Act of 2004, P.L. 108-293 , Section 415). This inspection regime was to include establishing structural standards for towing vessels as well as standards for the number and qualifications of crew members. Section 409 of the 2004 act also authorized the Coast Guard to evaluate an hours-of-service limit for crews on towing vessels. In the Coast Guard Authorization Act of 2010 ( P.L. 111-281 , Section 701) Congress directed that the final rule be issued by October 15, 2011. The Coast Guard missed this deadline, but did issue a final rule pertaining to the inspection of vessels on June 20, 2016, while leaving the hours-of-service limit for further consideration and potentially a separate rulemaking. Inspection of these vessels will add about 2,500 vessels to the Coast Guard's marine inspection program, approximately doubling the number of vessels the agency inspects. The new safety requirements for towing vessels are going into effect at a time when more crude oil and chemicals are being transported by barge due to an increase in domestic production of oil and of natural gas, which is a feedstock for many chemical plants. According to oil spill data compiled by the Coast Guard, from 1995 to 2011 (the latest year available) barges spilled about 2.7 times more oil in U.S. waters than did tanker ships. During this time, the number of oil spill incidents and the amount spilled annually have declined significantly for both barges and tankers. In its 2011 notice of proposed rulemaking on work hours, the Coast Guard stated that a typical towing vessel schedule providing six hours of work followed by six hours of rest gradually increases crew members' fatigue levels over a multi-day voyage. The Coast Guard cited a number of expert studies supporting this contention. Barge operators filed comments opposed to addressing hours of service as part of this particular rulemaking (which also included the proposed rules on tug vessel inspection), while maritime unions have filed comments in favor of a mandatory eight-hour rest period. The National Transportation Safety Board (NTSB) filed comments reiterating its support for a crew schedule that allows for 8 hours of uninterrupted sleep per 24-hour period (which could require a 10-hour rest period). A report by a group of experts in sleep and circadian biology at Northwestern University contends that a rotating schedule of six hours of work followed by six hours of rest (referred to as the "square-watch system") does allow for adequate sleep by barge crews. The Coast Guard's decision on hours of service for barge crews could have important ramifications for the economics of barge transportation. For example, providing for longer rest periods could require towing vessels (like ships) to employ three teams of crew rather than two, potentially increasing their costs. The Coast Guard is currently reexamining the crewing requirements for articulated tug-barges (ATBs). An ATB is a coastal tank barge designed for open seas that can hold 50,000 to 185,000 barrels of oil. Some recently built ATBs can carry 240,000 to 340,000 barrels, a capacity comparable to that of coastal tankers. Seagoing barges have speeds of about 10 knots (12 miles per hour), a few knots slower than a tank ship. According to an original designer of the ATB, "the American coastwise shipping business has grown in a way that differs from many other nations. The high cost of manning and building ships has led over the years to a coastwise transportation network dominated by tugs and barges." ATBs are sometimes referred to as "rule breakers" within the maritime industry because they operate with smaller crews. The Coast Guard determines crewing requirements based on the registered tonnage of a vessel, which for barges includes only the tug, not the barges the tug may be pushing. As a result, an ATB typically has a crew of 6 to 12, versus 21 to 28 for a tank ship. The precise number for any particular vessel depends on that vessel's level of advanced technology (more automated vessels may need smaller crews). If the Coast Guard were to require ATBs to carry larger crews, it could reduce their economic advantage compared to tankers. Such an outcome occurred previously with a precursor to the ATB called the integrated tug barge; when the Coast Guard increased their manning requirements in 1981, integrated tug barges lost their economic advantage, and none have been built since. The Coast Guard increased manning requirements because integrated tug barges operated essentially as ships since the tug and barge seldom separated. While ATBs are designed for easier separation of tug and barge, they also seldom separate. A river barge can be used in "drop and swap" operation—that is, the tugboat can drop a loaded barge at a facility where it can be used for storing product while the tugboat is free to make other barge movements—but the tugs designed for ATBs sail poorly without the barge, so they generally do not perform drop and swap operations. Some stakeholders have criticized the distinction in crewing requirements between ships and ATBs because they believe it distorts the domestic shipping market by encouraging the use of otherwise less efficient barges instead of ships. Since 1980, the amount of cargo carried by coastal ships in domestic commerce has declined by 72% while the amount carried by coastal barges has increased by 35%, with barges now carrying more cargo than ships. Since ships are needed for military deployments overseas, a primary objective of U.S. maritime policy is development of the skills and know-how for building and crewing oceangoing ships. Addressing this may require reducing manning requirements for coastal tankers to make them more competitive. In the Howard Coble Coast Guard and Maritime Transportation Act of 2014 ( P.L. 113-281 , Section 605), Congress asked for an independent review of Coast Guard requirements for U.S.-flag vessels that are different from international standards. The expert panel convened by the Transportation Research Board concluded in a 2016 report that the Coast Guard's requirements for vessel equipment in many cases differ from standards set by the International Maritime Organization (IMO, a United Nations body described in the Appendix ) but do not provide a higher level of safety. The expert panel found that stricter U.S. equipment requirements could discourage owners from registering their ships under the U.S. flag. Most manufacturers do not build their equipment to requirements of the relatively small U.S.-flag fleet. The report also recommended that the Coast Guard accept international practices for "reduced manning" of engine room operations with automated equipment (particularly for ship operators with proven safety track records) rather than requiring additional equipment, trial periods, and a period of Coast Guard onboard observation. The report suggested that the Coast Guard rely more on independent vessel classification societies (described in the Appendix ) to perform inspections of U.S.-flag vessels, particularly because the classification societies update their equipment standards more frequently than the Coast Guard does. While the Coast Guard testified in April 2016 that it was taking steps in line with the TRB report's recommendations, it noted that the container ship El Faro , which sank in a hurricane near Puerto Rico in October 2015 (killing all 33 crew members), was enrolled in a classification society inspection program. The Coast Guard said it would wait for the results of official investigations into the sinking before considering changes to vessel inspections. Congress is debating to what extent commercial fishing vessels should be inspected by classification societies. In 1988, Congress required that fish processing vessels be built and maintained to class ( P.L. 100-424 ). In the 2010 and 2012 Coast Guard Authorization Acts ( P.L. 111-281 and P.L. 112-213 ), Congress required that newly built fish catching and fish tender vessels over 50 feet in length also be classed. However, due to concerns over the cost to classify fishing vessels, in 2015 Congress provided an alternative option for independent inspection of fishing vessels ( P.L. 114-120 ). H.R. 2518 and S. 1129 contain further provisions that reflect a concern for the cost of independent inspection for commercial fishing vessel owners by, among other things, postponing the deadline. A September 2016 review by the National Transportation Safety Board (NTSB) of the Coast Guard's Vessel Traffic Service (VTS) centers (described in the Appendix ) found that they may not be achieving their purpose of reducing vessel accidents in harbors. The primary reason, according to the NTSB, is as lack of workforce experience due to the regular turnover of VTS personnel. For example, the NTSB's survey of VTS watchstanders found that 95% had never worked on a commercial vessel and 93% had five years of experience or less working at a VTS center. Thus, most of the recommendations the NTSB made to improve the effectiveness of VTS centers concerned the training and qualifications of the personnel working in them. S. 1129 (§405) requires the Coast Guard to examine whether it is feasible to establish a VTS center in U.S. arctic waters. The Coast Guard's technical expertise in providing effective safety oversight of certain maritime operations has been a persistent issue. In 2007, the then chairman of the House Committee on Transportation and Infrastructure considered creating a civilian agency within the Department of Transportation to take over maritime safety functions. In an internal report, the Coast Guard acknowledged that its practice of regularly rotating staff geographically or by activity, as military organizations typically do, hinders its ability to develop a cadre of staff with sufficient technical expertise in marine safety. In response to this problem, the agency revamped its safety program, and Congress has appropriated additional funds specifically for safety personnel. Under the revamped safety program, the Coast Guard created additional civilian safety positions, converted military positions into civilian ones, and developed a long-term career path for civilian safety inspectors and investigators. Congress may inquire whether these changes have brought about the desired outcome, given the NTSB's recent findings with respect to Coast Guard VTS personnel. The Coast Guard Authorization Act of 2015 contained a provision to facilitate development of an Alaskan port along the Bering Strait that the Coast Guard could use as a base of Arctic operations (§531 et al.). At a July 2016 hearing, the Coast Guard indicated its preferred strategy was to rely on mobile assets (vessels and aircraft) and seasonal bases of operation rather than pursue a permanent port in the Arctic. Less sea ice during late summer has led to increased maritime activity in the Arctic. The Bering Strait along the west coast of Alaska is the entrance and exit waterway for ships transiting the Northern Sea Route along Russia's north coast as well as the Northwest Passage through the Canadian archipelago. The latter appears to be far less viable as a route for large commercial vessels, as it is more constricted by shallow and narrow straits and unpredictable ice movement. Most cargo ship activity has taken place along the Northern Sea Route, while cruise vessel excursions have increased in the Northwest Passage. Before the recent fall in oil prices, there was also exploratory oil drilling activity off Alaska's North Coast. The Coast Guard has defined a shipping lane in the Bering Strait and continues to work on improving its ability to operate in the Arctic; its search and rescue capability is a priority. The Coast Guard was also instrumental in developing a specific IMO code for ships sailing in the Arctic that went into effect January 1, 2017. The code contains requirements related to ship construction, lifesaving equipment, and crew training. In the Cruise Vessel Security and Safety Act of 2010 ( P.L. 111-207 ) as modified by the Coast Guard Authorization Act of 2015 (§608), Congress required that cruise ships install technology for capturing images of passengers falling overboard or detecting passengers falling overboard, if possible, depending on the extent that such technology is available. In the Coast Guard's notice of proposed rulemaking implementing this provision, the Coast Guard states that most cruise lines are employing video cameras that record a passenger going overboard (with date and time to aid search and rescue). Most cruise lines are not employing other detection systems because they have found that this technology does not yet work reliably. Congress has debated whether smaller passenger vessels, such as tour boats and harbor ferries, should be equipped with lifeboats or inflatable rafts that would keep passengers completely out of the water as opposed to the current regulation that these boats be equipped with life floats that keep passengers afloat but not out of the water (and thus still subject to hypothermia). The 2015 Coast Guard Authorization Act requires the former for vessels built in 2016 or thereafter and that operate in cold waters as determined by the Coast Guard (§301). In the Coast Guard Authorization Act of 2015 (§307), Congress requested that the Coast Guard indicate how it intends to implement the Department of Homeland Security Inspector General's (IG's) recommendations for improving marine casualty reporting. The IG, as well as other observers, has noted that the number and quality of the Coast Guard's investigations and reports of marine accidents, as well as the lack of a "near-miss" reporting system, are missed opportunities to learn from past incidents. The May 2013 IG audit concluded: The USCG does not have adequate processes to investigate, take corrective actions, and enforce Federal regulations related to the reporting of marine accidents. These conditions exist because the USCG has not developed and retained sufficient personnel, established a complete process with dedicated resources to address corrective actions, and provided adequate training to personnel on enforcement of marine accident reporting. As a result, the USCG may be delayed in identifying the causes of accidents; initiating corrective actions; and providing the findings and lessons learned to mariners, the public, and other government entities. These conditions may also delay the development of new standards, which could prevent future accidents. The IG found that at the 11 sites it visited, two-thirds of accident inspectors and investigators did not meet the Coast Guard's own qualification standards. The IG stated that the shortage of qualified personnel would be further compounded by the new towing vessel safety regime, which would expand the inspection workload. Similarly, the NTSB found in its investigation of Coast Guard VTS centers (cited above) that personnel at these centers were not adequately recording interventions and near-miss events so as to analyze the data for trends, despite a Coast Guard policy that each VTS keep a monthly activity log. Congress has long tasked the Coast Guard with determining U.S. pilotage rates for foreign trading vessels transiting the St. Lawrence Seaway and the Great Lakes. (See the Appendix for a description of the role of harbor pilots.) A ship navigating the entire system from the mouth of the St. Lawrence River to the Port of Duluth, MN, must hire and pay for five pilots, two of them Canadian for the easternmost portions of the St. Lawrence River. In March 2016, the Coast Guard increased pilotage rates so that the 37 American pilots each would receive a total compensation of $326,000 per year, with 10 days off each month during the nine-month shipping season between late March and late December. The Coast Guard determined this rate based on the compensation of Canadian pilots and its judgement as to the rate necessary to attract a sufficient number of pilots to avoid traffic delays. Reportedly, pilots in some coastal ports earn annual salaries of around $500,000. Great Lakes ports contend that the cost of pilotage at this rate now exceeds a ship's daily operating cost in the Great Lakes and is eroding the competitiveness of the Great Lakes navigation system. Great Lakes ports have sued the Coast Guard arguing its methodology for determining pilotage rates violates the Administrative Procedure Act. In 1995, Great Lakes pilotage rate-making was transferred from the Coast Guard to the St. Lawrence Seaway Development Corporation, the federal agency tasked with promoting use of the Seaway. However, some pilotage groups sued, claiming the Department of Transportation did not have the authority to make this change. After a court ruling in favor of the pilot groups, pilotage rate-making was transferred back to the Coast Guard in 1998. A primary and resource-intensive function of the Coast Guard is installing and maintaining aids to navigation (ATON). This includes buoys, beacons, and other visual aids which mark and guide vessels through harbor and waterway channels (see "Marine Exchanges and Vessel Traffic Services" in the Appendix for further explanation of how ships navigate in harbors). According to the Coast Guard, there are about 50,000 federally owned visual aids, and an equal number of nonfederal visual aids. Because storms or ice can move buoys out of place and channels can move due to shoaling, the Coast Guard services about 134 buoys and fixed aids to navigation on an average day. Part of the Coast Guard's fleet includes 68 "buoy tenders," which are vessels designed for the proper positioning of channel markers. Mariners continue to rely on these physical visual aids even though vessels are now equipped with electronic navigation aids, such as GPS, Automatic Identification System (AIS), and electronic charts. These technologies, in essence, allow channel markings to be made known to a vessel operator by electronic transmission (e-navigation), either enhancing or potentially replacing a physical aid to navigation. The increase in size of the largest ships transiting U.S. harbors, as well as a general increase in the number of vessels on many waterways, places a premium on the accuracy of aids to navigation. The Coast Guard has begun testing electronic aids to navigation on the west coast and the Mississippi River. ATON activities consume about 20% of the Coast Guard's discretionary budget. While e-navigation offers the potential of significant savings in maintaining physical aids to navigation, key questions have yet to be answered. How reliable and resilient is e-navigation? Should e-navigation replace physical aids or merely supplement them? Are e-navigation aids as accessible to recreational craft? Are there cybersecurity concerns associated with e-navigation? The Coast Guard's ATON budgetary needs in coming years will depend on the answers to these questions. Congress has expressed specific interest in the feasibility and advisability of using e-navigation in U.S. areas of the Arctic Ocean. In FY2016, Congress provided an additional $12 million above the President's request for the use of UAS (drones) aboard national security cutters. Congress has also expressed interest in receiving a more detailed plan showing how the Coast Guard could take advantage of this technology. Like e-navigation, greater use of UAS potentially offers significant efficiencies in the vessels, aircraft, and crews needed to perform various Coast Guard missions. The Coast Guard has tested both smaller, hand-held UAS and larger UAS to extend the surveillance range of its patrol vessels. In April 2015, the Coast Guard announced that it would be testing UAS in the Arctic for missions such as surveying ice conditions, marine environmental monitoring, marine safety, and search and rescue. The unmanned aircraft being tested can be launched from land or a Coast Guard cutter. H.R. 2518 , as reported by the House Transportation and Infrastructure Committee, requests a study by the National Academy of Sciences as to how drone aircraft could be used to enhance the Coast Guard's maritime domain awareness. The bill also places restrictions on the Coast Guard's pursuit of UAS, making it dependent on a lack of funding for Offshore Patrol Cutters and UAS procurement by the Departments of Defense and Homeland Security. The United States has established a perimeter up to 200 miles from its coastlines within which maritime vessels must reduce their emissions. To meet a stricter requirement that was triggered on January 1, 2015, ships are switching to cleaner-burning (lower-sulfur) fuel when they reach this zone. The Coast Guard is responsible for enforcing correct fuel use. Given the additional costs associated with cleaner-burning fuels, ocean carriers are concerned that the level of enforcement be uniform to ensure a level playing field. The House Appropriations Committee requested that the Coast Guard provide information on ECA enforcement actions taken since January 1, 2015, as well as the number of reports by vessels that cleaner-burning fuel was not available and, hence, the number of waivers or exemptions granted to vessels. The recent drop in world fuel prices has dampened the economic impact of ECA requirements, but additional emission caps pending in 2020, which will apply to all shipping routes, could have a more significant impact on shipping costs, according to an OECD report. Reportedly, some ships have experienced loss of propulsion (LOP) during the switchover to cleaner fuel as well as subsequently while operating with the cleaner fuel. This loss may be due to "thermal shock," since the cleaner fuel is less viscous than bunker fuel and does not need to be heated before entering the engine. The temperature difference is believed to cause fuel pump seizures, leaks, and wax buildup in filters, especially in colder months. In March 2015, the Coast Guard issued a safety alert to vessels about LOP, stating that "many losses of propulsion have occurred in different ports and have been associated with changeover processes and procedures." Loss of propulsion creates serious safety and environmental protection concerns. The Houston Pilots Association contends that a March 2015 collision between two ships that resulted in an 88,000-gallon chemical spill was most likely caused by a switch to low-sulfur fuel and consequent loss of speed. Liquefied natural gas (LNG) as a ship fuel may offer a means of meeting the tighter emissions requirements enforced within emissions control areas. Some cargo ships serving U.S. noncontiguous trades (Alaska, Hawaii, Puerto Rico) have converted to LNG. Operators of ferries, cruise ships, and other vessels that sail entirely or mostly in ECA waters also are interested in LNG. In February 2015, Harvey Marine launched the first of six LNG-fueled offshore oil service vessels in the Gulf of Mexico. In 2015, TOTE Maritime launched two LNG-fueled container ships that will provide service between Florida and Puerto Rico. Crowley Maritime will take delivery of two LNG-fueled cargo ships for service in the same trade lane in 2017 and 2018. Carnival Cruise Lines announced that it has ordered four LNG-powered cruise ships for delivery beginning in 2019. The Coast Guard is developing regulations as to the placement of LNG fuel tanks on vessels, the protocol for LNG refueling operations in ports, and spill response requirements. In February 2015, the Coast Guard issued voluntary guidelines for using LNG as vessel fuel, including training of personnel, safeguards during fuel transfer operations, safeguards for shoreside LNG fueling facilities, and the design of barges carrying LNG for fueling operations. The guidelines are not new regulations but identify existing regulations pertaining to the carriage of LNG as cargo and to storage of LNG in bulk at waterfront terminals. For example, the same safeguards required for loading or unloading LNG as cargo aboard an LNG tanker are applicable when transferring LNG to fuel a ship. In April 2012, the Coast Guard issued guidelines regarding the specifications for LNG engines and fuel system machinery and equipment on vessels. LNG-fueled ship engines are not entirely new, as LNG tankers often have engines that are fueled by "boil-off" (LNG that has re-gasified in cargo tanks). Both guidelines are issued as policy letters, not as final rules in a rulemaking procedure, and are meant to inform industry and local Coast Guard officials about existing regulations that are enforceable with regard to LNG used as fuel. There may be uncertainty concerning aspects of LNG bunkering that existing Coast Guard regulations do not specifically address. For instance, a shoreside LNG fueling facility has different siting needs from an LNG cargo terminal. Existing regulations for LNG cargo terminals therefore may not take into account the surrounding environment that may be different for an LNG fueling facility, posing different safety issues. Another matter left unclear is whether LNG-fueled cargo ships may load or unload cargo, passengers, or crew supplies simultaneously while loading LNG fuel; existing regulations for transferring LNG as cargo do not envision other operations that an LNG-fueled ship might need to engage in while refueling is taking place. The guidelines currently state that an LNG fuel supplier should conduct a formal quantitative risk assessment to assist the Coast Guard in evaluating whether simultaneous operations can occur. Also, current regulations concerning spill response are written with heavy marine oil or marine diesel fuel in mind. These requirements are not readily adaptable to LNG, which would vaporize in the event of a spill. While the policy letters are intended to assist the Coast Guard in applying a uniform national policy with regard to LNG fuel, some issues will be determined on a case-by-case basis. The local Coast Guard captain of the port often is left to make the final determination based on the information provided by local fueling operators. Some amount of local discretion is not unique to LNG fueling, as safety and security risk profiles of ports differ significantly due to differences in geography and mix of maritime activity taking place. In June 2015, the IMO finalized safety standards, known as the "IGF code," for ships using LNG as fuel. The standards became effective January 1, 2017, and are an annex to the Safety of Life at Sea (SOLAS) convention, to which the United States is a signatory. Projects to develop offshore wind energy resources are in various stages of development. The Coast Guard conducted a study to serve as a guide in determining desirable buffer zones between wind farms and shipping routes along the Atlantic Coast. The 2016 study noted that wind farms could funnel vessels into narrower shipping corridors, thereby increasing traffic density and the risk of collisions. The study also found that wind farms could force seagoing barges to transit further offshore than is desirable. Wind farm advocates have commented that the Coast Guard study is overly restrictive toward wind farms in making room for navigation corridors. H.R. 2518 requests that the Coast Guard report on the actions it has taken to carry out the recommendations contained in its port access route study. Harbor Pilots Maritime pilots play an important role in maritime safety because they drive many of the ships arriving and departing U.S. harbors. Maritime pilots possess navigational expertise for a particular harbor and are hired by ocean carriers to take command of their ships for harbor transits. The pilots board ships at the entrance to a harbor (with use of a pilot boat) and take position at the bridge alongside the master (captain) of the vessel and other bridge crew. The pilot will order instructions to the helmsmen to steer the ship through the harbor and may direct tugboats, if they are assisting. Pilots describe turning a ship like turning a car on ice—it slides through the turn. Pilotage is described as a process of continually watching how the ship responds to a maneuver, which will dictate the pilot's next command. How a ship responds is affected by the characteristics of the ship, weather, and water conditions. A pilot needs to be aware of multiple cues: wind, tide and river currents, and (in the case of estuaries) the salt water versus fresh water mix that affects buoyancy. While the pilot is in command of the navigation of the ship through the harbor, the captain of the ship remains in command of the ship and retains ultimate responsibility for its safe passage. Often the pilot will board the ship with a computer laptop or other handheld device that contains his or her own set of charts for that harbor as well as ship tracking technology. The laptop may also be plugged into the ship's navigation console to incorporate the ship's navigation technology into the pilot's navigation software. When the pilot boards the ship, the captain is required to inform the pilot about the navigation particulars of the ship, such as the draft, air draft (highest point on the vessel), and maneuvering characteristics. A "pilot card" is used for this purpose. Although English is the required language of international shipping, language can be a barrier to expansive communication between the pilot and captain. Most U.S. ports make it compulsory for a ship to hire a pilot, although in some ports hiring a pilot may be voluntary. In these latter cases, if a ship captain regularly calls at a port and is confident that he or she can navigate the ship through the harbor, the captain may elect not to hire a pilot, but the shipping line will still be charged either the full pilotage fee or some portion thereof. For liability reasons, many shipping lines will take on a pilot even if it is not compulsory. On the west and Gulf coasts, the pilot usually navigates the ship from the harbor entrance to the dock (and vice versa), but on the east coast, some ports require a "docking pilot" to take over from the pilot when docking the ship. Docking pilots are usually former tugboat captains and are not members of the local pilot association. In Louisiana, in addition to hiring a harbor pilot, shipping lines may also be required to hire one or two "river pilots" depending on how far up the Mississippi River the ship is transiting (to call at the Port of Baton Rouge or South Louisiana). Especially large ships may be required to hire two pilots, or a full pilot and an assistant pilot. A maritime pilot typically works as an independent contractor through the pilot association at a given port. The association takes care of administrative functions such as dispatching pilots to vessels, maintaining pilot boats, and billing and collecting pilotage fees. Pilots are assigned to ships on a rotating basis and the shipping line has no choice in the selection of the pilot. Pilot associations are regulated by a state board of commissioners, or in some cases, by city government. Typically, a pilot board is composed of 3 to 10 members who serve part time. Representation on the board must consist of a specific ratio of pilots, members of the broader maritime industry in the port area, and members of the public not connected with the maritime industry. The pilot board is responsible for ensuring the qualifications of the pilots, setting pilotage fees charged to the vessel operators, and reviewing the performance of pilots. Pilotage fees are based on the draft and tonnage of the vessel and, in some cases, the distance piloted. Pilots do not work in a competitive environment. Pilot associations are effectively local or regional monopolies. The pilot association only selects enough member pilots to service the traffic at hand. Pilot associations chartered by state and local governments have jurisdiction only over the pilotage of ships in foreign trade—that is, ships carrying import or export cargo. Congress has decided not to exercise federal control over pilotage of foreign trading ships. The federal government has jurisdiction over the pilotage of ships in domestic trade, such as a tanker carrying oil from Alaska to California. Typically, a sea captain engaged in domestic trade will carry a Coast Guard pilot's endorsement on his or her captain's license and therefore will not need to hire a pilot upon entrance to a harbor. This type of federal pilot authorization is the most common. There are also a few independent federal pilots who are not employed by a coastwise shipping line, but offer their piloting service at the particular port for which they are licensed. Like a state pilot license, the federal pilot license pertains to a specific port. Therefore, the ship captain must obtain a pilot license for each port that he or she expects to call on a routine basis. Generally, all state and local pilots licensed to pilot foreign trade vessels also hold a federal license to pilot ships in domestic trade. Most state and local pilot associations require a federal pilot's license as a minimum requirement for being allowed to work toward a state pilot's license. The federal government will grant a federal pilot's license to anyone who qualifies, unlike states, which limit the number of licenses based on the perceived need for pilot services. Marine Exchanges and Vessel Traffic Services To assist the pilot and crew with safe navigation, the Coast Guard has established vessel traffic services (VTSs) in many ports. From the VTS, Coast Guard "watchstanders" can monitor and provide guidance to harbor traffic with the use of electronic communication, radio, radar, differential global positioning system (DGPS), surveillance cameras, and binoculars. A VTS operates 24 hours a day, seven days a week. VTSs vary depending on the geography and the nature and volume of vessel traffic in a port area, but they generally are staffed with both uniformed and civilian Coast Guard watchstanders. Currently there are VTSs in 12 U.S. ports staffed by about 155 civilian and 130 active-duty personnel. VTSs may also be staffed by members of a "maritime exchange" from which they have evolved. U.S. ports without a Coast Guard-led VTS have a maritime exchange that provides "VTS-like" services, and are more accurately called Vessel Traffic Information Services (VTIS). A maritime exchange may be jointly operated or run by a pilot association and be staffed by pilots. VTSs and VTISs are funded from some combination of user fees charged to vessel operators, financing from port authorities, state governments, and the Coast Guard. The original purpose of maritime exchanges was to alert ship service providers in port (i.e., agents, pilots, tugs, stevedores, longshoremen unions, terminals, U.S. Customs, and other vendors and government agencies) of a ship's pending arrival. Before the development of current technology, a lookout was posted with a telescope, signal flags, and flashing signal lights. While maritime information exchange is still the central function of marine exchanges, in the 1960s and 1970s they also began offering a VHF radio communication and radar system for pilots and captains to avoid collisions and groundings. Participation was initially voluntary and unregulated and there were no protocols. However, after a ship collision in San Francisco Bay in 1971, Congress passed the Ports and Waterways Safety Act of 1972 (P.L. 92-340), which directed the Coast Guard to establish VTS systems at ports where the Coast Guard deemed them necessary. In the 1970s, VTSs were established in San Francisco, Puget Sound, New York, New Orleans, and Houston-Galveston. VTSs were added in Morgan City, Port Arthur (including Lake Charles), Louisville, Valdez, Los Angeles, and Sault St. Marie thereafter. The Oil Pollution Act of 1990, passed in response to the Exxon Valdez oil spill, made participation in the VTS mandatory where they exist. While VTSs or VTISs might be compared to an air traffic control tower in an airport, the key difference is that maritime watchstanders do not direct whether and how a vessel is to proceed in a harbor. For instance, they do not issue orders to pilots about vessel heading and speed. Those decisions are entirely left to pilots, who maintain open radio communication with other vessels in the area to avoid collisions. VTSs are an advisory service, not a traffic control center. The Coast Guard describes them as offering a range of four basic services that represent an increasing continuum of involvement: (1) monitoring of harbor traffic; (2) providing information to mariners so that they can navigate more safely or efficiently; (3) advising or recommending a course of action to a vessel (usually infrequently); and (4) in rare circumstances, directing a vessel to move to a certain location or hold at anchor or at the dock until safe to proceed, but without giving direct maneuvering orders. The level of VTS involvement in harbor navigation varies depending on the circumstances of the harbor. For instance, in busy harbors or in harbors with a drawbridge, the VTS may enforce a harbor traffic management plan that dictates one-way traffic or order of procession through a waterway. In these cases, the VTS could be described as traffic management, as opposed to traffic control. VTSs could potentially exert more control over harbor traffic in bad weather conditions. The Coast Guard already has authority to restrict vessel movements during hazardous weather conditions, but does not regularly do so. In the Coast Guard Authorization Act of 2014 ( P.L. 113-281 , Section 228) Congress directed the Coast Guard to establish a process for marine exchanges to send relevant navigation information to vessels via the Automatic Identification System, a short-range communication system among vessels for transmitting vessel headings and speeds, among other information, to avoid collision. The International Maritime Organization (IMO) Due to the international nature of the shipping industry, maritime trading nations have adopted international treaties that establish standards for ocean carriers in terms of safety, pollution prevention, and security. These standards are agreed upon by shipping nations through the International Maritime Organization (IMO), a United Nations agency that first met in 1959. The Coast Guard represents the United States at the IMO and has been the lead proponent of some amendments regarding shipping safety and security. Key conventions that the 168 IMO member nations have adopted include the Safety of Life at Sea Convention (SOLAS), which was originally adopted in response to the Titanic disaster in 1912 but has since been revised several times; the International Convention for the Prevention of Pollution from Ships (MARPOL), which was adopted in 1973 and modified in 1978; and the Standards for Training, Certification, and Watchkeeping for Seafarers (STCW), which was adopted in 1978 with the most recent amendment coming into force January 1, 2017. It is up to ratifying nations to enforce these standards. The United States is a party to these conventions, and the U.S. Coast Guard enforces them when it boards and inspects ships and crews arriving at U.S. ports and the very few ships engaged in international trade that sail under the U.S. flag. Flag Registration Like the United States, most of the other major maritime trading nations lack the ability to enforce IMO regulations as a "flag state" because much of the world's merchant fleet is registered under so-called "flags of convenience" or "open-registry" countries. While most ship owners and operators are headquartered in developed countries, they often register their ships in Panama, Liberia, the Bahamas, the Marshall Islands, Malta, and Cyprus, because these nations offer more attractive tax and employment regulatory regimes. For instance, crews do not have to be nationals of these countries. Because of this development, most maritime trading nations enforce shipping regulations under a "port state control" regime—that is, they require compliance with IMO standards as a condition of calling at their ports. The fragmented nature of ship ownership and operation can be a further hurdle to regulatory enforcement. It is common for cargo ships to be owned by one company, operated by a second company (which markets the ship's space), and managed by a third (which may supply the crew and other services a ship requires to sail), each of which could be headquartered in different countries. Classification Societies Classification societies are independent third parties that inspect and certify that a ship meets their specifications in design and operation. The inspection process occurs at various stages as the ship is constructed and periodically after the ship is in operation. Inspection becomes more thorough as the ship ages. Insurance companies and banks require a ship to be classed before they will underwrite or finance it and, thus, class certification is necessary if a vessel is to enter and remain in commercial service. The Coast Guard may refer to a set of classification society standards in its regulations when identifying requirements that ship operators must meet. Decades ago the credibility of classification societies began to be questioned because they were paid by vessel owners who found it advantageous to have their ships built to the societies' standards ("built to class"). From an insurer's or banker's perspective, a classification society had a conflict of interest if it was being paid by a ship's owner. In response, some insurers and banks began hiring their own inspectors to survey ships, in addition to requiring class inspection. Also, classification societies typically have a for-profit side of their business, selling technical expertise to vessel owners. This places them in competition with one another and raises the possibility that they might allow for some leeway when enforcing standards in order to gain business. Some of the classification societies established a trade association in 1969 to set industry practices to address these concerns. In 2004, Congress required that the Coast Guard not accept certifications by classification societies that are not members of this trade association or that have not been approved by the Coast Guard under specified criteria. The criteria include the requirement that the society not be involved in any activity that could be a conflict of interest. | Congress has made the U.S. Coast Guard responsible for safeguarding vessel traffic on the nation's coastal and inland waterways. Congress typically passes Coast Guard authorization bills every one to two years and appropriates funds to the agency annually under the Department of Homeland Security appropriations bill. H.R. 2518, reported by the House Transportation and Infrastructure Committee, and S. 1129, reported by the Senate Commerce Committee, authorize appropriations for the Coast Guard for FY2018 and FY2019 and have provisions related to the agency's safety mission. The fleet of vessels the Coast Guard inspects for safety reasons recently doubled because the agency is now responsible for inspecting tugs and towboats that push or pull barges (towing vessels), in addition to ships. In June 2016 the Coast Guard issued a final rule on this matter. The Coast Guard is now considering an hours-of-service limit for crews working on towing vessels in an effort to reduce accidents caused by fatigue and is reevaluating the crewing requirements for certain seagoing barges. These potential changes are controversial and could raise the cost of transporting petroleum and chemical products by barge. Other current controversies related to the Coast Guard's vessel safety responsibilities include the following: Whether the agency should place greater reliance on nonprofit vessel classification societies to perform vessel inspections in place of Coast Guard personnel, as recommended by an independent review panel requested by Congress. The effectiveness of Coast Guard vessel traffic service centers in preventing harbor accidents, which is questionable due to insufficient staff experience and expertise. The Coast Guard's ability to operate in the Arctic, where a decline in sea ice during the late summer has led to increased maritime activity. The potential for replacing physical aids to navigation, such as channel marking buoys and beacons, with virtual aids utilizing GPS and electronic charts, at significant cost saving. The potential use of unmanned aerial vehicles (drones) to increase the efficiency and reduce the cost of Coast Guard sea patrols. Guidelines for the safe refueling of ships using liquefied natural gas (LNG). Enforcement of cleaner fuels for ships; cleaner fuels are reportedly causing some ships to have engine problems and are believed by some to be part of the reason for a ship collision in Houston in March 2015. Coast Guard guidelines for establishing buffer zones between offshore wind farms and shipping corridors. |
Although the most recent figures for 2007 indicate a drop, the number of uninsured persons generally has grown during the past several years, as health care costs to consumers, employers, and the government have also grown. State legislators and policymakers have responded to these trends by proposing a spectrum of reforms to address concerns regarding coverage, cost, and other issues. State governments are in a unique position to impact the availability and affordability of health insurance. They are the primary regulators of this industry, and provide funding toward the coverage of millions of residents. States can be receptive to local economic, labor, and other conditions, and adopt policies tailored to their own needs. Given this, health reforms vary greatly from state to state. For instance, some states may pursue comprehensive reform, while others may design reform initiatives that are more narrow in scope. These more limited reform efforts may focus on a particular component of the health care system, such as the availability of private health insurance options, the delivery of health care, or public financing for health coverage. Reform strategies also vary in terms of the target stakeholder group (e.g., children) and policy lever used (e.g., tax code). This report identifies general approaches proposed at the state level to reform health insurance, and describes specific strategies to illustrate the breadth of possible reform options. It discusses a selection of current reform strategies; it is not meant to be inclusive of all health reforms. While the states have implemented a wide range of reforms to address concerns about both coverage and the health care delivery system, most health reform discussions focus primarily on health insurance. Under this broad policy area, coverage and cost concerns are paramount. The primary objective related to coverage is reducing the number of uninsured persons. Reforms may target a specific group (e.g., small businesses), or address the uninsured population as a whole. Cost reforms primarily address concerns about the affordability of health insurance for individuals, families, and employers. This typically results in policies that invest public resources to assist consumers and firms with the cost of health insurance. Below are general descriptions of select reform strategies that have been proposed or implemented at the state level. Since an all-inclusive analysis of state reforms is beyond the scope of this report, these descriptions include examples of both common and innovative initiatives to illustrate the breadth of reforms. The selected strategies reflect the current diversity of reform approaches, in terms of scope of reforms, policy levers used, and populations affected. The reform strategies have been identified according to targeted stakeholder groups: consumers, employers, purchasers of health coverage, and health plans. In addition, the report explores key design and implementation challenges related to coverage and cost, and provides a succinct state example for each reform strategy. State reforms that focus on consumers generally target vulnerable populations that make up a disproportionate share of the uninsured, such as low-income individuals and young adults. However, reform in this area may also be very broad and include all consumers, regardless of health status, family income, or other characteristic. An individual mandate is a requirement that all persons have health insurance coverage. Such a mandate may specify the source of that coverage, such as a government program or through an employer. Only Massachusetts currently has an individual mandate, but other states have included such a requirement in their reform proposals. For states that intend to achieve universal coverage, an individual mandate lends itself to such a goal. However, implementation of a mandate requires policies to address compliance and enforcement issues that are integral to the success of this reform strategy. Also, the effectiveness of this approach depends on the availability of insurance options to all persons who must meet this requirement. For example, unemployed adults with poor health status currently may not have any coverage options available to them, because they cannot get employment-based insurance, are ineligible for public programs, and private insurers deny them coverage based on pre-existing health conditions. Complying with an individual mandate may be difficult for low-income persons who find insurance unaffordable. States that have proposed an individual mandate usually also include subsides and/or exemptions for poor individuals. In the former situation, the cost to the government would increase to finance those subsidies. In the latter situation, exemptions defeat the intent of an individual mandate. Young adults make up a disproportionate share of the uninsured, compared to their representation in the overall population. Nearly half of all states have sought to address this issue by enacting laws to increase young adults' access to health coverage. Such laws typically require private health insurers to allow adult dependents to continue to be eligible for coverage under their family's health insurance policy, up to a specified age and under certain conditions, such as being unmarried or attending college. This reform approach could apply to a moderate share of the uninsured. However, its reach is limited given that the family would also have to have coverage in order for the dependent to benefit. Moreover, this is a temporary solution since the individuals would eventually age out of this benefit, regardless of their educational, marital, or other personal circumstances. Since the premium for a family policy typically does not vary with the number of dependents covered, this reform strategy would not affect the family's costs when purchasing insurance. However, if the cumulative impact of this reform results in more individuals with health coverage, that would likely lead to an increase in overall health care spending. Given that a majority of Americans obtain health insurance through the workplace, many states target employers in their coverage expansion efforts. Some states focus their work-based reforms on small firms, given the disadvantages that small firms face in obtaining private health coverage, compared with large firms. These disadvantages include limited ability to spread insurance risk, limited ability to leverage size to negotiate better benefits and lower premiums, no economies of scale, and a more transient, lower-wage workforce. Cafeteria plans are employer-established benefit plans under which employees may choose between receiving cash (typically additional take-home pay) and certain benefits (such as health insurance) without being taxed on the value of the benefits if they select the latter. Essentially, section 125 of the Internal Revenue Code provides a tax incentive to workers to obtain health coverage or other benefits. While this benefit is through the federal tax code, states have used cafeteria plans as a vehicle for making health insurance more affordable for workers. A handful of states require employers to establish section 125 plans to allow employees to buy insurance using pre-tax dollars. However, these states do not necessarily require employers to fund these plans once they have been established. Small firms typically are exempt from requirements to establish cafeteria plans. This reform strategy benefits only individuals who are employed and whose employer establishes cafeteria plans. Therefore, cafeteria plans have limited reach as a coverage strategy. Cafeteria plans allow individuals to buy coverage using pre-tax dollars. Because consumers are using money that is not taxed to buy insurance, they are in effect receiving a discount on the price of that insurance. On the flip side, the government "loses" tax revenue that it would have collected if those funds were in the form of take-home pay as opposed to benefits. An employer mandate typically refers to a requirement that employers provide health benefits to their employees and those employees' dependents. Such a mandate may allow exemptions for small firms, who find it more difficult to provide health benefits than large firms. Employer mandates may also encompass "pay or play" policies (also referred to as "fair share" laws), which require employers either to contribute to a fund to finance coverage provided through a public program, or provide health benefits to their workers. Currently, only Hawaii and Massachusetts have employer mandates in place, but several other states have proposed such a requirement in the recent legislative sessions. Requiring employers to insure their workforce may be the beginning steps to a universal coverage initiative, when paired with other related policies. However, there is ongoing debate whether a state may impose any kind of benefit requirement on employers. While states are the primary regulators of health insurance, the Employee Retirement Income Security Act of 1974 (ERISA) places the regulation of private- sector employee benefits (including health insurance) under federal jurisdiction. This leaves open the possibility of legal challenges to any state planning to implement an employer mandate. Costs related to complying with an employer mandate would be directly borne by employers. However, economic theory would argue that the additional costs would ultimately be borne by workers in the form of lower wages. Moreover, even with employer contributions toward a health care fund or health benefits to employees, individuals may still have to pay a premium to get coverage. And to the extent that the state would enforce compliance of this mandate, there are administrative costs and capacity issues related to enforcement. Some state reforms target both consumers and businesses as purchasers of health insurance. These reforms may attempt to address availability and cost concerns, as well as administrative burden issues. A health insurance connector or exchange is a clearinghouse that provides "one-stop shopping" for purchasers of insurance, typically individual consumers and small businesses. This entity generally offers a choice of insurance options, simplifies plan administration, and provides portable coverage that allows a person to remain covered regardless of life and work changes. It may also have other responsibilities, such as negotiating with plans regarding benefits and premiums, but fundamentally it functions as a "store" or "facilitator" that brings together health insurance carriers and purchasers. Massachusetts established a connector as part of its overall health reform plan, but a few others states have proposed creating one within the context of their reform initiatives. While a connector or exchange may provide additional insurance options to any given state resident, such options do not automatically lead to increased coverage by themselves. Questions regarding the value of benefits offered and affordability of insurance still apply. Through the clearinghouse function, a connector may reduce administrative costs, and through negotiations, it may be able to get favorable rates, but this is dependent on what other reforms and market rules have been enacted in any given state. In other words, these entities, in and of themselves, do not necessarily lead to significant reductions in premiums for those buying insurance through them. In order to make coverage more affordable, many states provide financial assistance to individuals and families for the purpose of buying health insurance, and businesses to encourage the provision of health benefits through the workplace. Assistance may be in the form of direct subsidies for premiums, or reimbursement through the tax system. For assistance to consumers, states may specify that subsidies be used to purchase only certain types of insurance, such as a policy in the nongroup market. For assistance to firms, states often focus on small businesses. Some states provide tax credits to small firms to encourage those firms to provide health benefits to their employees. Given that health insurance premiums have grown faster than wages and increasing numbers of people and businesses find coverage to be unaffordable, premium assistance addresses a primary reason why people are uninsured. However, subsidies do have their limits if they are tied to insurance options that are not available to everyone, or in every area. States may have to provide a generous subsidy to encourage either uninsured individuals to purchase coverage or small firms to offer coverage who otherwise would not. Depending on the scope of the coverage expansion, the cost to taxpayers for financing these subsidies may be large. This set of reform strategies focuses on what private insurance carriers may offer, how plans formulate premiums, how insurers conduct their business, and other requirements that states may impose on the insurance industry. The spectrum of issues addressed may target the benefit package (e.g., minimum benefit requirements), rating rules (e.g., community rating requirement), other access provisions (e.g., guaranteed issue), and cost-sharing limits (e.g., maximum out-of-pocket costs). In an effort to entice both small employers to offer coverage to employees and individuals to purchase insurance, many states have enacted legislation to allow insurance carriers to offer limited-benefit health plans, or established coverage programs that provide a limited set of benefits. Limited-benefit plan policies allow insurers to avoid all or some benefits mandated by the state. By decreasing the number of covered services, such policies may lead to a reduction in premiums. States may increase insurance options through limited-benefit plan policies, but value and affordability considerations still apply. For uninsured but otherwise healthy people, these policies may be an attractive option. However, persons with pre-existing health conditions may find little to no value in limited-benefit plans. Likewise, individuals with low incomes may still find such plans unaffordable. Existing studies have found that such plans do reduce premiums, but the overall impact varies both within and across states. That impact often depends on the specific mandates that no longer apply and any accompanying policies—such as premium subsidies or increased cost-sharing—which may be coupled with these plans. In the former example, a subsidy reduces the premium that a consumer pays, but there is a cost to the government. In the latter example, the consumer may pay a lower premium but at the expense of higher out-of-pocket costs once he/she uses services. Insurance carriers face the risk that the premiums they collect will not be sufficient to cover their expenses and generate profit, so they seek reinsurance to provide some protection from significant financial losses. Given that reinsurance is insurance for insurers, state reinsurance programs benefit carriers directly and consumers indirectly. The impact on coverage depends greatly on the premiums charged by carriers participating in the reinsurance program. Unless a reinsurance program requires participating insurers to reduce premiums in order to receive the reinsurance benefit, the insurer has complete discretion over what premiums will be, which directly affects the potential for coverage expansion. And because reinsurance benefits carriers directly, the subsequent impact on premiums (and consumers) varies. States may finance reinsurance programs through assessments on all insurers in that market, as well as general revenue and the collection of premiums from participating insurers. To compensate insurers that may end up enrolling a sicker, more expensive population, the state may withhold a portion of premiums collected and distribute those withholds at a later time according to the actual risk enrolled by each participating insurer (this concept is referred to as "risk adjustment"). The above-mentioned state reforms (and other strategies) are policy levers that are available to federal legislators and policymakers. But while state experiences provide some insight, they are not directly generalizable to the nation as a whole. The differences between state-level reform and national reform relate not only, or even primarily, to scope, but also involve fiscal and legal constraints, the regulatory environment, economic conditions, labor market supply, and other factors. The complexity of national reform poses unique challenges and opportunities. For example, each state sets regulatory standards with which insurance carriers licensed in their state must abide, such as benefit mandates, rating rules, and solvency standards. Some states establish very strict standards, others impose less restrictive requirements, and some not at all, depending on the regulatory area and segment of the health insurance market. Given that state laws and regulations vary, any new standard imposed nationwide would place unequal burden on insurance carriers, depending on which state they already operate in. On the other hand, only federal law applies to health coverage that is self-insured. Given that self-insured plans provide coverage to approximately half of all workers with health insurance, federal action is necessary if the objective is to apply health reforms broadly. In addition, while individual states have achieved some measureable successes in their efforts to expand coverage or make health insurance more affordable, those successes have had their limitations and trade-offs. For example, while Massachusetts has achieved near-universal coverage two years after enactment of comprehensive health reform, the costs associated with reform have exceeded initial estimates and long-term financing is an ongoing concern. Moreover, the increase in newly insured residents has highlighted a common feature in health care delivery in Massachusetts and other states: severe physician labor shortages, particularly in primary care. Overall, the Massachusetts experience exemplifies the eventuality that any national reform will involve consideration of trade-offs. And in the climate of limited resources, such consideration will necessitate priority setting. | States have taken the initiative to propose and enact health care reforms to address perceived problems related to health insurance coverage, health care costs, and other issues. These reform efforts vary in scope, intent, and target demographic group. While not all members of Congress agree in the need to reform health care, many have expressed interest in learning about these state efforts to inform ongoing debate at the national level. Each state has implemented a unique set of reform strategies to address concerns about health insurance and the health care delivery system. However, most health reform discussions, at both the state and federal level, focus primarily on insurance. Under this broad policy area, coverage and cost concerns are paramount. The primary objective related to coverage is reducing the number of uninsured persons. Related reforms may target a specific group, or address the uninsured population as a whole. Cost reforms primarily address concerns about the affordability of health insurance for individuals, families, and employers. This typically results in policies that invest public resources to assist consumers and firms with the cost of health insurance. This report identifies general approaches proposed at the state level to reform health insurance, and describes selected reform strategies. These descriptions are intended to be illustrative, not exhaustive. They include examples of both common and innovative initiatives to reflect the diversity of reform approaches, in terms of scope, policy levers used, and populations affected. The reform strategies have been identified according to targeted stakeholder groups: consumers, employers, purchasers of health coverage, and health plans. In addition, the report explores key design and implementation challenges related to coverage and cost, and provides a succinct state example for each reform strategy. This report will be updated as circumstances warrant. |
The General Services Administration (GSA) is the federal government's primary civilian real property management agency with 11 regional offices that oversee GSA owned and leased properties across the nation. At the end of FY2012, GSA—through its real property office, the Public Buildings Service (PBS)—owned or leased 8,708 buildings with more than 422 million square feet of floor space, which represents about 12.6% of the government's 3.354 billion total building square footage. GSA's inventory includes offices, courthouses, and land ports of entry. Given the breadth of GSA's holdings, the agency is sometimes referred to as "the government's landlord." Until Congress enacted the Public Buildings Act in 1926, construction authority for each federal building was approved and funded in separate pieces of legislation. The 1926 act provided the basic authority for the construction of federal buildings through the congressional authorization and appropriation process. Congress later enacted the Public Buildings Act of 1949 to authorize the planning, site acquisition, and design of federal buildings located outside of Washington, DC, and for improvements to existing federal buildings. Congress also enacted the Federal Property and Administrative Services Act of 1949, which established the General Services Administration (GSA), and gave the GSA Administrator (Administrator) responsibility for administering federal real property. In 1954, Congress amended the Public Buildings Act of 1949 to authorize the Administrator to acquire titles to real property and to construct federal buildings through lease-purchase contracts. Under this procedure, a building was financed by private capital, and the federal government made installment payments on the purchase price in lieu of rent payments. Title to the property was vested in the federal government at the end of the contract period, which could range from 10 to 30 years. When authority for lease-purchase contracts expired in 1957, Congress approved a successor statute, the Public Buildings Act of 1959. The 1959 act re-established earlier requirements to provide for direct federal construction of public buildings through the congressional authorization and appropriation process. This act, as amended and re-codified over the years, remains the basic statute authorizing the Administrator to construct, own, lease, operate, maintain, and renovate buildings to serve civilian agencies of the federal government. Notably, while GSA works with many executive branch agencies and the judiciary to meet their space needs, it generally does not perform real property functions on behalf of the legislative branch. GSA is responsible for the design and construction of its buildings and courthouses, and for repairs and alterations to existing facilities, including those that are leased. As part of the President's annual budget submission to Congress, GSA requests funding for new construction projects, as well as for purchasing, renovating, and leasing existing properties. Congress authorizes appropriations for these projects, however, through the prospectus approval process, which is discussed below. Under the Public Buildings Act, as amended (PBA), GSA is required to submit a formal document, known as a prospectus, to the Senate Committee on Environment and Public Works and the House Committee on Transportation and Infrastructure (referred to throughout this report as the authorizing committees) as part of the process to authorize and appropriate funds for constructing, purchasing, leasing, or renovating real property. Each prospectus must include a brief description of the building to be constructed, altered, or leased; the building's location; an estimate of the maximum cost of the project; a statement by the Administrator that suitable space in existing government-owned buildings is not available; a statement of rents and other housing costs currently being paid by agencies that would occupy the newly constructed, renovated, or leased space; and an estimate of the future energy performance of the building. A prospectus is only required for projects with estimated costs that meet or exceed a specified amount, referred to as the prospectus threshold. Under authorities provided in 40 U.S.C. § 3307, GSA establishes annual prospectus thresholds for four different types of real property activities. A description of each threshold is provided in Table 1 below. GSA has the authority to adjust these thresholds each year in order "to reflect a percentage increase or decrease in construction costs during the prior calendar year." GSA adjusts the thresholds based on the Building Cost Index of the Engineering News-Record , an industry trade journal published by McGraw-Hill. As noted, for each project that meets or exceeds the appropriate threshold, GSA must submit a prospectus to the authorizing committees. Each committee must pass a resolution approving the prospectus before the project is authorized to receive appropriations. The resolutions must only be approved at the committee level—floor action is not required. If an appropriation is not made within one year after the date the prospectus was approved, the committees may pass resolutions rescinding their approval. Congress appropriates funds for GSA's authorized construction and leasing projects each fiscal year through the Financial Services and General Government appropriations bill. Once a proposed project receives congressional funding—and not all authorized projects do—GSA's Public Buildings Service contracts with private sector firms for design and construction work. When leasing space, GSA searches for space that meets energy efficiency and renewable energy performance goals. In times of emergency or disaster—such as when a hurricane causes structural damage to a federal building—the normal prospectus thresholds and procedures are temporarily lifted to enable GSA to quickly find new space for displaced federal employees. To that end, GSA is authorized to enter into an emergency lease agreement without an approved prospectus during any period "declared by the President to require emergency leasing authority." Emergency leases may not exceed 180 days, however, without an approved prospectus. It is not uncommon for the cost of real property projects—particularly the construction of new buildings—to escalate as the project proceeds. GSA is required to resubmit an amended prospectus for congressional approval if the cost of the project exceeds the approved estimated maximum amount by more than 10%. The prospectus approval process provides Congress with an opportunity to exercise oversight of GSA's real property activities. With a multi-billion dollar budget and thousands of buildings under its control, GSA manages one of the government's largest and most diverse real property portfolios. Moreover, given its role as the procurer of space for numerous other agencies, congressional oversight of GSA's prospectus-level proposals has broad implications. In recent years, for example, GSA has submitted prospectuses to consolidate the headquarters of the Department of Homeland Security at the St. Elizabeth's Campus in Washington, DC; construct a new courthouse in Rockford, IL; and expand a land port of entry in San Diego, CA. These projects illustrate the central role GSA-controlled buildings often play in helping federal agencies fulfill their unique missions. The prospectus process provides an opportunity for Congress to assess how well GSA's proposals meet the needs of its clients and to reject those that it finds poorly conceived or unnecessary. Congress may also use the prospectus approval process to evaluate cost and space projections. It is not uncommon for GSA to estimate that a single real property project will cost hundreds of millions, or even billions of dollars. Poor project planning may result in cost escalation and unneeded space. The 33 courthouses built between 2000 and 2010, for example, included 3.56 million square feet of unneeded space, which in turn resulted in an additional $835 million in construction expenditures. This prompted Congress to ask the Government Accountability Office (GAO) to audit multiple courthouse construction and renovation projects to identify the origins of widespread cost overruns, and to hold hearings on how to address courthouse cost escalation. At a time when the debt and deficit are salient issues, prospectus approval may be considered an opportunity for Congress to control costs and avoid wasteful spending. The usefulness of the prospectus approval process as an oversight tool may be limited by data that are not available to authorizing committees. The lack of data that directly compare the cost of leasing versus owning space means that Congress is unable to determine whether it is being asked to approve the most cost-effective option for meeting an agency's real property needs. Similarly, the lack of data on the cost of alterations may prevent Congress from knowing the full costs associated with a particular lease prospectus. Oversight may also be limited by the number of real property projects for which prospectuses should be submitted as required by statute, but are not. One of the primary reasons GAO has listed federal real property management as a high-risk area since 2003 is that the government increasingly acquires space through leases rather than by constructing or purchasing buildings. Since 2008, GSA's portfolio has included more leased than owned space, even though leasing is often less cost effective, particularly if the space will be needed for long-term occupancy (20 years or more). One study of 27 long-term leases estimated that the government will spend $866 million more than it would have spent building or buying comparable space. Nonetheless, GSA's lease prospectuses do not include a comparison of the costs of leasing versus owning space over time, known as an alternative analysis. While GSA is not required by law to include an alternative analysis in its prospectuses, the absence of comparative cost data means Congress is making decisions without knowing whether a proposed lease is the most cost-effective option. The cost of leasing space is more than the sum of rent and operating expenses—in some cases, agencies need to alter leased space in order for it to meet the agencies' needs. An agency may determine, for example, that while the location and square footage are suitable, security features may need to be enhanced, technological capabilities upgraded, or conference rooms added. Such alterations are not necessarily included in the cost estimate of a lease prospectus because the actual building in which space will be leased has not been selected when GSA submits a prospectus. Typically, GSA first seeks authorization to enter into a lease and then identifies suitable space through a competitive process. Moreover, any investment in alterations will be lost if the agency moves to another location at the end of the lease term—a factor that may dissuade the agency relocating, even if a different property was less costly or otherwise more suitable. Alterations to leased space can add millions of dollars to the cost of the lease and affect agency decision-making, but authorizing committees may not know about them and thus not take them into consideration because they are not part of the prospectus. As noted, GSA is required by law to obtain congressional approval if a project exceeds its authorized cost estimate by more than 10%. This approval is obtained by submitting an amended prospectus with the new estimate to the House and Senate authorizing committees. For example, GSA submitted amended prospectuses for courthouse construction projects that exceeded their authorized cost estimates by more than 10%, as required. While the same rule applies to leased space, there is evidence that GSA does not consistently submit amended prospectuses when the cost of a previously authorized lease increased by more than 10%. Similarly, a prospectus must be submitted for leases that initially fell below the prospectus threshold—and therefore did not require congressional authorization—but which were amended so that the new cost of the lease exceeded the threshold. As with leases that increased in cost by more than 10%, auditors have identified multiple instances where GSA did not submit a prospectus for leases that exceeded the prospectus threshold after being amended. In an effort to make GSA's real property activities more cost effective and transparent, Representative Lou Barletta introduced H.R. 2612 , the Public Buildings Service Savings and Reform Act, on July 8, 2013. The legislation was co-sponsored by Delegate Eleanor Holmes Norton, Representative Bill Shuster, and Representative Nick Rahall. The bill was referred to the Committee on Transportation and Infrastructure, and then on July 9, to the Subcommittee on Economic Development, Public Buildings and Emergency Management. The following day, after committee markup, the committee ordered the bill to be reported; the subcommittee was discharged from further consideration of the bill. No further action has been taken. The bill would make numerous changes to the way that the Public Buildings Service (PBS)—the office within GSA responsible for real property management—constructs and leases space, reports on the size and cost of GSA's portfolio, and tracks administrative expenses, such as travel and conference costs. The provisions that relate specifically to the prospectus approval process are discussed below. Section 2(a) would require any prospectus that proposes new space, whether leased or owned, in fiscal years 2014, 2015, 2016, and 2017, to include the details of the elimination of at least an equal amount of space from GSA's inventory. The following paragraph, 2(b), does not apply to prospectuses but would prohibit GSA from increasing its leased or owned space when compared to its FY2012 inventory as a baseline. Section 2(a) therefore appears to establish a mechanism for Congress to verify that GSA is implementing the offset requirements of Section 2(b). Section 3(b) would prohibit GSA from entering into a lease that falls below the prospectus threshold but exceeds the "maximum rental rate established by the Administrator for the respective geographical location" unless GSA notifies the authorizing committees in writing at least 10 days before entering into the lease. This provision appears to codify existing GSA policy. In essence, the proposed language would prevent GSA from signing a lease where the rental rate would be greater than that paid for comparable properties in a geographic area. This language would apply specifically to leases that fall below the annual threshold and therefore do not have prospectuses approved by authorizing committees. This may suggest that the provision is intended to prevent GSA from paying above-market rental rates on smaller leases that have less oversight. Section 4(a) would require GSA to submit to the authorizing committees, by December 3 of each year, a list of all leases that it entered into during the previous fiscal year. The list must include, for each lease, its size, location, tenant agency, total annual rent, and authorized annual rent (for prospectus-level leases only). Section 5(3) would require GSA to include in all prospectuses, whether for construction, purchase, alteration, or lease of space, an explanation of why such space could not be obtained from existing unused space in federal properties. Section 13 would clarify that a project may not increase or decrease in scope or size by more than 10% unless an amended prospectus is submitted to, and approved by the authorizing committees. It would also require GSA to notify the authorizing committees, in writing, of any project that would increase in cost, or increase or decrease in scope or size beyond its authorized size or scope by 5% or more. If H.R. 2612 is enacted it could result in significant changes in GSA's management of real property, the most sweeping of which might be the offset of space requirements. These requirements, found in Section 2 of the bill, would prohibit GSA from increasing the size of its portfolio above its FY2012 level. Any proposal to build, lease, or purchase new space would have to be offset by an equivalent reduction in existing GSA space, and the details of that offset would have to be included in the project's prospectus. The government owns tens of thousands of properties with unused space—including approximately 11,600 buildings that are less than half-occupied—and GSA is currently required to first try to fill new space needs at those underutilized federal properties before constructing, purchasing, or leasing space from the private sector. H.R. 2612 would go further, mandating that GSA actually dispose of—rather than merely consider utilizing—unneeded federal building space as a condition of obtaining new space. The principle of offsetting space is consistent with current legislative proposals to streamline and accelerate the disposal of unneeded federal property. With regard to H.R. 2612 , the current disposal process presents a challenge of timing: statutory disposal requirements and local market conditions make it difficult to estimate how long it will take to dispose of a property. Agencies are required by statute, for example, to first offer to transfer unneeded property to other federal agencies that may need it, then offer to convey it to state or local governments and non-profits that might use it for a public benefit, such as a homeless shelter or medical center, and, finally, if the property was neither transferred nor conveyed, offer it for sale to the public. Each step can take weeks—or months—as properties are assessed by interested parties, applications are submitted and reviewed, and financial and legal terms established. Moreover, the condition of the building, the need for the kind of space that is available, and the cost of any required historical or environmental remediation are all local factors that could affect how long it takes to dispose of the property. Some properties may generate no interest at all. It is not clear how H.R. 2612 would take the unpredictable nature of disposition into account. The bill requires "the details of the elimination" of space, but it does not specify whether the space must have already been disposed of prior to the submission of the prospectus, or whether GSA would meet the offsetting requirement by providing a plan for disposing of equivalent space within a given timeframe. It is also not clear how Congress would track proposed disposals to ensure they are completed as detailed in the prospectus. Congress may consider requiring GSA to include in its Performance and Accountability Report or annual budget justification a list of the status of all offset activities approved through the prospectus process. A related provision of H.R. 2612 , the zero-space justification requirement, would also use the prospectus process to constrain the size of GSA's portfolio. By requiring GSA to justify, in its prospectuses, why it must obtain the space requested from a private landholder instead of a federal agency, the provision would increase transparency into GSA's decision-making. Currently, GSA is required to first consider acquiring space in underutilized federal buildings before looking to the private sector to lease or buy space, or to construct new buildings. It is not known how consistently it is undertaken or what criteria are evaluated when determining suitability. The bill does not establish what specific information should be included in the explanation, which could limit the usefulness of the prospectus as an oversight mechanism. GSA could simply state, for example, that there was no suitable space available given the tenant's requirements. Congress may wish to consider whether to require certain information, such as the criteria used to determine whether a federal property was suitable for the tenant, the properties evaluated, and the factors that disqualified each property from consideration. H.R. 2612 also includes provisions designed to monitor and control real property acquisition costs. As noted, project cost escalation has become a concern to many Members of Congress, highlighted by massive cost overruns among courthouse construction projects. The bill proposes a new requirement that may provide Congress with a "red flag" for projects at risk for significant cost escalation. This requirement—that GSA notify the authorizing committees in writing of any increase or decrease of more than 5% of the estimated maximum cost or scope or size of a project—may give Congress an opportunity to hold hearings and work with GSA to prevent further cost escalation. The 5% requirement also stipulates that GSA must provide an explanation of why a project's cost or size exceeds the amount authorized. The explanation may be useful in making revisions to the project management plan and preventing further escalation, but it also may help identify factors that contribute to escalation across projects. It was determined, for example, that courthouse costs often escalated because the method for calculating the amount of courtroom space needed was flawed, resulting in costly over-building, and GSA agreed to use a new asset management planning method for courthouses going forward. Quickly identifying the factors that drive cost escalation may allow GSA to take steps to prevent similar problems in other projects. A second cost containment measure in the bill would require GSA to notify the authorizing committees in writing before entering into certain leases that fall below the prospectus threshold. This provision would apply specifically to leases for which a prospectus is not required to be submitted and therefore have little congressional oversight. It reaffirms the principle that the government should obtain suitable space in the most cost-effective manner, regardless of the amount of funds involved. As policy, the bill would require GSA to ensure it is not paying above the local market rate for the type and amount of space being leased, even if the lease is below the prospectus threshold. With little data available on these leases, Congress may wish to request periodic audits from the GSA Inspector General or from GAO to (1) determine the extent to which GSA complies with the requirement and (2) estimate of the cost of leases that exceed local market rates. H.R. 2612 would require additional reporting on GSA leases. Much, but not all of the information the bill would require to be reported is already made available in spreadsheets on GSA's website. These lease inventory reports provide data on the size, address, tenant agency, and rental rate of GSA's leases—which represents four of the five data elements GSA would be required to report under H.R. 2612 . The one required data element that GSA does not currently report is the amount authorized for leases that exceed the prospectus threshold. GSA's inventory reports also differ from the requirements of H.R. 2612 in that they are issued monthly, rather than annually, and they include data on all of GSA's active leases, not just leases entered into during the previous fiscal year. However, given that the data required by the bill are either already being reported or should be readily accessible, there should not be significant burden placed on GSA in meeting these requirements. In addition, given the limitations on oversight discussed in this report, Congress may wish to consider whether to require GSA to provide additional data, either through the report mandated by H.R. 2612 or through GSA's monthly lease inventory reports. Congress may find it useful to know, for example, the projected and actual costs invested in each lease beyond rent (i.e., upgrades and renovations), whether the lease has increased 5% in cost or size beyond authorized parameters, whether GSA has notified the authorizing committees of this increase, whether the lease has increased 10% in cost or size beyond authorized parameters, and whether an amended prospectus has been approved. While GSA may be commonly referred to as "the government's landlord," it only controls approximately 422 million square feet in buildings, which represents about 12.6% of the government's 3.354 billion total building square footage. There may be oversight provisions that would be useful if they applied to all federal landholding agencies, or at least the 24 large agencies commonly referred to as the Chief Financial Officer Act (CFO Act) agencies, which control 3.302 billion square feet in federal buildings. There are several committees that are considering real property reform bills which share some of the core objectives of H.R. 2612 —reducing inventory, increasing transparency, and controlling costs—but which would apply to a broader range of federal landholders. Particular provisions that do not appear in these government-wide real property reform bills but that committees might consider incorporating could include the required offset of new space, zero-based space-justification, and additional cost-escalation warnings. By the same token, there may be provisions in active legislation which, if enacted, could provide mechanisms for implementing provisions of H.R. 2612 . Several bills propose increased public reporting of agency real-property data or providing public access to GSA's Federal Real Property Profile, an existing database which contains a great deal of information about owned and leased properties government-wide. A publicly accessible, government-wide real-property database, if established, might be able to incorporate additional information as proposed in H.R. 2612 , such as lease data, as well as data that are not specifically required by H.R. 2612 or other reform bills but which might be a valuable cost-assessment tool—an alternative analysis of all proposed leases which would compare the cost of leasing versus owning new space over a 20- or 30-year period. | The General Services Administration (GSA) controls more than 8,700 owned and leased buildings with 422 million square feet of floor space, which represents about 12.6% of the government's 3.354 billion total building square footage .Sometimes referred to as the "government's landlord," GSA has the authority to acquire, operate, and dispose of real property on behalf of other federal agencies, including the judiciary. Its portfolio includes courthouses, land ports of entry, and federal office space. Prior to seeking appropriations, GSA is required to obtain congressional authorization for constructing, purchasing, leasing, or renovating real property. To that end, GSA submits a prospectus to two committees—the Senate Committee on Environment and Public Works and the House Committee on Transportation and Infrastructure—for each proposal that exceeds $2.85 million. The prospectus provides detailed information about the project, including its location and estimated cost. By law, a project that exceeds the $2.85 million threshold may not receive appropriations unless both committees pass resolutions approving of the prospectus. While the prospectus process provides Congress an opportunity to evaluate GSA real property activities, oversight may be limited by data that are not available to the authorizing committees. GSA's prospectuses, for example, do not always include a comparison of the costs of leasing versus owning space over time, which means Congress is making decisions without knowing whether a proposed project is the most cost effective option. Similarly, many lease prospectuses do not include the cost of altering space to meet agency needs, such as upgraded security, which means authorizing committees may not be aware of the full costs of the projects they are considering. In addition, there are instances where GSA fails to submit prospectuses for projects that exceed the threshold. Several bills in the 113th Congress propose reforms to the real property process, particularly the process for disposing of unneeded buildings. Examples include the Excess Federal Building and Property Disposal Act (H.R. 328), the Federal Real Property Asset Management Reform Act (S. 1398), and the Civilian Property Realignment Act (H.R. 695 and S. 1715). Another bill, the Public Building Service Savings and Reform Act of 2013 (H.R. 2612) proposes changing the prospectus approval process. The bill would require GSA to include in its prospectuses a plan to offset any new space acquired by eliminating an equal amount of existing space from its inventory. It would also require GSA to ensure it is obtaining the best possible rental rate for leases that fall below the prospectus threshold. Other provisions would require GSA to provide the authorizing committees with an annual report listing all of the leases it entered into during the previous fiscal year; to notify Congress if a project's costs increased by 5% or more; and, when requesting authorization to acquire space, to explain why existing federal space could not be used. H.R. 2612 could mitigate several long-standing weaknesses in the prospectus process. The bill proposes to help control costs by ensuring that the authorizing committees have access to comparative cost data, and by requiring GSA to provide cost estimates of alterations associated with a new lease that are not included in the estimate of rent. In addition, H.R. 2612 might enhance oversight by requiring GSA to provide a more detailed justification for requesting new space, and to notify Congress when a project exceeds the cost and size parameters established in the prospectus. This report will be updated as events warrant. |
This report analyzes the threat to U.S. security posed by the Al Qaeda organization. The State Department's report on international terrorism for 2004 deems the organization as "the most prominent component" of a global movement of Islamic militants that has "adopted the ideology and targeting strategies of [Al Qaeda founder Osama] bin Laden and other senior Al Qaeda leaders." This report will not analyze all Al Qaeda-inspired movements worldwide, but it will address Al Qaeda's relationship with some of its known affiliates. The primary founder of Al Qaeda, Osama bin Laden, was born in July 1957, the seventeenth of twenty sons of a Saudi construction magnate of Yemeni origin. Many Saudis are conservative Sunni Muslims, and bin Laden appears to have adopted militant Islamist views while studying at King Abdul Aziz University in Jeddah, Saudi Arabia. There he studied Islam under Muhammad Qutb, brother of Sayyid Qutb, the key ideologue of a major Sunni Islamist movement, the Muslim Brotherhood. Another of bin Laden's instructors was Dr. Abdullah al-Azzam, a major figure in the Jordanian branch of the Muslim Brotherhood. Azzam is identified by some experts as the intellectual architect of the jihad against the 1979-1989 Soviet occupation of Afghanistan, and ultimately of Al Qaeda itself; he cast the Soviet invasion as an attempted conquest by a non-Muslim power of sacred Muslim territory and people. Bin Laden went to Afghanistan shortly after the December 1979 Soviet invasion, joining Azzam there. He reportedly used some of his personal funds to establish himself as a donor to the Afghan mujahedin and a recruiter of Arab and other Islamic volunteers for the war. In 1984, Azzam and bin Laden structured this assistance by establishing a network of recruiting and fund-raising offices in the Arab world, Europe, and the United States. That network was called the Maktab al-Khidamat (Services Office), also known as Al Khifah ; many experts consider the Maktab to be the organizational forerunner of Al Qaeda. Another major figure who utilized the Maktab network to recruit for the anti-Soviet jihad was Umar Abd al-Rahman (also known as "the blind shaykh"), the spiritual leader of radical Egyptian Islamist group Al Jihad. Bin Laden apparently also fought in the anti-Soviet war, participating in a 1986 battle in Jalalabad and, more notably, a 1987 frontal assault by foreign volunteers against Soviet armor. Bin Laden has said he was exposed to a Soviet chemical attack and slightly injured in that battle. During this period, most U.S. officials perceived the volunteers as positive contributors to the effort to expel Soviet forces from Afghanistan, and U.S. officials made no apparent effort to stop the recruitment of the non-Afghan volunteers for the war. U.S. officials have repeatedly denied that the United States directly supported the volunteers. The United States did covertly finance (about $3 billion during 1981-1991) and arm (via Pakistan) the Afghan mujahedin factions, particularly the Islamic fundamentalist Afghan factions, fighting Soviet forces. By almost all accounts, it was the Afghan mujahedin factions, not the Arab volunteer fighters, that were decisive in persuading the Soviet Union to pull out of Afghanistan. During this period, neither bin Laden, Azzam, nor Abd al-Rahman was known to have openly advocated, undertaken, or planned any direct attacks against the United States, although they all were critical of U.S. support for Israel in the Middle East. In 1988, toward the end of the Soviet occupation, bin Laden, Azzam, and other associates began contemplating how, and to what end, to utilize the Islamist volunteer network they had organized. U.S. intelligence estimates of the size of that network was about 10,000 - 20,000; however, not all of these necessarily supported or participated in Al Qaeda terrorist activities. Azzam apparently wanted this "Al Qaeda" (Arabic for "the base") organization—as they began terming the organization in 1988—to become an Islamic "rapid reaction force," available to intervene wherever Muslims were perceived to be threatened. Bin Laden differed with Azzam, hoping instead to dispatch the Al Qaeda activists to their home countries to try to topple secular, pro-Western Arab leaders, such as President Hosni Mubarak of Egypt and Saudi Arabia's royal family. Some attribute the bin Laden-Azzam differences to the growing influence on bin Laden of the Egyptians in his inner circle, such as Abd al-Rahman, who wanted to use Al Qaeda's resources to install an Islamic state in Egypt. Another close Egyptian confidant was Dr. Ayman al-Zawahiri, operational leader of Al Jihad in Egypt. Like Abd al-Rahman, Zawahiri had been imprisoned but ultimately acquitted for the October 1981 assassination of Egyptian President Anwar Sadat, and he permanently left Egypt for Afghanistan in 1985. There, he used his medical training to tend to wounded fighters in the anti-Soviet war. In November 1989, Azzam was assassinated, and some allege that bin Laden might have been responsible for the killing to resolve this power struggle. Following Azzam's death, bin Laden gained control of the Maktab 's funds and organizational mechanisms. Abd al-Rahman came to the United States in 1990 from Sudan and was convicted in October 1995 for terrorist plots related to the February 1993 bombing of the World Trade Center in New York. Zawahiri stayed with bin Laden and remains bin Laden's main strategist today. The August 2, 1990 Iraqi invasion of Kuwait apparently turned bin Laden from a de-facto U.S. ally against the Soviet Union into one of its most active adversaries. Bin Laden had returned home to Saudi Arabia in 1989, after the completion of the Soviet withdrawal from Afghanistan that February. While back home, he lobbied Saudi officials not to host U.S. combat troops to defend Saudi Arabia against an Iraqi invasion, arguing instead for the raising of a " mujahedin "army to oust Iraq from Kuwait. His idea was rebuffed by the Saudi leadership as impractical, causing bin Laden's falling out with the royal family, and 500,000 U.S. troops deployed to Saudi Arabia to oust Iraqi forces from Kuwait in "Operation Desert Storm" (January 16 - February 28, 1991). About 6,000 U.S. forces, mainly Air Force, remained in the Kingdom during 1991-2003 to conduct operations to contain Iraq. Although the post-1991 U.S. force in Saudi Arabia was relatively small and confined to Saudi military facilities, bin Laden and his followers painted the U.S. forces as occupiers of sacred Islamic ground and the Saudi royal family as facilitator of that "occupation." In 1991, after his rift with the Saudi leadership, bin Laden relocated to Sudan, buying property there which he used to host and train Al Qaeda militants—this time, for use against the United States and its interests, as well as for jihad operations in the Balkans, Chechnya, Kashmir, and the Philippines. During the early 1990s, he also reportedly funded Saudi Islamist dissidents in London, including Saad Faqih, organized as the "Movement for Islamic Reform in Arabia (MIRA)." Bin Laden himself remained in Sudan until the Sudanese government, under U.S. and Egyptian pressure, expelled him in May 1996; he then returned to Afghanistan and helped the Taliban gain and maintain control of Afghanistan. (The Taliban captured Kabul in September 1996.) Bin Laden and Zawahiri apparently believed that the only way to bring Islamic regimes to power was to oust from the region the perceived backer of secular regional regimes, the United States. During the 1990s, bin Laden and Zawahiri transformed Al Qaeda into a global threat to U.S. national security, culminating in the September 11, 2001 attacks. By this time, Al Qaeda had become a coalition of factions of radical Islamic groups operating throughout the Muslim world, mostly groups opposing their governments. Cells and associates have been located in over 70 countries, according to U.S. officials. The pre-September 11 roster of attacks against the United States that are widely attributed to Al Qaeda included the following: In 1992, Al Qaeda claimed responsibility for bombing a hotel in Yemen where 100 U.S. military personnel were awaiting deployment to Somalia for Operation Restore Hope. No one was killed. A growing body of information about central figures in the February 1993 bombing of the World Trade Center in New York, particularly the reputed key bomb maker Ramzi Ahmad Yusuf, suggests possible Al Qaeda involvement. As noted above, Abd al-Rahman was convicted for plots related to this attack. Al Qaeda claimed responsibility for arming Somali factions who battled U.S. forces there in October 1993, and who killed 18 U.S. special operations forces in Mogadishu in October 1993. In June 1995, in Ethiopia, members of Al Qaeda allegedly aided the Egyptian militant Islamic Group in a nearly successful assassination attempt against the visiting Mubarak. The four Saudi nationals who confessed to a November 1995 bombing of a U.S. military advisory facility in Riyadh, Saudi Arabia claimed on Saudi television to have been inspired by bin Laden and other radical Islamist leaders. Five Americans were killed in that attack. The September 11 Commission report indicated that Al Qaeda might have had a hand in the June 1996 bombing of the Khobar Towers complex near Dhahran, Saudi Arabia. However, then director of the FBI Louis Freeh previously attributed that attack primarily to Saudi Shiite dissidents working with Iranian agents. Nineteen U.S. airmen were killed. Al Qaeda allegedly was responsible for the August 1998 bombings of U.S. embassies in Kenya and Tanzania, which killed about 300. On August 20, 1998, the United States launched a cruise missile strike against bin Laden's training camps in Afghanistan, reportedly missing him by a few hours. In December 1999, U.S. and Jordanian authorities separately thwarted related Al Qaeda plots against religious sites in Jordan and apparently against the Los Angeles international airport. In October 2000, Al Qaeda activists attacked the U.S.S. Cole in a ship-borne suicide bombing while the Cole was docked the harbor of Aden, Yemen. The ship was damaged and 17 sailors were killed. After the 1998 embassy bombings, the Clinton Administration began to exert pressure on Al Qaeda's host, the Taliban regime of Afghanistan. On August 20, 1998, two weeks after those attacks, the United States launched cruise missile strikes against an Al Qaeda camp in an attempt to hit bin Laden, but the strike apparently missed him by a few hours. In July 1999, President Clinton imposed a ban on U.S. trade with Taliban-controlled Afghanistan and froze Taliban assets in the United States. On December 19, 2000, U.N. Security Council Resolution 1333 banned any arms shipments or provision of military advice to the Taliban. The Clinton Administration also pursued a number of covert operations against bin Laden during 1999-2000, and the Bush Administration considered some new options prior to September 11, including arming anti-Taliban opposition groups. The September 11 attacks instilled greater urgency in the U.S. effort against Al Qaeda. Although U.S. officials say that the post-September 11 struggle against Al Qaeda uses all aspects of U.S. national power (legal, economic, diplomatic, as well as military), a cornerstone of the post-September 11 U.S. effort has been the military effort in Afghanistan. The U.S.-led war succeeded in ousting the Taliban regime there (December 2001) and replacing it with a pro-U.S., moderate government. Approximately 18,000 U.S. troops remain in and around Afghanistan, searching for remaining Al Qaeda and Taliban leaders and fighters. However, bin Laden and Zawahiri are not widely believed to be in Afghanistan proper; they reportedly escaped from their redoubt in the Tora Bora mountains (near the city of Khost) during the war and, according to most assessments, fled into Pakistan. Central Intelligence Agency paramilitary officers and other U.S. personnel (some as contractors) in Pakistan are dedicated to this search, assisting Pakistani forces and agents. Acting on the assumption that bin Laden and Zawahiri are in remote areas of Pakistan rather than in or around urban areas, in March 2004, Pakistan deployed about 70,000 troops against suspected Al Qaeda hiding places in the South Waziristan region, but failed to find the two, or any other major Al Qaeda figures. Current Pakistani military operations are centered around North Waziristan. There are very few indications of their whereabouts, but, in Time Magazine 's June 27, 2005 issue, Director of Central Intelligence Porter Goss said that the United States had an "excellent idea" where bin Laden was, but he did not specify any exact location. White House spokesman Scott McLellan subsequently clarified the Goss comment to reflect less certainty than Goss indicated. Some experts believe the two might be in settled areas, perhaps even a large Pakistani city. The videotaped statements by the two, released over the past six months, appear to demonstrate that they have access to technology and physical infrastructure. Many of the 15 top Al Qaeda operatives captured or killed since September 11—of the 37 such operatives identified after September 11—have been found in urban areas. These include number three leader Mohammad Atef, killed in Kabul, Afghanistan by U.S. Predator; September 11 planner Khalid Shaikh Mohammed, arrested by Pakistani agents near Rawalpindi; key recruiter and planner Abu Zubaydah, arrested by Pakistani agents in Faisalabad; September 11 plotter Ramzi bin al-Shibh, arrested by Pakistani agents in Karachi; and Abu Faraj al-Libbi, arrested by Pakistani forces near Peshawar in May 2005. Al Libbi is perceived as an operative who has risen in the organization since September 11, but some question al-Libbi's seniority and importance to recent Al Qaeda plotting. Other senior Al Qaeda leaders have been found outside Pakistan or Afghanistan. Hanbali (Riduan Isammudin), a key operative of Al Qaeda- affiliate Jemaah Islamiyah was arrested in Thailand. Abdul Ali al-Harithi, a key plotter, was killed by a U.S. Predator strike in Yemen. In the aggregate, since the September 11 attacks, about 3,000 suspected Al Qaeda members have been detained or arrested by about 90 countries, of which 650 are under U.S. control. Some other senior figures are apparently beyond U.S. reach. Al Qaeda spokesman Suleiman Abu Ghaith, operations planner Sayf al-Adl, and bin Laden's son Saad are believed to be in Iran. Iran has acknowledged publicly that it has some senior Al Qaeda figures "in custody"—without naming them specifically—but Iran has refused to transfer them to their countries of origin for interrogation and trial. Many doubt the degree of constraint, if any, that Iran has placed on them, and the Bush Administration has publicly alleged that the three were responsible for planning the May 2003 suicide attacks on a housing complex in Riyadh, Saudi Arabia. If true, this would suggest that the three are in contact with Al Qaeda operatives outside Iran. Some might argue that, if these three senior figures are able to communicate with bin Laden and Zawahiri, a major portion of the core of the Al Qaeda leadership as it existed on September 11, 2001 is still operating and possibly in control of ongoing operations. Those who take this view tend to believe that the United States should exert greater efforts to capture bin Laden and Zawahiri on the grounds that they remain pivotal leadership figures and that their capture would greatly deflate the organization. Another view is that the Al Qaeda organization, as it still exists, is less central to the overall Islamic terrorist threat faced by the United States than it was at the time of the September 11 attacks. Reflecting this view, the State Department report on terrorism for 2004 (p. 7) says, as do many experts, that: ... the core of al-Qa'ida has suffered damage to its leadership, organization, and capabilities...At the same time, al-Qa'ida has spread its anti-U.S., anti-Western ideology to other groups and geographical areas. It is therefore no longer only al-Qa'ida itself but increasingly groups affiliated with al-Qa'ida, or independent ones adhering to al-Qa'ida's ideology, that present the greatest threat of terrorist attacks against U.S. and allied interests globally. Al Qaeda's evolution since September 11 could change the nature of the threat posed by the organization. Many believe that the weakening of central direction renders Al Qaeda less able to conduct catastrophic attacks inside the United States because its diffusion limits its ability to orchestrate complicated, coordinated plots similar to the September 11, 2001 attacks. The Bush Administration asserts that the absence of attacks inside the United States since September 11 demonstrates that the main thrust of Administration policy is succeeding. However, it could be argued that more autonomous affiliates might be better able to adapt attacks to local conditions and goals, making them a major collective threat. Younger Al Qaeda figures, some of whom fled the Afghanistan battlefield, are said to be emerging as major planners, and these activists apparently see Al Qaeda as inspiration rather than as a structured organization. According to this view, bin Laden and Zawahiri are far less operationally relevant than they were at the time of September 11 and U.S. and allied counter-terrorist efforts might be better spent on countering the ideology that is promoted by Al Qaeda. Experts have advanced some ideas for doing so, including enhanced U.S. public diplomacy and stepped up efforts to engage moderate Islamic clerics in the Islamic world to enlist them in an effort to de-legitimize Al Qaeda's tactics. Some experts believe that Al Qaeda is not significantly more diffuse than it was prior to the September 11 attacks. Al Qaeda has always been more a coalition of different groups than a unified structure, many argue, and it has been this diversity that gives Al Qaeda global reach—the ability to act in many different places and to pose a multiplicity of hard-to-predict threats. In most cases, the degree of involvement, if any, by bin Laden, Zawahiri, or other known Al Qaeda leaders in the operations of these diverse groups has never been precisely known. Some major groups were part of the Al Qaeda coalition before September 11, and most remain active and still associated with Al Qaeda today, to varying degrees, are as follows: the Islamic Group and Al Jihad (Egypt). Zawahiri was the operational and political leader of Al Jihad before he "merged" it with Al Qaeda in 1998; the Armed Islamic Group and the Salafist Group for Call and Combat (Algeria); the Islamic Movement of Uzbekistan (IMU). This group has been less active since its military commander, Juma Namangani, was killed by a U.S. airstrike on fighters at Konduz, Afghanistan in November 2001; the Jemaah Islamiyah (Indonesia). This group allegedly was responsible for the attack on a Bali nightclub in October 2002 that killed 180 persons; the Libyan Islamic Fighting Group (Libyan opposition); and Harakat ul-Mujahedin, Jaish-e-Mohammad, Lashkar-e-Tayyiba, and Lashkar-e-Jhangvi (Kashmiri militant groups based in Pakistan); and Asbat al-Ansar (Lebanon). Since the September 11 attacks, some other Al Qaeda affiliates have been established or publicly identified, and they have been active. One notable example is the Al Qaeda Jihad Organization in Mesopotamia, headed by Abu Musab al-Zarqawi, a 38-year-old Jordanian Arab who reportedly fought in Afghanistan. The group, which is designated as a Foreign Terrorist Organization (FTO), consists of foreign volunteers fighting alongside Iraqi insurgents against U.S.-led and Iraqi forces. It is an offshoot of another group called Ansar al-Islam, which is named as an FTO, and was based in Kurdish-controlled northern Iraq prior to the U.S.-led war to oust Saddam Hussein. Ansar al-Islam, which consists of both Islamist Kurds and Arabs, is said to be continuing to operate in Iraq under the banner of a group called Ansar al-Sunna, although some see this as a distinct group. Although Zarqawi reputedly sees himself as a potential leader of Islamic forces in his own right, in 2004 he formally swore fealty to bin Laden and affiliated with Al Qaeda. Some maintain that Zarqawi is successfully stoking Muslim opposition to the U.S. intervention in Iraq to recruit Muslim fighters not only for combat in Iraq, but possibly also for terrorist operations in other Western countries and in other Middle Eastern countries, including his native Jordan. In this view, which reportedly is shared by the Central Intelligence Agency in a recent assessment, the U.S. involvement in Iraq has strengthened rather than weakened groups connected to or influenced by Al Qaeda. The reputed CIA assessment says that Iraq is now playing a role similar to that of Afghanistan during the Soviet occupation - a training ground for Islamic militants who might travel elsewhere after the Iraq conflict winds down. Zarqawi's formal affiliation with bin Laden gives some support to the view that the remaining Al Qaeda leaders might be trying to rebuild the organizational structure of Al Qaeda before its leadership was ousted from Afghanistan in late 2001. A range of other terrorist groups that have not been formally named as Foreign Terrorist Organizations are associated with Al Qaeda, according the State Department. These groups, either in partnership with Al Qaeda or on their own, are attempting to destabilize established regimes in the region. These include the Islamic Army of Aden (Yemen), and Hizb-e-Islam/Gulbuddin), named after radical Afghan faction leader Gulbuddin Hikmatyar. The latter group is fighting against the government of President Hamid Karzai, the leader of post-Taliban Afghanistan. Another such pro-Al Qaeda organization is the Moroccan Islamic Combatant Group, which allegedly was responsible for a suicide bomb attack against five sites in Casablanca killing about 40 people in May 2003. According to the State Department report for 2004 (p.52), Spanish authorities are also investigating the possibility that members of the group were behind the March 11, 2004 bombings of commuter trains in Madrid, which killed 191 persons. Another group, "Al Qaeda in the Arabian Peninsula," is believed to consist of Al Qaeda or pro-Al Qaeda fighters seeking to overthrow the ruling Al Saud family in Saudi Arabia. The faction has claimed responsibility for the December 6, 2004 attack on the U.S. consulate in Jeddah. It also was allegedly responsible for two car bombs that exploded outside the Interior Ministry in Riyadh on December 29, 2004. Saudi counter-efforts have generally been effective, reducing the frequency of attacks in Saudi Arabia in recent months. In 2004, Saudi security forces capture or killed all but seven of its 26 most-wanted terrorists, including the leader of the faction, Abd al-Aziz al-Muqrin, who was killed in a raid in June 2004. Al Qaeda in the Arabian Peninsula is not named as an FTO and is not analyzed separately in the 2004 State Department report on international terrorism. Depending on the outcome of investigations, some of the bombings and attempted bombings of the London transportation system in July 2005 might support the belief in the Administration and among some outside experts that there is a growing Al Qaeda presence in East Africa. Two of the suspects arrested in the failed July 21 bombings were of East African origin, and there had been longstanding fears among Western intelligence agencies that Al Qaeda might be recruiting or controlling cells consisting of East Africans for operations in Europe or elsewhere. Al Qaeda was allegedly responsible for the bombing of an Israeli-owned hotel and the related firing (and near miss) of shoulder-fired missiles at an Israeli passenger aircraft, both in Mombasa, Kenya in November 2002. Reflecting Administration fears about Al Qaeda's expansion in Africa, the U.S. military has begun a program to train the militaries of nine African nations to prevent infiltration by terrorist groups, particularly Al Qaeda. It is not yet known to what extent, if any, the July 21 bombers might have had links to the bombers who set off the July 7 explosions in London that killed 52 persons. Some of those alleged perpetrators (who died in the bombings) were British-born but of South Asian origin, but some press reports indicate that the July 7 and the July 21 bombers might have visited Pakistan simultaneously, suggesting a possible tie between them and perhaps to the Al Qaeda leadership that is thought to be in Pakistan. A claim of responsibility for the July 7 attacks came from a previously little known group called "The Secret Organization of Al Qaeda in Europe," a name that suggest some linkage to or affinity with Al Qaeda. Two days after the failed July 21 London attacks, suicide bombers in Sharm el-Sheikh, Egypt killed 88 in attacks on a hotel district; an investigation is under way to determine linkages, if any, of those attacks to Al Qaeda, to radical Islamist groups in Egypt, or to October 2004 bombings in Taba, Egypt that killed 34 persons. The assessment of the degree and character of the threat posed by the Al Qaeda organization might suggest strategies for combating it. Those who believe that Al Qaeda as an organization is marginal to the overall global Islamist threat might focus on such policy objectives as addressing regional conflicts, promoting democracy in the Arab world, cooperating with regional governments to prevent terrorism financing and terrorist infiltration, and improving public diplomacy to better explain U.S. policies in the Middle East. On the other hand, some who believe that Al Qaeda remains central to the Islamist terrorism threat might tend to recommend policies that focus on finding, combating, and arresting Al Qaeda leaders and operatives that are still at large. Many believe that, no matter the structure and capabilities of Al Qaeda, stabilizing Iraq will likely be crucial to reducing the recruitment of militants willing to conduct acts of terrorism against the United States and its allies. Others believe that the Al Qaeda and global Islamic terrorist threat is difficult to assess, no matter how much intelligence is shared and gathered, and that combating Al Qaeda and its affiliates abroad could have only partial success. Those who take this view tend to believe that U.S. counter-efforts should focus more intently on homeland security, stressing such measures as improving airline security, establishing enhanced security measures for passenger train travel, and expanding security of U.S. ports. Some tend to favor additional powers for law enforcement to investigate potential Islamist cells in the United States. The latter suggestions often trigger debate from civil liberties and American Muslim organizations who believe that such measures will inevitably impinge on the civil liberties of Arab and Muslim Americans through profiling and other investigative techniques. | There is no consensus among experts in and outside the U.S. government about the magnitude of the threat to U.S. national interests posed by the Al Qaeda organization. Virtually all experts agree that Al Qaeda and its sympathizers retain the intention to conduct major attacks in the United States, against U.S. interests abroad, and against Western countries. In assessing capabilities, many believe that the Al Qaeda organization and its leadership are no longer as relevant to assessing the global Islamic terrorist threat as they were on September 11, 2001. Some believe U.S. and allied counter efforts have weakened Al Qaeda's central leadership structure and capabilities to the point where Al Qaeda serves more as inspiration than as an actual terrorism planning and execution hub. According to this view, the threat from Al Qaeda has been replaced by a threat from a number of loosely affiliated cells and groups that subscribe to Al Qaeda's ideology but have little, if any, contact with remaining Al Qaeda leaders. Those who take this view believe that catastrophic attacks similar to those on September 11, 2001 are unlikely because terrorist operations on that scale require a high degree of coordination. An alternate view is that the remaining Al Qaeda leadership remains in contact with, and possibly even in control of numerous Islamic militant cells and groups that continue to commit acts of terrorism, such as the July 7, 2005 bombings of the London underground transportation system. According to those who subscribe to this view, Al Qaeda as an organization has not been weakened to the degree that some Administration officials assert, and the global effort against Islamic terrorism would benefit significantly from finding and capturing Al Qaeda founder Osama bin Laden and his top associate, Ayman al-Zawahiri. Subscribers to this view believe that a coordinated attack on the scale of September 11 should not be ruled out because the remaining Al Qaeda structure is sufficiently well-organized to conduct an effort of that magnitude. This paper will focus on the Al Qaeda organization and its major affiliates, but not the full spectrum of like-minded Islamist cells or groups that might exist. This report will be updated as warranted by developments. See also CRS Report RL32759, Al Qaeda: Statements and Evolving Ideology, by [author name scrubbed]. |
The 2016 U.S. presidential election drew much attention to the country's trade policies as candidates advanced trade proposals intended to improve the economy and the terms of certain trade agreements. These proposals raise questions about the President's authority to act unilaterally in this area, especially his ability to impose tariffs on imported goods from certain countries, and continue to prompt debate post-election. While tariffs fell out of favor in international trade negotiations by the 1970s, the 2016 election cycle brought renewed consideration of the use of tariffs as a means to aid U.S. businesses. An understanding of the constitutional and statutory underpinnings of the tariff-making power, a cognizance of the role of tariffs in U.S. trade law over time, and an examination of the evolution of related trade legislation are necessary to evaluate any future executive actions with regard to U.S. trade policy. In this vein, this report describes the constitutional framework establishing Congress's tariff powers, as well as the President's authority to act pursuant to specific legislation from Congress. It then provides examples of statutory provisions that delegate tariff powers to the President. Finally, it concludes with an overview of how the President's exercise of his delegated tariff powers may be challenged in the courts. Article I of the Constitution gives Congress the "Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States," and "To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes." Thus, Congress is constitutionally authorized to raise revenue through taxes, tariffs, duties, and the like, and to regulate international commerce. As with all of its express constitutional powers, Congress has the accompanying authority to "make all Laws which shall be necessary and proper for carrying into Execution" these powers. Under Article II of the Constitution, the President has the "Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur." The Constitution, however, assigns no specific power over international commerce and trade to the President. In other words, under the Constitution, the President has the authority to negotiate international trade agreements, but Congress has sole authority over the regulation of foreign commerce and the imposition of tariffs. Thus, because the President does not possess express constitutional authority to modify tariffs, he must find authority for tariff-related action in statute. Prior to the early 1930s, Congress itself usually set tariff rates for imported products. In 1934, Congress for the first time expressly delegated to the President the authority to reduce tariffs in the Reciprocal Tariff Act. This authority, however, was limited by statutorily prescribed time periods within which the President could exercise such power, and was subject to periodic review and renewal. From 1934 until 1974, Congress continued to enact legislation delegating some authority to the President to negotiate tariff rates with other countries within pre-approved levels, and to implement agreed-upon tariff rates through proclamation, rather than through congressional legislation. As the focus of international trade negotiations shifted from the imposition of tariffs to other non-tariff barriers to trade, such as antidumping duties, Congress was less inclined to authorize the President to implement these non-tariff measures by presidential proclamation. Instead, in the Trade Act of 1974, Congress provided for legislative implementation of international trade agreements under an expedited legislative procedure, now known as trade promotion authority, so long as certain criteria were met. Over the past few decades, Congress has continued to enact various provisions governing the negotiation and implementation of trade agreements, including free trade agreements, but has not delegated to the President a general authority to modify tariff rates outside of the confines of particular trade agreements or the trade promotion authority framework. Congress's delegations of tariff and other international trade-related powers to the President through legislation have been worded in various ways. A non-exhaustive list of sample statutory provisions that delegate some authority to the President to take trade-related action follows. What can be culled from these examples is that most of the provisions require the President to make some threshold finding or determination before he may take some circumscribed trade-related action to counteract his finding. For example, under the International Emergency Economic Powers Act of 1977, certain importation/exportation powers were given to the President if he first "declares a national emergency ... to deal with an unusual and extraordinary threat." Similarly, in the Trade Expansion Act of 1962, if the Secretary of Commerce determines that "an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security," then the President is authorized to take certain "actions necessary to adjust the imports of such article." More recent statutes frequently begin with the word "Whenever" to set out this threshold determination before delineating the specific authority given to the President. As the following list illustrates, these delegations of power are usually accompanied by clearly defined conditions and frequently include time restrictions. Trading with the Enemy Act of 1917 § 5(b)(1)(B) : 22 "During the time of war, the President may ... investigate, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest, by any person, or with respect to any property, subject to the jurisdiction of the United States." This is an example of a fairly broadly worded authority that can be exercised only "[d]uring the time of war." Tariff Act of 1930 § 338(a) : 23 "The President when he finds that the public interest will be served shall by proclamation specify and declare new or additional duties as hereinafter provided upon articles wholly or in part the growth or product of, or imported in a vessel of, any foreign country whenever he shall find as a fact that such country—(1) Imposes, directly or indirectly, upon the disposition in or transportation in transit through or reexportation from such country of any article wholly or in part the growth or product of the United States any unreasonable charge, exaction, regulation, or limitation which is not equally enforced upon the like articles of every foreign country; or (2) Discriminates in fact against the commerce of the United States...." Trade Expansion Act of 1962 § 232(b)–( c) : 24 If the Secretary of Commerce "finds that an article is being imported into the United States in such quantities or under such circumstances as to threaten to impair the national security," then the President is authorized to take "such other actions as the President deems necessary to adjust the imports of such article so that such imports will not threaten to impair the national security" (subject to certain procedural requirements). Trade Act of 1974 § 122 : 25 "Whenever fundamental international payments problems require special import measures to restrict imports—(1) to deal with large and serious United States balance-of-payments deficits, (2) to prevent an imminent and significant depreciation of the dollar in foreign exchange markets, or (3) to cooperate with other countries in correcting an international balance-of-payments disequilibrium, the President shall proclaim, for a period not exceeding 150 days (unless such period is extended by Act of Congress)—(A) a temporary import surcharge, not to exceed 15 percent ad valorem, in the form of duties (in addition to those already imposed, if any) on articles imported into the United States; (B) temporary limitations through the use of quotas on the importation of articles into the United States; or (C) both a temporary import surcharge described in Subparagraph (A) and temporary limitations described in subparagraph (B)." This example clearly expresses a time period restriction ("for a period not exceeding 150 days") and the permissible tariff range ("not to exceed 15 percent ad valorem"). This section also authorizes the President "to proclaim, for a period of 150 days (unless such period is extended by Act of Congress)—(A) a temporary reduction (of not more than 5 percent ad valorem) in the rate of duty on any article; and (B) a temporary increase in the value or quantity of articles which may be imported under any import restriction, or a temporary suspension of any import restriction." Trade Act of 1974 § 123(a) : 26 "Whenever—(1) any action taken [that is related to relief from injury caused by import competition, the enforcement of U.S. rights under trade agreements, or the trade relations with countries not receiving nondiscriminatory treatment occur]; or (2) any judicial or administrative tariff reclassification that becomes final after August 23, 1988; increases or imposes any duty or other import restriction, the President ... may proclaim such modification or continuance of any existing duty, or such continuance of existing duty-free or excise treatment, as he determines to be required or appropriate to carry out any such agreement." Trade Act of 1974 § 301 : 27 Delegates authority to the Executive to modify certain tariff rates when "the rights of the United States under any trade agreement are being denied" or "an act, policy, or practice of a foreign country ... (i) violates, or is inconsistent with, the provisions of, or otherwise denies benefits to the United States under, any trade agreement, or (ii) is unjustifiable and burdens or restricts United States commerce." Trade Act of 1974 § 501 : 28 "The President may provide duty-free treatment for any eligible article from any beneficiary developing country in accordance with the provisions of this subchapter" after considering certain conditions. This is an example of a statute authorizing the President to grant certain duty preferences. International Emergency Economic Powers Act of 1977 § 203(a)(1)(B) : 30 If the President "declares a national emergency" "to deal with any unusual and extraordinary threat, which has its source in whole or substantial part outside the United States, to the national security, foreign policy, or economy of the United States" under Section 202(a) (50 U.S.C. §1701(a)), "the President may ... investigate, block during the pendency of an investigation, regulate, direct and compel, nullify, void, prevent or prohibit, any acquisition, holding, withholding, use, transfer, withdrawal, transportation, importation or exportation of, or dealing in, or exercising any right, power, or privilege with respect to, or transactions involving, any property in which any foreign country or a national thereof has any interest by any person, or with respect to any property, subject to the jurisdiction of the United States." In exercising this power, Section 204 (19 U.S.C. §1703) specifies that "The President, in every possible instance, shall consult with the Congress before exercising any of the authorities granted by this chapter and shall consult regularly with the Congress so long as such authorities are exercised." North American Free Trade Agre ement Implementation Act § 201(a)(1) (1993) : 31 "The President may proclaim—(A) such modifications or continuation of any duty, (B) such continuation of duty-free or excise treatment, or (C) such additional duties, as the President determines to be necessary or appropriate to carry out or apply [specified] articles ... of the Agreement." This is an example of an Agreement-specific delegation that allows the President to act within the confines of the Agreement. North American Free Trade Agreement Implementation Act § 201(b)(1) (1993) : 32 "[T]he President may proclaim—(A) such modifications or continuation of any duty, (B) such modifications as the United States may agree to with Mexico or Canada regarding the staging of any duty treatment set forth in Annex 302.2 of the Agreement, (C) such continuation of duty-free or excise treatment, or (D) such additional duties, as the President determines to be necessary or appropriate to maintain the general level of reciprocal and mutually advantageous concessions with respect to Canada or Mexico provided for by the Agreement." This is another example of an Agreement-specific delegation that allows the President to act within the confines of the Agreement. Uruguay Round Agreements Act § 111(a) (1994) : 33 "[T]he President shall have the authority to proclaim—(1) such other modification of any duty, (2) such other staged rate reduction, or (3) such additional duties, as the President determines to be necessary or appropriate to carry out Schedule XX." This is another example of an Agreement-specific delegation that allows the President to act within the confines of the Agreement. Dominican Republic-Central America Free Trade § 201(a) (2005 ) : 34 "The President may proclaim—(A) such modifications or continuation of any duty, (B) such continuation of duty-free or excise treatment, or (C) such additional duties, as the President determines to be necessary or appropriate to carry out or apply [specified] articles ..., and [specified] Annexes ... of the Agreement." This is an example of limited tariff-reduction authority under the implementing legislation of a free trade agreement, and is another example of an Agreement-specific delegation that allows the President to act within the confines of the Agreement. Bipartisan Congressional Trade Priorities and Accountability Act of 2015 § 103(a) : 35 "Whenever the President determines that one or more existing duties or other import restrictions of any foreign country or the United States are unduly burdening and restricting the foreign trade of the United States and that the purposes, policies, priorities, and objectives of this chapter will be promoted thereby, the President ... may ... proclaim—(i) such modification or continuance of any existing duty, (ii) such continuance of existing duty-free or excise treatment, or (iii) such additional duties, as the President determines to be required or appropriate to carry out any such trade agreement.... The President shall notify Congress of the President's intention to enter into an agreement under this subsection." This authority is subject to the following restrictions: "No proclamation may be made under paragraph (1) that—(A) reduces any rate of duty (other than a rate of duty that does not exceed 5 percent ad valorem on June 29, 2015) to a rate of duty which is less than 50 percent of the rate of such duty that applies on June 29, 2015; (B) reduces the rate of duty below that applicable under the Uruguay Round Agreements or a successor agreement, on any import sensitive agricultural product; or (C) increases any rate of duty above the rate that applied on June 29, 2015." This act is the most recent example of trade promotion authority legislation, but also includes tariff-modifying authority with set ranges and timelines. When the President exercises trade-related powers delegated to him by Congress, his actions might be challenged in court. Certain legal issues commonly emerge from such challenges, including whether the federal courts have jurisdiction to review the President's exercise of delegated power, and, if so, which court; whether Congress's delegation of power was constitutional; whether a President's course of action falls within the scope of the specific powers delegated to him by Congress; and whether the action taken by the President bears a reasonable relation to the power delegated. The following discussion of court challenges to presidential proclamations highlights how the courts have addressed these issues. As a threshold matter, a court must determine whether it has jurisdiction to review a challenge to a presidential proclamation issued pursuant to a congressional delegation of power. In Cornet Stores v. Morton , a case involving a challenge to a presidential proclamation that imposed a 10% surcharge duty on certain imported merchandise in light of a declared national emergency, the plaintiffs sought recovery of the import surcharges they had paid, relying on the jurisdictional provisions of the Trading with the Enemy Act of 1917. Both the district court and the U.S. Court of Appeals for the Ninth Circuit dismissed the matter, finding it fell within the exclusive jurisdiction of the former Court of Customs and Patent Appeals Court (Customs Court), which has since been replaced at the trial level by the U.S. Court of International Trade (CIT). Thus, a challenge to a trade-related presidential proclamation may need to be filed at a specific court like the CIT. The CIT's jurisdictional statute vests that court with jurisdiction over certain challenges to presidential proclamations issued under trade-related powers delegated to the Executive by Congress. Indeed, today, with some exceptions, challenges to presidential proclamations involving tariffs and other trade-related issues are filed at the CIT, with appeals going to the U.S. Court of Appeals for the Federal Circuit (Federal Circuit). The following describes a few such challenges. In U.S. Cane Sugar Refiners' Association v. Block , an association of sugar refiners brought a challenge to a presidential proclamation that imposed quotas on the importation of sugar into the United States. The proclamation was issued under Section 201 of the Trade Expansion Act of 1962. The government argued that the CIT lacked jurisdiction over the challenge because the Association had not followed the statutory scheme of the Tariff Act, which requires that parties exhaust their options at the administrative agency level before turning to the courts. The CIT found, however, that such an exercise would require the plaintiff "to attempt to import over-quota sugar simply in order to obtain a protestable exclusion of the merchandise ... before seeking judicial review of the validity of the proclamation imposing the quota in a suit for injunctive and declarative relief." Determining that exhaustion was an unreasonable requirement in light of the need for "expeditious resolution" of this case, the court exercised jurisdiction after concluding the Association had no other remedy reasonably available to it. On appeal, the former Customs Court affirmed the CIT's exercise of jurisdiction over the case in a footnote: Respecting jurisdiction ..., we note the provision of injunctive powers to the [CIT] in the Customs Courts Act of 1980 and the special circumstances of this case which, absent that provision, would have required Association to present its case to the District Court. We are persuaded that in this case, involving the potential for immediate injury and irreparable harm to an industry and a substantial impact on the national economy, the delay inherent in proceeding under [the usual route requiring the exhaustion of remedies at the administrative level] makes relief under that provision manifestly inadequate and, accordingly, the court has jurisdiction in this case under [19 U.S.C.] § 1581(i). More recently, however, the CIT declined to exercise its jurisdiction over a challenge to a presidential proclamation. In Michael Simon Design, Inc. v. United States , the plaintiffs challenged a presidential proclamation adopting the International Trade Commission's (Commission's) recommended modifications to the Harmonized Tariff Schedule of the United States pursuant to powers delegated to him by the Omnibus Trade and Competitiveness Act of 1988. The plaintiffs brought their challenge under the Administrative Procedure Act (APA). Because the Commission's recommendations were not final agency action for purposes of the APA, but were merely advisory in nature, the CIT held the final action was the presidential proclamation itself, which is not subject to APA review because the President is not an "agency" whose actions constitute "agency action. The Federal Circuit affirmed on the same grounds. To reconcile the outcome of these cases, it is important to note that the U.S. Cane Sugar Refiners' Association's challenge sought declaratory and injunctive relief under the jurisdictional statute of the CIT itself, while the Michael Simon Design case challenged the presidential proclamation under the APA. The CIT has limited exclusive jurisdiction over specific matters arising under the Tariff Act of 1930, and also possesses "residual jurisdiction" over related trade matters under 28 U.S.C. §1581(i). Further, the CIT "possess[es] all the powers in law and equity of, or as conferred by statute upon, a district court of the United States," including declaratory and injunctive relief. Thus, combining the CIT's equitable powers under Section 1585 with its residual jurisdiction under Section 1581(i), the Association was able to establish jurisdiction in that court. By contrast, the Michael Simon Design plaintiffs proceeded by filing a challenge to administrative action under the APA. Challenging a presidential proclamation in this fashion will likely fail because, although an administrative agency may serve an advisory role in the issuance of a presidential proclamation, the President will be considered the ultimate actor for jurisdictional purposes. Therefore, the law underlying a claim for relief based on a trade-related executive action is crucial to determining which court has jurisdiction to review the challenge. Early challenges to the President's exercise of tariff powers delegated to him by Congress addressed whether the delegation was constitutional in the first instance. These cases established the principles guiding this inquiry, while clarifying the constitutional parameters of Congress's ability to apportion some part of its exclusive tariff powers to the President. One such case, Marshall Field & Co. v. Clark , 143 U.S. 649 (1892), involved the Tariff Act of 1890, which contained a "free list" of 300 items that would be exempt from import duties "unless otherwise specifically provided for in this act." Section 3 of the act included the following language: [W]henever and so often as the president shall be satisfied that the government of any country producing and exporting [certain products], imposes duties or other exactions upon the agricultural or other products of the United States, which in view of the free introduction of such sugar, molasses, coffee, tea, and hides into the United States he may deem to be reciprocally unequal and unreasonable, he shall have the power, and it shall be his duty, to suspend, by proclamation to that effect, the provisions of this act relating to the free introduction of such sugar, molasses, coffee, tea, and hides, the production of such country, for such time as he shall deem just , and in such case and during such suspension duties shall be levied, collected, and paid upon sugar, molasses, coffee, tea, and hides, the product of or exported from such designated country. In other words, Congress delegated to the President authority to reinstate tariffs on otherwise duty-free items if he determined "that the government of any country producing and exporting [the covered articles], imposes duties or other exactions upon the agricultural or other products of the United States, which in view of the free introduction of such [articles] into the United States he may deem to be reciprocally unequal and unreasonable." After the President exercised this delegated power by suspending the duty-free treatment of certain articles, several U.S.-based importers of textile goods challenged the resulting duties that were assessed and collected. The importers claimed, among other things, that Section 3 of the act was unconstitutional "so far as it authorize[d] the president to suspend the provisions of the act relating to the free introduction of sugar, molasses, coffee, tea, and hides," because it "delegat[ed] to him both legislative and treaty-making powers, and, being an essential part of the system established by congress, the entire act must be declared null and void." The Supreme Court disagreed. While observing "[t]hat congress cannot delegate legislative power to the president is a principle universally recognized as vital to the integrity and maintenance of the system of government ordained by the constitution," the Court found the act in question "is not inconsistent with that principle" because "[i]t does not, in any real sense, invest the president with the power of legislation." In support, the Court noted that "congress itself determined that the provisions of the act ... should be suspended as to any country producing and exporting them that imposed exactions and duties on the agricultural and other products of the United States." Furthermore, "Congress itself prescribed, in advance, the duties to be levied, collected, and paid on sugar, molasses, coffee, tea, or hides, produced by or exported from such designated country while the suspension lasted. Nothing involving the expediency or the just operation of such legislation was left to the determination of the president." In 1928, a similar challenge was brought in the Customs Court in J.W. Hampton, Jr., & Co. v. United States . In Hampton , an importer challenged an increase in duties on certain imported goods as a result of a presidential proclamation issued under Section 315 of the Tariff Act of 1922, which provides: [W]henever the President, upon investigation of the differences in costs of production of articles wholly or in part the growth or product of the United States and of like or similar articles wholly or in part the growth or product of competing foreign countries, shall find it thereby shown that the duties fixed in this act do not equalize the said differences in costs of production in the United States and the principal competing country he shall, by such investigation, ascertain said differences and determine and proclaim the changes in classifications or increases or decreases in any rate of duty provided in this act shown by said ascertained differences in such costs of production necessary to equalize the same. Similar to Marshall Field , the importer in this case argued that, because Section 315 was an unlawful delegation of Congress's legislative powers to the President, it was unconstitutional. Once again, the Supreme Court disagreed, concluding: If Congress shall lay down by legislative act an intelligible principle to which the person or body authorized to fix such rates is directed to conform , such legislative action is not a forbidden delegation of legislative power. If it is thought wise to vary the customs duties according to changing conditions of production at home and abroad, it may authorize the Chief Executive to carry out this purpose, with the advisory assistance of a Tariff Commission appointed under congressional authority. As is evident from these cases, a delegation by Congress will likely be upheld as constitutional so long as the statute allows the President to act as the "agent" of the legislative department, rather than play a law-making role. In other words, a constitutional delegation of tariff powers is one in which the President is simply asked to carry out the will of Congress as expressed in its statute. These principles were reaffirmed in Federal Energy Administration v. Algonquin SNG, Inc. , which involved a challenge brought in federal district court to a presidential proclamation that raised license fees on imported oil under the authority of Section 232(b) of the Trade Expansion Act of 1962, as amended by the Trade Act of 1974. The license fees were challenged by eight states and their governors, 10 utility companies, and a Member of Congress, who argued that the fees were beyond the President's authority and were an unconstitutional delegation of power by Congress. The Supreme Court again disagreed. Drawing upon the "intelligible principle" test articulated in Hampton , the Court upheld the delegation of power in Section 232(b) because it "establishe[d] clear preconditions to Presidential action." Once a court has determined it has jurisdiction to review a case and that a delegation of power by Congress was constitutional, the issue of whether the President's action fell within the scope of the power delegated to him might arise. In United States v. Yoshida International , an importer of zippers from Japan challenged a presidential proclamation that imposed an import duty surcharge of 10%. The proclamation followed a declaration of a national emergency by the President. The Customs Court observed that Section 5(b) of the Trading with the Enemy Act of 1917 contained a broad, express delegation of power. In light of this broad, express delegation, the court concluded that "[i]t appears incontestable that § 5(b) does in fact delegate to the President, for use during war or during national emergency only, the power to 'regulate importation.' The plain and unambiguous wording of the statute permits no other interpretation." The court's inquiry did not end there; it went on to note that, "Though courts will not normally review the essentially political questions surrounding the declaration or continuance of a national emergency, they will not hesitate to review the actions taken in response thereto or in reliance thereon." Therefore, the court went on to examine whether the "means of execution of the delegated power are permissible." To guide this inquiry, the court articulated the following test: "A standard inherently applicable to the exercise of delegated emergency powers is the extent to which the action taken bears a reasonable relation to the power delegated and to the emergency giving rise to the action." Accordingly, "[t]he nature of the power determines what may be done and the nature of the emergency restricts the how of its doing, i.e., the means of execution." Similarly, in U.S. Cane Sugar Refiners' Association , the CIT and the Customs Court both upheld a presidential proclamation imposing quotas on imports of sugar under Section 201 of the Trade Expansion Act of 1962. The Customs Court described the dispositive issue as "whether the President acted within his delegated authority in issuing Proclamation 4941." In reaching its conclusion that the President acted within the scope of the powers delegated to him by Congress, the court noted that "[t]he President's action being authorized by the statute on which he relied, his motives, his reasoning, his finding of facts requiring the action, and his judgment, are immune from judicial scrutiny." That is, so long as the President's action is authorized by statute, his reasoning for determining that action is necessary will likely not be reviewed by the court. Both cases demonstrate that while courts will not review the reasoning behind a threshold determination made by the President, such as the existence of a national emergency, or the fact-finding involved in arriving at that determination, they will closely review whether the action taken in response bears a reasonable relationship to that determination. These sample statutory provisions and court cases highlight several considerations for drafting new legislation or amending older statutes that delegate tariff-modifying powers to the President. First, to be upheld as constitutional, the delegation by Congress should not bestow law-making powers upon the President. In other words, a delegation should empower the President to act as the agent of the legislative department by carrying out its will, as clearly expressed in the statute. The test likely to be used by the courts to determine whether a delegation is constitutional is whether Congress has included in the statute an "intelligible principle to which the [President] is directed to conform." If so, the delegation will likely be upheld as constitutional. Second, courts will generally not examine the President's decisionmaking process in arriving at a determination that some condition exists that triggers his ability to take action under the statute. This condition precedent, frequently denoted by "Whenever ..." language at the beginning of the statute, should be carefully drafted to define the conditions under which the President is authorized to act. The language that defines the scope of the delegated power trigged by the condition as set forth in the statute, however, will likely be subject to closer scrutiny by the courts. Indeed, courts will likely begin by determining whether the President acted within the scope of his delegated power as defined by the words of the statute. Third, the closest scrutiny will likely be reserved for an examination of the President's selected means of executing his delegated powers to determine whether his actions are permissible. While this appears to be in the hands of the Executive, Congress can assist in this determination by providing clearly defined limitations on the authorized means of exercising the delegated powers, including time restrictions and durations, tariff ranges, and the like, to circumscribe clearly the trade-related action that is being authorized. The courts will likely examine the President's selected means of execution to determine whether they "bear a reasonable relation" to the condition precedent that allows the President to act. By providing limitations and descriptions of these actions in the statute itself, Congress can increase the likelihood that a court will find the President's actions to be authorized, so long as he adheres to the conditions set forth in the statute. | The United States Constitution gives Congress the power to impose and collect taxes, tariffs, duties, and the like, and to regulate international commerce. While the Constitution gives the President authority to negotiate international agreements, it assigns him no specific power over international commerce and trade. Through legislation, however, Congress may delegate some of its power to the President, such as the power to modify tariffs under certain circumstances. Thus, because the President does not possess express constitutional authority to modify tariffs, he must find authority for tariff-related action in statute. Prior to the early 1930s, Congress itself usually set tariff rates for imported products. Over time, however, Congress increasingly delegated authority to the President to reduce tariffs, subject to statutorily prescribed time periods, periodic review, and renewal. As the focus of international trade negotiations shifted from the imposition of tariffs to other non-tariff barriers to trade, such as antidumping duties, however, Congress was less inclined to authorize the President to implement such measures by presidential proclamation. Instead, Congress provided for legislative implementation of international trade agreements under an expedited procedure, so long as certain criteria were met. Over the past few decades, Congress has continued to enact various provisions governing the negotiation and implementation of trade agreements, but has not delegated to the President a general authority to modify tariff rates. Congress's delegations of tariff and other trade-related powers to the President through legislation have been worded in various ways. A non-exhaustive list of sample statutory provisions that delegate some authority to the President to take trade-related action shows that most provisions require that the President make some threshold finding or determination before he may take some circumscribed trade-related action to counteract his finding. More recent statutes frequently begin with the word "Whenever" to set out this threshold determination before delineating the specific authority given to the President. These delegations of power are usually accompanied by clearly defined conditions and frequently include time restrictions. When the President exercises powers over trade delegated to him by Congress, his actions might be challenged in court. These challenges often involve both procedural matters and substantive issues related to the scope of the President's authority under the Constitution and statute. As a threshold matter, a court must determine whether it has jurisdiction to review a challenge to a trade-related presidential proclamation. The jurisdictional statute of the U.S. Court of International Trade has been construed to vest that court with jurisdiction over challenges to trade-related presidential proclamations because the court has limited exclusive jurisdiction over specific matters arising under the Tariff Act of 1930 and possesses all of the equitable powers of a federal district court. As to the merits of such a challenge, a delegation of power by Congress will likely be upheld as constitutional so long as the statute asks the President to carry out the will of Congress as expressed in its statute, rather than to play a law-making role. Once a court determines it has jurisdiction to review a case and that a delegation of power by Congress was constitutional, it will likely turn to whether the President acted within the scope of his delegated powers as defined by the words of the statute. While a court will probably not review the reasoning behind a President's determination that executive action is warranted, it will likely examine closely whether the selected means of executing the delegated powers bear a reasonable relationship to that determination. |
Note: New funding from this law is not reflected in discussions of appropriations for the Departments of Labor, Health and Human Services, and Education, and Related Agencies (L-HHS-ED) in this report. On June 24, 2009, President Obama signed the Supplemental Appropriations Act, 2009, which provided a total of $106 billion in supplemental FY2009 funds for a variety of purposes. Most of the funding is for defense and intelligence activities in Iraq and Afghanistan, international affairs, and selected domestic purposes. The Department of Health and Human Services (HHS) received a total of $7.7 billion for pandemic influenza preparedness, $1.9 billion available immediately and $5.8 billion in a contingency fund to be used if the President determines it is needed. For further information, see CRS Report R40531, FY2009 Spring Supplemental Appropriations for Overseas Contingency Operations , coordinated by [author name scrubbed] and [author name scrubbed], and CRS Report R40554, The 2009 Influenza Pandemic: An Overview , by [author name scrubbed] and [author name scrubbed]. On February 23, 2009, after lengthy negotiations between House and Senate appropriators and with the new Obama Administration, the chairman of the House Appropriations Committee introduced an omnibus FY2009 appropriations bill, H.R. 1105 , accompanied by an explanatory statement. The bill and statement, which took the place of a conference report, had a division for each of the nine regular appropriations measures that had not yet been enacted. The bill was passed by the House on February 25 and by the Senate on March 10, and was signed by the President on March 11, 2009. Division F of the law provided the FY2009 L-HHS-ED appropriations, including $155.0 billion in discretionary funding. Adding that amount to the $5.1 billion provided earlier in P.L. 110-329 brought regular FY2009 discretionary appropriations for L-HHS-ED programs to a total of $160.1 billion. On March 6, 2009, the President signed H.J.Res. 38 into law, which amended the first FY2009 continuing resolution, Division A of P.L. 110-329 , to extend temporary funding for government agencies to March 11, 2009. On February 17, 2009, President Obama signed a broad economic stimulus package, the American Recovery and Reinvestment Act of 2009 (ARRA), that provided emergency supplemental appropriations to selected federal programs, among many other provisions. Discretionary L-HHS-ED programs received a total of $124.2 billion; the funds were generally made available for obligation until September 30, 2010 (the end of FY2010). H.R. 1 passed the House on January 28, 2009, and the Senate passed its version on February 10. The conference report ( H.Rept. 111-16 ) was filed February 12 and agreed to in the House and the Senate on February 13. The bill became P.L. 111-5 on February 17, 2009. For more information, see CRS Report R40537, American Recovery and Reinvestment Act of 2009 (P.L. 111-5): Summary and Legislative History , by [author name scrubbed] et al. On September 30, 2008, President George W. Bush signed H.R. 2638 into law. The act, referred to in short form as the Consolidated Appropriations Act for FY2009, included three of the 12 regular appropriations acts for FY2009, continuing appropriations for the remaining nine regular appropriations acts for FY2009 (through March 6, 2009), and supplemental appropriations for disaster relief and recovery. For further details on the contents of and proceedings relative to H.R. 2638 , see CRS Report RL34711, Consolidated Appropriations Act for FY2009 (P.L. 110-329): An Overview , by [author name scrubbed]. Interim FY2009 appropriations for the Departments of Labor, Health and Human Services, and Education, and Related Agencies (L-HHS-ED) were provided by Division A of P.L. 110-329 , referred to as the Continuing Appropriations Resolution, 2009 (FY2009 CR). Most programs were funded, through March 6, 2009, at the rate of operations they had for FY2008, not counting emergency funding. One HHS program, the Low-Income Home Energy Assistance Program (LIHEAP), received its full-year funding of $5.1 billion in the CR. On August 1, 2008, President Bush submitted a budget amendment, requesting an additional $955 million for L-HHS-ED programs, primarily for preparedness activities in HHS. On July 8, 2008, the Senate Committee on Appropriations reported S. 3230 ( S.Rept. 110-410 ), its proposal for FY2009 L-HHS-ED appropriations. The bill recommended $155.7 billion in discretionary funds for L-HHS-ED. The House Committee on Appropriations convened a markup session on its draft bill on June 26, 2008. It adopted one package of amendments (a "manager's amendment"), but the session was subsequently adjourned before the committee took final action on the draft bill. Adoption of the manager's amendment raised the discretionary total in the bill to $157.7 billion. On June 19, 2008, the House L-HHS-ED Appropriations Subcommittee marked up its draft bill and approved it for consideration by the full committee. The subcommittee recommended $157.6 billion in discretionary funds for L-HHS-ED. On February 4, 2008, President George W. Bush submitted his FY2009 budget to Congress; the request was for $146.5 billion in discretionary funds for L-HHS-ED programs. The request was amended in August 2008 (see above). Table 1 summarizes the legislative status of FY2009 L-HHS-ED appropriations. In this report, unless stated otherwise, data on FY2008 and FY2009 appropriations are based on a March 2009 table from the House Committee on Appropriations, reflecting House and Senate committee work in the 110 th Congress on proposed FY2009 L-HHS-ED bills, and final passage of P.L. 111-8 (FY2009 Omnibus Appropriations) and P.L. 111-5 (ARRA). In most cases, data represent net funding for specific programs and activities, and take into account current and forward funding and advance appropriations; however, all data are subject to additional budgetary scorekeeping. Except where noted, data refer only to those programs within the purview of L-HHS-ED appropriations, and not to all programs within the jurisdiction of the relevant departments and agencies. Funding from other appropriations bills, and entitlements funded outside of the annual appropriations process, are excluded. The FY2008 data reflect the funding provided under the terms of the Consolidated Appropriations Act, 2008 ( P.L. 110-161 , H.R. 2764 ), which was signed into law on December 26, 2007. Division G of the act provided funding for L-HHS-ED programs. A series of four continuing resolutions (CRs), beginning with P.L. 110-92 , had provided temporary L-HHS-ED funding from October 1, 2007, through December 26, 2007. Later, Congress passed the Supplemental Appropriations Act, 2008, P.L. 110-252 , signed into law on June 30, 2008. The law had a few provisions that affected FY2008 funding levels for some L-HHS-ED agencies. FY2008 figures in this report include the June supplemental appropriations. For additional information, please see CRS Report RL30343, Continuing Resolutions: Latest Action and Brief Overview of Recent Practices , by [author name scrubbed], and 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. This report describes President George W. Bush's proposal for FY2009 appropriations for L-HHS-ED programs, as submitted to Congress on February 4, 2008, and amended on August 1, 2008, and the congressional response to that proposal. It compares the President's FY2009 request to the FY2008 L-HHS-ED enacted amounts. It tracks legislative action and congressional issues related to the regular L-HHS-ED appropriations, as well as to the supplemental appropriations provided in ARRA. Discussions focus primarily on discretionary programs. The report does not follow specific funding issues related to mandatory L-HHS-ED programs—such as Medicare or Social Security—nor does it follow any authorizing legislation related to the President's budget initiatives. For a glossary of budget terms and relevant websites, see the Appendix , "Terminology and Web Resources." The L-HHS-ED bill typically is one of the more controversial of the regular appropriations bills, not only because of the size of its funding total and the scope of its programs, but also because of the continuing importance of various related issues, such as restrictions on the use of federal funds for abortion and for human embryonic stem cell research. This bill provides discretionary and mandatory funds to three federal departments and 13 related agencies, including the Social Security Administration (SSA). Discretionary funding represents only one-quarter of the total in the bill. Among the various appropriations bills, L-HHS-ED is the largest single source of discretionary funds for domestic (non-defense) federal programs (the Department of Defense bill is the largest source of discretionary funds among all federal programs). This section presents several overview tables on funding in the bill, particularly discretionary funding; summarizes major funding changes proposed and enacted for L-HHS-ED; and discusses related issues such as 302(b) allocations and advance appropriations. Later sections provide details on individual L-HHS-ED departments and agencies. Table 2 summarizes the L-HHS-ED appropriations enacted for FY2008 and proposed and enacted for FY2009, including both discretionary and mandatory appropriations. The table shows various aggregate measures of L-HHS-ED appropriations, including the discretionary program-level, current-year level, and advance appropriations, as well as scorekeeping adjustments. Program-level discretionary appropriations reflect the total discretionary appropriations in a given bill, regardless of the year in which they will be spent, and therefore include advance funding for future years. Unless otherwise specified, appropriations levels in this report refer to program-level amounts . Current-year discretionary appropriations represent discretionary appropriations in a given bill for the current year, plus discretionary appropriations for the current year that were enacted in prior years—for example, FY2009 appropriations that were enacted in the FY2008 act. As the annual congressional appropriations process unfolds, current-year discretionary appropriations, including scorekeeping adjustments (see below), are measured against the 302(b) allocation ceilings (discussed later in this report). Note that media reports and comments from the Administration about appropriations activities typically cite figures representing the current-year discretionary totals rather than the program levels in the bill. Advance appropriations are funds that will not become available until after the fiscal year for which the appropriations are enacted (for example, funds for certain education programs like Title I Part A Grants to Local Educational Agencies for the Education of the Disadvantaged that were included in the FY2008 act that could not be spent before FY2009 at the earliest, discussed later in this report). Scorekeeping adjustments are made to account for special funding situations, as monitored by the Congressional Budget Office (CBO). Because appropriations may consist of mixtures of budget authority enacted in various years, both of the summary measures mentioned above are frequently used: program-level appropriations and current-year appropriations. How are these measures related? For an "operational definition," program-level funding equals (a) current year, plus (b) advances for future years, minus (c) advances from prior years, and minus (d) scorekeeping adjustments. Alternatively, current-year funding is derived by taking the program level (total in the bill), subtracting the advances for future years, adding in the advances from prior years, and applying the scorekeeping adjustments. Table 2 shows each of these amounts for discretionary funding, along with current-year funding and program-level funding for mandatory programs, and the grand total for L-HHS-ED. The L-HHS-ED appropriations bills include both mandatory and discretionary funds; however, the Appropriations Committees fully control only the discretionary funds. Mandatory funding levels for programs included in the annual appropriations bills are modified through changes in the authorizing legislation. Typically, these changes are accomplished through authorizing committees by means of reconciliation legislation, and not through appropriations committees in annual appropriations bills. Table 3 shows the trend in discretionary budget authority enacted in the regular L-HHS-ED appropriations for FY2002 through FY2009. During the past eight years, L-HHS-ED discretionary funds have grown from $127.2 billion in FY2002 to $160.1 billion in FY2009, an increase of $32.9 billion, or 25.9%. Adjusted for inflation during this same period, using the Gross Domestic Product (GDP) deflator, L-HHS-ED discretionary funds in estimated FY2008 dollars grew from $148.6 billion in FY2002 to $156.9 billion in FY2009, an increase of $8.3 billion, or 5.6%. The annual L-HHS-ED appropriations act typically includes five titles. The first three provide appropriations and program direction for the Department of Labor (Title I), the Department of Health and Human Services (Title II), and the Department of Education (Title III). Each of the three titles includes some sections of "General Provisions" for the department; they provide specific program directions, modifications, or restrictions that the appropriators wish to convey in bill language, not just in report language. Title IV covers funding for 13 related agencies, the largest of which is the Social Security Administration. Title V contains general provisions with broader application than those in the department titles. Occasionally, the act has one or more additional titles, which may be legislative (authorizing) language rather than appropriations provisions. The FY2008 L-HHS-ED appropriations act (Division G of P.L. 110-161 ) included a Title VI that provided for establishment of a National Commission on Children and Disasters, while the FY2009 L-HHS-ED appropriations act (Division F of P.L. 111-8 ) included the Afghan Allies Protection Act of 2009 (relating to special immigrant status) as Title VI. Table 4 summarizes by title the program-level discretionary spending that was provided for FY2008 and proposed and enacted for FY2009 L-HHS-ED appropriations and compares the program-level totals with the current-year discretionary totals. Which are the largest among the discretionary programs funded in the regular L-HHS-ED appropriations act? Table 5 shows the L-HHS-ED discretionary programs with the highest funding levels; in FY2009, nine programs accounted for about 65% of all L-HHS-ED discretionary appropriations. Each of the programs shown in Table 5 received more than $3.0 billion in regular FY2009 appropriations. The aggregate funding for this group was $96.0 billion in FY2008 and $104.9 billion in FY2009. As shown in the previous tables, L-HHS-ED discretionary funding totaled $148.6 billion in FY2008 and $160.1 billion in FY2009. On February 4, 2008, President George W. Bush submitted his FY2009 request to Congress, proposing $146.5 billion in discretionary appropriations. On August 1, 2008, he submitted a budget amendment requesting an additional $955 million. With regard to the President's budget, issues raised during congressional consideration of any appropriations request generally relate to proposed funding changes, as well as to the overall level of support for programs. The following summary highlights changes of at least $100 million proposed in FY2009 discretionary budget authority in comparison with the FY2008 amount. Viewing this list by itself should be done with caution, since the relative impact of a $100 million funding change to a $500 million program (a 20% increase or decrease) is greater than a $100 million change to a $5 billion program (a 2% increase or decrease). Later in this report, the discussion of budgets for individual departments includes tables to compare the FY2009 request with the FY2008 funding for many of the major programs in the L-HHS-ED bill. Overall, $147.4 billion in discretionary appropriations were requested for L-HHS-ED for FY2009, $1.2 billion (0.8%) less than the FY2008 amount of $148.6 billion. For the Department of Labor (DOL), the Bush Administration's FY2009 request included a decrease of $553 million for WIA programs, from $5.2 billion for FY2008 to $4.6 billion for FY2009. The proposed reduction included $241 million less for Dislocated Worker Assistance programs (funded at $1.5 billion in FY2008) and $150 million less for Adult Training grants to states (down from $862 million for FY2008). The proposal decreased funding for the Community Service Employment for Older Americans program by $172 million (from $522 million for FY2008). It eliminated $703 million in funding for Employment Service grants to states, leaving $20 million in funding for other Employment Service activities. Overall, the President requested $10.5 billion in discretionary appropriations for DOL for FY2009, a 10.7% reduction from FY2008 funding of $11.8 billion. For the Department of Health and Human Services (HHS), the FY2009 amended request proposed an increase of $1.6 billion for the Public Health and Social Services Emergency Fund (PHSSEF), covering homeland security activities and Pandemic Influenza Preparedness. Health programs proposed for elimination included Health Professions programs other than those for nursing (funded at $194 million in FY2008), Children's Hospitals Graduate Medical Education (CHGME, $302 million in FY2008), and Health Care-Related Facilities and Activities ($304 million in FY2008). Decreases were proposed of $112 million for Rural Health Programs, $150 million for NIH, and $126 million for Mental Health. A $198 million initiative for Fraud and Abuse Control at the Centers for Medicare and Medicaid Services (CMS) was proposed, along with a $156 million increase for CMS Program Management. A decrease of $570 million for the Low-Income Home Energy Assistance Program (LIHEAP) was proposed, while a $149 million increase for Head Start was requested. The $654 million Community Services Block Grant (CSBG) received no funding in the request. Overall, $64.7 billion in FY2009 discretionary appropriations were requested for HHS, 1.5% less than the FY2008 amount of $65.7 billion. For the Department of Education (ED), the President's FY2009 request increased funding for the Elementary and Secondary Education Act of 1965 (ESEA) programs in the aggregate by $125 million. The proposal increased funding by $406 million for Title I, Part A, Grants to Local Educational Agencies (LEAs) for the Education of the Disadvantaged, and by $607 million for Reading First State Grants. Teacher Quality State Grants were decreased by $100 million. The request included a proposal for one new K-12 education initiative of at least $100 million—the Pell Grants for Kids program, funded at $300 million. The request proposed the elimination of the $267 million Educational Technology State Grants program and the $1.3 billion Perkins Career and Technical Education program. The request proposed reducing the 21 st Century Community Learning Centers program by $281 million, the Fund for the Improvement of Education by $201 million, and Safe and Drug-Free Schools State Grants by $195 million. The Teacher Incentive Fund was increased by $103 million. An increase of $337 million was requested for the Special Education Part B Grants to States program authorized by the Individuals with Disabilities Education Act (IDEA). The request also proposed the elimination of the $757 million Supplemental Educational Opportunity Grants. In the request, Pell Grants were increased by $2.7 billion, Aid for Institutional Development was decreased by $139 million, and funding for the Institute for Education Sciences was increased by $112 million. Overall, $60.1 billion in FY2009 discretionary appropriations were requested for ED, 1.6% more than the FY2008 amount of $59.2 billion. For the Related Agencies, the Administration's request for FY2009 increased funding for SSA administrative expenses by $582 million, from $9.7 billion for FY2008 to $10.3 billion for FY2009. The request eliminated the two-year advance funding for the Corporation for Public Broadcasting (CPB) and proposed to rescind $220 million in advance funding for FY2010 (appropriated in FY2008) and $200 million in advance funding for FY2009 (appropriated in FY2007). Overall, the Administration requested $12.1 billion in discretionary appropriations for L-HHS-ED Related Agencies for FY2009, a 0.9% increase over FY2008 funding of $12.0 billion. The House Committee on Appropriations did not report an FY2009 L-HHS-ED bill. On June 19, 2008, the House L-HHS-ED Appropriations Subcommittee marked up a draft bill and approved it for consideration by the full committee. On June 26, the House Committee on Appropriations convened a markup session on its draft bill and adopted a manager's amendment, but adjourned before final action. Overall, the draft House bill recommended FY2009 discretionary appropriations of $157.7 billion for L-HHS-ED programs. President Bush requested $147.4 billion; the FY2008 amount was $148.6 billion. The House bill differed from the President's request in a number of details. For DOL, the draft House bill recommended $5.3 billion for WIA programs, $693 million more than the Administration's request. The bill funded WIA Dislocated Worker Assistance programs at $1.5 billion, $281 million above the request. The Job Corps received $153 million more than the request of $1.6 billion. The bill recommended funding WIA Adult Training grants to states at $862 million, $150 million more than the request. Community Service Employment for Older Americans received $222 million more than the request of $350 million. The bill recommended $703 million for Employment Service grants to states, which would have been eliminated under the Administration's request. Overall, the draft measure considered by the House committee included $12.2 billion in discretionary funds for DOL. The Administration requested $10.5 billion, and $11.8 billion was provided for FY2008. For HHS, the draft House bill recommended the following amounts of funding for selected programs, compared to the Administration's request: Health Centers, $2.17 billion, $73 million more than the request; Health Professions other than nursing, $244 million, with no funds requested; CHGME, $310 million, with no funds requested; Ryan White HIV/AIDS programs, $2.24 billion, $99 million more than the request; Rural Health programs, $122 million, $97 million more than the request; Health Care-Related Facilities and Activities, $158 million, with no funds requested; CDC Infectious Diseases program, $1.96 billion, $106 million more than requested; CDC Terrorism Preparedness and Response program, $1.52 billion, $100 million more than requested; Preventive Health and Health Services Block Grant (PHBG), $100 million, with no funds requested; National Institutes of Health (NIH), $30.38 billion, $1.15 billion more than requested; Mental Health programs in the Substance Abuse and Mental Health Services Administration (SAMHSA), $932 million, $169 million more than requested. The Agency for Healthcare Research and Quality (AHRQ) was recommended for a specific appropriation of $323 million, plus indirect funding of $52 million, for a total of $375 million; the request was for indirect funding of $326 million. LIHEAP was recommended for $2.77 billion, $770 million more than requested; Head Start, $7.12 billion, $93 million more than requested; CSBG, $700 million, with no funds requested; and Administration on Aging, $1.49 billion, $79 million more than requested. For the Public Health and Social Services Emergency Fund, the draft bill provided $1.44 billion, $48 million more than the President's original request but $857 million less than the revised request. Overall, the draft House bill included $69.2 billion in discretionary funds for HHS, $4.4 billion more than the request of $64.7 billion, and $3.5 billion more than the FY2008 amount of $65.7 billion. For ED, the draft House bill recommended the following amounts for selected programs: ESEA programs, $24.9 billion in the aggregate, $380 million more than was requested; Title I, Part A Grants to Local Educational Agencies (LEAs), $14.5 billion, $150 million more than was requested; School Improvement Grants, $600 million, $109 million more than requested; Reading First State Grants, no funding provided, while $1 billion was requested. The draft House bill did not fund the President's proposed Pell Grants for Kids program. Teacher Quality State Grants were recommended for $3.0 billion, $125 million more than requested; Education Technology State Grants, $272 million, with no funding in the request; 21 st Century Community Learning Centers, $1.1 billion, $331 million more than requested; Fund for the Improvement of Education, $203 million, $151 million more than requested; Safe and Drug-Free Schools State Grants, $295 million, $195 million more than requested; IDEA, Part B, $11.6 billion, $267 million more than requested; Perkins Career and Technical Education, $1.3 billion, with no funds requested; Pell Grants, $17.3 billion, $394 million more than requested, and with an increase in the maximum appropriated Pell Grant award to $4,410 compared to $4,310 under the request; Federal Supplemental Opportunity Grants, $757 million, with no funds were requested; and Aid for Institutional Development for higher education, $510 million, $147 million more than requested. Overall, the draft House bill provided $63.6 billion in FY2009 discretionary appropriations for ED, $3.5 billion more than the request of $60.1 billion and $4.4 billion more than the FY2008 amount of $59.2 billion. For Related Agencies, the draft House bill included $430 million in two-year advance funding (for FY2011) for the Corporation for Public Broadcasting. The amount was $430 million above the President's request and $10 million more than the two-year advance provided in FY2008 (for FY2010). Unlike the Administration's request, the draft bill did not reduce funding previously advanced for fiscal years 2009 and 2010. The bill increased funding for SSA administrative expenses to $10.4 billion, $100 million more than the Administration's request and $682 million more than provided for FY2008. Overall, the draft House bill recommended $12.7 billion in discretionary funds for Related Agencies, $630 million more than requested and $744 million more than appropriated for FY2008. The Senate Committee on Appropriations reported its version of the FY2009 L-HHS-ED appropriations as S. 3230 ( S.Rept. 110-410 ) on July 8, 2008. Overall, the Senate bill, as reported, recommended FY2009 discretionary appropriations of $155.7 billion for L-HHS-ED programs. The draft House bill recommended $157.7 billion; the President requested $147.4 billion. The comparable FY2008 amount was $148.6 billion. The Senate bill differed from the House proposal in a number of ways. For DOL, the bill passed by the Senate Appropriations Committee increased funding for state Unemployment Compensation operations by $196 million above the $2.6 billion recommended in the draft House bill and requested by the President. Overall, the Senate committee recommended $12.4 billion in discretionary funds for DOL, $138 million more than included in the House draft bill, $1.8 billion more than the request, and $551 million more than appropriated for FY2008. For HHS, the Senate bill included $93 million less than the draft House bill for Ryan White HIV/AIDS programs, $150 million more for CDC Buildings and Facilities, $125 million less for NIH, and $200 million less for LIHEAP. AHRQ was recommended for a specific appropriation of $91 million ($232 million less than the House), plus indirect funding of $244 million ($192 million more than the House), for a total of $335 million, $40 million less than the House bill amount. Overall, the Senate-reported bill included $68.2 billion in discretionary appropriations for HHS programs, $0.9 billion less than the House bill amount of $69.2 billion, $3.5 billion more than the requested amount of $64.7 billion, and $2.6 billion more than HHS funding of $65.7 billion in FY2008. For ED, the Senate-reported bill recommended $24.6 billion for ESEA programs in the aggregate, $374 million less than provided by the House draft bill. The bill included $491 million for School Improvement Grants, $109 million less than in the House draft bill; $11.4 billion for IDEA Part B Grants to States, $127 million less than the House amount; and $16.9 billion for Pell Grants, $445 million less than the House amount. The maximum appropriated Pell Grant award was set at $4,310 compared with a House proposed maximum Pell Grant award of $4,410. Overall, the Senate-reported bill included $62.5 billion in FY2009 discretionary appropriations for ED, $1.1 billion less than the draft House bill amount of $63.6 billion, $2.4 billion more than the requested amount of $60.1 billion, and $3.3 billion more than the FY2008 amount of $59.2 billion. For Related Agencies, the bill passed by the Senate Appropriations Committee did not differ from the draft House bill by at least $100 million for any program. Overall, the Senate committee recommended $12.6 billion in discretionary funds for Related Agencies, $53 million less than the House amount, $578 million more than requested, and $691 million more than appropriated for FY2008. The 110 th Congress did not complete action on any regular FY2009 appropriations until passage of the Consolidated Appropriations Act for FY2009, P.L. 110-329 , on September 30, 2008. That law provided full-year funding for three of the 12 regular appropriations acts for FY2009 (those related to defense, veterans, and homeland security), temporary funding (continuing appropriations) through March 6, 2009, for the remaining nine regular appropriations acts (including L-HHS-ED), and supplemental appropriations for disaster relief and recovery. One HHS program received its full-year funding in the law ($5.1 billion for LIHEAP). On February 23, 2009, after lengthy negotiations between House and Senate appropriators and with the new Obama Administration, the chairman of the House Appropriations Committee introduced an omnibus FY2009 appropriations bill, H.R. 1105 , accompanied by an explanatory statement. The bill and statement, which took the place of a conference report, had a division for each of the nine regular appropriations measures that had not yet been enacted. The bill was passed by the House on February 25 and by the Senate on March 10, and was signed into law by the President on March 11, 2009, as P.L. 111-8 . Division F of the law provided the FY2009 L-HHS-ED appropriations, including $155.0 billion in discretionary funding. Adding that amount to the $5.1 billion provided earlier in P.L. 110-329 brought regular FY2009 discretionary appropriations for L-HHS-ED programs to a total of $160.1 billion. (Note that in the tables and discussions in this report, regular FY2009 HHS and L-HHS-ED funding is frequently described as having come from P.L. 111-8 , without distinguishing the separate source of the LIHEAP funding.) As shown in Table 2 , P.L. 111-8 provided discretionary appropriations at the program level of $160.1 billion for L-HHS-ED programs, compared to $155.7 billion in the Senate-reported bill, $157.7 billion in the draft House bill, and $147.4 billion in the President's request. The comparable FY2008 amount was $148.6 billion. In current-year terms (the amounts generally cited by the President when making comparisons to his budget), P.L. 111-8 provided $152.3 billion for discretionary L-HHS-ED programs, an increase of $7.2 billion (4.9%) over the President's requested level of $145.1 billion. The FY2009 total was an increase of $7.3 billion (5.1%) over the FY2008 level of $144.9 billion, whereas the President's request represented an increase of $0.2 billion (0.1%) over FY2008. In comparison, estimated current-year funding for mandatory L-HHS-ED programs was slated to increase by $18.0 billion (3.9%), from $455.4 billion in FY2008 to $473.4 billion in FY2009. Compared to FY2008 funding levels, the FY2009 program-level discretionary amounts were increased or decreased by at least $100 million for the following programs. Additional details and funding amounts are provided in separate agency summaries. For DOL, P.L. 111-8 increased funding for WIA programs by $127 million, from $5.2 billion for FY2008 to $5.3 billion for FY2009. State Unemployment Insurance and Employment Service Operations received an additional $260 million, up from $2.6 billion for FY2008 to $2.8 billion for FY2009. Overall, the omnibus provided $12.4 billion in discretionary funds for DOL for FY2009, $608 million more than FY2008 funding of $11.8 billion. For HHS, funding was increased by the following amounts compared to FY2008: Community Health Centers, $125 million; NIH, $938 million; CMS Program Management, $154 million; CMS Fraud and Abuse Control Initiative, $198 million; LIHEAP, $2.5 billion; Head Start, $235 million; and Public Health and Social Services Emergency Fund, $669 million. Overall, HHS received $71.4 billion in discretionary funds for FY2009, $5.7 billion more than FY2008 funding of $65.7 billion. For ED, ESEA programs were funded at $24.8 billion in the aggregate, $412 million more than in FY2008. Two K-12 education programs received an increase of at least $100 million in funding from FY2008 to FY2009: Title I, Part A Grants to LEAs were increased by $594 million; and IDEA Part B grants to states were increased by $558 million. The only K-12 education program that lost $100 million or more was the Reading First State Grants program, which received no funding, a decrease of $393 million from FY2008. One postsecondary program, Pell Grants, received $3.1 billion more in FY2009. The maximum appropriated Pell Grant award was $4,860, an increase of $619 over the appropriated Pell award of $4,241 in FY2008. Overall ED received $63.5 billion in discretionary funds, $4.4 billion more than FY2008 funding of $59.2 billion. For Related Agencies, P.L. 111-8 increased funding for SSA administrative expenses by $709 million, from $9.7 billion for FY2008 to $10.5 billion for FY2009. Overall, for FY2009, the Omnibus provided $12.7 billion in discretionary funding for L-HHS-ED Related Agencies, an increase of $791 million over FY2008 appropriations of $12.0 billion. On February 17, 2009, President Obama signed a broad economic stimulus package, the American Recovery and Reinvestment Act of 2009 (ARRA), that provided emergency supplemental appropriations to selected federal programs, among many other provisions. Discretionary L-HHS-ED programs received a total of $124.2 billion; the funds were generally made available for obligation until September 30, 2010 (the end of FY2010). H.R. 1 passed the House on January 28, 2009, and the Senate passed its version on February 10. The conference report ( H.Rept. 111-16 ) was filed February 12 and agreed to in the House and the Senate on February 13. The bill became P.L. 111-5 on February 17, 2009. For more information, see CRS Report R40537, American Recovery and Reinvestment Act of 2009 (P.L. 111-5): Summary and Legislative History , by [author name scrubbed] et al. Two titles of ARRA provided funding for the Departments of Labor, Health and Human Services, and Education, and Related Agencies. Title VIII provided a total of $70.6 billion in discretionary funding, including $4.8 billion for the Department of Labor, $21.9 billion for the Department of Health and Human Services, $42.6 billion for the Department of Education, and $1.2 billion for Related Agencies. Title XIV provided $53.6 billion to the Department of Education for a new State Fiscal Stabilization Fund, bringing the ARRA Education total to $96.2 billion for discretionary programs. The ARRA discretionary total from the two titles was $124.2 billion, a 78% supplement to the $160.1 billion in regular discretionary appropriations for Labor, Health and Human Services, Education, and Related Agencies for FY2009. For DOL, ARRA included a total of $4.8 billion. Of that amount, $4.2 billion was for WIA programs. The remainder was for the Community Service Employment for Older Americans program ($120 million), state unemployment insurance and employment service operations ($400 million), departmental management ($80 million), and the Office of the Inspector General ($6 million). For HHS, ARRA included a total of $21.9 billion for the agencies funded by the L-HHS-ED bill. NIH received the largest share at $10.0 billion. The Administration for Children and Families received $5.2 billion for the Child Care and Development Block Grant ($2.0 billion) and for Children and Family Services programs ($3.2 billion). The Office of the HHS Secretary received a total of $3.1 billion for several programs, including a new Prevention and Wellness Fund ($1.0 billion) and health information technology activities ($2.0 billion). The Health Resources and Services Administration received $2.5 billion, $2.0 billion for health centers and $500 million for health professions training programs. The Agency for Healthcare Research and Quality received a total of $1.1 billion for comparative effectiveness research ($300 million for AHRQ programs, $400 million for transfer to NIH, and $400 million for the Secretary to allocate). The Administration on Aging received $100 million for senior nutrition programs. For ED, ARRA provided $96.2 billion in discretionary funding for programs that are or will be administered by the Department. Of the total, $42.6 billion was appropriated for existing ED programs. Three programs received the largest shares of the funding, while the balance was provided in smaller amounts to numerous other ED programs. ARRA provided $10.0 billion for Title I-A, Education for the Disadvantaged, Grants to Local Educational Agencies. The Individuals with Disabilities Education Act (IDEA), Part B Grants to States program received $11.3 billion. At the postsecondary level, ARRA provided $15.6 billion in discretionary funding for Pell Grants. The remaining $53.6 billion in ARRA funding for ED was appropriated for the new State Fiscal Stabilization Fund. The bulk of the money will be provided to states through formula grants. For Related Agencies, ARRA included $1.2 billion. ARRA provided an additional $1.0 billion to the Social Security Administration (SSA). Of this amount, $500 million was designated for replacing SSA's National Computer Center and $500 million for processing disability and retirement claims. SSA's Office of the Inspector General received an additional $2 million. ARRA also provided $201 million in additional funding for the Corporation for National and Community Service. As mentioned earlier in the " Most Recent Developments " section, a continuing appropriations resolution (CR, enacted as Division A of P.L. 110-329 , H.R. 2638 ) was signed into law on September 30, 2008. It provided temporary FY2009 funding for most ongoing L-HHS-ED activities, including the costs of direct loans and loan guarantees. It covered the period October 1, 2008, through March 6, 2009, because regular appropriations were not enacted before the end of that period. A continuing resolution for FY2009 was necessary because the regular L-HHS-ED appropriations were not enacted by the start of FY2009 on October 1, 2008. The CR was amended on March 6 by P.L. 111-6 to extend the temporary funding through March 11, 2009. Under the FY2009 continuing resolution, the funding level for most activities was provided at a rate of operations like that provided in FY2008 appropriations acts and under the same conditions and authority. (An exception was the provision of full-year funding to HHS for LIHEAP; see HHS discussions later in this report.) Only the most limited funding actions were authorized in order to provide for the continuation of projects and activities. New initiatives were prohibited. For programs with high spend-out rates that normally would occur early in the fiscal year, special restrictions prohibited spending levels that would impinge on final FY2009 funding decisions. For entitlements and other mandatory activities, spending was allowed that would maintain existing program levels under current law, including additional funding, if needed, to continue benefits for eligible beneficiaries. For additional information, please see CRS Report RL30343, Continuing Resolutions: Latest Action and Brief Overview of Recent Practices , by [author name scrubbed]. Continuing Appropriations Resolution, 2009, Division A of P.L. 110-329 ( H.R. 2638 ) , provided temporary appropriations for the period October 1, 2008, through March 6, 2009, as long as regular appropriations were not enacted sooner. H.R. 2638 was passed by the House on September 24 and by the Senate on September 27, and signed into law by President George W. Bush on September 30, 2008, as P.L. 110-329 . Further Continuing Appropriations, 2009 , P.L. 111-6 ( H.J.Res. 38 ) , extended the provisions of Division A of P.L. 110-329 through March 11, 2009. H.J.Res. 38 was passed by the House and the Senate on March 6, 2009, and was signed into law as P.L. 111-6 by President Obama the same day. The maximum budget authority for annual L-HHS-ED appropriations is determined through a two-stage congressional budget process. In the first stage, Congress establishes the 302(a) allocations —the maximum spending totals for all congressional committees for a given fiscal year. This task is sometimes accomplished through the concurrent resolution on the budget, where spending totals are specified through the statement of managers in the conference report. In years when the House and Senate do not reach a budget agreement, these totals may be set through leadership arrangements in each chamber. The 302(a) allocations determine spending totals for each of the various committees, as well as the total discretionary budget authority available for enactment in annual appropriations through the House and Senate Committees on Appropriations. Congress reached agreement on the FY2009 budget resolution in early June, 2008, when the Senate (June 4) and the House (June 5) agreed to the conference report ( H.Rept. 110-659 ) accompanying S.Con.Res. 70 . The resolution established a 302(a) discretionary budget allocation to the Appropriations Committees of $1,011.7 billion. The resolution allowed the Budget Committees to increase that amount if certain conditions relating to funding of specific programs were met. On July 16, 2008, the Senate Budget Committee increased its 302(a) allocation by $968 million to $1,012.7 billion. For the purpose of comparison, the 302(a) discretionary allocation originally agreed to for FY2008 was $953.1 billion. In the second stage of the annual congressional budget process, the House and Senate Committees on Appropriations separately establish the 302(b) allocations —the maximum discretionary budget authority available to each subcommittee for each annual appropriations bill. The total of these allocations must not exceed the 302(a) discretionary total. This process creates the basis for enforcing discretionary budget discipline, since any appropriations bill reported with a total above the ceiling is subject to a point of order. The 302(b) allocations can and often do get adjusted during the year as the various appropriations bills progress toward final enactment. Table 6 shows the 302(b) discretionary allocations for the FY2009 L-HHS-ED appropriations determined by the House and Senate Committees on Appropriations. Comparable amounts for the FY2008 appropriations and the President's FY2009 budget request are also shown. Both the 302(a) and 302(b) allocations regularly become contested issues in their own right. Advance appropriations occur when funds enacted in one fiscal year are not available for obligation until a subsequent fiscal year. For example, P.L. 110-161 , which enacted FY2008 L-HHS-ED appropriations, provided $420 million for the Corporation for Public Broadcasting (CPB) for use in FY2010. Advance appropriations may be used to meet several objectives. These might include the provision of long-term budget information to recipients, such as state and local educational systems, to enable better planning of future program activities and personnel levels. The more contentious aspect of advance appropriations, however, involves how they are counted in budget ceilings. Advance appropriations avoid the 302(a) and 302(b) allocation ceilings for the current year, but must be counted in the year in which they first become available for obligation. This procedure uses up ahead of time part of what will be counted against the allocation ceiling in future years. In FY2002, the President's budget proposed the elimination of advance appropriations for federal discretionary programs, including those for L-HHS-ED programs. Congress rejected that proposal, and the proposal has not been repeated. For an example of the impact of advance appropriations on program administration, see the discussion titled "Forward Funding and Advance Appropriations" in the section on the Department of Education, later in this report. The FY1999 and FY2000 annual L-HHS-ED appropriations bills provided significant increases in advance appropriations for discretionary programs, moving from $4.0 billion in FY1998 to $19.0 billion in FY2000. From FY2001 through FY2007, advance appropriations generally were provided at $19.3 billion, with the exceptions of $18.8 billion in FY2001 and $21.5 billion in FY2003. For FY2008, President Bush requested $18.9 billion, but Congress decided to add $2.0 billion to the previous total, bringing the amount to $21.3 billion. For FY2009, President Bush requested $20.9 billion in discretionary advance appropriations for L-HHS-ED. The House draft bill recommended advances of $24.8 billion, while the Senate-reported bill included advance appropriations totaling $23.0 billion. The final amount included in the Omnibus Appropriations Act, 2009, was $24.8 billion. At that level, advance appropriations accounted for 15.5% of the L-HHS-ED program-level discretionary total of $160.1 billion in FY2009. In terms of current-year funding, advances from previous years, at $21.3 billion, represented 14.0% of the current-year discretionary total of $152.3 billion for FY2009. From FY1998 to the present, advance appropriations included in L-HHS-ED bills have been as follows: FY1998, $4.0 billion; FY1999, $8.9 billion; FY2000, $19.0 billion; FY2001, $18.8 billion; FY2002, $19.3 billion; FY2003, $21.5 billion; FY2004, $19.3 billion; FY2005, $19.3 billion; FY2006, $19.3 billion; FY2007, $19.3 billion; FY2008, $21.3 billion; FY2009, President's budget request, $20.9 billion; FY2009, House committee draft recommendation, $24.8 billion; FY2009, Senate committee-reported bill, $23.0 billion; and FY2009, P.L. 111-8 , $24.8 billion. FY2008 discretionary appropriations for the Department of Labor (DOL) were $11.8 billion. For FY2009, the George W. Bush Administration requested $10.5 billion, $1.3 billion (10.7%) less than the FY2008 amount, as shown in Table 7 . The draft bill marked up but not reported by the House Appropriations Committee included $12.2 billion in discretionary funding, an increase of $413 million (3.5%) over FY2008. The bill reported by the Senate Committee on Appropriations recommended $12.4 billion for FY2009, an increase of $551 million (4.7%) over FY2008. P.L. 111-8 provided $12.4 billion, increasing funding by $608 million (5.2 % ) over spending for FY2008. ARRA provided an additional $4.8 billion in discretionary funding for FY2009, some portion of which will not be obligated until FY2010. Total discretionary appropriations for DOL for FY2009 were $17.2 billion, an increase of $5.4 billion (45.9%) over FY2008. Mandatory DOL programs included in P.L. 111-8 were funded at $2.9 billion and consist of the Black Lung Disability Trust Fund ($1,072 million), Federal Unemployment Benefits and Allowances ($959 million), Advances to the Unemployment Insurance and Other Trust Funds ($422 million), Special Benefits for Disabled Coal Miners ($244 million), Employment Standards Administration (ESA) Special Benefits ($163 million), and administrative expenses for the Energy Employees Occupational Illness Compensation Fund ($50 million). ARRA did not include additional funding for DOL for mandatory programs. President George W. Bush's FY2009 budget request for DOL included funding changes for a number of activities. Proposed discretionary changes of at least $100 million compared to FY2008 appropriations were as follows. The request reduced funding for Workforce Investment Act (WIA) programs by $553 million, from $5.2 billion for FY2008 to $4.6 billion for FY2009. Appropriations for WIA Dislocated Worker Assistance programs, funded at $1.5 billion in FY2008, were reduced by $241 million. WIA Adult Training grants to states, funded at $862 million in FY2008, were reduced by $150 million. Funding for Community Service Employment for Older Americans fell $172 million, from $522 million to $350 million. The President proposed to eliminate $703 million in funding for Employment Service grants to states, leaving $20 million in funding for other Employment Service activities. These grants fund a nationwide system of employment services for job-seekers and employers. The President proposed that these services be provided by One-Stop Career Centers. The request increased funding for State Unemployment Insurance and Employment Service Operations by $172 million, from $2,464 million for FY2008 to $2,636 million for FY2009. The Supplemental Appropriations Act of 2008 ( H.R. 2642 , P.L. 110-252 ) included an additional $110 million for these operations for FY2008, for a total of $2.574 million. Thus, the President's request was $62 million above total FY2008 funding. The President requested $2.8 billion for new individual Career Advancement Accounts (CAA). To pay for the accounts, the request eliminated or reduced funding for WIA Adult, Youth, and Dislocated Worker programs; the Work Opportunity Tax Credit (WOTC); and workforce information. The request proposed that the maximum amount of an account be $3,000 per year. The House Appropriations Committee did not complete its markup of the draft L-HHS-ED bill. Recommended funding for DOL, taken from a table reflecting committee actions, differed by at least $100 million from the President's budget request, as follows. The draft House bill raised funding for WIA programs by $693 million above the Administration's request for $4.6 billion and by $140 million above the amount appropriated for FY2008. The draft proposal funded WIA Dislocated Worker Assistance programs at $1.5 billion, which was $281 million above the Administration's request and $40 million above funding approved for FY2008. The draft increased funding for the Job Corps by $153 million above the Administration's request of $1.6 billion and $107 million above funding for FY2008. The draft funded WIA Adult Training grants to states at $862 million, which was $150 million more than the Administration's request and the same as funding for FY2008. Community Service Employment for Older Americans received $222 million more than the Administration's request of $350 million and $50 million more than Congress appropriated for FY2008. The draft bill provided $703 million for Employment Service grants to states, which was $703 million above the President's request and the same as funding for FY2008. The House committee did not recommend the creation of individual Career Advancement Accounts (CAA). For DOL programs, the bill reported by the Senate Appropriations Committee differed from the draft House bill by at least $100 million as follows: The bill reported by the Senate committee increased funding for State Unemployment Insurance and Employment Service Operations by $196 million above the $2.6 billion recommended in the draft House bill and requested by the President. The Senate committee did not recommend the creation of individual Career Advancement Accounts (CAA). Compared to FY2008 funding, P.L. 111-8 increased discretionary funding by at least $100 million in the following areas: WIA funding was increased by $127 million, from $5.2 billion for FY2008 to $5.3 billion for FY2009. Funding for State Unemployment Insurance and Employment Service Operations was raised by $260 million, from a total of $2.6 billion in FY2008 to $2.8 billion for FY2009. ARRA included a total of $4.8 billion for the Department of Labor. All of the stimulus funding was for discretionary programs, and represented a 39% supplement to the $12.4 billion in regular FY2009 discretionary funding for DOL. Of the $4.8 billion total, $4.2 billion was provided for employment and training programs authorized by WIA, and the remaining $606 million went to related DOL programs. The amount for WIA programs represented a 79% supplement to the $5.3 billion in the Omnibus Appropriations Act, 2009. Of the $4.2 billion in WIA funding, a total of $4.0 billion was appropriated for Training and Employment Services activities as follows: (1) formula grants to states received $3.0 billion, including $500 million in grants for adult employment and training, $1.2 billion in grants for youth activities, and $1.3 billion in grants for dislocated worker assistance; (2) the Dislocated Workers Assistance National Reserve received $200 million; (3) the YouthBuild program received $50 million; and (4) $750 million was provided for a new program of competitive grants for worker training and placement in high-growth and emerging industries. The remaining $250 million in WIA funding went to the Office of Job Corps for construction and renovation of Job Corps centers. The balance of ARRA funding for DOL was for the Community Service Employment for Older Americans program ($120 million), state unemployment insurance and employment service operations ($400 million), departmental management ($80 million), and the Office of the Inspector General ($6 million). Unlike most regular appropriations, ARRA made the stimulus funds available for obligation for two years, until the end of FY2010. DOL has developed program-specific plans for spending the money, indicating how much they expect to obligate in FY2009 and FY2010. The plans are available at http://www.dol.gov/recovery , together with other DOL Recovery Act reports. CRS Report R40182, Funding for Workforce Development in the American Recovery and Reinvestment Act (ARRA) of 2009 , by [author name scrubbed] and [author name scrubbed]. CRS Report RL34383, Trade Adjustment Assistance (TAA) for Workers: Current Issues and Legislation , by [author name scrubbed]. CRS Report RS22718, Trade Adjustment Assistance for Workers (TAA) and Reemployment Trade Adjustment Assistance (RTAA) , by [author name scrubbed]. CRS Report RL33362, Unemployment Insurance: Available Unemployment Benefits and Legislative Activity , by [author name scrubbed] and [author name scrubbed]. CRS Report R40368, Unemployment Insurance Provisions in the American Recovery and Reinvestment Act of 2009 , by [author name scrubbed], [author name scrubbed], and [author name scrubbed]. CRS Report RL33687, The Workforce Investment Act (WIA): Program-by-Program Overview and Funding of Title I Training Programs , by [author name scrubbed]. Department of Labor http://www.dol.gov http://www.dol.gov/dol/aboutdol/main.htm#budget Table 8 shows the appropriations details for offices and major programs of DOL. FY2008 discretionary appropriations for the Department of Health and Human Services (HHS) were $65.7 billion. For FY2009, President George W. Bush's revised budget request was $64.7 billion, $953 million (1.5%) less than the FY2008 amount, as shown in Table 9 . The draft bill marked up but not reported by the House Appropriations Committee included $69.2 billion in discretionary funding, an increase of $3.5 billion (5.3%) over FY2008. The bill reported by the Senate Committee on Appropriations recommended $68.2 billion for FY2009, an increase of $2.6 billion (3.9%) over FY2008. Regular discretionary appropriations for HHS totaled $71.4 billion ($66.3 billion from the FY2009 Omnibus Appropriations Act, P.L. 111-8 , and $5.1 billion for LIHEAP from the FY2009 Continuing Resolution, Division A of P.L. 110-329 ). The total was an increase of $5.7 billion (8.7%) over FY2008. ARRA provided an additional $21.9 billion in discretionary funding for FY2009, some portion of which will not be obligated until FY2010. Total discretionary appropriations for HHS for FY2009 were $93.3 billion, an increase of $27.6 billion (42.1%) over FY2008. Mandatory HHS programs included in the L-HHS-ED act were funded at $429.8 billion in FY2009, and consist primarily of Medicaid Grants to States ($221.0 billion), Payments to Medicare Trust Funds ($195.4 billion, including both Part B Supplementary Medical Insurance and Part D Prescription Drugs), Foster Care and Adoption Assistance State Payments ($6.9 billion), Family Support Payments to States ($3.8 billion), and the Social Services Block Grant ($1.7 billion). President George W. Bush's FY2009 budget request for HHS proposed increased support for the Public Health and Social Services Emergency Fund (PHSSEF), for Head Start, and for program management and a fraud control initiative for the administration of Medicare and Medicaid. At the same time, it proposed overall funding reductions for health resources and services, disease control and prevention, substance abuse and prevention, programs for children and families, and services for the aging. Not all programs in each category were decreased; selected programs in most of the categories were requested for increases. Requests for major changes are indicated below. Discretionary spending changes of at least $100 million were requested in the President's FY2009 budget for several HHS programs, as follows. Health Professions programs other than those for nursing, funded at $194 million in FY2008, were eliminated. Children's Hospitals Graduate Medical Education (CHGME), funded at $302 million in FY2008, was eliminated. Rural Health Programs, funded at $136 million in FY2008, were reduced by $112 million to $25 million. Health Care-Related Facilities and Activities, funded at $304 million in FY2008, were eliminated. National Institutes of Health, funded at $29.4 billion in FY2008, was reduced by $150 million to $29.2 billion. At the Substance Abuse and Mental Health Services Administration (SAMHSA), Mental Health programs, funded at $889 million in FY2008, were reduced by $126 million to $763 million. At the Centers for Medicare and Medicaid Services (CMS), a Fraud and Abuse Control Initiative was proposed for new funding at $198 million, while CMS Program Management was increased by $156 million, from $3.2 billion in FY2008 to $3.3 billion. The Low-Income Home Energy Assistance Program (LIHEAP), funded at $2.6 billion in FY2008, was decreased by $570 million to $2.0 billion. The Social Services Block Grant, funded at $1.7 billion in FY2008, would have been reduced by $500 million to $1.2 billion, but only if a legislative change proposed by the Administration had been adopted by Congress. (Under current law, the request remained at $1.7 billion.) Head Start, funded at $6.9 billion in FY2008, was increased by $149 million to $7.0 billion. The Community Services Block Grant (CSBG), funded at $654 million in FY2008, was eliminated. The PHSSEF, funded at $729 million in FY2008, was increased in the revised request by $1.6 billion to $2.3 billion. Funding includes homeland security activities (increased by $685 million) and pandemic influenza preparedness (increased by $873 million). The House Appropriations Committee did not complete its markup of the draft L-HHS-ED bill. Recommended funding for HHS, taken from a table reflecting committee actions, differed by at least $100 million from the President's budget request, as follows. Health Professions other than nursing received $244 million. No funds were requested; $194 million was provided in FY2008. The CHGME received $310 million. No funds were requested; $302 million was provided in FY2008. Health Care-Related Facilities and Activities received $158 million. No funds were requested; $304 million was provided in FY2008. The CDC Infectious Diseases program received $2.0 billion, $106 million more than requested; $1.9 billion was provided in FY2008. The CDC Terrorism Preparedness and Response program received $1.5 billion, $100 million more than requested; $1.5 billion was provided in FY2008. The Preventive Health and Health Services Block Grant (PHBG) received $100 million. No funds were requested; $97 million was provided in FY2008. The National Institutes of Health (NIH) received $30.4 billion, $1.2 billion more than requested; $29.4 billion was provided in FY2008. SAMHSA Mental Health programs received $932 million, $169 million more than requested; $889 million was provided in FY2008. The Agency for Healthcare Research and Quality (AHRQ) received an appropriation of $323 million; previously, all of its funding came from the PHS Evaluation Tap. The draft House bill provided an additional $52 million from the PHS tap, for a total of $375 million, $49 million more than the request; AHRQ received $335 million from the tap in FY2008. LIHEAP received $2.8 billion, $770 million more than requested; $2.6 billion was provided in FY2008. The CSBG was funded at $700 million. No funds were requested; $654 million was provided in FY2008. The Administration on Aging received $1.5 billion, $111 million more than requested; $1.4 billion was provided in FY2008. The PHSSEF received $1.4 billion, $857 million less than was included in the revised request; $729 million was provided in FY2008. Funding for homeland security activities was decreased by $486 million and for pandemic influenza preparedness by $363 million. As reported, the Senate bill differed from the draft House measure by at least $100 million for several HHS programs. CDC Buildings and Facilities was funded at $150 million. No funds were recommended in the House draft bill, and none were requested; $55 million was provided in FY2008. The NIH received $30.3 billion, $125 million less than the House amount of $30.4 billion; $29.2 billion was requested, and $29.4 billion was provided, in FY2008. AHRQ received an appropriation of $91 million, $232 million less than the House amount of $323 million. The Senate bill provided an additional $244 million from the PHS Evaluation Tap, for a total of $335 million. Total funding for AHRQ was $40 million less than the House total of $375 million, and $9 million more than the request; AHRQ received $335 million from the tap in FY2008. LIHEAP was funded at $2.6 billion, $200 million less than the House amount of $2.8 billion; $2.0 billion was requested, and $2.6 billion was provided in FY2008. The PHSSEF received $1.3 billion, $192 million less than the House amount of $1.4 billion; $2.3 billion was included in the revised request, and $729 million was provided in FY2008. Funding for homeland security activities was decreased by $187 million below the House amount, while the recommended level for pandemic influenza preparedness was the same as in the draft House bill. Compared to FY2008 funding, P.L. 111-8 changed discretionary spending by at least $100 million for several HHS programs. Community Health Centers received $2.2 billion, $98 million more than requested and $125 million more than the FY2008 amount of $2.1 billion. NIH received $30.3 billion, $1.1 billion more than requested and $938 million more than the FY2008 amount of $29.4 billion. CMS Program Management received $3.3 billion, $2 million less than requested and $154 million more than the FY2008 amount of $3.2 billion. The CMS Fraud and Abuse Control Initiative received $198 million, the same as was requested; there was no funding in FY2008. LIHEAP received no funding in P.L. 111-8 because it had received its full-year appropriation in the FY2009 Continuing Appropriations Resolution, P.L. 110-329 , Division A. LIHEAP was funded at $5.1 billion, $3.1 billion more than requested and $2.5 billion more than the FY2008 amount of $2.6 billion. Head Start received $7.1 billion, $86 million more than requested and $235 million more than the FY2008 amount of $6.9 billion. The PHSSEF received $1.4 billion, $903 million less than requested and $669 million more than the FY2008 amount of $729 million. Included in the funding was $788 million for homeland security activities and $585 million for pandemic influenza preparedness; the comparable FY2008 amounts were $633 million and $75 million. ARRA included a total of $21.9 billion for the HHS agencies funded by the annual L-HHS-ED appropriations act. All of the stimulus funding was for discretionary programs, and represented a 31% supplement to the $71.4 billion in regular FY2009 discretionary funding for HHS. Of the $21.9 billion, the National Institutes of Health (NIH) received the largest share at $10.0 billion (a 33% supplement to regular FY2009 appropriations). The Administration for Children and Families received $5.2 billion, including $2.0 billion for the Child Care and Development Block Grant (a 94% supplement) and $3.2 billion for Children and Family Services programs (a 34% supplement). The Office of the HHS Secretary received a total of $3.1 billion for several programs, including $1.0 billion for a new Prevention and Wellness Fund and $2.0 billion to implement activities authorized under the Health Information Technology for Economic and Clinical Health Act (Division A, Title XIII of ARRA). The Health Resources and Services Administration received $2.5 billion, including $2.0 billion for health centers (a 91% supplement) and $500 million for health professions training programs. The Agency for Healthcare Research and Quality (AHRQ) received a total of $1.1 billion for comparative effectiveness research ($300 million for AHRQ programs, $400 million for transfer to NIH, and $400 million for the Secretary to allocate). Finally, the Administration on Aging received $100 million for senior nutrition programs. Unlike most regular appropriations, ARRA made the stimulus funds available for obligation for two years, until the end of FY2010. HHS agencies have developed implementation plans for spending the money, indicating how much they expect to obligate in FY2009 and FY2010. The plans are available at http://www.hhs.gov/recovery/reports/index.html , together with other HHS Recovery Act reports. Annual L-HHS-ED appropriations regularly contain restrictions that limit—for one year at a time—the circumstances under which federal funds can be used to pay for abortions. Restrictions on appropriated funds, popularly referred to as the "Hyde Amendments," generally apply to all L-HHS-ED funds. Medicaid is the largest program affected. Given the perennial volatility of this issue, these provisions may be revisited at any time during the annual consideration of L-HHS-ED appropriations. From FY1977 to FY1993, abortions could be funded only when the life of the mother was endangered. The 103 rd Congress modified the provisions to permit federal funding of abortions in cases of rape or incest. The FY1998 L-HHS-ED appropriations, P.L. 105-78 , extended the Hyde provisions to prohibit the use of federal funds to buy managed care packages that include abortion coverage, except in the cases of rape, incest, or life endangerment. The FY1999 L-HHS-ED appropriations, P.L. 105-277 , continued the FY1998 Hyde Amendments with two added provisions: (1) a clarification to ensure that the restrictions apply to all trust fund programs (namely, Medicare), and (2) an assurance that Medicare + Choice plans (now Medicare Advantage) cannot require the provision of abortion services. No changes were made from FY2000 through FY2004. The FY2005 L-HHS-ED appropriations, P.L. 108-447 ( H.Rept. 108-792 , p. 1271), added a restriction, popularly referred to as the "Weldon Amendment," that prevents federal programs or state or local governments that receive L-HHS-ED funds from discriminating against health care entities that do not provide or pay for abortions or abortion services. The FY2006, FY2007, FY2008, and FY2009 L-HHS-ED appropriations retained the Weldon amendment language and the Hyde restrictions. The current provisions can be found in §507 and §508 of P.L. 111-8 , Division F. For additional information, please see CRS Report RL33467, Abortion: Legislative Response , by [author name scrubbed]. Many scientists are interested in pursuing research using human embryonic stem cells, but funding restrictions have been in place for a number of years. The use of stem cells raises ethical issues for some because the embryos are destroyed in order to obtain the cells. In August 2001, President George W. Bush had announced that for the first time, federal funds could be used to support research on human embryonic stem cells, but that funding would be limited to "existing stem cell lines." On March 9, 2009, President Barack Obama signed an executive order reversing that limitation. The Obama decision directed the National Institutes of Health to issue new guidelines for the conduct of embryonic stem cell research. Draft guidelines were released on April 23, 2009, and final guidelines were issued on July 6, 2009. As part of a continuing resolution for FY1996 appropriations ( P.L. 104-99 , §128), Congress prohibited NIH from using funds for the creation of human embryos for research purposes or for research in which human embryos are destroyed. Since FY1997, annual appropriations acts have extended the prohibition to all L-HHS-ED funds, with the NIH as the agency primarily affected. The restriction, originally introduced by Representative Jay Dickey, has not changed significantly since it was first enacted. The current provision is found in §509 of P.L. 111-8 , Division F. For additional information, please see CRS Report RL33540, Stem Cell Research: Federal Research Funding and Oversight , by [author name scrubbed] and [author name scrubbed]. Health CRS Report R40554, The 2009 Influenza Pandemic: An Overview , by [author name scrubbed] and [author name scrubbed]. CRS Report RL33467, Abortion: Legislative Response , by [author name scrubbed]. CRS Report RL30731, AIDS Funding for Federal Government Programs: FY1981-FY2009 , by [author name scrubbed]. CRS Report RL34448, Federal Research and Development Funding: FY2009 , coordinated by [author name scrubbed] CRS Report RS22438, Health Workforce Programs in the Public Health Service (PHS) Act: Appropriations History, FY2001-FY2010 , by [author name scrubbed] and [author name scrubbed]. CRS Report RS21044, Legal Issues Related to Human Embryonic Stem Cell Research , by [author name scrubbed]. CRS Report RL33695, The National Institutes of Health (NIH): Organization, Funding, and Congressional Issues , by [author name scrubbed]. CRS Report RL34098, Public Health Service (PHS) Agencies: Background and Funding , coordinated by [author name scrubbed]. CRS Report RL33279, The Ryan White HIV/AIDS Program , by [author name scrubbed]. CRS Report R40181, Selected Health Funding in the American Recovery and Reinvestment Act of 2009 , coordinated by [author name scrubbed]. CRS Report RL33540, Stem Cell Research: Federal Research Funding and Oversight , by [author name scrubbed] and [author name scrubbed]. CRS Report RL33997, Substance Abuse and Mental Health Services Administration (SAMHSA): Reauthorization Issues , by [author name scrubbed]. Human Services CRS Report RL34121, Child Welfare: Recent and Proposed Federal Funding , by [author name scrubbed]. CRS Report RL32872, Community Services Block Grants (CSBG): Background and Funding , by [author name scrubbed]. CRS Report R40212, Early Childhood Care and Education Programs: Background and Funding , by [author name scrubbed] and [author name scrubbed]. CRS Report R40473, Family Violence Prevention and Services Act: Programs and Funding , by [author name scrubbed]. CRS Report R40211, Human Services Provisions of the American Recovery and Reinvestment Act , by [author name scrubbed] et al. CRS Report RS22185, Individual Development Accounts (IDAs): Background and Current Legislation for Federal Grant Programs to Help Low-Income Families Save , by [author name scrubbed]. CRS Report RL31865, The Low-Income Home Energy Assistance Program (LIHEAP): Program and Funding , by [author name scrubbed]. CRS Report RL33880, Older Americans Act (OAA) Funding , by [author name scrubbed]. CRS Report 94-953, Social Services Block Grant (Title XX of the Social Security Act) , by [author name scrubbed]. CRS Report RL30871, Violence Against Women Act: History and Federal Funding , by [author name scrubbed]. CRS Report RL33975, Vulnerable Youth: Background and Policies , by Adrienne L. Fernandes. Department of Health and Human Services http://www.hhs.gov http://www.hhs.gov/budget/docbudget.htm Table 10 shows the appropriations details for offices and major programs of HHS. FY2008 discretionary appropriations for the Department of Education (ED) were $59.2 billion. For FY2009, President George W. Bush's budget request was $60.1 billion, $921 million (1.6%) over the FY2008 amount, as shown in Table 11 . The draft bill marked up but not reported by the House Appropriations Committee included $63.6 billion in discretionary funding, an increase of $4.4 billion (7.5%) over FY2008. The bill reported by the Senate Committee on Appropriations recommended $62.5 billion for FY2009, an increase of $3.3 billion (5.6%) over FY2008. P.L. 111-8 provided $63.5 billion, increasing funding by $4.4 billion (7.4%) over spending for FY2008. ARRA provided an additional $96.2 billion in discretionary funding for FY2009, some of which will not be obligated until FY2010. Total discretionary appropriations for ED (including ARRA funding) for FY2009 were $159.8 billion, an increase of $100.6 billion (170%) over FY2008. A single mandatory ED program is included in the L-HHS-ED bill; the Vocational Rehabilitation State Grants program was provided funding of $2.9 billion in FY2009, the same amount it received in FY2008. Under the FY2009 budget request, funding for several programs would have increased, and six new education programs were proposed. While President Bush's budget requested an increase in discretionary funding for education of $921 million over the FY2008 funding level, it eliminated funding for 47 existing programs. The President's FY2009 budget request proposed changes of at least $100 million for the following ED programs: Elementary and Secondary Education Act of 1965 (ESEA) programs, funded in aggregate at $24.4 billion in FY2008, were increased by $125 million in the President's FY2009 budget request; Title I, Part A, Grants to Local Educational Agencies (LEAs) for Education for the Disadvantaged, funded at $13.9 billion in FY2008, were increased by $406 million; Reading First State Grants, funded at $393 million in FY2008, were increased by $607 million; One K-12 education initiative of at least $100 million was proposed by the President: $300 million for Pell Grants for Kids; Teacher Quality State Grants, funded at $2.9 billion in FY2008, were decreased by $100 million; Educational Technology State Grants, funded at $267 million in FY2008, were eliminated; 21 st Century Community Learning Centers, funded at $1.1 billion in FY2008, were decreased by $281 million and renamed the 21 st Century Learning Opportunities program; The Fund for the Improvement of Education (FIE), funded at $254 million in FY2008, was reduced by $201 million; The Teacher Incentive Fund, funded at $97 million in FY2008, was increased by $103 million; Safe and Drug-Free Schools State Grants, funded at $295 million in FY2008, were decreased by $195 million; The Individuals with Disabilities Education Act (IDEA) Part B Grants to States program, funded at $10.9 billion in FY2008, were increased by $337 million; The Perkins Career and Technical Education program, funded at $1.3 billion in FY2008, was eliminated; The Pell Grants program, funded at $14.2 billion in FY2008, was increased by $2.7 billion. The maximum appropriated award was set at $4,310; $4,241 was the maximum award in FY2008; Federal Supplemental Educational Opportunity Grants, funded at $757 million in FY2008, were eliminated; Aid for Institutional Development, funded at $501 million in FY2008, was decreased by $139 million; and The Institute for Education Sciences, funded at $546 million in FY2008, was increased by $112 million. The House Appropriations Committee did not complete its markup of the draft L-HHS-ED bill. Recommended funding for ED, taken from a table reflecting committee actions, differed by at least $100 million from the President's budget request, as follows. Programs authorized by the ESEA in aggregate received $24.9 billion, $380 million more than requested; $24.4 billion was provided in FY2008. Title I, Part A, Grants to LEAs received $14.5 billion, $150 million more than requested; $13.9 billion was provided in FY2008. School Improvement Grants received $600 million, $109 million more than requested; $491 million was provided in FY2008. Reading First State Grants received no funding, whereas $1 billion was requested; $393 million was provided in FY2008. No funds were provided for the President's proposed Pell Grants for Kids initiative, funding of $300 million was requested. Teacher Quality State Grants received $3.0 billion, $125 million more than requested; $2.9 billion was provided in FY2008. Education Technology State Grants received $272 million; no funds were requested; $267 million was provided in FY2008. The 21 st Century Community Learning Centers received $1.1 billion, $331 million more than requested; $1.1 billion was provided in FY2008. The Fund for the Improvement of Education received $203 million, $151 million more than requested; $254 million was provided in FY2008. Safe and Drug-Free Schools State Grants received $295 million, $195 million more than requested; $295 million was provided in FY2008. IDEA Part B Grants to States received $11.6 billion, $267 million more than requested; $10.9 billion was provided in FY2008. Perkins Career and Technical Education received $1.3 billion; no funds were requested; $1.3 billion was provided in FY2008. Pell Grants received $17.3 billion, $394 million more than requested; $14.2 billion was provided in FY2008. The Pell Grant maximum appropriated award was increased to $4,410; $4,310 was requested as the appropriated maximum award; $4,241 was the maximum award in FY2008. Federal Supplemental Opportunity Grants received $757 million; no funds were requested; $757 million was provided in FY2008. Aid for Institutional Development for higher education received $510 million, $147 million more than requested; $501 million was provided in FY2008. As reported, the Senate bill differed from the draft House measure by at least $100 million for several ED programs. ESEA programs in aggregate received $24.6 billion, $374 million less than the House amount of $24.9 billion; $24.5 billion was requested; $24.4 billion was provided in FY2008. School Improvement Grants received $491 million, $109 million less than the House amount of $600 million; $491 million was requested; $491 million was provided in FY2008. IDEA Part B Grants to States received $11.4 billion, $127 million less than the House amount of $11.6 billion; $11.3 billion was requested; $10.9 billion was provided in FY2008. Pell Grants received $16.9 billion, $445 million less than the House amount of $17.3 billion; $16.9 billion was requested; $14.2 billion was provided in FY2008. The FY2009 maximum appropriated award would have been $4,310 under the Senate bill, compared to $4,410 under the House bill. The maximum appropriated award would have been $4,310 under the request. In FY2008, the maximum appropriated Pell Grant award was $4,241. Aid for Institutional Development for higher education received $363 million, $147 million less than the House amount of $510 million; $363 million was requested; $501 million was provided in FY2008. Compared to FY2008 funding, P.L. 111-8 changed discretionary spending by at least $100 million for several ED programs. ESEA programs in aggregate received $24.8 billion, $287 million more than requested, and $412 million more than the FY2008 amount of $24.4 billion. Title I, Part A, Grants to LEAs received $14.5 billion, $188 million more than requested, and $594 million more than the FY2008 amount of $13.9 billion. Reading First State Grants received no funding, $1 billion less than requested, and $393 million less than the FY2008 amount. IDEA Part B Grants to States received $11.5 billion, $221 million more than requested, and $558 million more than the FY2008 amount of $10.9 billion. Pell Grants received $17.3 billion, $347 million more than requested, and $3.1 billion more than the FY2008 amount of $14.2 billion. The FY2009 maximum appropriated grant award was $4,860, $550 more than requested and $619 more than the FY2008 amount of $4,241. ARRA provided $96.2 billion in total discretionary funding for programs that are or will be administered by the Department of Education. This was a 151% supplement to the $63.5 billion in regular FY2009 discretionary appropriations for ED. Of the $96.2 billion total, $42.6 billion in discretionary funds was appropriated for existing ED programs (a 90% supplement to the regular FY2009 appropriations for these programs). Three programs that received the largest shares of the funding are discussed here; the balance of ARRA funding for existing programs was provided in smaller amounts to numerous other ED programs. Most of ARRA funds for existing elementary and secondary education programs were appropriated for programs that provide formula grants directly to states or local educational agencies (LEAs), while most funds at the postsecondary level were appropriated for Pell Grants, which go directly to students. For some programs, these appropriations provided a substantial increase over the amount of funding provided through the regular appropriations process in recent years. ARRA provided $10.0 billion for Title I-A, Education for the Disadvantaged, Grants to LEAs, a 69% supplement to the $14.5 billion in regular FY2009 appropriations for the program. Similarly, ARRA provided $11.3 billion for the Individuals with Disabilities Education Act (IDEA), Part B Grants to States, a 98% supplement to the $11.5 billion in regular FY2009 appropriations. At the postsecondary level, ARRA provided $15.6 billion in discretionary funding for Pell Grants, a 90% supplement to the $17.3 billion in regular FY2009 appropriations. The remaining $53.6 billion in ARRA funding was appropriated for the new State Fiscal Stabilization Fund. After making reservations from the appropriation, including a $5.0 billion reservation for the Secretary of Education to provide State Incentive Grants and establish an Innovation Fund, $48.3 billion will be provided to governors through formula grants to each state that chooses to apply for funding through this program. Governors must use 81.8% of the funds received to restore state support for public elementary and secondary education and for public institutions of higher education (IHEs) to the greater of the FY2008 or FY2009 level for FY2009, FY2010, and FY2011. Governors are required to use the remaining 18.2% of the state allocation for "public safety and other government services," which may include assistance for elementary and secondary education and public IHEs, and for modernization, renovation, and repair of public school and IHE facilities. Unlike most regular appropriations, ARRA made the stimulus funds available for obligation for two years, until the end of FY2010. The Department has established an ARRA website that provides detailed guidance. See http://www.ed.gov/policy/gen/leg/recovery/index.html . Since the enactment of the No Child Left Behind Act of 2001, P.L. 107-110 , which amended the ESEA among other programs, there has been a continuing discussion regarding the appropriations "promised" and the resulting "shortfall" when the enacted appropriations are compared to authorization levels. Some would contend that the ESEA authorizations of appropriations, as amended by NCLBA, represent a funding commitment that was promised in return for legislative support for the new administrative requirements placed on state and local educational systems. They would contend that the authorized levels are needed for implementing the new requirements, and that the differences between "promised" and actual funding levels represent a shortfall of billions of dollars. Others would contend that the authorized funding levels represent no more than appropriations ceilings, and as such are no different from authorizations for most education programs. That is, when the authorization amount is specified, it represents only a maximum amount, with the actual funding level to be determined during the regular annual appropriations process. In the past, education programs with specified authorization levels generally have been funded at lower levels; few have been funded at levels equal to or higher than the specified authorization amount. Five ESEA programs, as amended by NCLBA, had specific authorization levels for FY2002 through FY2007: Title I, Part A Grants to Local Educational Agencies (LEAs); 21 st Century Community Learning Centers (21CCLC); State Grants for Innovative Programs; School Choice; and the Fund for the Improvement of Education. For FY2007, the aggregate authorization for these five programs was $28.9 billion, and the appropriation was $14.4 billion, or $14.5 billion less than the amount authorized. All current ESEA program authorizations expired after FY2007. They were automatically extended, however, for one additional year under section 422 of the General Education Provisions Act (GEPA) (20 U.S.C. 1226a, providing for contingent extension of programs). Therefore, current ESEA programs were authorized through September 30, 2008. GEPA also specifies that the amount authorized to be appropriated for a program during the extension shall be the amount that was authorized to be appropriated for the program during the terminal fiscal year of the program. Thus, in the case of the five ESEA programs with specific authorization levels for FY2007, those authorizations remained the same for FY2008. Therefore, for FY2008, the aggregate authorization for the five programs was $28.9 billion, and the programs were funded at $15.7 billion, or $13.1 billion less than the amount authorized. The GEPA extension applied for one year only. For FY2009, all funding for ESEA programs is taken to be based on authorizations provided implicitly by appropriations, with funds used under the policies in effect at the end of the explicit authorization period. That is, if one assumes that appropriations will continue to be provided for ESEA programs despite an expired authorization, it may also be reasonable to assume that the use of these funds will continue to be governed by the same policies as they were when the ESEA was still explicitly authorized. Under these circumstances, the authorization levels for the five ESEA programs with specific authorization levels for FY2007 would continue to have the same authorization levels in FY2009. Thus, the aggregate authorization for these five programs would continue to be $28.9 billion; the programs were funded at $15.9 billion, or $13.0 billion less than the authorization. From 1975 to 2004, the IDEA Special Education Part B Grants to States program authorized state payments up to a maximum amount of 40% of the excess cost of educating children with disabilities ages 3-21 that each state serves. Appropriations have never reached the 40% level. In 2004, Congress addressed the funding issue in P.L. 108-446 , which specified authorization ceilings for Part B Grants to States for FY2005 through FY2011. For FY2008, the authorized amount was $19.2 billion, and $10.9 billion was appropriated, or $8.3 billion less than the amount authorized. For FY2009, the authorized amount was $21.5 billion, and $11.5 billion was appropriated, or $10.0 billion less than the authorized amount. As with ESEA and NCLBA, some view these differences as funding shortfalls, while others see the maximum federal share and the specified authorizations as nothing more than appropriations ceilings. Most appropriations are available for obligation during the federal fiscal year of the appropriations bill. For example, most FY2009 appropriations will be available for obligation from October 1, 2008, through September 30, 2009. Several L-HHS-ED programs, including some of the larger ED programs, have authorization or appropriations provisions that allow funding flexibility for program years that differ from the federal fiscal year. For example, many of the elementary and secondary education formula grant programs receive appropriations that become available for obligation to the states on July 1 of the same year as the appropriations, and remain available for 15 months through the end of the following fiscal year. That is, FY2009 appropriations for some programs will become available for obligation to the states on July 1, 2009, and will remain available until September 30, 2010. This budgetary procedure is popularly known as "forward" or "multi-year" funding, and is accomplished through funding provisions in the L-HHS-ED appropriations bill. Forward funding in the case of elementary and secondary education programs was designed to allow additional time for school officials to develop budgets in advance of the beginning of the school year. For Pell Grants for undergraduates, however, aggregate program costs for individual students applying for postsecondary educational assistance cannot be known with certainty ahead of time. Appropriations from one fiscal year primarily support Pell Grants during the following academic year; that is, the FY2009 appropriations will be used primarily to support grants for the 2009-2010 academic year. Unlike funding for elementary and secondary education programs, however, the funds for Pell Grants remain available for obligation for two full fiscal years. An advance appropriation occurs when the appropriation is provided for a fiscal year beyond the fiscal year for which the appropriation was enacted. In the case of FY2009 appropriations, funds normally would have become available October 1, 2008, under regular funding provisions, but did not become available for some programs until July 1, 2009, under the forward funding provisions discussed above. However, if the July 1, 2009 forward funding date for obligation were to be postponed by three months—until October 1, 2009—the appropriation would be reclassified as an advance appropriation since the funds would become available only in a subsequent fiscal year , FY2010. For example, the FY2009 budget request for Title I, Part A Grants to LEAs was $14.3 billion. This amount included not only forward funding of $6.4 billion (to become available July 1, 2009), but also an advance appropriation of $7.9 billion (to become available October 1, 2009). Like forward funding provisions, these advance appropriations are specified through provisions in the annual appropriations bill. What is the impact of these changes in funding provisions? At the appropriations level, there is no difference between forward funded and advance appropriations except for the period available for obligation. At the program or service level, relatively little is changed by the three-month delay in the availability of funds, since most expenditures for a standard school year occur after October 1. At the scorekeeping level, however, a significant technical difference occurs because forward funding is counted as part of the current fiscal year, and is therefore fully included in the current 302(b) allocation for discretionary appropriations. Under federal budget scorekeeping rules, an advance appropriation is not counted in the 302(b) allocation until the following year. In essence, a three-month change from forward funding to an advance appropriation for a given program allows a one-time shift from the current year to the next year in the scoring of discretionary appropriations. For more information, please see CRS Report RS20441, Advance Appropriations, Forward Funding, and Advance Funding , by [author name scrubbed]. CRS Report RS20441, Advance Appropriations, Forward Funding, and Advance Funding , by [author name scrubbed]. CRS Report R40212, Early Childhood Care and Education Programs: Background and Funding , by [author name scrubbed] and [author name scrubbed]. CRS Report RL33960, The Elementary and Secondary Education Act, as Amended by the No Child Left Behind Act: A Primer , by [author name scrubbed] and [author name scrubbed]. CRS Report RL31668, Federal Pell Grant Program of the Higher Education Act: Background and Reauthorization , by [author name scrubbed]. CRS Report RL32085, Individuals with Disabilities Education Act (IDEA): Current Funding Trends , by [author name scrubbed]. CRS Report RL33371, K-12 Education: Implementation Status of the No Child Left Behind Act of 2001 (P.L. 107-110) , coordinated by [author name scrubbed]. CRS Report RL33749, The No Child Left Behind Act: An Overview of Reauthorization Issues for the 111 th Congress , by [author name scrubbed]. CRS Report RL34214, A Primer on the Higher Education Act (HEA) , by [author name scrubbed]. CRS Report RL34017, Vocational Rehabilitation Grants to States and Territories: Overview and Analysis of the Allotment Formula , by Scott Szymendera. Department of Education http://www.ed.gov/index.jhtml http://www.ed.gov/about/overview/budget/index.html?src=gu Table 12 shows the appropriations details for offices and major programs of ED. FY2008 discretionary appropriations for L-HHS-ED Related Agencies were $12.0 billion, as shown in Table 13 . For FY2009, the George W. Bush Administration requested $12.1 billion, $114 million (0.9%) more than the FY2008 amount. The draft bill marked up but not reported by the House Appropriations Committee included $12.7 billion in discretionary funding, an increase of $744 million (6.2%) over FY2008. The bill reported by the Senate Committee on Appropriations recommended $12.6 billion for FY2009, an increase of $691 million (5.8%) over FY2008. P.L. 111-8 provided $12.7 billion for FY2009, $791 million (6.6%) more than for FY2008. ARRA provided an additional $1.2 billion in discretionary funding for FY2009, some portion of which will not be obligated until FY2010. Total discretionary appropriations for Related Agencies for FY2009 were $14.0 billion, an increase of $2.0 billion (16.7%) over FY2008. Mandatory programs for Related Agencies included in the L-HHS-ED bill are funded at $42.7 billion for FY2009, virtually all of it for the Supplemental Security Income (SSI) program. One independent agency formerly funded by the L-HHS-ED appropriations act was disbanded in FY2008. The functions of the National Commission on Libraries and Information Science were transferred to the Institute of Museum and Library Services. President George W. Bush's FY2009 budget request for Related Agencies included changes in discretionary spending of at least $100 million for the following agencies: In recent years, the Corporation for Public Broadcasting (CPB) has been funded two years in advance. The President's FY2009 budget did not request two-year advance funding (for FY2011) for the CPB. The request also proposed to reduce the $420 million advance for FY2010 (appropriated in FY2008) by $220 million and the $400 million advance for FY2009 (appropriated in FY2007) by $200 million; and The Administration's request for FY2009 increased funding for SSA administrative expenses by $582 million, from $9.7 billion for FY2008 to $10.3 billion for FY2009. The House Appropriations Committee did not complete its markup of the draft L-HHS-ED bill. Recommended funding for Related Agencies, taken from a table reflecting committee actions, differed by at least $100 million from the President's budget request, as follows. The draft House bill provided $430 million in two-year advance funding (for FY2011) for the Corporation for Public Broadcasting (CPB). This amount was $430 million above the President's request and $10 million more the two-year advance provided in FY2008 (for FY2010). Unlike the Administration's request, the draft bill did not reduce funding previously advanced for FY2009 and FY2010. The draft bill increased funding for SSA administrative expenses by $100 million above the requested amount of $10.3 billion, for a total increase over FY2008 of $682 million. For Related Agencies, the bill reported by the Senate committee did not differ from the House draft bill by at least $100 million for any program. Overall, the Senate committee recommendation for discretionary spending for Related Agencies was $53 million less than the House draft recommendation. Compared to appropriations for FY2008, P.L. 111-8 increased discretionary funding by at least $100 million for SSA administrative expenses. The omnibus increased funding for SSA administrative expenses by $709 million to $10.5 billion, up from $9.7 billion for FY2008. ARRA included a total of $1.2 billion for Related Agencies. All of the stimulus funding was for discretionary programs, and represented a 9% supplement to the $12.7 billion in regular FY2009 discretionary funding for these agencies. Of the $1.2 billion, ARRA provided $1.0 billion to the Social Security Administration. Of this amount, $500 million was designated for replacing SSA's National Computer Center and $500 million for processing disability and retirement claims. SSA's Office of the Inspector General received $2 million. ARRA provided $201 million to the Corporation for National and Community Service. This amount included $89 million for AmeriCorps State and National Grants, $65 million for the AmeriCorps Volunteers in Service to America program, and $40 million for the National Service Trust. Among other activities, the National Service Trust provides educational awards to participants in AmeriCorps, VISTA, and the National Civilian Community Corps. Unlike regular appropriations for SSA and CNCS, ARRA made the stimulus funds available for obligation for two years, until the end of FY2010. Both SSA and CNCS have developed implementation plans for spending the money. The plans for SSA and CNCS are available at http://www.ssa.gov/recovery and http://www.nationalservice.gov/about/recovery/index.asp , respectively. CRS Report RS22677, Social Security Administration: Administrative Budget Issues , by [author name scrubbed]. CRS Report R40207, Social Security Administration: Workloads, Resources, and Service Delivery , by [author name scrubbed]. CRS Report R40188, Social Security Provisions in the American Recovery and Reinvestment Act of 2009 , by Scott Szymendera. CRS Report RL33544, Social Security Reform: Current Issues and Legislation , by [author name scrubbed]. CRS Report RL33931, The Corporation for National and Community Service: Overview of Programs and FY2009 Funding , by Abigail B. Rudman and [author name scrubbed]. CRS Report R40432, Reauthorization of the National and Community Service Act of 1990 and the Domestic Volunteer Service Act of 1973 (P.L. 111-13) , by [author name scrubbed]. CRS Report RS22168, The Corporation for Public Broadcasting: Federal Funding Facts and Status , by [author name scrubbed] and [author name scrubbed]. Committee for Purchase From People Who Are Blind or Severely Disabled http://www.jwod.gov/jwod/index.html Corporation for National and Community Service http://www.cns.gov Corporation for Public Broadcasting http://www.cpb.org Federal Mediation and Conciliation Service http://www.fmcs.gov Federal Mine Safety and Health Review Committee http://www.fmshrc.gov Institute of Museum and Library Services http://www.imls.gov Medicare Payment Advisory Commission http://www.medpac.gov National Council on Disability http://www.ncd.gov National Labor Relations Board http://www.nlrb.gov National Mediation Board http://www.nmb.gov Occupational Health and Safety Review Commission http://www.oshrc.gov Railroad Retirement Board http://www.rrb.gov Social Security Administration http://www.ssa.gov http://www.ssa.gov/budget Table 14 shows the appropriations details for offices and major programs of the L-HHS-ED Related Agencies. The following items include some of the key budget terms used in this report; they are based on CRS Report 98-720, Manual on the Federal Budget Process , by [author name scrubbed] and Allen Schick (pdf). The websites provide general information on the federal budget and appropriations. Advance appropriation is budget authority that will become available in a fiscal year beyond the fiscal year for which the appropriations act is enacted; scorekeeping counts the entire amount in the fiscal year it first becomes available for obligation. Appropriation is budget authority that permits federal agencies to incur obligations and to make payments out of the Treasury for specified purposes. Appropriations represent the amounts that agencies may obligate during the period of time specified in the law. Annual appropriations are provided in appropriations acts; most permanent appropriations are provided in substantive law. Major types of appropriations are regular, supplemental, and continuing. Budget authority is legal authority to incur financial obligations that normally result in the outlay of federal government funds. Major types of budget authority are appropriations, borrowing authority, and contract authority. Budget authority also includes the subsidy cost to the federal government of direct loans and loan guarantees, estimated on a net present value basis. Budget resolution is a concurrent resolution passed by both chambers of Congress, but not requiring the signature of the President, setting forth the congressional budget for at least five fiscal years. It includes various budget totals and functional allocations. Discretionary spending is budget authority provided in annual appropriations acts, other than appropriated entitlements. Entitlement authority is the authority to make payments to persons, businesses, or governments that meet the eligibility criteria established by law; as such, it represents a legally binding obligation on the part of the federal government. Entitlement authority may be funded by either annual or permanent appropriations acts. Forward funding is budget authority that becomes available after the beginning of the fiscal year for which the appropriation is enacted and remains available into the next fiscal year; the entire amount is counted or scored in the fiscal year in which it first becomes available. Mandatory (direct) spending includes (a) budget authority provided in laws other than appropriations; (b) entitlement authority; and (c) the Food Stamp program. Rescission is the cancellation of budget authority previously enacted. Scorekeeping is a set of procedures for tracking and reporting on the status of congressional budgetary actions. Supplemental appropriation is budget authority provided in an appropriations act that provides funds that are in addition to regular appropriations. Websites General information on budget and appropriations may be found at these websites. Specific L-HHS-ED agency sites are listed in relevant sections of this report. House Committees http://appropriations.house.gov/ http://republicans.appropriations.house.gov/ http://budget.house.gov/ http://budget.house.gov/republicans/ Senate Committees http://appropriations.senate.gov/ http://budget.senate.gov/democratic/ http://budget.senate.gov/republican/ Congressional Budget Office (CBO) http://www.cbo.gov/ Congressional Research Service (CRS) http://apps.crs.gov/cli/level_2.aspx?PRDS_CLI_ITEM_ID=73 Government Accountability Office (GAO) http://www.gao.gov/ Government Printing Office (GPO) http://www.gpoaccess.gov/usbudget/ Office of Management and Budget (OMB) http://www.whitehouse.gov/omb/budget/index.html Statements of Administration Policy (SAPs): http://www.whitehouse.gov/omb/legislative/sap/index.html | This report tracks FY2009 appropriations for the Departments of Labor, Health and Human Services, Education, and Related Agencies (L-HHS-ED). This legislation provides discretionary funds for three major federal departments and 13 related agencies. The report, which will not be further updated, summarizes L-HHS-ED discretionary funding issues but not authorization or entitlement issues. President George W. Bush's FY2009 budget request to Congress, including amendments, proposed $147.4 billion in discretionary L-HHS-ED funds; the comparable FY2008 amount was $148.6 billion. The Senate Appropriations Committee reported its FY2009 L-HHS-ED bill (S. 3230, S.Rept. 110-410), including $155.7 billion in discretionary funds. The House Appropriations Committee considered but did not report an FY2009 L-HHS-ED bill; a draft bill recommended $157.7 billion. Two continuing resolutions (CRs) provided temporary FY2009 funding until enactment of P.L. 111-8, the Omnibus Appropriations Act, 2009, on March 11, 2009. Division F of the omnibus act provided $155.0 billion for discretionary L-HHS-ED programs, adding to $5.1 billion provided in the first CR, for an FY2009 total in regular appropriations of $160.1 billion. FY2009 emergency supplemental appropriations totaling $124.2 billion for discretionary L-HHS-ED programs were provided in the economic stimulus legislation enacted February 17, 2009, P.L. 111-5, the American Recovery and Reinvestment Act of 2009 (ARRA). Department of Labor (DOL). DOL discretionary appropriations were $12.4 billion for FY2009, an increase of $0.6 billion (5.2%) over funding for FY2008. The request for FY2009 was $10.5 billion, including a reduction in funding for Workforce Investment Act (WIA) programs of $553 million. P.L. 111-8 increased funding for WIA by $127 million. ARRA added $4.8 billion in funding for DOL, including $4.2 billion for WIA programs. Department of Health and Human Services (HHS). HHS discretionary appropriations were $71.4 billion for FY2009, an increase of $5.7 billion (8.7%) over funding for FY2008. The request for FY2009 was $64.7 billion. P.L. 111-8 increased funding over FY2008 for Health Centers ($125 million); National Institutes of Health (NIH, $938 million); Centers for Medicare and Medicaid Services (CMS) Program Management ($154 million); CMS Fraud and Abuse Control Initiative ($198 million); Low-Income Home Energy Assistance Program (LIHEAP, $2.5 billion); Head Start ($235 million); and Public Health and Social Services Emergency Fund ($669 million). ARRA added $21.9 billion in funding for HHS, including $10.4 billion for NIH. Department of Education (ED). ED discretionary appropriations were $63.5 billion in FY2009, an increase of $4.4 billion (7.4%) over funding for FY2008. Elementary and Secondary Education Act (ESEA) programs were funded at $24.8 billion in FY2009, an increase of $412 million (1.7%) over funding for FY2008. Pell Grants were increased by $3.1 billion to $17.3 billion. ARRA added $96.2 billion in discretionary funding for ED, including $14.0 billion for ESEA programs. Related Agencies. Discretionary appropriations for L-HHS-ED were $12.7 billion for FY2009, an increase of $0.8 billion (6.6%) over funding for FY2008. The Administration requested $12.1 billion. P.L. 111-8 added $709 million for SSA administrative expenses. ARRA added $1.2 billion for Related Agencies, including $1.0 billion for SSA. |
The natural gas market is composed of three major components on the supply side; producers,pipelines, and local distribution companies. The price of natural gas paid by consumers is layered,in the sense that the wellhead price paid to producers forms a baseline. Pipeline transportation costsare then added, which yields the city gate price. Finally, local distribution companies add additionalcharges to yield the prices actually paid by consumers. Consumer markets themselves are dividedinto segments, each of which tends to pay a different, in many cases a significantly different, price. Residential consumers pay the highest prices, followed by commercial, industrial, and electricityusers. Table 1 shows the relationship between these prices in recent months. The residential prices presented in Table 1 represent an increase of 7% over residential pricesfor a comparable period in 2003. The most recent EIA natural gas price data available at the timeof this report was August 2004. On the New York Mercantile Exchange (NYMEX), natural gas fordelivery in December 2004 was trading at $6.80 per mcf and January and February 2005 natural gaswas trading at over $7.50 per mcf. (1) Table 1. Natural Gas Prices Source : EIA Natural Gas Price Data, measured as dollars per mcf. Natural Gas Monthly, October,2004, Table 4, p.8. In addition to multiple prices faced by consumers, other prices are key variables for supply and policy decisions. The wellhead price of natural gas, as noted in this report, is competitivelydetermined by market forces. This was not always the case. The process of natural gas pricederegulation began in 1978 when the Natural Gas Policy Act ( P.L. 95-621 ) became law. Under theNatural Gas Policy Act, nearly all price controls were phased out by the end of 1984. (2) The spot price of natural gas is recorded at a transportation hub, the largest in the United Statesbeing Henry Hub in Louisiana, and is generally somewhat higher than the wellhead price becauseit includes some processing and transportation costs. Natural gas futures contract trading on theNYMEX establishes forward prices for natural gas, and allows market participants to hedge shortand medium term price risk. The NYMEX future price is determined by the interaction of traderswho have business interests in the real, physical natural gas market, and financial traders whospeculate on the market. Natural gas is also traded by numerous brokers and other entities forphysical delivery at a number of local markets. Interstate pipeline rates are not directly regulated and their pricing structure largely reflects open access for shippers and market pricing. The Federal Energy Regulatory Commission (FERC)monitors pipeline tariffs to assure "just and reasonable" pricing, and has intervened in a number oftariff situations. The city gate price includes the addition of these pipeline transportation charges. Residential and small commercial consumers buy gas from a local distribution company, which delivers gas from a long-haul pipeline to the customer's premises. Local distribution companies areregulated by state public service commissions, who set distribution charges. The price data in Table1 indicates that residential prices have recently been almost double city gate prices in 2004. Theprice premium paid by residential and commercial consumers reflects the high fixed cost associatedwith distribution of their supply, as well as the added cost of small volume purchases. The EIA defines effective productive capacity as the maximum production available fromnatural gas wells, allowing for limitations in the production, gathering, and transportation systems. (3) The effective capacity utilization rate (ECUR) is the ratio of actual production to effective productivecapacity. Surplus capacity is the difference between effective productive capacity and actualproduction. Figure 1 shows, for monthly data over the period 1987 to 2001, that the average wellheadpricehas stayed below $3.00 per mcf whenever the ECUR was below 90%. The data also show howupwardly volatile natural gas prices can be as the ECUR rises above 90%. The correlation betweenhigh values of the ECUR and high prices suggests that when the ECUR is above 90%, conditionsare in place that are consistent with high, volatile natural gas prices. Figure 2 shows the history of the ECUR, capacity and production since 1985. Several trendsare noticeable in the data. Productive capacity has declined since the late 1980s, but appears to haveremained stable since 1993. Actual production has trended up from 1985 to 1995 and has beenrelatively stable since then. These two trends, taken together, drove the ECUR to 90% or higherlevels for almost all of the past eight years. An ECUR in excess of 90% indicates that available natural gas output is nearly fully allocated to meeting demand. Any further increase in demand, or disruption of supply, can only be metthrough extraordinary draws on existing gas wells, increased draws from storage, or increasedimports. All of these alternatives suggest that prices for the consumer are likely to rise. If thesesources are unavailable for expansion the price could rise dramatically, and supply disruption mightoccur. As part of the market adjustment to higher prices, increased development drilling could take place, but exploration and development does not immediately result in gas on the market. The EIAestimates that there is a lag of between 6 and 18 months between an increase in natural gas pricesand an increase in developmental drilling and ultimately higher production. (4) The decliningproductivity of U.S. fields is also a factor. According to one industry observer, "it takesapproximately 2.5 times more active rig capacity to produce the same amount of gas as just eightyears ago." (5) Alternatively, when the ECUR is below90%, any requirement for additional supply canbe quickly brought to the market by increasing production from existing wells. Source : U.S. Energy Information Administration, derived from data available at http://tonto.eia.doe.gov/dnav/ng/hist/n9190us3A.htm . Figure 3 shows the history of the wellhead price of natural gas from 1973 through 2003. Again, several trends are noticeable. The first run up in prices, from 1973 to the mid 1980s was theresult of price deregulation in a market where supply was not abundant, demand-after years ofregulated prices-was strong, and oil prices were high, as a result of the Arab oil embargo of theUnited States in 1973-74, and the Iranian political upheaval of the late 1970s. Prices declined after1985-as did demand-and the United States entered a decade long period of relatively low, stableprices. During this period, use of natural gas as an abundant, cheap, clean fuel was promoted. Increasing demand, in conjunction with the supply trends shown in Figure 2 ,has resulted in theECUR remaining at, or above, 90% since 1995. These conditions set the stage for the gas priceincreases and price volatility experienced since 2000. An interesting break in the pattern of the Figure 2 data is associated with the sharp price increases of the winter of 2000-01. As can be seen in Figure 2 , the ECUR achieved very highvaluesduring this period. When coupled with the low temperatures of that winter, the result was highprices that set off a boom in exploration and drilling. While only 496 rotary drilling rigs, on average,were drilling for natural gas in 1999, that number increased to 720 in 2000 and rose to 939 for 2001. As the resulting production entered the market in 2002 (6 to 18 months later) the ECUR fell below90% in 2002 and the price of natural gas fell. (6) Thelower price, however, resulted in lowerdevelopmental drilling and set the stage for sharp price increases in the winter of 2002-03. As pricesdeclined in 2002, as seen in Figure 3 , the drilling rig count also declined, to 691. The ECUR,reflecting the lower anticipated increments to production from reduced exploratory drilling, againrose above 90%, and price increases beginning during the winter of 2002-03 followed. Drilling activity may be responding to 2003's higher prices. The EIA reported that the average monthly drill rig count for 2003 was 872, with the count running over 900 per month from June toDecember. The nine month average drilling rig count for 2004 is 1009, and has been on a path ofsteady monthly increases since January 2004. (7) Whether the recent increase in drilling activity resultsin large enough supply increases to allow the price of natural gas to fall depends on the explorationsuccess rate, the size of the fields found, and the degree to which existing producing wells showoutput declines. Any factor that increases demand or decreases supply will increase the ECUR. When theECUR is below 90% extra pressure on the market is likely to result in higher production. Once theECUR rises to 90% or above, timely increases in production are less available and pressure on themarket manifests itself as higher prices. Higher prices create incentives that eventually could causeprice increases to moderate, although new sources may require higher prices to satisfy investmentcriteria. The demand for natural gas exhibits a seasonal pattern even when the weather is normal. Figure 4 shows the typical pattern, which is characterized by seasonal demand peaks. Sinceseasonal patterns are repetitive, suppliers, attempting to accommodate consumers, accumulatequantities of gas in storage facilities in the traditional off-peak season for release during the heatingseason. Source : U.S. Energy Information Administration available at http://www.eia.doe.gov/pub/oil_gas/natural_gas/presentations/2004/searuc/searuc_files/frame.htm If the seasonal demand pattern is accentuated by extreme weather conditions, the stored quantities of natural gas might not be sufficient, setting the stage for price increases if the ECUR ishigh. For example, as we approached the heating season of 2002-03, stored gas was at a normallevel of approximately 3 trillion cubic feet (tcf). Below average temperatures early in the winterquickly drove stored quantities down to low levels, which set the stage for the price increases thatfollowed. If the ECUR remains high, as is likely, and a cold winter weather pattern repeats, the limited amount of stored gas, as well as the unresponsiveness of both supply and demand to real time pricevariations at the consumer level, could well bring about another price spike in the winter of 2004-05. The seasonal pattern of natural gas demand is being altered by its growing use by electric power generators. Power generators expanded their demand for natural gas by 36% over the period1997-2002. The EIA expects that over the long term forecast period, 80% of new electricitygeneration will be fueled by natural gas, continuing the strong growth of the last several years. Notonly is electricity demand adding to total natural gas demand, but the pattern of peak demand mightinterfere with traditional gas demand cycles. The demand for natural gas for electricity generationpeaks in the months June through October when space heating demand from residential andcommercial customers is low, but when storage facilities replenish their stocks. As a result, it mightbe the case that the ECUR is pushed to higher levels, year round. Competition for summer suppliescould cause short falls in storage quantities, create price pressures that squeeze out price sensitiveindustrial customers, or force higher electricity rates or even shortages to the system. (8) As discussed earlier in this report, when the ECUR is 90% or above, the ability of the industry to respond to increased demand with expanded supply from existing wells is limited, causing priceto increase quickly. However, the higher prices do provide an incentive to begin the process ofdrilling new wells and exploring for new supplies. The resulting supply increase will tend to causeprice to fall as productive capacity is enhanced, reducing the ECUR. The nature of this relationship in the natural gas industry can, under some circumstances, lead to a cycle of unstable boom and bust feared by those investing in gas production. Taken to itsextreme, this could lead to chronic under-investment in gas production and stagnant supply. Higher prices for natural gas justify investment in exploratory drilling by increasing the value of the expected cash flow derived from the new production. In an efficiently operating market, asustained, marginal increase in price is supposed to elicit a marginal increase in production. Innatural gas, when the price rises, hundreds of extra rigs drill thousands of additional wells. Historical averages suggest that about 80% of these efforts will be successful and yield some newproduction. Once a well is brought into production, there is little economic rationale for notproducing at full capacity. As a result, the market moves to a condition of excess supply as newproduction begins, causing a fall in the price. The reduced price brings a disincentive to invest inexploratory drilling, which leads to a period of stable supply setting the stage for a rising ECUR atightening market balance and rising prices. A key factor in the ability of the rate of investment in exploration to affect the ECUR is the degree to which existing wells deplete, or yield declining output levels. For example, the EIAexpected that in 2003 the estimated effective productive capacity of the U.S. natural gas industrywould be approximately 57 billion cubic feet per day (bcf/d). For 2003, production was expectedto be approximately 51.4 bcf/d, leaving a surplus of 5.6 bcf/d, or about 10%. To demonstrate howthis balance depends on new drilling and expansion of capacity, the EIA estimated that 25% ofeffective productive capacity comes from wells one year old or less. The two largest suppliers ofU.S. natural gas, Texas and the Gulf of Mexico, derive 30% of their production from wells one yearold or less. If drilling were to stop in the U.S., all surplus capacity would disappear in less than oneyear. In 2001, the incentive of high prices led to 22,800 well completions that resulted in increased productive capacity. Only 17,800 wells were completed in 2002 and productive capacity declined. If, as this recent data suggests, the potential for a boom/bust investment cycle may be developing inthe natural gas industry, the result will be brief periods of low prices and plentiful supply followedby periods of high prices and potential physical shortages. (9) The measures analyzed in the EIA study of effective productive capacity only refer to resources in the lower 48 states. As the U.S. natural gas market develops, this restriction will become lessappropriate. The U.S. natural gas market is well integrated with the Canadian market. Imports ofCanadian natural gas have long been an important supply source when U.S. consumption exceededU.S. production and available stock draw down. Imports of natural gas from Canada, all viapipeline, reached over 3.7 tcf per year in 2001 and 2002, but declined to less than 3.5 tcf in 2003. Canadian gas fields, like those in the United States, may be unable to easily expand output withoutthe development of new fields. An additional source of imports might be liquefied natural gas (LNG). (10) The U.S. has fouroperational (or near operational) LNG receiving facilities with an annual operational send-outcapacity of 1.4 tcf per year after all planned expansions are completed. (11) The critical issueconcerning LNG is cost. Although the cost of a complete LNG facility has fallen substantially(30%) due to economies of scale and enhanced technology over the last decade, LNG cost is greaterthan most conventional gas from wells in the lower 48 states. (12) As a result, dependence on LNG maysafeguard the nation from physical shortage by building a new, higher, baseline price into the market. The volume of gas held in storage is a critical element in evaluating the possibility of price volatility. If storage volumes are below normal as the winter heating season begins, and the ECURis above 90%, the potential for elevated prices must be considered to be high. Notes: A weekly record for March 8, 2002, was linearly interpolated between the derived weeklyestimates that end March 1 and the initial estimate from the EIA-912 on March 15. The shaded areaindicates the range between the historical minimum and maximum values for the weekly series from1999 through 2003. Source: Weekly storage values from March 15, 2002, to the present are from Form EIA-912, "Weekly Underground Natural Gas Storage Report." Values for earlier weeks are from theHistorical Weekly Storage Estimates Database, with the exception of March 8, 2002. Figure 5 shows the variability of storage volumes of working gas. Stored volumes totaled 2.7tcf at the end of the 2000 refill season. The severe temperatures during the heating season of2000-01 drew this down to a low of 742 billion cubic feet (bcf) in March of 2001. In contrast, at theend of the 2001 refill season, the stored volume was 3.1 tcf, but the heating season was characterizedby more moderate temperatures and the stored volume did not fall below 1.5 tcf, double the As shown in Figure 5 , in November 2004 working gas storage levels were above their five yearaverage, suggesting that adequate supplies were available. The EIA reported that by November 26,2004 stocks in the lower 48 states totaled about 3.3 tcf, about 0.2 tcf more than at the same time in2003. (13) Given this storage report, it would seemunlikely that the current high futures pricesobserved on the NYMEX could be supported by uncertainties related to available stocks. The potential effects of high, volatile natural gas prices on both the national economy as wellas individual consumers is not insignificant. High, sustained levels of natural gas prices can act asa drag on economic growth. As with oil price shocks in the past, high natural gas prices canconstitute a classic supply side shock which reduces output and productivity growth. If severeenough, a shock of this type can increase unemployment and cause inflation in the short term. On the level of individual consuming sectors, high natural gas prices negatively affect specific industrial users who make heavy use of natural gas in their production process, which makes themuncompetitive. Residential users might have difficulty paying their winter heating bills, forcing themto choose between adequate home heating and other necessities. In the very near term little can be done to affect natural gas prices, except through market intervention in the form of price controls, mandatory conservation, and prioritized rationing. Theconditions that will determine market balance for 2004 and 2005 are largely in place, with the majorexception of the weather. To help mitigate the effects of possible price spikes this winter, aid to lowincome gas consumers through the Low Income Home Energy Assistance Program (LIHEAP) couldbe increased. (14) Much can be done to alter the demand and supply characteristics of the natural gas market in the long term. Conservation, expansion of LNG use, access to areas not currently available forexploration, and new pipeline construction, among others can be debated. Any of these options willtake significant time to implement and must be considered in a long term context. None of themare likely to have significant influence on prices over the next six months to one year. | Intermittently high, volatile natural gas prices since 2000 have raised concern among all types of consumers. Residential customers have seen gas bills increase dramatically during the heatingseason. Industrial consumers have seen costs increase, which reduces their competitiveness. Because the price of natural gas at the consumer level is a mixture of market forces and regulation,explaining the behavior of price can be difficult. Debate in the 108th Congress concerning the energy bill ( H.R. 6 ), considered provisions which are intended to improve long term natural gas supplies in the United States. Otherissues are likely to be brought before the 109th Congress for consideration. This paper analyzes theshort term forces which influence the natural gas market. The Energy Information Administration has developed a metric called the effective capacity utilization rate as a framework for analyzing the economics of the natural gas market. This measurehas been shown to be correlated with the price of natural gas. When as the effective capacityutilization rate attains high levels (90% and above) it becomes increasingly likely that tight marketconditions will yield high prices. As a result of the Natural Gas Policy Act of 1978 ( P.L. 95-621 ) and subsequent legislation in 1989 and 1992 ( P.L. 101-60 and P.L. 102-486 ) the wellhead price of natural gas is marketdetermined. Pipeline rates are federally monitored and distribution charges are regulated at the statelevel. Price variability centers on the wellhead price as well as the price determined in futuresmarkets. Price spikes have occurred in two of the past three heating seasons. Whether severe weather causes price increases depends on the tightness of the market as measured by the effective capacityutilization rate. The same level of demand could lead to very different price results if the effectivecapacity utilization rate is high or low. A variety of factors can affect the effective capacity utilization rate. Since short run supply adjusts to meet demand, the weather will be an important determinant. The relationship betweennatural gas prices and investment in exploration, development and production is an important factorin determining productive capacity. The availability of stored gas and imported gas become vitalto price stability as the effective productive capacity exceeds 90%. In the very short term there appears to be little that can be done from a policy perspective to alter the fundamental economics of the natural gas market. In the longer term, policies that slowdemand growth and/or encourage the growth of supply, either from domestic or foreign sourcescould be effective. This report will be updated as events warrant. |
The Administration's response to the September 11, 2001 events was swift, wide-ranging, and decisive. After Administration officials attributed responsibility for the attack to Osama bin Laden and the Al Qaeda organization, there was an announced policy shift from deterrence to preemption, generally referred to as the "Bush Doctrine." Given the potentially catastrophic consequences of terrorist attacks employing weapons of mass destruction (WMD), Administration decisionmakers felt that the United States could not afford to sit back, wait for attacks to occur, and then respond. The nation was mobilized; combating terrorism and crippling Al Qaeda became top national priorities. Preemptive use of military force against foreign terrorist groups and infrastructure gained increasing acceptance in Administration policy circles. A full-scale campaign was launched, using all elements of national and international power, to go after Al Qaeda and its affiliates and support structures. The campaign involved rallying the international community, especially law enforcement and intelligence components, to shut down Al Qaeda cells and financial networks. A U.S. military operation was initiated in early October, 2001 against the Taliban regime—which had harbored Al Qaeda since 1996—and against Al Qaeda strongholds in Afghanistan. A total of 136 countries offered a range of military assistance to the United States, including overflight and landing rights and accommodations for U.S. forces. As a result, the Taliban was removed from power, all known Al Qaeda training sites were destroyed, and a number of Taliban and Al Qaeda leaders were killed or detained. Since then, according to President Bush in his address to the nation on May 1, 2003, nearly half of the known Al Qaeda leadership has been captured or killed. Notwithstanding, top Al Qaeda leaders Osama bin Laden and Ayman al Zawahiri, as well as the Taliban leader Mullah Mohammed Omar, apparently remain at large, and a resurgence of Taliban warlords and militia is reportedly occurring in Southern and Northern Afghanistan. On March 19, 2003, after an intensive military buildup in the Persian Gulf, the United States launched the war against Iraq, at the time one of seven nations on the State Department's sponsors of terrorism list, with an attack on a suspected meeting site of Saddam Hussein. President Bush, in his January 28, 2003 State of the Union Address, had emphasized the threat posed to world security by a Saddam Hussein armed with weapons of mass destruction and stated that Iraq "aids and protects" the Al Qaeda terrorist organization. After a swift military campaign, President Bush announced on April 15, 2003 that "the regime of Saddam Hussein is no more." Saddam Hussein was arrested by U.S. personnel December 13, 2003, near his hometown of Tikrit. In addition to U.S. troops currently in Afghanistan and Iraq, U.S. forces have been dispatched to Yemen, the Philippines, and the former Soviet Republic of Georgia to train local militaries to fight terrorists. In FY2002 and FY2003, the Administration sought and received funding (subject to annual review) for U.S. military aid to Colombia to support the Colombian government's "unified campaign against narcotics trafficking, terrorist activities, and other threats to its national security." Similar authorization was granted for FY2004-FY2006. Previously, such assistance had been restricted to supporting counternarcotics operations in Colombia. A February 14, 2003 National Strategy for Combating Terrorism gave added emphasis to the role of international cooperation, law enforcement and economic development in countering terrorism. In the context of this campaign, the United States has stepped up intelligence-sharing and law enforcement cooperation with other governments to root out terrorist cells. Experts believe that terrorist cells are operating not just in places where they are welcomed or tolerated, but in many other areas as well, including Western Europe and the United States. According to Patterns of Global Terrorism 2003 (Patterns 2003) , as of January 2003 an aggressive international law enforcement effort had resulted in detention of approximately 3,000 terrorists and their supporters in more than 100 countries and in the freezing of $124 million in assets in some 600 bank accounts around the world, including $36 million in the United States alone. On June 2, 2003, the G-8 leaders publicized plans, subsequently implemented, to create a Counter-Terrorism Action Group to assist nations in enhancing their anti-terrorism capabilities through initiatives including (1) outreach to countries in the area of counter-terrorism cooperation, and (2) providing capacity building assistance to nations with insufficient capacity to fight terrorism. An encouraging sign in the anti-terrorism struggle has been the apparent willingness of certain previously recalcitrant states to distance themselves from international terrorism and/or development of weapons of mass destruction. Libya renounced its WMD programs on December 21, 2003, and has cooperated extensively with the United States and the international community in dismantling those programs. Sudan, in cooperation with U.S. law enforcement and intelligence agencies, has arrested Al Qaeda members and "by and large" shut down Al Qaeda training camps on its territory. In contrast, Iran, according to the Department of State, remained the primary state sponsor of terrorism in 2005 and has been actively conducting a longstanding nuclear development program, raising concerns in the international community that Iran's nuclear ambitions extend well beyond nuclear research, with direct implications for a host of ongoing terrorist activities. In order to stave off punitive action by the International Atomic Energy Agency (IAEA) Board of Governors, Iran, on December 19, 2003, signed an agreement to suspend its enrichment-related and reprocessing activities and to allow international inspections of its nuclear facilities. Intensive inspections, however, revealed likely violations of its suspension obligations, hence in late 2005, the IAEA Board of Governors voted to call Iran into noncompliance with its Nuclear Non-Proliferation Treaty (NPT) obligations. The U.N. Security Council passed a resolution on July 31, 2006, giving Iran a one-month deadline to comply with demands for halting enrichment, or face possible sanctions. Notwithstanding, Iran insists on the "right" to continue its enrichment program under the label of "nuclear research," ostensibly for its energy industry. Iran did not comply with the demands of the Resolution, according to a report by the International Atomic Energy Agency (IAEA) dated August 31, 2006 (Gov/2006/53). Increasingly, international terrorism is recognized as a threat to U.S. foreign, as well as domestic, security. Both timing and target selection by terrorists can affect U.S. interests in areas ranging from preservation of commerce to nuclear non-proliferation to the Middle East peace process. A growing number of analysts expresses concern that radical Islamist groups seek to exploit economic and political tensions in Saudi Arabia, Egypt, Indonesia, Russia, Jordan, Pakistan, and other countries. Because of their avowed goal of overthrowing secular or Western-allied regimes in certain countries with large Moslem populations, such groups are seen as a particular threat to U.S. foreign policy objectives. Facing the possibility that a number of states might reduce or withdraw their sponsorship of terrorist organizations, such organizations appear to be seeking and establishing operating bases in countries that lack functioning central governments or that do not exercise effective control over their national territory. For example, on November 17, 2003, the Washington Post reported that Al Qaeda affiliates were training Indonesian operatives in the southern Philippines. In general, the gray area of "terrorist activity not functionally linked to any supporting or sponsoring nation" represents an increasingly difficult challenge for U.S. policymakers. Terrorists have been able to develop their own sources of financing, which range from NGOs and charities to illegal enterprises such as narcotics, extortion, and kidnapping. Colombia's FARC is said to make hundreds of millions of dollars annually from criminal activities, mostly from "taxing" of, or participating in, the narcotics trade. Bin Laden's Al Qaeda depends on a formidable array of fundraising operations including Moslem charities and wealthy well-wishers, legitimate-seeming businesses, and banking connections in the Persian Gulf, as well as various smuggling and fraud activities. Furthermore, reports are ongoing of cross-national links among different terrorist organizations. Of utmost concern to policymakers is the specter of proliferation of weapons of mass destruction (WMD) or the means to make them. All of the five officially designated state sponsors of terrorism, Cuba, Iran, North Korea, Sudan, and Syria, are known or suspected to have had one or more WMD-related program. Two of the states—Iran and North Korea—have, or have had, nuclear weapons-oriented programs in varying stages of development. Terrorists have attempted to acquire WMD technology through their own resources and connections. For instance, the Aum Shinrikyo cult in Japan was able to procure technology and instructions for producing Sarin, a deadly nerve gas, through contacts in Russia in the early 1990s. The gas was subsequently used in an attack on the Tokyo subway in March 1995 that killed 12 people and injured over 1,000. Media reports of varying credibility suggest that Osama bin Laden is interested in joining the WMD procurement game, but open-source evidence to date remains scant. A London Daily Telegraph dispatch of December 14, 2001, cited "long discussions" between bin Laden and Pakistani nuclear scientists concerning nuclear, chemical and biological weapons. Earlier, on November 12, 2001, Time magazine reported that a bin Laden emissary tried to buy radioactive waste from an atomic power plant in Bulgaria, and cited the September 1998 arrest in Germany of an alleged bin Laden associate on charges of trying to buy reactor fuel. BBC reports cite the discovery by intelligence officials of documents indicating that Al Qaeda had built a radiological "dirty" bomb near Herat in Western Afghanistan. In January, 2003 British authorities reportedly disrupted a plot to use the poison ricin against personnel in England. The Department of State provides to Congress annually a report on global terrorism. The most recent edition, released in March 2006 is: Country Reports on Terrorism 2005. Statistical data on terrorist incidents, analyzed in the report, are provided by the National Counter Terrorism Center (NCTC). The analysis addresses trends in terrorism and the evolving nature of the terrorist threat, and presents information on anti-terror cooperation by nations worldwide. The report and underlying data portray a threat from radical Jihadists which is becoming more widespread, diffuse, possibly more deadly, and increasingly homegrown, often with a lack of apparent formal operational connection with Al Qaeda ideological leaders, although perhaps inspired by them or assisted through training. Related to the issue of homegrown terrorism is growing concern that limited terrorist sanctuaries may already be found within the cities of democratic societies. Three trends in terrorism are identified in the Department of State report. First is the emergence of so-called "micro actors," spurred in part by U.S. and allied successes in isolating and killing much of Al Qaeda's leadership. The result is an Al Qaeda perceived as having a more subdued operational role, but assuming more of an ideological, motivational, and propaganda role. Second is a trend toward "sophistication"; i.e. terrorists exploiting the global interchange of information, finance, and ideas to their benefit, often through the Internet. Third is a growing overlap between terrorist activity and international crime, which may expose the terrorists to a broad range of law enforcement activities. Also cited in the report is an overall increase in suicide bombings and a strong connection between the ongoing unrest in Iraq and the broader terrorism conflict. The report suggests that "terror" incidents in Iraq accounted for almost a third of all terror incidents in 2005 and more than half of terror related deaths worldwide that year. Data released by the NCTC concomitantly with the Department of State's 2006 terror report indicate that in 2005 roughly 40,000 individuals were wounded or killed in terrorist incidents, as compared to 9,300 the previous year and 4,271 in 2003. Terror-related deaths in 2005 numbered 14,602 as compared to 1,907 deaths in 2004 and 625 in 2003. The report placed the number of total reported terrorist attacks in 2005 at 11,111 as compared to 3,168 in 2004 and 208 in 2003. Foiled attacks are not included in the data reported. Some would argue, however, that NCTC data concerning Iraq casualties—which are largely the product of sectarian violence, rampant criminal activity, and home grown insurgency—grossly distort the global terrorism picture and perhaps should not be attributed to terrorist activity. Looking at the data outside of Iraq, according to the NCTC, the total number of incidents with ten or more deaths remained at approximately the 2003-2004 level: 70 per year. This suggests that, excluding Iraq, the number of higher casualty terror attacks remains relatively stable. Aside from Iran, and perhaps to some degree Syria , the report suggests that, but for a few notable exceptions, active state sponsorship of terror is declining. It continues to list Iran as the most active state sponsor of terrorism. In general, it praises the Saudi Government for its antiterrorism efforts. Some observers might suggest, however, that the report tends to mute criticism of nations of strategic importance to the United States, such as Pakistan and Saudi Arabia , that arguably could do much more to curb terror . Echoing language of previous years' versions of the report, the 2006 edition states that Libya and Sudan "continued to take significant steps to cooperate in the global war on terror," and shortly after the report's release, Libya was removed from the U.S. list of state sponsors of international terrorism. As in previous years, Syria is cited for providing political and material support (presumably weapons) to both Hezbollah and Palestinian terrorist groups, which also enjoy sanctuary in Syria. Cuba and North Korea are primarily cited for lack of anti-terror cooperation and past involvement in terrorist incidents, thereby possibly suggesting a trend of their less active support for terrorism than in previous decades. However, many perceive North Korea's nuclear program, with its potential for future sales of WMD to terrorists, as extremely worrisome. Although not included on the State Department's list of state sponsors of terrorism, Lebanon is cited in the report for its recognition of several terrorist organizations, including Hezbollah. Also, the report stresses that because the Government of Lebanon does not exercise effective control over areas in the south and in Palestinian refugee camps, terrorists can operate "relative freely" in such areas. This loss of governmental control is representative of a broader phenomenon that countries with weak counterterrorism resources and infrastructure are, more and more, subject to becoming sanctuaries for terrorism. A core premise of the State Department's 2006 report is recognition that because the Al Qaeda network is increasingly assuming the characteristics of an ideological movement, it will not be decisively defeated in the near future. However, some indicate elimination of Bin Laden and Al Zawahiri would go a long way in that direction. As in any long-term campaign, international cooperation and capacity-building programs, such as the State Department's Anti-Terrorism Assistance Program (ATA), are seen as having a central role in combating terrorism. Most terrorist acts do not take place in the United States, nor do most terror-related arrests and prosecutions. Likewise, much, if not most, intelligence gathering on terrorist groups today is not done by the United States. The report also presents countering terrorism on the economic front as an important component of a successful strategy. However, some independent analysts suggest that efforts to curb terrorist finances have reached a point of diminishing returns, as terrorist groups are often self-supporting, and that the amount of terrorist funds governments seize is insignificant. Subsequent to the release of the State Department's report, the Administration declassified and released excerpts from an April 2006 National Intelligence Estimate titled Trends in Global Terrorism, Implications for the United State s. Declassified key judgments of the report were generally consistent with findings in the State Department's March 2006 Country Reports on Terrorism 2005 and concomitant NCTC data which cited decentralization of Al Qaeda and expressed concern over the potential for "spillover" of battlefield skills, technology, and ordnance from Iraq. Of concern to many observers is the overall growth in numbers and political influence of radical Islamist political parties throughout the world, some of which reportedly serve—or might serve—as fronts for terrorist activity. Even if the parties are not actively serving as fronts, some are concerned that the actions and agendas of such groups could facilitate creation of a political climate in their home countries which views terrorism as a politically acceptable tactic and which might make their home countries appear as attractive locations for active terrorist groups to establish secure bases. Others view political participation as a sign that these groups may be adopting channels other than violence to secure their base. Examples include groups in Indonesia, Pakistan, Malaysia, and in the Middle East notably Hamas and Hezbollah. Any rise in the power and influence of such terror-linked or terror-supportive political parties—especially should their representatives be elected through democratic processes—presents major policy dilemmas for the United States, since it pits U.S. support for democracy directly against America's commitment to aggressively combat terrorism. Past Administrations have employed a range of measures to combat international terrorism, from diplomacy, international cooperation, and constructive engagement to protective security measures, economic sanctions, covert action, and military force. The application of sanctions is one of the most frequently used anti-terrorist tools of U.S. policymakers. Governments supporting international terrorism are often prohibited from receiving U.S. economic and military assistance. U.S. exports of munitions to such countries are foreclosed, and restrictions are imposed on exports of "dual use" equipment. The presence of a country on the "terrorism list," though, may also reflect considerations—such as its pursuit of WMD, a poor human rights record or simply U.S. domestic political considerations—that are largely unrelated to support for international terrorism. Generally, U.S. anti-terrorism policy from the late 1970s to the mid-1990s focused on deterring and punishing state sponsors as opposed to terrorist groups themselves. The passage of the Anti-Terrorism and Effective Death Penalty Act of 1996 ( P.L. 104-132 ) signaled an important shift in policy. The act, largely initiated by the executive branch, created a legal category of Foreign Terrorist Organizations (FTO) and banned funding, granting of visas and other material support to such organizations. The USA PATRIOT Act of 2001 ( P.L. 107-56 ) extended and strengthened the provisions of that legislation. The State Department's 2006 global terrorism report lists 42 groups designated by the Secretary of State as FTOs. After 9/11, U.S. anti-terrorism policy increasingly focused on preempting attacks from Al Qaeda, often by bringing the "war" to the territory of the enemy. A parallel area of policy focus involves protecting the homeland from terrorist attacks and their aftermath by securing the borders, reducing vulnerabilities of critical infrastructures, enhancing support and resources available to law enforcement and intelligence, and enhancing consequence management capabilities. A central area of policy focus remains denying/minimizing access of WMD to rogue states and terrorist non-state actors. On September 24, 2003, the White House Office of Management and Budget (OMB) released its 2003 Report to Congress on Combating Terrorism, which detailed spending by federal agency and activity for combating terrorism and for homeland security. After 2003, the practice of publishing a consolidated federal counterterrorism budget was discontinued; the homeland security component of the budget is readily accessible. In July 18, 2006 congressional testimony, the Comptroller General stated that since 2001 Congress has appropriated about $430 billion for military and diplomatic efforts in support of the Global War On Terrorism, and stressed that neither the Department of Defense nor Congress had a clear picture of how much that war was costing in terms of dollars spent and how appropriated funds were being used. Notwithstanding, it is estimated that Congress had appropriated a total of about $437 billion for the war in Iraq through the end of FY2006. In their desire to combat terrorism in a modern political context, democratic countries often face conflicting goals and courses of action: (1) providing security from terrorist acts, that is, limiting the freedom of individual terrorists, terrorist groups, and support networks to operate unimpeded in a relatively unregulated environment; versus (2) maintaining individual freedoms, democracy, and human rights. Efforts to combat terrorism are complicated by a global trend towards deregulation, open borders, and expanded commerce. In democracies such as the United States, the constitutional limits within which policy must operate are viewed by some to conflict directly with a desire to secure the lives of citizens more effectively against terrorist activity. A majority, however, strongly holds that no compromise of constitutional rights is acceptable. Another challenge for policymakers is the need to identify the perpetrators of particular terrorist acts as well as those who train, fund, or otherwise support or sponsor them. As the international community increasingly demonstrates its ability to unite and apply sanctions against "rogue" states, states will become less likely to overtly support terrorist groups or engage in state-sponsored terrorism. The possibility of covert provisioning of weapons, financing, and logistical support remains open, and detecting such transfers would require significantly increased deployment of U.S. intelligence and law enforcement assets in countries and zones where terrorists operate. Particularly challenging is identification of those "dual use" items which might creatively be adapted for military-type applications and therefore should be subject to U.S. export restrictions. Today, the U.S. policy focus is on terrorist organizations, such as Al Qaeda and affiliated networks, and state supporters. But in the future, the recent phenomenon of new types of terrorists appears likely to continue: individuals who are not affiliated with any established terrorist organization and who are apparently not agents of any state sponsor. The terrorist Ramzi Ahmed Yousef, who is believed to have masterminded the 1993 World Trade Center bombing, apparently did not belong to any larger, established, and previously identified group, although he may have had some ties to Al Qaeda operatives. Also, should organizational infrastructure of groups such as Al Qaeda continue to be disrupted, the threat of individual or "boutique" terrorism, or that of "spontaneous" terrorist activity, such as the bombing of bookstores in the United States after Ayatollah Khomeini's death edict against British author Salman Rushdie, may well increase. Thus, one profile for the terrorist of the 21 st century may be that of a private individual(s) not affiliated with any established group, but drawing on other similarly-minded individuals for support. As the central focus of U.S. international counterterrorism policy is currently on state sponsors and terrorist groups, some adjustments in policies and approaches may warrant consideration. Another problem surfacing in the wake of a number of incidents associated with Islamist fundamentalist groups is how to condemn and combat such terrorist activity, as well as the extreme and violent ideology of specific radical groups, without appearing to be anti-Islamic in general. Also, the desire to punish a state for supporting international terrorism may conflict with other foreign policy objectives involving that nation, which might require a more positive engagement. Use of diplomacy to help create a global anti-terror coalition is a central component of the Bush Administration response to September 11 events. For example, diplomacy was a key factor leading to the composition of the U.S.-led coalition against the Taliban. Notwithstanding, some suggest that the Administration far-too-long undervalued diplomacy and that its ability to conduct effective diplomacy has been weakened by its non-multilateral positions on a host of international issues. Moreover, diplomacy may not always be effective against determined terrorists or the countries that support them; however, in most cases, diplomatic measures are considered least likely to widen conflicts and therefore are often tried first by the United States when crises arise. Some are concerned that U.S. diplomacy may not be sufficiently pro-active, possibly as a result of resource or funding limitations. They contend that more extensive, multi-faceted, ongoing diplomatic relations, including expanded public diplomacy initiatives, might contribute to improved international anti-terror cooperation, and argue that pro-active diplomacy is much less expensive than subsequent military or security operations which might be required if these diplomatic efforts are absent, insufficient, or unsuccessful. Moreover, they suggest that in a region(s) of the world where personal relationships are culturally important, it may be desirable to consider more funding for face-to-face diplomacy at all levels as a long-term investment in future diplomatic relations. Some contend that U.S. embassies abroad, particularly in hardship locations in the Middle East where diplomats or their families may hesitate to go, are often understaffed or underfunded, or have significant numbers of junior officers with limited diplomatic experience or language skills. Others disagree. They contend that diplomacy is but one of many tools in the nation's portfolio for combating terrorism, and that the current mix of policy emphasis and resources is a sound one, as evidenced by ongoing success against Al Qaeda's operatives, network, infrastructure, and financial sources of support. When responding to incidents of terrorism by subnational groups, reacting by constructive engagement is complicated by the lack of existing channels and mutually accepted rules of conduct between governmental entities and the groups in question. The United States has a longstanding policy of not negotiating with terrorists, or hostage takers. Some observers suggest, however, that in the changed circumstances of the 21 st century, communications with terrorists in some cases may prove beneficial to U.S. interests. In this regard, practitioners who deal with the psychology of conflict may provide some useful insights. In some instances, legislation may specifically prohibit official contact with a terrorist organization or its members. Yet for groups that are well-entrenched in a nation's political fabric and culture, such as Hezbollah or Hamas, some suggest trying to engage the group might be more productive than trying to exterminate it. Colombia's on-again, off-again peace process with FARC is one recent example. Some observers, though, are skeptical of the value of engaging with terrorists. Former CIA director James Woolsey asserted, in a spring 2001 National Strategy Forum Review article, that increasingly, terrorists do not just want a place at the table, "they want to blow up the table and everyone who is sitting at the table." On a different level, in the wake of the September 11 attacks, the Bush Administration explored the possibility of enlisting nations considered state sponsors of terrorism at the time, such as Libya, Sudan, and Syria, in a broader Islamic coalition against Al Qaeda and its followers. Much cooperation has been obtained; however, notably in the case of Syria, results have been mixed at best. To some critics, though, such initiatives detract from the imperative of taking a principled stand against international terrorism in all its guises. The issue of seeking to talk to, negotiate with, or otherwise diplomatically engage: (1) states which support or carry out acts of terrorism; (2) organizations which support or engage in terrorism; or (3) key terrorist leaders is seen as troublesome by many. Some see positive outcomes for most any type of direct contact; others see little utility for direct contact where such contact is not likely to lead to positive outcomes and where such contact may lend legitimacy to a rogue nation, terrorist organization, or leader. Compromise, it is often noted, though highly valued in certain societies and groups, may be equally repugnant in others. The 79 recommendations of the Iraq Study Group Commission (ISG), released December 6, 2006, included a call for the United States to actively engage Iran and Syria in constructive diplomatic dialogue. Proponents argue that public diplomacy can play an important role in winning "hearts and minds." The influence of public diplomacy through the media on public opinion may impact not only on the attitudes of populations and the actions of governments, but also on the actions of groups engaged in terrorist acts. Effective public diplomacy vis-à-vis the media may help mobilize public opinion in other countries to pressure governments to take action against terrorism. From the terrorist perspective, media coverage is an important measure of the success of a terrorist act. To better give effect to the notion of winning hearts and minds, the Bush Administration created a position of Undersecretary of State for Public Diplomacy and Public Affairs, a post initially held by Charlotte Beers, later assumed by Margaret Tutwiler, and since July 2005 held by Karen Hughes. Among other efforts, Hughes has created a Rapid Response Unit designed to assist U.S. officials abroad to respond to the day's news. Critics deride Hughes' quick hit tactics as an overly "campaign-like" approach to a years-long ideological struggle and cite her inexperience in foreign affairs. Supporters, on the other hand, point to her energy, focus, elan and the fresh approach she brings to an uphill battle. A daunting challenge facing Hughes is how to get federal agencies to agree on a single—or coordinated—message or strategy. Sanctions on regimes can be essentially unilateral—such as U.S. bans on trade and investment relations with Cuba and Iran—or multilateral, such as those endorsed by the United Nations in response to Libya's involvement in the Pan Am 103 bombing. In the past, use of economic sanctions was usually predicated upon identification of a nation as an active supporter or sponsor of international terrorism. Sanctions also can be used to target assets of terrorist groups themselves. On September 23, 2001, President Bush signed Executive Order 13224, freezing the assets of 27 individuals and organizations known to be affiliated with bin Laden's network, giving the Secretary of the Treasury broad powers to impose sanctions on banks around the world that provide these entities access to the international financial system, and providing for designation of additional entities as terrorist organizations. By late October 2002, according to the U.S. Treasury Department, the freeze list had expanded to include designated terrorist groups, supporters, and financiers of terror. In addition, on September 28, 2001, the U.N. Security Council adopted Resolution 1373, which requires all states to "limit the ability of terrorists and terrorist organizations to operate internationally" by freezing their assets and denying them safe haven. The Security Council also set up a Counter Terrorism Committee to oversee implementation of Resolution 1373. U.N. Security Council Resolution 1390 of January 16, 2002, obligated member states to freeze funds of "individuals, groups, undertakings, and entities" associated with the Taliban and Al Qaeda. As of September 11, 2003, in the range of $200 million in terrorist funds had been frozen worldwide as a result of these initiatives, according to U.S. and U.N. financial data. The effects of these economic measures are uncertain, because much of the flow of terrorist funds reportedly takes place outside formal banking channels, in elusive "hawala" chains of money brokers. Moreover, much, if not most of the assets were frozen relatively early on with very little being frozen subsequently, raising the issue of whether such countermeasures have peaked and lost their sting. Furthermore, much of Al Qaeda's money is believed to be held not in banks but in untraceable assets such as gold and diamonds, and some observers have noted that lethal terrorist operations can be relatively inexpensive. With respect to nation-states, economic sanctions fall into six main categories of restrictions: trading, technology transfer, foreign assistance, export credits and guarantees, foreign exchange and capital transactions, and economic access. Sanctions may include a total or partial trade embargo, an embargo on financial transactions, suspension of foreign aid, restrictions on aircraft or ship traffic, or abrogation of a friendship, commerce, and navigation treaty. The President has a variety of laws at his disposal, but the broadest in its potential scope is the International Emergency Economic Powers Act ( P.L. 95-223 ; 50 U.S.C. 1701, et seq.). The act permits imposition of restrictions on economic relations once the President has declared a national emergency because of a threat to U.S. national security, foreign policy, or the economy. Although the sanctions authorized must apply to the threat responsible for the emergency, the President can regulate imports, exports, and all types of financial transactions, such as the transfer of funds, foreign exchange, credit, and securities, between the United States and the country in question. Specific authority for the Libyan trade embargo is in Section 504 of the International Security and Development Cooperation Act of 1985 ( P.L. 99-83 ), while Section 505 of the act (22 U.S.C. 2349aa9) authorizes the banning of imports of goods and services from any country supporting terrorism. Other major laws that can be used against countries supporting terrorism are the Export Administration Act of 1979 ( P.L. 96-72 ), the Arms Export Control Act (P.L. 90-629), and specific items or provisions of foreign assistance legislation. P.L. 90-629 prohibits arms sales to countries not fully cooperating with U.S. antiterrorism efforts and requires that foreign assistance be withheld from any nation providing lethal military aid to a country on the terrorism list. The Syria Accountability and Lebanese Sovereignty Restoration Act of 2003, P.L. 108-175 , signed December 14, 2003, calls for new sanctions against Syria until the Assad regime stops providing support for terrorists groups and ceases other activities at variance with U.S. policy. Past Administrations have been critical of Syria's support for terrorism, interest in acquiring weapons of mass destruction, and military presence in Lebanon. An array of U.S. legislation currently bans aid to, and restricts commerce with, Syria and P.L. 108-175 seeks to further limit diplomatic and commercial dealings with the Assad regime. On May 11, 2004, President Bush imposed economic sanctions against Syria, charging it had failed to take action against terrorist groups fighting Israel and had failed to stem the flow of foreign fighters through Syria into Iraq. As a result, most U.S. exports to Syria (which used to total about $200 million a year) are banned; however, a significant number of waivers have been granted. The United States also imposes economic sanctions against North Korea, one of the five nations designated by the Secretary of State as a state sponsor/supporter of international terrorism. Economic inducements can arguably play a powerful role in the levels of anti-terror cooperation when nation states are the recipients of such inducements. Moreover, counterterrorism policy can include efforts to change economic and social conditions that provide a breeding ground for terrorists. Some have suggested that most terrorists worldwide are unemployed or underemployed, with virtually nonexistent prospects for economic advancement. Some analysts believe that targeted assistance programs to reduce poverty and increase education (which might also include supporting secular educational alternatives to the Madrasas—Islamic religious schools) can bring stability to weak countries, make a difference in lifestyles and attitudes, and can diminish the appeal of extremist groups. A further rationale, some say, is to project a more positive image of the United States in terrorism-prone lands. Critics, though, argue that severe economic conditions are not the sole or even the main motivational factors driving the emergence of terrorism, stressing that resentment against a particular country or political order, and religious fanaticism, also are important motivations. Osama bin Laden's large personal fortune and his far-flung business empire would seem to contradict economic deprivation as explanation of his involvement in terrorism. Similarly, all of the 15 Saudi Arabian hijackers implicated in the September 11 attacks were from middle-class families or well-connected ones. The Basque Fatherland and Liberty organization (ETA) in Spain is a relatively well-heeled terrorist organization. Ambient economic conditions partly explain certain kinds of terrorist behavior in specific situations, but political, ideological and religious factors may often be paramount. Intelligence gathering, infiltration of terrorist groups, and military operations involve a variety of clandestine or "covert" activities. Much of this activity is of a passive monitoring nature aimed at determining the intentions, capabilities, and vulnerabilities of terrorist organizations. An active form of covert activity occurs during events such as a hostage crisis or hijacking, when a foreign country may quietly request advice, equipment, technical or tactical support, with no public credit given to the providing country. Covert action may also seek to create or exploit vulnerabilities of terrorist organizations, for example, by spreading disinformation about leaders, encouraging defections, promoting divisions between factions, or exploiting conflicts between organizations. Some nations have periodically resorted to unconventional methods beyond their territory for the express purpose of neutralizing individual terrorists and/or thwarting pre-planned attacks. Examples of such methods might run the gamut from intercepting or sabotaging the delivery of funding or weapons to a terrorist group, to destroying a terrorist's embryonic WMD production facilities, to seizing and transporting a wanted terrorist to stand trial for assassination or murder. Arguably, such activity might be justified as preemptive self-defense under Article 51 of the U.N. charter. On the other hand, it could be argued that such actions violate customary international law. The Senate and House Intelligence Committees, in a December 10, 2002 report, recommended maximizing covert action to counter terrorism. Assassination is specifically prohibited by U.S. executive order (most recently, E.O. 12333), but bringing wanted criminals to the United States for trial is not. There exists established U.S. legal doctrine that allows an individual's trial to proceed regardless of whether he has been forcibly abducted from another country, international waters, or airspace. Experts warn that bringing persons residing abroad to U.S. justice by means other than extradition or mutual agreement with the host country can vastly complicate U.S. foreign relations, sometimes jeopardizing interests far more important than "justice," deterrence, and the prosecution of a single individual. Notwithstanding the unpopularity of such abductions in nations that fail to apprehend and prosecute those accused, the "rendering" of wanted criminals to U.S. courts is permitted under limited circumstances by a June 21, 1995 Presidential Decision Directive (PDD-39). Such conduct, however, raises prospects of other nations using similar tactics against U.S. citizens. International cooperation in such areas as law enforcement, Customs control, and intelligence activities is an essential pillar of the Bush Administration's anti-terrorism policy. For example, the stationing of FBI agents overseas in some 50 countries facilitates investigations of terrorist crimes and augments the flow of intelligence about terrorist group structures and membership. Similarly, DEA currently maintains offices in 62 countries staffed by some 750 direct hire personnel and 260 contract personnel. An important law enforcement tool in combating international terrorism is extradition of terrorist suspects. However, international extradition traditionally has been subject to several limitations, including the refusal of some countries to extradite for political or extraterritorial offenses or to extradite their own nationals. Also, the U.S. application of the death penalty for certain crimes can impede extradition from countries that have abolished the death penalty in terrorism-related cases. This reportedly led U.S. authorities to increasingly use the controversial practice of extrajudicial transfer (referred to as "rendition"), whereby a country will "hand over" a terrorist suspect to U.S. authorities without going through formal extradition procedures should they be available. The United States has been negotiating and concluding treaties with fewer limitations, in part as a means of facilitating the transfer of wanted terrorists. Because much terrorism involves politically motivated violence, the State Department has sought (with varying degrees of success) to curtail the availability of the political offense exception, found in many extradition treaties, to avoid extradition. Money can be a powerful motivator. Rewards for information have been instrumental in Italy in destroying the Red Brigades and in Colombia in apprehending drug cartel leaders. A State Department program is in place, supplemented by the aviation industry, usually offering rewards of up to $5 million to anyone providing information that would prevent or resolve an act of international terrorism against U.S. citizens or U.S. property, or that leads to the arrest or conviction of terrorist criminals involved in such acts. This program contributed to the 1997 arrest of Mir Amal Kansi, who shot CIA personnel in Virginia, and possibly to the arrest in 1995 of Ramzi Yousef, architect of the 1993 World Trade Center bombing. The bounty for the capture of Osama bin Laden and his aide Ayman al Zawahiri has been raised to $25 million each. However, awards of this magnitude have not provided enough motivation—to date—vis-à-vis senior Al Qaeda leadership. Although not without difficulties, military force, particularly when wielded by a superpower such as the United States, can carry substantial clout. Proponents of selective use of military force usually emphasize the military's unique skills and specialized equipment. The April 1986 decision to bomb Libya for its alleged role in the bombing of a German discotheque exemplifies use of military force against terrorism. In addition, U.S. military components are currently involved in a variety of anti-terrorism related missions, exercises, and deployments in areas such as Afghanistan, Iraq, Colombia, the Horn of Africa (Djibouti), and the Philippines. Successful use of military force for preemptive or retaliatory strikes presupposes the ability to identify a terrorist perpetrator or its state sponsor, as well as the precise location of the group, information that is often unavailable from intelligence sources. Generally, terrorists possess modest physical facilities that present few high-value targets for military strikes. Some critics have observed that military action is a blunt instrument that can cause foreign civilian casualties as well as collateral damage to economic installations in the target country. Examples proffered include U.S. military action which toppled the regime of Saddam Hussein and the Israeli military operations in July 2006 aimed at weakening the escalating threat posed to that nation by Hezbollah in Lebanon. However, part of the purpose for using military force, in addition to eradication or discouragement of specific terrorist groups, may be to send a political message to the target nation that providing refuge or support to such groups comes with a price. According to a July 21, 2002 New York Times report, a "pattern of mistakes" in the U.S. bombing campaign in Afghanistan killed "as many as 400 civilians" in 11 different locations. Some argue that such tragic mishaps create anger against the United States and may bolster terrorist recruitment efforts. A 1999 U.S. study of the sociology and psychology of terrorism states that "counterterrorist military attacks against elusive terrorists may serve only to radicalize large sectors of the Moslem population and damage the U.S. image worldwide." Other disadvantages or risks associated with the use of military force include counter-retaliation and escalation by terrorist groups or their state sponsors, failure to destroy the leaders of the organization, and the perception that the United States ignores rules of international law. In addition, the financial costs associated with Operation Enduring Freedom in Afghanistan have concerned some observers, as have costs of the U.S. military presence in Iraq. Causing a financial blow to the U.S. and the West seems to be a major goal of Al Qaeda and related terrorist organizations. To date, the United States has joined with the world community in developing all of the major anti-terrorism conventions. These conventions impose on their signatories an obligation either to prosecute offenders or extradite them for terrorism-related crimes, including hijacking vessels and aircraft, taking hostages, and harming diplomats. An important convention is the Convention for the Marking of Plastic Explosives. Implementing legislation is in P.L. 104-132 . On July 26, 2002, the U.N. Convention on the Suppression of Terrorist Bombings, and the U.N. Anti-Terrorism Financing Convention, both entered into force for the United States. Many experts have urged that an international court be established, perhaps under the U.N., to sit in permanent session to adjudicate cases against persons accused of international terrorist crimes. However, granting jurisdiction to international courts such as the International Criminal Court implies a loss of national sovereignty, a concern, among others, prompting the United States not to become a party to the International Criminal Court. Some suggest that working with the media to encourage voluntary guidelines for reporting on terrorism issues is an option which holds promise. For others however, the term "media self-restraint" is an oxymoron; the sensational scoop is the golden fleece, and dull copy is to be avoided. In the past, the media have been occasionally manipulated into the role of mediator and publicist of terrorist goals. Increasingly, the media are sensitive to such charges. On October 11, 2001, five major U.S. news organizations agreed to abridge video statements by Osama bin Laden, and this policy continues to date. Well before the September 11, 2001 events, various legislative proposals and congressionally mandated panels had called for reconfiguring the federal government's strategic planning and decision processes vis-à-vis the global terrorist threat. On November 25, 2002, the President signed the Homeland Security Act of 2002 ( P.L. 107-296 ), consolidating at least 22 separate federal agencies, offices, and research centers comprising more than 169,000 employees into a new cabinet level Department of Homeland Security (DHS). The creation of the new department, charged with coordinating defenses and responses to terrorist attacks on U.S. soil, constitutes the most substantial reorganization of the Federal government since the National Security Act of 1947, which placed the different military departments under a Secretary of Defense and created the National Security Council (NSC) and CIA. P.L. 107-296 includes provisions for an information analysis element within DHS, many of the envisioned tasks of which appear assigned to the Administration's Terrorist Threat Integration Center (TTIC), which was activated May 1, 2003 and subsequently became the National Counterterrorism Center (NCTC). The USA PATRIOT Act ( P.L. 107-56 ), enacted in October 2001 and renewed in March 2006 gave law enforcement increased authority to investigate suspected terrorists, including enhanced surveillance procedures such as roving wiretaps; provided for strengthened controls on international money laundering and financing of terrorism; improved measures for strengthening of defenses along the U.S. northern border; and authorized disclosure of foreign intelligence information obtained in criminal investigations to intelligence and national security officials. On July 22, 2004, the National Commission on Terrorist Attacks upon the United States ("9/11 Commission") issued its final report. Included are 41 recommendations for changing the way the government is organized to combat terrorism and how it prioritizes its efforts. Many of these dovetail with elements of the Administration's February 14, 2003 National Strategy for Combating Terrorism, such as diplomacy and counter-proliferation efforts, preemption, intelligence and information fusion, and winning hearts and minds—including not only public diplomacy, but also policies that encourage development and more open societies, law enforcement cooperation, and defending the homeland. Recommendations generally fall into the categories of (1) preemption (attacking terrorists and combating the growth of Islamist terrorism); (2) protecting against and preparing for attacks; (3) coordination and unity of operational planning, intelligence and sharing of information; (4) enhancing, through centralization, congressional effectiveness of intelligence and counterterrorism oversight, authorization, and appropriations; (5) centralizing congressional oversight and review of homeland security activities; and (6) beefing up FBI, DOD, and DHS capacity to assess terrorist threats and improving the agencies' concomitant response strategies and capabilities. The report deals only indirectly with problems in the U.S.-Saudi relationship, such as terrorist financing and the issue of ideological incitement. Recommendations of the Commission are at various stages of acceptance, funding and implementation. Press reports dated May 29, 2005, indicated that the Bush Administration launched a high-level internal review of its anti-terrorism strategy, with an emphasis on developing a strategy more focused on combating violent extremism. Under the revised strategy concept, public diplomacy received a major boost in emphasis. A new national anti-terrorism strategic approach followed which is currently being elaborated by the United States Government. The approach, embodied in a NCTC coordinated interagency National Implementation Plan (NIP) for the National Strategy for Combating Terrorism, was reportedly approved by the President in mid-summer 2006. Its overarching goals are to: (1) defeat terrorism as a threat to America's way of life as a free and open society, and (2) create an environment inhospitable to terrorism worldwide. The document, according to press reports, designates lead and subordinate agencies to carry out a multitude of tasks to include: destroying Al Qaeda; enlisting support from allies; and training of experts in foreign languages and cultures with emphasis on gaining a better understanding of Islam. The approach seeks to enhance effectiveness of the 2003 National Strategy for Combating Terrorism in the long term by strengthening the ideological component in the war on terror. Inherent here is widespread recognition that the United States will need to increasingly engage in the realm of ideas (public diplomacy), in conjunction with other efforts to protect and defend the homeland and efforts to attack terrorists and reduce their capabilities. In September 2006, an updated version of the National Strategy for Combating Terrorism was released. The 2006 strategy document gives added weight to earlier efforts aimed towards placing enhanced long-term policy emphasis on the "war of ideas"; i.e. confronting the radical ideology that justifies the use of violence against innocents in the name of religion. Seen as core to the success of the strategy in the long run is the advancement of "effective" democracies which is seen as central to minimizing conditions which fuel terrorist support and recruitment. Two assumptions would appear to underlie the reasoning upon which the countering ideological support component of the strategy is based: (1) that it is indeed realistically possible for the United States to advance effective democracies in regions where political compromise and respect for minority rights may not be established cultural, political, or religious norms, and (2) that terrorist causes are less likely to win recruits in democratic societies and/or that individual terrorists and terrorist organizations will be less likely to recruit, operate, and/or base in societies where protection of individual liberties is strong. Both assumptions are subject to rational debate and the possibility that democratic nations may be increasingly spawning a trend of homegrown terrorist recruits remains generally problematic to policymakers. The interagency framework for combating terrorism overseas is a complex web of relationships among federal organizations and agencies. Some agencies play lead roles in specific areas; others play coordination roles; yet others serve in support roles. The National Security Council (NSC) advises the President on national security and foreign policy; serves as a forum for discussion among the President, presidential advisers, and cabinet officials; and is the President's mechanism for coordinating policy among government agencies on interdisciplinary issues such as terrorism. Under the NSC structure are a series of committees and working groups which address terrorism issues. Key is the Counterterrorism Security Group (CSG) composed of high-level representatives from the Departments of State, Justice, Defense, and Homeland Security, and the FBI and CIA, as well as representatives of other departments or agencies as needed. A series of interagency working groups under the CSG coordinate specific efforts. The Homeland Security Council (HSC) is analogous to the National Security Council. Located within the Executive Office of the President, it has a number of working groups, called policy coordinating committees, which coordinate policy and operations across the executive departments to prevent, respond to, and recover from terrorist attacks within the United States. Some areas of HSC involvement include the international aspects of terrorism as they relate to the homeland, to include border- and trade-related security issues, as well as security aspects of international transportation issues. The Department of State is the lead agency for U.S. government efforts to combat terrorism through use of "soft power" (diplomacy/foreign aid-related) overseas. The Department of Justice has the lead for law enforcement and criminal matters related to terrorism overseas and domestically. On December 17, 2004, President Bush signed the Intelligence Reform and Terrorism Prevention Act of 2004 ( S. 2845 , P.L. 108-458 ) establishing the position of Director of National Intelligence (a position separate from that of the CIA Director) to serve as the President's principal intelligence advisor, overseeing and coordinating the foreign and domestic activities of the intelligence community. Also established was a National Counterterrorism Center, designed to serve as a central knowledge bank for information about known and suspected terrorists and to coordinate and monitor counterterrorism plans and activities of all government agencies. The Center provides daily terrorism threat information to the President and other policy makers. The State Department's Antiterrorism Assistance (ATA) Program is a central part of the effort to help nations develop the capacity to effectively combat terrorism. The ATA Program provides training and equipment to foreign countries to help them improve their antiterrorism capabilities. More than 485,000 individuals from 141 countries have received training since the program's inception in 1983, in such skills as crisis management, VIP protection, airport security management, and bomb detection and deactivation. In September, 2003, President Bush issued Homeland Security Presidential Directive 6 (HSPD-6), establishing a Terrorist Screening Center (TSC) to consolidate the U.S. government's approach to terrorist screening. To this end, certain terrorist identification and watch list functions previously performed by the Department of State's Bureau of Intelligence and Research (INR) were transferred to the Terrorist Threat Integration Center (TTIC)—today the National Counterterrorism Center (NCTC)—while others were transferred to the TSC. Today, the NCTC serves as a central hub for the fusion and analysis of information collected from all foreign and domestic sources on international terrorist threats. The NCTC maintains a Terrorist Identities Datamart Environment (TIDE)—designated under HSPD-6 to be the single repository into which all international terrorist-related data available to the U.S. government will be stored. According to a press account, the TIDE includes over 325,000 terrorist-related records. The TSC, meanwhile, is a multi-agency collaborative effort administered by the Federal Bureau of Investigation. NCTC shares selected data from TIDE on international terrorists with the TSC. With these data, the TSC has established and maintains a consolidated Terrorist Screening Database (TSDB). The TSC, in turn, distributes TSDB-generated international terrorist lookout records—along with domestic terrorist lookout records —to other agencies. In addition, the TSC has developed comprehensive procedures for handling encounters with known and suspected terrorists and their supporters, and provides terrorist screening authorities with around-the-clock operational support in the event of possible terrorist encounters. According to the Department of Justice's Office of Inspector General, as of January 2005, the TSDB included nearly 238,000 records. The TSC also supports the Department of Homeland Security's Transportation Security Administration (TSA) and Customs and Border Protection (CBP) for the administration of the "No Fly" and "Automatic Selectee" lists. However, the use of these lists continues to prove problematic, particularly in regard to misidentifications, and coordination between Justice and Homeland Security on related issues has proved challenging. The Department of State's Terrorist Interdiction Program (TIP), initiated in FY2002, helps foreign governments improve their border control capability through software for creating an automated terrorist screening system with fusion of names and relevant data. A benefit of TIP is that it provides immigration officials in selected countries with a computer-based, real-time system to verify the identities of travelers presenting themselves at border crossings. Facilitating payment of compensation by state sponsors or their agents to victims of terrorism is an ongoing area of congressional interest. P.L. 106-386 , allowed victims of terrorist acts committed by Cuba and Iran to collect payment of judgments rendered from those countries' funds held by the U.S. government, and clarified circumstances under which immunity from jurisdiction or attachment may not apply when victims of state-sponsored terrorism seek compensation. The State Department's Counterterrorism Research and Development Program is overseen by State's Coordinator for Counterterrorism and is managed by the Assistant Secretary of Defense for Special Operations and Low-Intensity Conflict. The program focuses on the interagency Technical Support Working Group (TSWG), which constitutes an R&D response to the threat posed by increasingly sophisticated equipment, explosives, and technology available to terrorist groups. Major project areas include chemical, biological, radiological, and nuclear countermeasures; explosives detection and improvised device defeat; infrastructure protection; investigative support and forensics; personnel protection; physical security; surveillance operations support; and tactical operations support. State and DOD provide core funding for TSWG activities. The Diplomatic Security Program of the State Department is designed to protect official U.S. personnel, information, and facilities domestically and abroad. Constructing secure facilities abroad, providing security guards, and supporting counterintelligence are some important elements of the program, as is detection and investigation of passport and visa fraud. Most agree that the evidence indicates that terrorists are both seeking to kill many people and concentrating on hitting economic targets such as support infrastructure and tourism. If correct, this might argue in favor of programs to combat terrorism which seek to safeguard nuclear materials; detect nuclear, chemical, and biological weapons and conventional explosives; protect infrastructure critical to the functioning of the national and global economy; and enhance information and network security. However, notwithstanding the best efforts of the nation and the international community, some terrorist acts likely will succeed. Since the timing, location, and nature of all future terrorist attacks are impossible to predict, much is to be said for programs which promote development of robust response capabilities in the area of disaster/crisis consequence management, including training of first responders. Due to the enormous cost of anti-terror efforts and the impossibility of omnipresent protection, difficult issues and trade-offs arise concerning cost-effectiveness, diminishing returns and levels of "acceptable losses." The issue of further reforming or enhancing programs that engage in public diplomacy may warrant consideration as well. The ideological nature of much of modern-day terrorism implies that the battle for hearts and minds is not just a cliché, but is an ongoing struggle, which the U.S., arguably, is not currently winning. On the other hand, some argue that to the degree United States public diplomacy efforts may be ineffective, cause should not be attributed to the government's organizational structure, nor its strategy or policy implementation. Rather, they suggest that the cause for any such shortcomings is likely that what the U.S. Government says does not match what it does; that U.S. foreign policy is undermining efforts at U.S. public diplomacy. They cite the fact that the United States is strongly committed to promoting democracy and human rights, yet supports regimes in Pakistan, Saudi Arabia, and Egypt where arguably government respect for such values could be dramatically improved. Moreover, some suggest that while U.S. public diplomacy resources are consolidating, they are not expanding. The former U.S. Information Agency (with its overseas element, the U.S. Information Service) has been subsumed into the U.S. Department of State, thereby losing some independence of action—although, some would argue, gaining policy consistency. The short-lived Strategic Information Initiative, a public diplomacy project launched by the Department of Defense, foundered due in part to adverse public opinion concerning its mission and to lack of active support from the other agencies with which it competed. The well-funded charitable activities and publicity efforts of terrorist or extremist groups appear to have led to broadened acceptance of extremist views in target populations. Radical madrasas in many nations indoctrinate their students with a philosophy of violence. Hezbollah charities provide services—and political indoctrination—to the impoverished in Lebanon, with the aim of securing their loyalty. The Hezbollah owned and operated Al-Manar television broadcasting network targets a large audience in the Middle East and Europe. To the extent that the U.S. and other Western countries fail to effectively address this "cold war of ideology," a growing proportion of the world's Moslem youth may grow up embracing extremist views which could ultimately lead to increased terrorism. For decades the U.S. may have had little need for public diplomacy to promote its positive image of freedom and democracy. The term "propaganda" was used derisively to describe publicity efforts by countries hostile to the United States. However, the world's demographics, economics and political alliances are evolving. Extremist views are being disseminated to the youth of countries with high birth rates. Some of the countries facilitating dissemination of these views—and those receiving them—control vast financial resources, derived from oil revenues, that could be used to influence public opinion on a large scale, for good or evil. The resources currently allocated for U.S. public diplomacy pale in comparison. The American public's reaction to an information outreach, public diplomacy or "propaganda" response to counter or refute hostile ideological efforts may depend upon how U.S. initiatives are presented or "packaged." For instance, Radio Free Europe and Radio Marti were generally accepted, while the Strategic Information Initiative (SII) was not. Whether correct or not, a perception widely perceived, was that DOD has little credibility in "winning hearts and minds". Moreover, the Strategic Information Initiative was viewed by critics as a disinformation activity, rather than traditional public diplomacy. To counter information-based activities by radical Islamist groups, Congress and the Bush Administration have created a U.S. government-sponsored Arabic language Middle East Television Network (METN), or Al-Hurra (Arabic for "the free one") to broaden U.S. public diplomacy efforts in the Middle East. Supporters of this initiative have asserted that there is a receptive audience for U.S. television, which could counterbalance negative perceptions of U.S. policy that are commonly found in the Arab media. According to the 9/11 Commission Report in 2004, "the government has begun some promising initiatives in television and radio broadcasting to the Arab world, Iran, and Afghanistan." Notwithstanding, more data are required to evaluate the effectiveness of such programming efforts to date. For FY2006, the Administration has requested $79 million, a figure that incorporates operations for the Al-Hurra satellite television network and the U.S. government-sponsored Arabic language radio station, Radio Sawa. It may well be that in a future political arena the West and its allies—while seeking co-optation—must learn to coexist uneasily with radical groups, as is often the case with organized crime, which has increasingly turned to legitimacy while retaining sinister underpinnings. Terrorism has long since become a "process" or pipeline, and its eradication is a goal which may not be achievable for many years, if ever. Thus, U.S. anti-terror policy increasingly embraces a long-term strategy to engage the process of terrorism on many fronts, to slow its spread, to ameliorate root causes, to deter recruitment, to promote tolerance, to modernize education, to interdict weapons, to promote democratic institutions. Some of these areas overlap with issues in the War on Drugs, and indeed there are similarities between counternarcotics and counterterrorism strategies. Others overlap with U.S. agendas to promote cultural exchange programs, provide humanitarian and development assistance, as well as to promote human rights, democracy, free trade and the rule of law. A series of National Security Council interagency policy coordinating committees on strategic communication, information strategy, and public diplomacy, first convened in 2002 have fallen short of developing a strategy aimed at marginalizing radical jihadist extremists. Also apparently unresolved is which agency or entity would be in charge of such an overall effort and how it would be coordinated and implemented. An open question is whether, and to what degree, the U.S. Department of State currently has the charter, the knowledge, the infrastructure, the funding or the personnel to effectively fight the cold war of ideology at appropriate levels of effort. For example, some have called for reviving the United States Information Agency (USIA) or creation of an entity which would only do public diplomacy without strings attached as might be the case with the Department of State or the Defense Department. From purely a standpoint of existing funding, however, the Department of Defense or the CIA may be better equipped for such a mission, which goes beyond traditional diplomacy. But on the other hand, to the extent that public diplomacy is associated with or linked to defense or intelligence agencies, it would be perceived as less credible. These issues, and the pros and cons associated with them, may warrant further attention by Congress. CRS Report RL33742, 9/11 Commission Recommendations: Implementation Status , by [author name scrubbed]. CRS Report RS21937, 9/11 Terrorism: Global Economic Costs , by [author name scrubbed]. CRS Report RL32759, Al Qaeda: Statements and Evolving Ideology , by [author name scrubbed]. CRS Report RL33038, Al Qaeda: Profile and Threat Assessment , by [author name scrubbed]. CRS Report RL33160, Combating Terrorism: The Challenge of Measuring Effectiveness , by [author name scrubbed]. CRS Report RL30252, Intelligence and Law Enforcement: Countering Transnational Threats to the U.S. , by [author name scrubbed] CRS Report RS22211, Islamist Extremism in Europe , coordinated by [author name scrubbed]. CRS Report RL32816, The National Counterterrorism Center: Implementation Challenges and Issues for Congress , by [author name scrubbed]. CRS Report RS22373, Navy Role in Irregular Warfare and Counterterrorism: Background and Issues for Congress , by [author name scrubbed]. CRS Report RL31672, Terrorism in Southeast Asia , by [author name scrubbed] et al. CRS Report RL33123, Terrorist Capabilities for Cyberattack: Overview and Policy Issues , by John Rollins and [author name scrubbed]. CRS Report RL33555, Trends in Terrorism: 2006 , by [author name scrubbed]. CRS Report RL32758, U.S. Military Operations in the Global War on Terrorism: Afghanistan, Africa, the Philippines, and Colombia , by [author name scrubbed]. CRS Report RL32607, U.S. Public Diplomacy: Background and the 9/11 Commission Recommendations , by [author name scrubbed]. There is no universally accepted definition of international terrorism. One definition widely used in U.S. government circles, and incorporated into law, defines international terrorism as terrorism involving the citizens or property of more than one country. Terrorism is broadly defined as politically motivated violence perpetrated against noncombatant targets by subnational groups or clandestine agents. For example, kidnaping of U.S. birdwatchers or bombing of U.S.-owned oil pipelines by leftist guerrillas in Colombia would qualify as international terrorism. A terrorist group is defined as a group which practices or which has significant subgroups which practice terrorism (22 U.S.C. 2656f). One shortfall of this traditional definition is its focus on groups and its exclusion of individual ("lone wolf") terrorist activity—philosophically but not organizationally aligned with any group—which has recently risen in frequency and visibility. To these standard definitions, which refer to violence in a traditional form, must be added cyberterrorism. Analysts warn that terrorist acts will now include more sophisticated forms of destruction and extortion such as disabling a national computer infrastructure or penetrating vital commercial computer systems. Also, the October 12, 2000 bombing of the U.S.S. Cole , a U.S. military vessel, raised issues of whether the standard definition would categorize this attack as terrorist, as the Cole would not under conventional definitions be considered a "non-combatant." Current definitions of terrorism mostly share one common element: politically motivated behavior, although religious motivation is increasingly being recognized as an important motivating factor, as high-profile activities of such groups as Al Qaeda underscore the significance of radical religious ideologies in driving terrorist violence, or at least providing a pretext. To illustrate: Osama bin Laden issued a fatwah (edict) in 1998 proclaiming in effect that all those who believe in Allah and his prophet Muhammad must kill Americans wherever they find them. Moreover, the growth of international and transnational criminal organizations, plus the growing range and scale of such operations, have resulted in a potential for widespread criminal violence with financial profit as the driving motivation. Notwithstanding, current definitions of terrorism do not include using violence for financial profit, even in cases where mass casualties might result with entire populations "terrorized." Complicating matters is that internationally, nations and organizations historically have been unable to agree on a definition of terrorism, since one person's terrorist is often another person's freedom fighter. To circumvent this political constraint, countries have taken the approach of enacting laws or negotiating conventions which criminalize specific acts such as kidnaping, detonating bombs or hijacking airplanes. The 1999 International Convention for the Suppression of the Financing of Terrorism comes close to a consensus definition, by making it a crime to collect or provide funds with the intent of killing or injuring civilians where the purpose is to intimidate a population or coerce a government. | This report examines international terrorist actions, threats, U.S. policies and responses. It reviews the nation's use of tools at its disposal to combat terrorism, from diplomacy, international cooperation, and constructive engagement to physical security enhancement, economic sanctions, covert action, and military force. A modern trend in terrorism appears to be toward loosely organized, self-financed, international networks of terrorists. Increasingly, radical Islamist groups, or groups using religion as a pretext, pose a serious threat to U.S. interests and to friendly regimes. Of concern as well is the growing political participation of extremist Islamist parties in foreign nations. Also noteworthy is the apparent growth of cross-national links among different terrorist organizations, which may involve combinations of military training, funding, technology transfer, or political advice. Looming over the entire issue of international terrorism is the specter of proliferation of weapons of mass destruction (WMD). Iran, seen as the most active state sponsor of terrorism, has been secretly conducting—and now openly seeks—uranium enrichment, and North Korea has both admitted to having a clandestine program for uranium enrichment and claimed to have nuclear weapons. Indications have also surfaced that Al Qaeda has attempted to acquire chemical, biological, radiological, and nuclear weapons. U.S. policy toward international terrorism contains a significant military component, reflected in U.S. operations in Afghanistan, deployment of U.S. forces elsewhere for specific missions, and, according to the Administration and its supporters, the war in Iraq. Issues of interest to the 110th Congress include whether the Administration is providing sufficient information about the long-term goals and costs of its diverse strategy and whether military force is an optimally effective anti-terrorism instrument when compared with other methods such as intelligence-enhanced law enforcement and pro-active public diplomacy. Increasingly, a wide range of well-funded charitable and publicity activities of radical Islamist groups has led to broadened acceptance of extremist views in target populations. To the extent that nations fail to effectively address this "cold war of ideology," a growing proportion of the world's Moslem youth may grow up embracing extremist views that could ultimately lead to increased terrorism. As terrorism is a global phenomenon, a major challenge facing policymakers is how to maximize international cooperation and support without unduly compromising important U.S. national security interests and options. Other significant policy challenges include (1) how to minimize the economic and civil liberties costs of an enhanced/tightened security environment, and (2) how to combat incitement to terrorism, especially in instances where such activity is state sponsored or countenanced. This report will be updated periodically. |
97-736 -- Victims' Rights Amendment in the 106th Congress: Overview of Suggestions to Amend the Constitution Updated January 12, 2001 Arguments put forward in support of an amendment include assertions that: � The criminal justice system is badly tilted in favor of criminal defendants and against victims' interests and a more appropriate balance should be restored; � The shabby treatment afforded victims has chilled their participation in the criminal justice system to the detriment of all; � Society has an obligation to compensate victims; � Existing statutory and state constitutional provisions are wildly disparate in their coverage, resulting in uneven treatment and harmful confusion throughout thecriminal justice system; and � Existing state and federal law is inadequate and likely to remain inadequate Critics argue to the contrary that: � The criminal justice system is not out of balance. The purpose of a criminal trial is to determine the guilt ofan accused by allowing an impartial jury to weighthe government's evidence that a crime has been committed and that the accused committed it, against any evidenceoffered by the defendant; the interests ofvictims do not fit in the equation; their interests are protected by the right to bring a civil suit against the accused,by court-order restitution if the accused isconvicted, and by victim compensation provisions. � If efficacious, a victims rights amendment would generate considerable uncertainty in the law and flood the federal courts with litigation, could be very costly,and would either jeopardize the rights of the accused (probably in a discriminatory manner) or undermine thegovernment's ability to prosecute. � If the mischief possible through a victims rights amendment is avoided, the proposal becomes purely hortatory; the Constitution is no place for commemorativedecorations. � It is inconsistent with the basic notions of federalism. Each of the states, through its legislatures and electorate, has decided how victims rights should beaccommodated within its criminal justice system. These decisions would be made subservient to a uniform standardthat in all likelihood no jurisdiction wouldhave chosen. S.J.Res. 3 and H.J.Res. 64 would have followed the general format favored in the state constitutions. They would have guaranteedvictims a right to notice, to attend, and/or to be heard at various stages of the criminal justice process. The impact of any victims rights amendment depends upon who is considered a victim for purposes of the amendment. S.J.Res. 3 would havecovered "victim[s] of a crime of violence, as these terms may be defined by law." H.J.Res. 64 would haveapplied to "[e]ach individual who is avictim of a crime for which the defendant can be imprisoned for a period of longer than one year or any other crimethat involves violence." The obviousdifference between the two was that the House Resolution would have covered nonviolent felonies, while the Senateproposal would not. Bail At least in theory, a victim's rights might attach upon commission of the offense. Under the proposals in the 106th and most of the state provisions, the rightsattach upon commencement of "proceedings" involving the crime of which the individual is the victim. The mostsignificant of these early proceedings for thevictim would likely be the bail hearing for the accused. Only a few states grant the victim the right to be heard atthe defendant's bail hearing; a few more permitconsultation with the prosecutor prior to the bail hearing. Most allow victims to attend. And virtually all provideeither that victims should be notified of bailhearings or that victims should be notified of the defendant's release on bail. Under existing federal law, victims of alleged acts of interstate domestic violence or interstate violations of a protective order have a right to be heard at federalbail proceedings concerning any danger posed by the defendant. In other federal cases, victims' prerogatives seemto be limited to the right to confer with theprosecutor and notification of and attendance at all public court proceedings. The proposals in the106th would have given victims the right "to be heard, ifpresent, and to submit a written statement at all such proceedings to determine a conditional release from custody.. . ." and to consideration for their safety "indetermination any conditional release from custody." Plea Bargains Negotiated guilty pleas account for over 90% of the criminal convictions obtained. For the victim, a plea bargain may come as an unpleasant surprise, one thatmay jeopardize the victim's prospects for restitution, one that may result in a sentence the victim finds insufficient,and/or one that changes the legal playing fieldso that the victim has become the principal target of prosecution. Some states' victims rights provisions are limitedto notification of the court's acceptance of aplea bargain. More often, however, the states permit the victim to address the court prior to the acceptance of anegotiated guilty plea or to confer with theprosecutor concerning a plea bargain. S.J.Res. 3 and H.J.Res. 64 would have required that victims beallowed to address the courtbefore a plea bargain could be accepted in any state or federal criminal or juvenile proceeding. Speedy Trial The United States Constitution guarantees those accused of a federal crime a speedy trial; the due process clause of the Fourteenth Amendment makes the rightbinding upon the states, whose constitutions often have a companion provision. The constitutional right isreenforced by statute and rule in the form of speedytrial laws in both the state and federal realms. Until recently, victims had no comparable rights, although theiradvocates contended they had a very real interest inprompt disposition. Most of the states have enacted statutory or constitutional provisions establishing a victim's rightto "prompt" or "timely" disposition of thecase in one form or another. Many have also made efforts to minimize the adverse impact of the delays that dooccur by either providing for employerintercession services and/or by prohibiting employers from penalizing victim/witnesses for attending courtproceedings. And most call for the prompt return of avictim's property, taken for evidentiary purposes, as soon as it is no longer needed. S.J.Res. 3 and H.J.Res. 64 would have entitled victims to consideration of their interests "that any trial be free from unreasonable delay." Courts might well have used the same test for this standard that they have used when testing for unacceptable delayunder the speedy trial and due process clauses:"length of delay, reasons for the delay, defendant's assertion of his right, and prejudice to the defendant." Trial The Sixth Amendment promises the accused a public trial by an impartial jury. It promises victims little. Their status is, at best, no better than that of any othermember of the general public for Sixth Amendment purposes and, in fact, the Constitution screens the accused'sright to an impartial jury trial from the overexuberance of members of the public. Moreover, victims who are also witnesses are even more likely to be barredfrom the courtroom during trial than membersof the general public. About a third of the states now permit victims to attend all court proceedings regardless ofwhether the victim is scheduled to testify;another group allows witnesses who are victims to attend subject to a showing as to why they should be excluded;a few leave the matter in the discretion of thetrial court; and some have maintained the traditional rule -- witnesses are sequestered whether they are victims ornot. S.J.Res. 3 and H.Res. 64 would have invested victims with the right "to notice of, and not to be excluded from, all public proceedingsrelating to the crime," state and federal, juvenile and adult. They made no explicit provision for instances wherethe victim is also a witness. Nor did they indicatehow unavoidable conflicts between the rights they conveyed and the constitutional rights of the accused (at leastas they exist until ratification) were to beresolved. Sentencing The most prevalent of victims' rights among the states is the right to have victim impact information presented to sentencing authorities. There is, however,tremendous diversity of method among the states. Many call for inclusion in a presentencing report prepared forthe court in one way or another, oftensupplemented by a right to make some form of subsequent presentation as federal law permits. Some are specificas to the information that may be included;some permit the victim to address the court directly; others do not. S.J.Res. 3 and H.J.Res. 6 would have afforded victims the right "to be heard . . . and to submit a written statement at all suchproceedings to determine . . . a sentence." They proposal did not address the question of whether relevancy,repetition, or any other limitation might have beenimposed upon exercise of the right. Experience among the states suggests that enforcement may be the stumbling block for any proposed amendment, since there seem to be few palatablealternatives. It is possible to draft the amendment to the United States Constitution so that victims' rightsenforcement is paramount. Legal proceedingsconducted without honoring victims rights would be rendered null; sentencing hearings rescheduled and conductedanew; plea bargains rejected; trials begunagain; unfaithful public servants exposed to civil and criminal liability; inattentive governmental entities madesubject to claims and court orders. A fewproponents suggest that enforcement should be limited to the equitable powers of the courts. This would appear tohave been the intent with respect to S.J.Res. 3 and H.J.Res. 64 which would have denied victims a cause of action or grounds to interrupta criminal trial and otherwiseleaves crafting of enforcement mechanisms to Congress and the state legislatures. S.J.Res. 3 and H.J.Res. 64 would have conferred legislative authority in two ways. First, they would have empowered Congress todefine the class of victims entitled to claim rights under the amendment. Second, they would have vested Congresswith the authority enforce their provisions"through legislation" but subject to the caveat that in doing so Congress craft exceptions to the rights created by theamendment "only when necessary to achieve acompelling interest." Earlier proposals explicitly recognized a greater state legislative role. The question of the states' legislative powers to implement the victims' rights amendment suggests another question. How much, if any, of existing victims rightslaw would survive an amendment? Under the present state of the law, statutory and state constitutional provisions are confined by the United States Constitution, U.S.Const. Art. VI, cl.2. Whentheir advocates have said nothing in them imperils defendant's rights under the United States Constitution, they areright; nothing could. But an amendment to theUnited States Constitution stands on different footing. It amends the Constitution. Its very purpose is to makeconstitutional that which would otherwise not havebeen constitutionally permissible. It may uniformly subordinate defendants' rights to victims' rights. It may requireany conflicting law or constitution precipe,state or federal, to yield. Even in the absence of a conflict, it may preempt the field, sweeping away all laws,ordinances, precedents, and decisions -- compatibleand incompatible alike -- on any matter touching upon the same subject. It may have none or some of theseconsequences depending upon its language and theintent behind its language. Few advocates have explicitly called for a "king-of-the-hill" victims rights amendment, but the thought seems imbedded in the complaint that existing law lacksuniformity. How else can universal symmetry be accomplished but by implementation of a single standard that fillsin where pre-existing law comes up short andshaves off where its generosity exceeds the standard? Proponents of S.J.Res. 3 and H.J.Res. 64 spokeof both the need to establish aminimum victims' rights standard and the need for uniformity. The principles of construction called into play in the case of a conflict between a victims' rights amendment and rights established elsewhere in the Constitutionare similar those used to resolve federal-state conflicts. Intent of the drafters is paramount. The courts will make every effort to reconcile apparent conflicts between constitutional provisions, but in the face of anunavoidable conflict between a right granted by an adopted victims rights amendment and some other portion ofthe Constitution, the most recently adoptedprovision will prevail. The proposals in the 106th Congress were designed to eliminate the unfair treatment that results because the criminal justice "system . . . permits the defendant'sconstitutional rights always to trump the protections given to victims," yet to do so in a manner that would "not denyor infringe any constitutional right of anyperson accused or convicted of a crime." In instances of unavoidable conflict between victim and defendant rights,this seemed to mean the prosecution mustyield. The text of the two hardly defeated this interpretation with the assurance that the "only the victim or thevictim's lawful representative shall have standingto assert the rights" created by the amendment, since the rights of the accused come not from the victims' rightsamendment but from the Sixth Amendment orsome other source within the Constitution. | Thirty-three states have added a victims rights amendment to their state constitutions. Both the House and SenateJudiciary Committees held hearings on similar proposals in the 106th Congress to amend the UnitedStates Constitution (S.J.Res. 3 introduced bySenator Kyl for himself and Senator Feinstein and H.J.Res. 64 introduced by Representative Chabot). TheSenate Committee initially reported outan amended version of S.J.Res. 3 without a written report, but issued a report prior to floor consideration ofthe reported proposal, S.Rept. 106-254. Neither S.J.Res. 3 nor H.J.Res. 64 were ever brought to a vote on the floor. This is an overview ofthose proposals and is an abbreviatedform of Victims' Rights Amendment: Proposals to Amend the United States Constitution in the 106thCongress, CRS Report RL30525(pdf). Authorities identifiedthere have been omitted here in the interests of brevity |
One of the main congressional concerns related to the budget process in recent years has been the amount of time it requires. The current process, which provides for consideration of various budget questions in the form of a concurrent resolution on the budget, reconciliation measures, tax measures, public debt measures, authorizations, regular appropriations, continuing appropriations, and supplemental appropriations, has been faulted as repetitive and inefficient. This, in turn, has fueled interest in the idea that the congressional budget process could be better structured to promote a more efficient use of Congress's limited time. Despite the perceived or actual permanence of much federal spending, the process of formulating, enacting, and executing the federal budget has remained characteristically annual. This annual budget cycle poses both an opportunity and a dilemma for Congress—although the annual review of spending legislation can afford Congress the opportunity to maximize its influence concerning the funding and operation of various programs and policies, many Members have expressed concern with the high percentage of the congressional workload that is devoted to budgetary matters. The annual completion of the budget cycle is dependent on the timely enactment of budgetary legislation. Consideration of certain types of budgetary legislation is often closely linked to the consideration of other types, so that delays in consideration of one measure may have an impact on the timing of all subsequent budgetary legislation. In recent years, final action occurred on appropriations measures an average of about 104 days after the start of the fiscal year on October 1 (see Table 1 ). The result has been frustration with the budget process and a desire to reduce the number or frequency of budget measures that need to be considered. The budget process has also been criticized as being unnecessarily repetitive, with some questions being debated in various forms several times each year. Defense policy, for example, may be debated in terms of its priority within the overall budget in the context of the budget resolution, in terms of policy in an authorization measure, and in terms of funding levels on an appropriations bill, only to have it all repeated the following year. Rather than promote efficient consideration, critics contend, this repetition has contributed to the complexity of the budget process, as well as to inefficiency and delay. A number of possible reforms, such as automatic continuing resolutions, joint budget resolutions, or merging the authorization and appropriations processes, have been advanced, at least in part, in the hope that they could make the budget process operate in a more timely fashion. For example, advocates of an automatic continuing resolution have argued that it could reduce deadline pressures in the appropriations process; those in favor of a joint budget resolution suggest that it would promote early agreement on budget priorities between Congress and the President; and some argue that a merged authorization-appropriations process could reduce the volume of legislation that needs to be considered in any given session of Congress. As a result, some see these and other proposed reforms as offering the potential to make the timely enactment of budget legislation more likely. Another possible approach to addressing this concern is to change the budget cycle from one year to two years, also known as "biennial budgeting." Because budgeting for the federal government encompasses a number of types of measures, biennial budgeting can have several meanings. Biennial budgeting can involve two-year budget resolutions, two-year appropriations, and other changes in the timing of legislation related to revenue or spending. Typically, biennial budgeting proposals have included at least the first two aspects. Biennial budgeting proposals may focus on enacting budgetary legislation for either a two-year period or two succeeding one-year periods in a single measure. In addition, biennial budget proposals typically require that executive branch planning and performance reviews be revised so that they are based on a two-year cycle. This report provides background on options, issues, and previous congressional action related to biennial budgeting. Biennial budgeting as a concept has many permutations, and may include a requirement for two-year budget resolutions, two-year appropriations, and also affect the timing of consideration for other types of legislation related to revenue and spending. The overall time frame contained in previous biennial budgeting proposals has typically taken either a "stretch" or "split sessions" approach. The stretch approach would extend the current budget process timetable to two full years. Advocates of this approach often argue that it allows for less hurried and more thorough consideration of budgetary legislation. In contrast, the split sessions approach is based on the expectation that all budgetary legislation would be considered in a single year or session of Congress (typically the first), while consideration of non-budgetary matters would occur primarily in the other year or session. Advocates of this approach often assert that limiting the time frame during which Congress may consider budgetary matters to every other year or session will encourage greater levels of agency and program oversight during the other. Biennial budgeting proposals have also varied with respect to the time frame for appropriations. "Biennial appropriations" may refer to all appropriations being enacted for a two-year period, all appropriations being enacted for two succeeding one-year periods in a single measure. In addition, the consideration of the 12 regular appropriations bills might occur in stages, so that some are enacted during the first year of the biennium and the others are enacted during the second year of the biennium. Because of the variety of approaches discussed above, biennial budgeting may have different meanings for different people. This section provides an overview of the options and selected issues related to two-year budget resolutions, two-year appropriations acts, and other possible changes in the timing of other types of legislation that might be associated with biennial budgeting. It is important to note, however, that this section does not discuss all possible outcomes and there is likely to be variance in what would occur if biennial budgeting were adopted, depending on the context and framework that was implemented. Whether these implications are viewed positively or negatively depends on the observer's assessment of the probable consequences of switching to a biennial budget, as well as the normative value placed on those consequences. Since the enactment of the Congressional Budget Act in 1974 ( P.L. 93-344 ; 88 Stat. 297), the budget process has centered around the concurrent resolution on the budget, which sets aggregate budget policies and functional priorities for Congress. The budget resolution is used to coordinate the various budgetary actions that are to be taken during a session of Congress. Proposals to convert the budget process to a two-year cycle have typically involved a process centered on a two-year budget resolution. Although the budget process is characteristically annual, there are a number of aspects of the Budget Act that encourage Congress to look beyond a single fiscal year. In particular, Section 301(a) currently requires that the budget resolution include binding figures for the upcoming fiscal year, plus planning levels for at least each of the four ensuing fiscal years. In recent years, budget resolutions have often included planning levels beyond the minimum number required by the Budget Act. For example, the budget resolution for FY2004 ( H.Con.Res. 95 , 108 th Congress) included planning levels through FY2013. The Budget Act also provides for the enforcement of the five-year totals for revenues and direct spending, and allows multi-year reconciliation instructions. In addition, the Senate's Pay-As-You-Go point of order (Section 201(a) of S.Con.Res. 21 , 110 th Congress, the FY2008 budget resolution) prohibits the consideration of revenue or direct spending legislation that would increase or cause an on-budget deficit over a six-year period and an 11-year period, each beginning with the current year. The Cut-As-You-Go rule in the House (Rule XXI, Clause 10) also provides a point of order against the consideration of legislation that would have the net effect of increasing mandatory spending over the same two time periods. It is possible that Congress might benefit from only needing to adopt the broad outlines of fiscal policy every two years. As Joseph White of the Brookings Institution stated in testimony before the Joint Committee on the Organization of Congress in 1993, "Annual fights about priorities between the same Congress and President do nobody any good." In addition, Congress was unable to adopt a budget resolution for FY1999, FY2003, FY2005, FY2007, and FY2011 through FY2014, and has therefore had to use other means to coordinate and enforce budgetary actions in those years. Based upon this recent experience, it could be argued that it is not necessary to adopt a budget resolution every year, and that a two-year budget resolution would better reflect current practice. It is also possible, however, that budget resolutions have served a useful purpose by providing Congress with the opportunity to participate in setting fiscal policy, and that the inability to adopt a budget resolution has been a portent of further budgetary battles throughout the year, rather than an indication that there is still agreement within Congress on the policies that were adopted in the previous year. In addition, although fiscal policy can be set for two-year periods, it is potentially subject to considerable uncertainty. If the adoption of a biennial budget resolution were to fully eliminate the opportunity currently provided by the budget resolution each year to either alter or confirm current policy, it might serve to further weaken the latter stages of the process. One of the significant changes that might be made by a biennial budgeting proposal would be a two-year cycle for appropriations. Under the split sessions approach, all regular appropriations measures would be considered in the first year of each Congress and could be provided either for a single two-year fiscal period or for two one-year periods. In either case, Congress would not need to act on appropriations during the second year of each Congress, except for emergency and other supplemental appropriations as needed. The stretch approach would opt instead for a process that would increase the duration of the current budget cycle so that, while the appropriations process could begin in the first session of a Congress, the fiscal biennium would not begin until October 1 of the second year. This would give Congress and the President a period of 20 months, rather than the current 8 months, to negotiate appropriations details. Under such proposals, Congress would not need to act on appropriations in the off-year, except for emergency or supplemental appropriations. Most biennial budget proposals include two-year appropriations because, supporters contend, a biennial budget resolution would not, in and of itself, present sufficient certainty for long-term planning by agencies, significant savings in congressional workload, or enough additional time for oversight. If regular appropriations were to be confined to the first fiscal year of the biennium, a possible benefit might be that additional programmatic review and oversight could occur during the year in which routine appropriations had already been provided. The extent to which this benefit would translate into greater time for the consideration of non-budgetary legislation and additional oversight would be dependent on a number of factors, including the extent to which emergency and other supplemental appropriations actions were necessary in the off-year. Current practice already includes a number of the devices proposed as part of a biennial budgeting system. For example, appropriations acts can provide for both budget authority that becomes available in future fiscal years ("advance appropriations") and budget authority available for periods of longer than a single fiscal year (multi-year or "no-year" appropriations). Making these practices mandatory for all programs could result in the more timely enactment of appropriations; this outcome, however, is dependent upon the type of appropriations that produce conflict and delays in the budget process. If routine appropriations are the cause of delays, then it is possible that making these decisions less often would be a beneficial change. If unforeseen and contentious issues are responsible, then widening the above practices (advance appropriations, for example) to mandate their use for all programs every other year is unlikely to result in any significant improvement in the process. One effect of either the stretch or split sessions biennial budgeting approaches would be that regular appropriations bills would be enacted only every other year. One consequence is that Congress over the years has previously attempted to limit the amount of executive branch discretion over the execution phase of the budget process by including earmarks and other types of provisos within the text or joint explanatory statement accompanying conference reports on regular appropriations bills. A decrease in the frequency of regular appropriations would appear to reduce the number of vehicles available to Congress, and thus have a direct impact on its ability to influence executive branch budget execution in this manner. Biennial budget proposals also might explicitly address the timing of other types of legislation—such as authorizations of appropriations, supplemental or emergency appropriations, reconciliation, entitlements, revenue, or other non-budgetary policy measures—within a biennial budgeting time frame. Many biennial budgeting proposals require that all types of authorizations be enacted for periods of at least two fiscal years. Under current practice, however, many authorizations of appropriations are already enacted for multi-year periods. The main exceptions to this are the Department of Defense and Intelligence authorizations of appropriations, which are considered annually, so the impact of such a requirement on other policy issues is unclear. Most proposals also divide action so that all authorizations would normally be considered in the second year of each Congress, separate from consideration of the budget resolution and regular appropriations measures. A previous concern regarding a multi-year authorization requirement is that, unless supported by biennial appropriations, they may lack the degree of certainty required to achieve the promised benefits of long-range planning. One proposed benefit of multi-year authorizations is that they could be in place before the appropriations process begins, providing for smoother working relationship between authorizers and appropriators. Although the requirement for multi-year authorizations within biennial budgeting would only affect some programs, such a system could have major repercussions for those specific issue areas. For example, Congress has operated under the presumption that the Defense and Intelligence authorizations are sensitive to a variety of foreign policy issues and, consequently, that these issues need to be addressed every year. An attempt to experiment with two-year authorizations for the Department of Defense in the 1980s proved unsuccessful. This experience has sometimes been partly attributed to the fact that the experiment was not part of a comprehensive move to biennial budgeting and was not supported by two-year appropriations. Another contributing factor was that the two-year process was overtaken by other budgetary decisions. For example, the deficit reduction concerns that led to a late 1987 budget summit between Congress and President Reagan effectively required the second year of the two-year authorization to be amended extensively. Given this experience, support for two-year defense authorizations waned. The proposed division between the consideration of authorizations and appropriations for split session approaches could serve to augment the separation of money and policy decisions currently embodied in House and Senate rules. The division also could clarify the different functions that authorizations and appropriations serve, but that some Members feel have been blurred or weakened in recent decades. Conversely, there might be an erosion of the separation between authorizations and appropriations. Absent an opportunity to consider authorizing legislation in the first year of a Congress, Members might feel it necessary to use appropriations bills as legislative vehicles to raise policy questions, rather than wait for the second authorization/oversight session. The extent to which supplemental or emergency appropriations might be available during various portions of the biennium depends on both the type of biennial budgeting that was enacted and the types of appropriations that would be allowed (or not explicitly prohibited) under a particular framework. Under a split session timetable, decisions on appropriations are typically confined to the first year in the biennium, with the goal being that the second year will be focused on programmatic decisions and oversight. The degree to which separation was enforced would determine the extent to which supplemental appropriations might also be confined to the first year of the biennium, or another alternative timetable. A stretch model might also limit the time frame in which appropriations decisions can be adjusted, for example, to the period after the budget resolution was adopted. Reconciliation instructions produce a type of legislation intended to bring existing revenue and spending law into conformity with the policies in the budget resolution. For such legislation to be in order, reconciliation instructions must first be adopted in the budget resolution. As a result, under a biennial budget resolution, the possibility of enacting reconciliation legislation would typically only exist once every two years, unless the rules governing reconciliation contained in the Congressional Budget Act were modified to allow for such legislation under an alternative mechanism or time frame. Some observers perceive this implication as an argument against biennial budgeting. Although biennial budget proposals have not typically addressed restricting other types of legislation, such as entitlements and revenue, to a particular time frame within the biennium, some observers have suggested that this also might be preferable. For example, under a split session approach, legislation affecting revenue or spending might be limited to the first year or session of Congress when other decisions regarding budgetary legislation are made. Aside from issues concerning how particular aspects of biennial budgeting might work in practice, a number of arguments have been made for and against its overall utility. These arguments are primarily drawn from congressional hearings, analyses of biennial budgeting by governmental committees and commissions, and scholarly articles and reports issued by think tanks analyzing various budget process reform proposals. Note that some of these arguments are based upon the potential implications discussed in the previous section. While these arguments are not an exhaustive list of all reasons why biennial budgeting proposals have been supported or opposed, and their applicability is heavily dependent upon the type of biennial budgeting being considered, they are representative of the debate that has developed over the past 30 years. Supporters of biennial budgeting have generally advanced three arguments—that a two-year budget cycle would (1) reduce congressional workload by eliminating the need for annual consideration of routine or repetitious matters; (2) allow Congress to reserve time to promote improved oversight and program review; and (3) allow better long-term planning by the agencies that spend federal funds at the federal, state, or local level. Advocates have asserted that reducing the number of times that Congress must consider budget questions would reduce the percentage of congressional time consumed by the process and would allow more time for Congress to conduct agency and program oversight. By effectively dividing each Congress into a budget year and an authorization/oversight year, a two-year cycle might reduce competition for Members' time and attention, and allow for more effective use of authorizations to establish policy. Congress would not have to resort to appropriating in the absence of a current authorization as often, because the authorizations would not be crowded out of the congressional schedule by appropriations questions. Another anticipated benefit has been that executive branch agencies, relieved of the need to develop and defend budget proposals as frequently, could better manage federal programs. Another argument that has often been made by proponents of biennial budgeting is that it might increase certainty about the level of future funding, thus allowing better long-range planning by federal agencies and by state and local governments. The Reagan, George H. W. Bush, Clinton, and George W. Bush Administrations all have previously expressed support for biennial budgeting. The 1993 report of the National Performance Review (the Gore Commission) noted, "Considerable time could be saved—and used more effectively—in both the executive and legislative branches of government if budgets and appropriations were moved to a biennial cycle." The Clinton Administration's final budget submission in 2000 reiterated its support for biennial budgeting. The George W. Bush Administration also included support for biennial budgeting (as well as other budget process reforms) in the President's annual budget submission to Congress. The FY2004 Budget request stated that "a biennial budget would allow lawmakers to devote more time every other year to ensuring that taxpayers' money is spent wisely and efficiently. In addition, Government agencies would receive more stable funding, which would facilitate longer range planning and improved fiscal management." Supporters have also pointed to the multi-year nature of the budget summit agreements between Congress and the President both as evidence of the efficacy of multi-year budgeting and as a major factor in recent years for promoting more efficient consideration of budgetary legislation. Notably, the 1987 agreement between Congress and the Reagan Administration, the 1990 agreement with the Bush Administration, and the 1993 and 1997 agreements with the Clinton Administration were all built around the projected future impact of a budget plan. Subsequent budget resolutions, and budget implementing legislation, generally adhered to those agreements. By institutionalizing this arrangement, advocates of biennial budgeting posit that the success of these agreements can be duplicated. Critics of biennial budgeting have countered with several arguments as to why some of the projected benefits might not be realized. Reducing the number of times that Congress considers budget matters, they have suggested, may only raise the stakes, and thereby heighten the possibility for conflict and increased delay. In addition, enacting a budget resolution and spending legislation every other year could be effective in reducing congressional workload or aiding longer-term planning, but likely only in the second year of the cycle. Even that benefit may not accrue without accurate budget projections. Making accurate projections of revenues and expenditures is always difficult. With total appropriations for FY2010 in excess of $1.9 trillion (of which mandatory spending accounted for over one-third) even small errors can be significant. Projecting revenues and expenditures for a two-year cycle requires forecasting as much as 30 months in advance, rather than 18 under an annual budget cycle, and even 18-month projections have previously been inaccurate. For example, during the FY2006 appropriations cycle, when the budget projections for the upcoming fiscal year were discovered to be $1.2 billion less than what would be required to provide for veterans' health care. Such issues with inaccurate forecasting, critics have argued, might be heightened by biennial budgeting and could result in providing either too much or too little money for individual programs. Some have feared that this would increase the need for revisions to the budget resolution, supplemental appropriations, or other adjustments in the off-year that would effectively undercut any intended improvements in planning. With only a limited ability to anticipate future conditions, critics have argued that a two-year cycle could require Congress to choose either to allow the President greater latitude for making budgetary adjustments in the off-years or to engage in mid-cycle corrections to a degree that would nullify any anticipated time savings or planning advantages. Furthermore, they have argued that annual review of appropriations requests is an important part of oversight that would be lost under a biennial budget, with no guarantee that committees would take advantage of a separate oversight session, or that oversight separate from review of funding decisions would be as effective. In addition, critics have contended that the institutional incentives for supporting two-year budgets can vary based on the expected budgetary outcome. A budget plan that would lock in an amount for the second year of a biennium would draw relatively little support from program advocates in a time of increasing budgets (because the program might receive more generous funding later), and, alternately, would draw relatively little support from program cutters in times of decreasing budgets (because the program would be somewhat insulated from possible later cuts). In other words, these critics have asserted, an action to lock in future budgetary resources would be likely to draw opposition when some decision makers believe that a "better" decision may be arrived at in the future. In response to the possibility of duplicating the success of previous long-term budget agreements, some opponents have argued that the lessons to be learned from successful executive-congressional summits are somewhat more narrow. Opponents have suggested that while these occasional summits have proved useful in the context of facilitating the following year's budget process, it would not be possible to institutionalize the process. Instead, some of these critics perceive that the political and budgetary context that brings Congress and the President to the bargaining table on a regular basis is also necessary to ensure a commitment to implementing the outcome. Perhaps because many Representatives and Senators have government experience at the state level, state practices are often cited in deliberations on budget process reform. In particular, 19 states operate under a two-year budget cycle (see Table 2 ), and this experience has been cited by many in discussing the applicability of biennial budgeting to the federal government. However, the state experience does not provide any single answer concerning biennial budgeting. Some states that operate under an annual cycle have significant portions of their budget enacted on a two-year cycle. For example, Missouri enacts its operating budget on an annual cycle, but its capital budget on a biennial cycle, whereas Kansas budgets for some regulatory agencies two years at a time within the overall context of an annual budget. Conversely, some states with biennial cycles do a significant portion of their budgeting on an annual basis. For example, Virginia and Oregon both enact a biennial budget that is routinely amended during the session when the budget is being executed. Minnesota considers both its operating and capital budgets on two-year cycles, but in different years. As a result, supporting examples can be found both for and against adopting a two-year cycle at the federal level. One argument of opponents of a two-year cycle has been that the trend among states has been to shift from biennial to annual budget cycles, particularly in those states with larger populations. This trend, opponents have suggested, demonstrates that biennial budgeting represents a way of budgeting less applicable to modern circumstances. In support of this, they have pointed out that, while 44 states operated with biennial budget cycles in 1940, this was because most state legislatures at that time tended to meet every other year. As of 2011, with the prevalence of annual sessions, 31 states use annual cycles, including 7 of the 10 most populous states. However, not all states have made changes in favor of annual budgeting. At least three states (Hawaii in 1967, Nebraska in 1987, and Connecticut in 1991) have switched to biennial budgeting after extended periods in which they used an annual cycle, while several others (Indiana, Minnesota, and Wisconsin) returned to biennial cycles after brief experiments with annual budgets. As discussed above, one of the main arguments made by opponents of biennial budgeting has been that it would inevitably lead to greater authority for the President. Again the experience at the state level is inconclusive. Both annual and biennial budget cycles have been coupled with varying degrees of executive branch discretion and authority. For example, Maine, with a biennial budget, has far stricter limits on the governor's authority to transfer funds or cut spending unilaterally than does South Dakota, with an annual budget. The natural tension between the desire for longer planning horizons and the increasing inaccuracy of budget projections when stretched over longer periods has not been solved at the state level. This is because the same basic system of funding stability and incremental budget changes that characterizes federal budgeting also operates in the state context. Few state programs are subject to sweeping changes in any given year, regardless of the budget cycle. This might suggest that both the assertions of a need for a longer budget cycle to ensure better planning and fears related to the inadequacy of long-term forecasts of budgetary needs might be overstated. Almost from the time the Congressional Budget Act was enacted in 1974, budget process reform has been a topic of congressional interest and biennial budgeting has been discussed at least since the 95 th Congress (1977-1978). Hearings on the subject of budget process reform have often included testimony concerning biennial budgeting. In addition, on several occasions, both House and Senate committees have conducted hearings specifically on the topic of biennial budgeting. Congressional interest in biennial budgeting has also been demonstrated by survey findings and by the level of cosponsorship of biennial budgeting proposals. Biennial budgeting has also been considered by a number of federal committees and commissions organized to study possible procedural or structural reforms to Congress, the budget process, or both. In addition to the Gore Commission the National Economic Commission, and the Study Group on Senate Practices and Procedures (also known as the Pearson-Ribicoff Commission) recommended a form of biennial budgeting. In 1993, both the Senate and House members of the Joint Committee on the Organization of Congress included proposals for a two-year budget cycle in recommendations to their respective chambers (S.Rept. 103-215, vol. 1, and H.Rept. 103-413, vol. 1). In recent years, House jurisdiction over budget process reform generally has been shared jointly by the Committee on Rules and the Committee on the Budget; both have considered the issue of biennial budgeting. In the Senate, prior to the 109 th Congress, jurisdiction over the budget process was shared jointly by the Committee on Governmental Affairs and the Committee on the Budget, under a standing order of the Senate (first agreed to August 4, 1977, and discontinued as of January 2005). Jurisdiction over the budget process is currently held by the Senate Budget Committee. Congressional action related to biennial budgeting first occurred in 1982 with hearings on S. 2008 , the Budget and Oversight Reform Act of 1981 (97 th Congress). Additional action, outlined below, occurred with respect to biennial budgeting during the 100 th , 101 st , 102 nd , 103 rd , 104 th , 105 th , 106 th , 107 th , 108 th , 109 th , 112 th , and 113 th Congresses. None of these proposals were ultimately enacted. In the 112 th Congress, the House Rules Committee Subcommittee on the Legislative and Budget Process held a hearing on H.R. 114 , the Biennial Budgeting and Appropriations Act of 2011; no further action occurred during that Congress. In the 113 th Congress, the Senate adopted an amendment ( S.Amdt. 136 ) to the FY2014 budget resolution ( S.Con.Res. 8 ) that created a deficit neutral reserve fund for the establishment of a biennial budget and appropriations process. Additionally, the House Budget Committee reported H.R. 1869 , the Biennial Budgeting and Enhanced Oversight Act of 2014, with an amendment ( H.Rept. 113-382 ). S. 2008 , the Budget and Oversight Reform Act of 1981, was introduced on January 25, 1982. This bill would have amended the Congressional Budget Act to provide for a biennial budget cycle. The measure was jointly referred to the Senate Committee on the Budget and Committee on Governmental Affairs. The Committee on the Budget held hearings on the measure on September 14, 16, 21, and 23, 1982. S. 2008 was not reported out of committee. On May 6, 1987, during consideration of S.Con.Res. 49 , the budget resolution for FY1988, an amendment ( S.Amdt. 186 to S.Amdt. 174 ) was offered on the floor of the Senate to express the sense of the Congress that biennial budget process should be enacted into law that year. The amendment was tabled, 53-45. S. 2478 , the Biennial Budget Act of 1988, was introduced on June 7, 1988. The measure was jointly referred to the Senate Committee on the Budget and Committee on Governmental Affairs. The Committee on Governmental Affairs held hearings on the measure on June 7, 1988. S. 2478 was reported by the Committee on Governmental Affairs on August 25, 1988, with amendments (S.Rept. 100-499). No further action was taken. S. 29 , the Biennial Budget Act, was introduced on January 25, 1989. The measure was jointly referred to the Senate Committee on the Budget and Committee on Governmental Affairs. The Committees on Budget and Governmental Affairs held joint hearings on the measure on October 18, 1989. S. 29 was reported by the Committee on Governmental Affairs on March 21, 1990 (S.Rept. 101-254). No further action was taken. On May 4, 1989, during consideration of S.Con.Res. 30 , the Senate budget resolution for FY1990, an amendment ( S.Amdt. 88 ) was offered on the floor of the Senate to express the sense of the Senate that Congress should enact legislation to establish a biennial budget process. The amendment was agreed to by a voice vote and was included in the Senate substitute amendment to H.Con.Res. 106 , the vehicle for the FY1990 budget resolution. This provision was ultimately removed in conference (H.Rept. 101-50). H.R. 1889 , the Budget Simplification and Reform Act of 1991, was introduced on April 17, 1991. This budget process reform bill included provisions establishing a biennial budget. The measure was jointly referred to Committee on Governmental Operations (and subsequently referred to the Subcommittee on Legislation and National Security) and the Committee on Rules (and subsequently referred to the Subcommittee on the Legislative Process). The Subcommittee on the Legislative Process held hearings on the measure on September 18 and 25, 1992. H.R. 1889 was not reported out of committee. H.R. 3801 , the Legislative Reorganization Act of 1994, was introduced on February 3, 1994. This bill included provisions establishing a biennial budget. The measure was jointly referred to the Committees on Government Operations, House Administration, and Rules (and subsequently referred to the Subcommittee on the Rules of the House and Subcommittee on the Legislative Process). The Committee on House Administration held hearings on the measure on June 14, 30, and July 14, 1994. The Subcommittee on the Rules of the House held hearings on March 9, 10, 16, 24, and April 13, 1994. The Subcommittee on Legislative Process held hearings on February 25 and March 2, 1994. No further action was taken. S. 1824 , the companion measure to H.R. 3801 , was introduced on February 3, 1994. The measure was referred to the Committee on Rules, which held hearings on February 10, 24, March 10, 17, and April 28 (S.Hrg. 103-488). The bill was reported with an amendment on July 1, 1994 (S.Rept. 103-297). No further action was taken. S. 261 , the Biennial Budgeting and Appropriations Act, was introduced on February 4, 1997. The measure was jointly referred to the Committee on the Budget and Committee on Governmental Affairs. The Committee on the Budget held a hearing on February 13, 1997. The Committee on Governmental Affairs held a hearing on April 23, 1997 (S.Hrg. 105-138). The bill was reported by the Committee on Governmental Affairs with an amendment in the nature of a substitute on September 4, 1997 ( S.Rept. 105-72 ). No further action was taken. S. 92 , the Biennial Budgeting and Appropriations Act, was introduced on January 19, 1999. The measure was jointly referred to the Committee on the Budget and Committee on Governmental Affairs. The Committees on the Budget and Governmental Affairs held a joint hearing on January 27, 1999. The bill was reported by the Committee on Governmental Affairs with an amendment in the nature of a substitute on March 10, 1999 ( S.Rept. 106-12 ). No further action was taken. S. 93 , the Budget Enforcement Act of 1999, was introduced on January 19, 1999. This bill included provisions providing for a biennial budget. The measure was jointly referred to the Committee on the Budget and Committee on Governmental Affairs. The Committees on the Budget and Governmental Affairs held a joint hearing on January 27, 1999. No further action was taken. On May 16, 2000, during consideration of H.R. 853 , an amendment ( H.Amdt. 708 ) was offered on the floor of the House to add a new title establishing a biennial budget process. The amendment was rejected, 201-217. H.R. 981 , the Budget Responsibility and Efficiency Act of 2001, was introduced on March 13, 2001. This bill would have amended the Congressional Budget Act to provide for a biennial budget cycle. The measure was jointly referred to the Committee on the Budget, Committee on Rules, and Committee on Government Reform. The Committee on the Budget reported the measure with an amendment on September 5, 2001 ( H.Rept. 107-200 , Part I). The Committee on Rules reported the measure with an amendment on November 14, 2001 ( H.Rept. 107-200 , Part 2). No further action was taken. During House consideration of H.R. 4663 , the Spending Control Act of 2004, an amendment ( H.Amdt. 621 ) was offered that sought to replace the text of the bill with the "Family Budget Protection Act of 2004," a budget process reform proposal containing provisions to provide for a biennial budget. The amendment was rejected, 88-326. S. 3521 , the Stop Over Spending Act of 2006, was introduced on June 15, 2006. This bill contained provisions providing for a biennial budget cycle. The measure was referred to the Committee on the Budget, which reported the measure with an amendment on July 14, 2006 ( S.Rept. 109-283 ). No further action was taken. H.R. 114 , the Biennial Budgeting and Appropriations Act of 2011, was introduced on January 5, 2011. The measure was jointly referred to the Committees on the Budget, Oversight and Government Reform, and Rules (and subsequently referred to the Subcommittee on the Legislative and Budget Process). The Subcommittee on the Legislative and Budget Process held a hearing on January 24, 2012. No further action was taken. During Senate consideration of S.Con.Res. 8 , the FY2014 budget resolution, an amendment was offered that created a deficit neutral reserve fund for the establishment of a biennial budget and appropriations process ( S.Amdt. 136 ). The amendment was adopted, 68-31. The resolution passed the Senate, 50-49, but final action on resolving differences did not occur before the end of the Congress. H.R. 1869 , the Biennial Budgeting and Enhanced Oversight Act of 2014, was introduced on May 8, 2013. The measure was jointly referred to the Committees on the Budget, Oversight and Government Reform, and Rules. The Committee on the Budget reported the measure with an amendment on March 21, 2014 ( H.Rept. 113-382 ). After the measure was discharged from the Committee on Oversight and Government Reform on March 21, 2014, and the Committee on Rules on December 11, 2014, no further congressional action occurred. | Difficulties in the timely enactment of budgetary legislation have long fueled interest in ways to structure the congressional budget process to ease time constraints. One long-discussed reform proposal would attempt to remedy this by changing the budget cycle from one to two years. Biennial budgeting is a concept that may involve several variations, including two-year budget resolutions, two-year appropriations, and other changes in the timing of legislation related to revenue or spending. Biennial budgeting proposals may focus on enacting budgetary legislation for either a two-year period or two succeeding one-year periods in a single measure. The overall time frame for a biennial budget cycle has previously taken either a "stretch" approach, where the current budget process timetable is extended to two full years, or a split sessions approach, where all budgetary activity is expected to occur in a single year or session of Congress (typically the first), while the other year or session is reserved primarily for oversight and the consideration of non-budgetary matters. Proponents of biennial budgeting have generally advanced three arguments—that a two-year budget cycle would (1) reduce congressional workload by eliminating the need for annual review of routine matters; (2) reserve the second session of each Congress for improved congressional oversight and program review; and (3) allow better long-term planning by the agencies that spend federal funds at the federal, state, or local level. Critics of biennial budgeting have countered by asserting that the projected benefits might not be realized. Projecting revenues and expenditures for a two-year cycle requires forecasting as much as 30 months in advance. This might result in less accurate forecasts and could require Congress to choose either allowing the President greater latitude to make budgetary adjustments in the off-years or engaging in mid-cycle corrections, which might effectively undercut any workload reduction or intended improvements in planning. Opponents have also pointed out that oversight through annual review of appropriations would be lost under a biennial budget, with no guarantee that a separate oversight session would be effective. Furthermore, they have argued that reducing the number of times that Congress considers budget matters may only raise the stakes, which heightens the possibility for conflict and increased delay. Biennial budgeting has a long history at the state level. The trend since World War II has been for states to convert to an annual budget cycle; however, the most recent data available, from 2011, indicate that 19 states operate with a two-year cycle, and some states operate with mixed cycles that put significant portions of their budgets on a two-year cycle. Congressional action related to biennial budgeting first occurred in 1982 with hearings on S. 2008, the Budget and Oversight Reform Act of 1981 (97th Congress). Additional action occurred with respect to biennial budgeting during the 100th, 101st, 102nd, 103rd, 104th, 105th, 106th, 107th, 108th, and 109th Congresses. None of these proposals were ultimately enacted. In the 112th Congress, the House Rules Committee Subcommittee on the Legislative and Budget Process held a hearing on H.R. 114, the Biennial Budgeting and Appropriations Act of 2011, but took no further action. In the 113th Congress, the Senate adopted an amendment (S.Amdt. 136) to the FY2014 budget resolution (S.Con.Res. 8), that created a deficit neutral reserve fund for the establishment of a biennial budget and appropriations process. Additionally, the House Budget Committee reported H.R. 1869, the Biennial Budgeting and Enhanced Oversight Act of 2014, with an amendment (H.Rept. 113-382). No further action was taken. |
Relatively high default and foreclosure rates in the housing market have led some to question whether borrowers were fully informed about the terms of their mortgage loans. There has been concern that mortgage disclosure forms are confusing and not easily understood by borrowers. It has been argued that transparent mortgage terms could enhance consumer shopping and discourage predatory, discriminatory, and fraudulent lending practices. Lending practices that involve hidden costs may result in a payment shock to a borrower, possibly leading to financial distress or even foreclosure. The issue of adequate disclosure of mortgage terms is longstanding. The Truth in Lending Act (TILA) of 1968, which was previously implemented by the Federal Reserve Board via Regulation Z, requires lenders to disclose the cost of credit and repayment terms of mortgage loans before borrowers enter into any transactions. The TILA Disclosure Statement conveys information about the credit costs and terms of the transaction. The TILA Disclosure Statement lists the annual percentage rate (APR), an interest rate calculation that incorporates both the loan rate and fees. The statement also discloses finance charges, the amount financed, the total number of the payments, whether the interest rate on the mortgage loan can change, and whether the borrower has the option to refinance the loan. The Real Estate Settlement Procedures Act (RESPA) of 1974 is another element of the consumer disclosure regime. RESPA requires standardized disclosures about the settlement or closing costs, which are costs associated with the acquisition of residential mortgages. Examples of such costs include loan origination fees or points, credit report fees, property appraisal fees, mortgage insurance fees, title insurance fees, home and flood insurance fees, recording fees, attorney fees, and escrow account deposits. In other words, the mortgage loan rate and fees are disclosed in separate calculations rather than in one calculation. In addition, RESPA, which was implemented by the Department of Housing and Urban Development (HUD), includes the following provisions: (1) providers of settlement services are required to provide a good faith estimate (GFE) of the settlement service costs borrowers should expect at the closing of their mortgage loans; (2) a list of the actual closing costs must be provided to borrowers at the time of closing, which are typically listed on the HUD-1 settlement statement; and (3) RESPA prohibits "referral fees" or "kickbacks" among settlement service providers to prevent settlement fees from increasing unnecessarily. The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203 ) transferred general rulemaking authority for various provisions of TILA and RESPA to a new Consumer Financial Protection Bureau (CFPB) effective July 21, 2011. Lenders currently present borrowers with both TILA and RESPA disclosures, but the Dodd-Frank Act has directed the CFPB to create a single disclosure form that satisfies both disclosure requirements. The CFPB must issue a proposed rule of the new Loan Estimate form within one year of its July 21, 2011 transfer date. The CFPB released two initial Loan Estimate prototypes in May 2011 and has proposed several rounds of updated prototypes since then. This report reviews current efforts to regulate the reporting of pertinent loan information to consumers, including actions taken by the CFPB. As previously stated, TILA requires mortgage lenders to present borrowers with a disclosure statement that conveys information about the credit costs and terms of the transaction in one APR calculation expressed as a percentage. TILA was amended in 1980 to require the Federal Reserve to publish APR disclosure forms. On November 17, 2008, HUD made changes to the RESPA component of the mortgage disclosure process that it supervises. Key modifications are discussed below. HUD's final rule developed a standardized good faith estimate form for use in the initial stages of obtaining mortgages. The GFE included changes intended to help consumers better understand and locate relevant information about their mortgage products. For example, the GFE conveys information about the mortgage terms, whether the interest rate can rise, whether the overall loan balance can rise, whether the loan has a prepayment penalty, whether the loan has a balloon payment, and whether the quoted monthly payment includes a monthly escrow payment for taxes. All of this information about the loan appears on the first page of the GFE. In addition to facilitating comparison shopping, the HUD GFE form also results in reliable GFEs in the sense that some of the estimated costs are required to not change substantially by the time consumers are ready to close on their loans. Shopping for the best deal or the most affordable loan would be pointless if the costs were to change when borrowers arrived at closing. Consequently, page three of the GFE lists charges that cannot increase, charges that are allowed to increase up to 10%, and charges that may change at settlement. For specific charges that should not change or exceed the 10% limit, a borrower has the option to withdraw the application. This makes it difficult for lenders to generate "costs" or fees that could not be easily justified. A separate GFE is required for each loan product offered to the borrower. For example, a borrower may wish to compare a traditional fixed rate mortgage (FRM) loan with an adjustable rate mortgage (ARM) loan. Both mortgage products must have separate GFEs to ensure that the information provided is unique to each product. HUD argued that these changes to the GFE would reduce confusion about loan and settlement costs, help the borrower better determine product affordability, and facilitate comparison shopping. HUD distinguished two stages in the overall mortgage seeking process. The consumer receives a GFE in stage 1, which occurs prior to proceeding with the official mortgage application in stage 2. In the first stage, the lender is not expected to have performed any underwriting, and the GFE need only consist of information obtained from the borrower without any verification of borrower statements. Final underwriting is expected to begin in stage 2 after the borrower has expressed a willingness to proceed with an official mortgage application. The GFE becomes binding only if the underwriting process confirms borrower statements and loan qualifications. If the underwriting process reveals that the borrower is unable to qualify for the specific loan product, then the lender may reject the borrower or propose a new GFE for another loan product in which the borrower is more likely to qualify. The TILA Disclosure Statement also has a two-stage process similar to the GFE. If the initial APR on the disclosure changes by more than a certain amount after the loan underwriting is performed, the lender must provide a corrected Disclosure Statement at least three days before the loan can be finalized. If a term other than the APR changes after underwriting, then the corrected disclosure must be presented to the borrower at the time the loan is finalized. For a majority of prime or high-credit quality borrowers, the final loan rates initially stated on the GFE forms are likely to become the actual ones after underwriting. Lenders typically advertise the interest rates that prime borrowers are likely to be charged, and high-credit quality borrowers are arguably already able to shop for loans. Subprime or high-risk borrowers, however, encounter difficulties shopping for loan rates and may continue to do so under this system. Lenders typically charge higher rates to riskier borrowers to compensate for the additional risk, and such rates are typically determined after underwriting has occurred. Hence, low-credit quality borrowers may be less likely to obtain estimates of loan rates prior to final underwriting that would not change afterwards. Assuming no substantial shifts in the current proportion of prime relative to subprime borrowers, or that the share of prime borrowers diminishes as a result of further borrower risk gradations, underwriting at the GFE stage might not be necessary for the vast majority of consumers to obtain fairly reliable pricing information of mortgage products. A standardized HUD-1 settlement statement is required at all settlements or closings involving mortgage loans. The HUD-1 lists all settlement charges paid at closing, the seller's net proceeds, and the buyer's net payment. HUD modified the HUD-1 form to make it easier for borrowers to trace the estimated costs on the GFE to the actual charges listed on the HUD-1 form. The itemized charges listed on the HUD-1 form include references to the same charges originally listed on the GFE. With these references, it may become more apparent to borrowers what charges remained the same or changed from the estimation stage to the closing stage. Prior to implementation of the standardized GFE, a Federal Trade Commission (FTC) study tested 819 consumers to document their understanding of mortgage cost disclosures and loan terms, as well as their ability to avoid deceptive lending practices. The authors found that both prime and subprime borrowers had difficulty understanding important mortgage costs after viewing mortgage cost disclosures. Some borrowers had difficulty identifying the APR of the loan and loan amounts. Many borrowers did not understand why the interest rate and APR of a loan would differ. In addition, borrowers had trouble understanding loan terms for the more complicated mortgage products, such as those with optional credit insurance, interest-only payments, balloon payments, and prepayment penalties. Many borrowers were unable to determine whether balloon payments, prepayment penalties, or up-front loan charges were part of the loan. The inability to understand a loan offer makes a borrower more vulnerable to predatory lending. Predatory loans are often characterized by high fees or interest rates and other provisions that may not benefit the borrower. Given that one area particularly susceptible to predatory action is the calculation of lender compensation, HUD's revised GFE form includes new disclosure methods so borrowers can understand the fees they are charged to obtain their mortgage loans. Loan charges may be collected either through points (up-front fees), or via the interest rate mechanism, which is referred to as the yield spread premium (YSP), or some combination of these two pricing mechanisms. Page two of the revised standardized GFE form discloses the computation of the total origination costs. In addition, if borrowers realize that mortgage loan origination costs may be collected by some combination of up-front fees and YSP, then they may also realize that it is possible to choose between paying higher up-front fees for a lower interest rate or lower up-front fees for a higher interest rate. Recognition of this trade-off may help borrowers avoid being charged both higher rates and higher fees. The GFE includes a trade-off table on page three to facilitate the understanding of the trade-off between interest rates and points. The trade-off table discloses how a loan with the same principal face value and a lower interest rate results in higher up-front settlement costs; it also discloses how the same loan with a higher interest rate results in lower up-front settlement costs. Although the trade-off table was found to benefit consumers, HUD's final rule required only the leftmost column of the table to be filled out. The decision to allow loan originators the option to fill out the remaining columns was related to concerns regarding the cost burden and time to calculate comparable loan costs information. In addition, the trade-off table may still be difficult to interpret for loans with adjustable interest rates, which are likely to change over the life of the loan and distort the inverse relationship between the interest rate and up-front fees. Some borrowers, however, may be inclined to request that loan originators fill out the table completely, which would facilitate HUD's policy objectives to achieve transparency. As required by the Dodd-Frank Act, the CFPB has proposed various prototypes of a standardized Loan Estimate form to combine the TILA Disclosure Statement and HUD's GFE into a single document. The Dodd-Frank Act directed the CFPB to issue a proposed rule of the new Loan Estimate form within one year of its July 21, 2011 transfer date. The CFPB stated its plans to perform five rounds of testing in six different cities before the final rule is proposed. In addition to consumer testing, the CFPB convened a Small Business Review Panel to solicit feedback on its prototype. The current prototype, Tupelo, is the most recent form available on the CFPB website and has been developed after at least five rounds of testing. Tupelo has three pages with the first page containing three sections. The first section presents the loan amount; the interest rate and whether it can change; the monthly loan payment; and whether a prepayment penalty or a balloon payment exists. The second section discloses the projected monthly payments over various time periods of the loan. Estimates of the borrower's monthly payment also includes estimated property taxes, insurance, and assessments. This section also shows whether an escrow account exists and how much the borrower should expect to pay each month. The last section on page one provides the estimated amount needed to close. The second page of the Tupelo prototype uses the example of a loan for $211,000 with $6,151 in closing costs for the sake of illustrating a completed form. The prototype has five sections. The first two sections itemize the various expenses associated with closing. The third section calculates the cash needed to close by summing the settlement fees, settlement costs, down payment, and other costs. Next, a table provides the potential borrower with information on the monthly payments, such as whether there are any interest-only payments and what the maximum payment could be. Finally, a second table describes whether the mortgage interest rate is adjustable and how it could potentially change. The third page of the Tupelo prototype contains three additional sections. The first section allows borrowers to compare the terms of other loans offered by other loan originators. The section lists the amount that a borrower will have paid in total over the first five years of the loan and how much would go to paying down principal. It also lists the APR as well as the total amount of interest paid over the loan term as a percentage of the loan. The next section provides brief information about other aspects (e.g., appraisal, homeowner's insurance, late payments, and servicing). Should the borrower decide to proceed with the mortgage origination process, the final section provides a space for the applicant to sign to confirm that the form was received. The CFPB has also developed a prototype settlement disclosure, which consolidates the HUD-1 Settlement Statement and the final TILA disclosure. | High default and foreclosure rates in the housing market have resulted in questions as to whether borrowers were fully informed about the terms of their mortgage loans. A lack of transparency with respect to loan terms and settlement costs can make it difficult for consumers to make well-informed decisions when choosing mortgage products. In addition, inadequate disclosures can make some borrowers more vulnerable to predatory lending or discriminatory practices. The adequate disclosure of mortgage terms is a longstanding issue that has prompted several congressional actions. For example, the Truth in Lending Act (TILA) of 1968 and the Real Estate Settlement Procedures Act (RESPA) of 1974 were enacted to require disclosures of credit costs and terms to borrowers. The Economic Growth and Regulatory Paperwork Reduction Act of 1996 (P.L. 104-208) directed the Federal Reserve Board and the Department of Housing and Urban Development (HUD) to propose a single form that satisfied the requirements of RESPA and TILA. However, the Federal Reserve Board and HUD concluded that regulatory changes would not be sufficient and that further statutory changes would be required for the forms to be consolidated. More recently, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act; P.L. 111-203), which established the Consumer Financial Protection Bureau (CFPB), mandated the new agency revisit disclosure stipulations for mortgage loans. In addition, the Dodd-Frank Act requires the CFPB to consolidate mandatory TILA and RESPA disclosures into one Loan Estimate form. The 112th Congress has been closely monitoring the subsequent rulemaking associated with the Dodd-Frank Act, as well as the performance and effectiveness of the CFPB. Consequently, this report examines one of the first major actions undertaken by the new agency. Specifically, efforts by the CFPB to create an effective mortgage disclosure form for borrowers are discussed. This report will be updated as warranted. |
Long-standing U.S. policy has treated the U.S.-flag international fleet as a naval auxiliary to be available in times of war or national emergency. When the United States is involved in an extended military conflict overseas, 90% or more of military cargoes are typically carried by ship. Congress also has determined that for economic security reasons, the United States should have a commercial fleet active in international commerce. To support the U.S.-flag international fleet, Congress has required that "government-impelled" cargo sent overseas be carried on U.S.-flag ships. Government-impelled cargo is government-owned cargo such as military supplies, foreign aid such as food, and any privately owned cargo financed by the federal government, such as goods purchased with an Export-Import Bank loan. Regulations suggested, but not formally proposed, by the U.S. Maritime Administration (MARAD) would also require that some U.S.-bound cargo financed by the government be carried on U.S.-flag ships. Cargo reserved for U.S.-flag vessels is referred to as "preference cargo." Cargo preference requirements are highly controversial, particularly among shippers of civilian aid cargoes, because they significantly increase shipping costs and may delay shipments. However, preference cargo is critical to some U.S.-flag ship lines, as U.S.-flag ships are not price-competitive with foreign-flag ships in carrying the overwhelming bulk of exports and imports transacted in the private sector. This report explains the motivation behind cargo preference law, discusses issues concerning the cost-effectiveness of the program, and reviews attempts to apply cargo preference to the nation's oil trade. The report also identifies several disparate bills reflecting wide disagreement on the future direction of cargo preference policy. The United States has three separate U.S.-flag fleets capable of carrying commercial cargo. The U.S.-flag domestic fleet comprises ships and barges that carry cargo and passengers between U.S. ports, including most U.S. island territories. Under a 1920 law, the Jones Act, such activity may be conducted only by vessels under U.S. ownership, built in the United States, and crewed by U.S. citizens. The domestic fleet is often referred to as the "Jones Act" fleet. These vessels do not receive direct government subsidies, but benefit by having exclusive access to cargoes such as oil shipments from Texas to the Northeast and goods moving by containership from California to Hawaii. Jones Act ships are not affected by cargo preferences, because the services they provide cannot be offered by foreign-flag ships. The U.S.-flag international fleet comprises vessels registered under U.S. law that carry cargo and passengers between the United States and other countries. U.S.-flag ships in foreign trade must be owned and crewed by U.S. citizens, but need not be built in the United States. Unlike the Jones Act fleet, the U.S.-flag international fleet faces competition from vessels registered in other countries. The privately owned U.S.-flag international cargo fleet consists of roughly 80 ships, including 43 containerships and 18 ships with roll-on/roll-off ramps to transport vehicles, including military vehicles. The fleet is owned by 19 different ocean carriers and is crewed by a pool of approximately 3,200 private-sector merchant mariners. The Military Sealift Command (MSC) in the Department of Defense (DOD) operates a fleet of about 120 ships. Many of these resupply Navy combatant ships at sea (an activity called "unrep," for underway replenishment) or perform missions such as ocean surveillance and submarine tendering. Approximately 50 MSC vessels carry military cargoes in port-to-port voyages similar to those undertaken by commercial ships. The cargo component of the MSC fleet includes oil tankers, containerships, and ships designed to carry oversize cargo, but the most prevalent type is roll-on/roll-off ships. The MSC fleet is mostly crewed by about 6,000 licensed mariners, who are federal civilian employees. The vessels these civilian mariners (known as "CivMars") crew do not plan to sail in combat waters. The MSC does not receive a direct appropriation from Congress. It bills DOD for the ocean transportation services it provides, and its budget is delineated in "working capital funds." The government-owned fleet of cargo ships also includes a reserve fleet of inactive vessels available for military deployment. These vessels are on standby at various ports. The Ready Reserve Force (RRF) consists of 46 ships that can sail upon either five or 10 days' notice. The RRF has a skeleton crew of 460 commercial mariners (10 per ship), but would require an additional 1,200 mariners to sustain its operation once activated. The average age of the ships in the RRF is 40 years, about 20 years beyond the typical economic life of a foreign-flag commercial ship. The RRF consists mostly of roll-on/roll-off ships, and is a subset of a larger National Defense Reserve Fleet (NDRF), which also comprises vessels not expected to be activated on short notice and ships that are ready for scrapping. The NDRF is managed by MARAD, an agency of the U.S. Department of Transportation, in peacetime and the MSC when activated for military deployment. The reserve fleet is relevant to cargo preference because the U.S.-flag privately owned fleet provides employment for mariners who would be drawn upon to sail reserve fleet ships when activated. The existence of both a privately owned deep-sea U.S.-flag fleet and a government-owned fleet capable of carrying similar types of military cargo overseas is a key motivation behind cargo preference laws. In the Military Transportation Act of 1904 (P.L. 58-198), Congress required that all U.S. military supplies be transported on U.S. vessels but did not specify whether government-owned or privately owned U.S.-flag vessels had to be used. In 1949, the Army's Transport Service, including 241 ships, was consolidated with the Navy's cargo (noncombatant) fleet of 94 ships to form the Military Sea Transportation Service (MSTS), with a total fleet of 335 ships. The MSTS fleet carried not only strictly military personnel and cargo, but also significant amounts of military-related cargo such as the dependents and personal property of military personnel and employees of military contractors. Foreigners with government grants to study at U.S. universities, civilian employees of other federal agencies, and refugees and displaced persons also traveled aboard MSTS ships. Moreover, MSTS ships often sailed to and from busy ports that also were served by commercial carriers. The MSTS found that it could transport passengers and cargo in government-owned vessels for 80% or less of the cost of using private U.S.-flag shipping space. According to a 2004 study, the privately owned U.S.-flag carriers were not competitive vis-à-vis foreign-flag carriers in carrying commercial U.S. imports and exports after World War II, and therefore "lobbied strenuously for the military's business." They sought to limit the size of the MSTS fleet, fearing that its expansion could ultimately result in the nationalization of the U.S.-flag fleet. Carriage of military cargoes was also important for private U.S.-flag operators as a basis for claiming political support, as it allowed them to point to their role in providing sealift in wartime. In a 1950 Senate hearing, the MSTS commander revealed that it was MSTS policy to maximize the use of its own ships before cargo was offered to commercial carriers. In 1951, the Department of Commerce, then the parent agency of MARAD, signed a memorandum of understanding with DOD identifying the priority MSTS was to follow in obtaining additional shipping capacity. First, it would purchase space on privately owned U.S.-flag liner services; second, it would charter privately owned U.S.-flag vessels; third, it would activate government-owned vessels held in the military reserve fleet. Only after all those options were exhausted would MSTS buy space on or charter foreign-flag ships. In 1954, the two departments signed another memorandum of understanding that severely restricted the size of the MSTS fleet to 151 ships and required approval of both secretaries for nonemergency expansion of the fleet. The objective of restricting the size of the MSTS fleet was to commit more military cargo to the privately owned U.S.-flag fleet. The "Wilson-Weeks" agreement, named after the two secretaries, remains substantively in effect today. Competition between the government-owned and privately owned fleets in carrying military-related cargo gave impetus to the Cargo Preference Act of 1954 (P.L. 83-644). As originally introduced, the act would have eliminated the MSTS entirely, requiring that 100% of government-impelled cargoes be carried in privately owned U.S.-flag vessels. Due to opposition from the Eisenhower Administration, which favored repealing cargo preference requirements in favor of direct subsidies to U.S.-flag operators, the 100% requirement was reduced to 50%, the Commerce Department was relieved of direct responsibility for administering the law, and a provision was added requiring that U.S.-flag commercial vessels charge the government "fair and reasonable rates." The clear intent of the legislation was to encourage greater use of U.S.-flag private operators and reduce the role of the MSTS as a vessel operator. Since passage of the 1954 act, Congress has amended the Cargo Preference Act numerous times, generally in favor of private U.S.-flag carriers. U.S. foreign-aid cargo was a substantial share of total U.S. exports in the 1950s, and many of the amendments concerned carriage of food aid. In 1961 (P.L. 87-266), Congress required that ships eligible for food-aid cargoes must either be built in the United States, or, if built abroad, must have sailed under the U.S. flag for the previous three years. Congress wanted to discourage foreign-flag ships from entering the U.S. cargo preference trade only temporarily in periods when the world shipping market was oversupplied. In the Merchant Marine Act of 1970 (P.L. 91-469), Congress empowered MARAD to regulate how other federal agencies should comply with the 1954 act after hearing allegations that other agencies intentionally did not fully comply with the law or interpreted the law differently than MARAD. Also in 1970, DOD renamed the MSTS the Military Sealift Command (MSC). In the Food Security Act of 1985 ( P.L. 99-198 ), Congress increased the requirement for the share of food-aid tonnage shipped on U.S.-flag vessels from 50% to 75%. It also mandated that a certain portion of such cargo be shipped through Great Lakes ports. In 1996, Congress established the Maritime Security Program (MSP; P.L. 104-239 ) to replace a similar program that had been in existence since 1936—the Operating Differential Subsidy program (ODS). The MSP provides a flat per-ship operating subsidy intended to offset the higher cost of registering under the U.S. flag. This change from the ODS, whose subsidy rates fluctuated based on the difference between American and foreign crewing costs aboard a particular vessel, was intended to encourage U.S.-flag operators to constrain their operating costs. A study sponsored by MARAD at the time showed that U.S. crew salaries were about three times greater than those aboard vessels sailing under European flags and several times greater than those of Asian-flag ships. Another important difference between the MSP and ODS programs is that MSP carriers are obligated to provide overland transport (to and from ports) to the military in addition to port-to-port ocean transport. Thus, through an operating subsidy, the military gains access to a worldwide commercial distribution network without having to fund the capital costs of that network. In 1997, Congress allowed MSP carriers to carry preference cargoes in foreign-built vessels ( P.L. 105-85 , §3603(b)). U.S.-flag international operators have stated that without both cargo preference and the MSP there would be no incentive to flag their ships under U.S. registry. In the FY2009 Defense Act ( P.L. 110-417 , §3511), Congress granted MARAD the authority to require "make up" cargoes if federal agencies fell short of the percentage of cargo required to be shipped on U.S.-flag vessels and to impose civil penalties. In 2012, Congress reversed its action of 1985, lowering the required share of food aid that must be carried in U.S.-flag vessels from 75% back to 50% (Moving Ahead for Progress in the 21 st Century Act, P.L. 112-141 ). Competition between the MSC and the commercial fleet for carriage of military-related cargo has continued. At a recent hearing, a representative of the U.S.-flag shipping industry stated the following: DOD must continue to abide by its long-standing "commercial first" policy to provide military cargo to privately owned United States flag vessels when available in lieu of government-owned or controlled vessels. This policy has resulted in military cargo support for the United States flag fleet, and we strongly urge Congress to ensure that DOD continues its unwavering adherence to this essential policy. At this same hearing, this witness stated that "United States flag vessels participating in MSP carried more than 90% of the war material to the forward-operating bases during the recent Afghanistan and Iraq conflicts." Signs of tension between the MSC and private owners of U.S.-flag vessels have appeared periodically. Commercial operators have sought to perform "unrep" missions to resupply Navy ships at sea, but the MSC continues to use its own ships and mariners for these missions. In one instance in the early 1980s, U.S.-flag tanker operators sued the MSC, claiming that it improperly tallied the costs for using its own tankers in order to justify rejecting the bids of private operators, which were much higher. In the late 1980s, the MSC fleet expanded from about 120 vessels to nearly 200, despite the opposition of commercial operators. In the early 1990s, when two U.S.-flag container carriers, Sea-Land and American President Lines, were threatening to reflag their ships under foreign registry, they called for requiring more military-related shipping activity to be turned over to commercial operators. At this time, there was reportedly an attempt by the Navy to amend the Wilson-Weeks agreement so as to effectively annul it. After the MSC attempted to use one of its own vessels for a large overseas shipment of tanks, legislation was introduced that would have written the Wilson-Weeks agreement into statute. When the MSC began acquiring its own fleet of roll-on/roll-off ships and contested with MARAD over control and administration of the reserve fleet, tensions with the commercial industry increased further. Since the mid-1990s, the MSC fleet has stabilized at around 120 ships, and the focus of U.S.-flag carriers has shifted from containing the size of the MSC fleet to fully funding the MSP program in annual appropriations and to more vigorous enforcement of civilian cargo preferences. U.S.-flag operators have also been wary of MSC attempts to allow foreign-flag carriers to bid on MSC contracts in an effort to increase competition and obtain lower rates, even though the foreign carriers would have used U.S.-owned ships and U.S. crews. In recent years, military cargo has accounted for the vast majority of government-sponsored cargo. According to the latest available data compiled by MARAD, in FY2011 military cargo accounted for about 86% of cargo preference tonnage, while food aid accounted for 11% and civilian agency cargoes accounted for 3%. The percentage breakdown of revenue was roughly the same. Historically, debate over cargo preference requirements has centered primarily on U.S. exports. While the requirements have long been imposed on imports directly impelled by the federal government, such as military equipment and the household goods of servicemembers returning to the United States, they were not enforced on goods imported with federal financial assistance by local or state agencies or private parties. The FY2009 Defense Act ( P.L. 110-417 , §3511) specifies that cargo preference requirements apply to cargo that is imported by an organization or person if the federal government "provides financing in any way with federal financial funds for the account of any persons unless otherwise exempted." At least 50% of such cargo must be shipped in U.S.-flag vessels. The law directs the Department of Transportation to issue regulations and guidance to govern the administration of cargo preference by other federal agencies. While the language was intended to alleviate disputes about the application of cargo preference to particular cargoes, such disputes persist. In 2010, a dispute arose over the application of imported wind turbines financed with Department of Energy Loan Guarantees. MARAD's attempt to apply cargo preference requirements in the 2009 law to vessel components imported for ships constructed with federal loan guarantees has generated objections from commenters who contend that Section 3511 of P.L. 110-417 does not provide MARAD with that authority. MARAD has not begun a rulemaking process to clarify how the cargo preference requirements of the FY2009 Defense Act will be implemented. The agency submitted a draft notice of proposed rulemaking for Office of Management and Budget approval in December 2011, but the draft notice is still apparently under interagency review and has not been published. The Federal Highway Administration has interpreted the law to apply cargo preference requirements to federally supported highway projects carried out by state departments of transportation and other agencies, but it has not yet issued notification and guidance. In 1955, U.S.-flag ships carried about 25% of U.S. foreign trade. Today, their market share is around 1%. The U.S.-flag international fleet has shrunk during this time from 850 ships to 80 ships. Sixty of these ships receive annual Maritime Security Program operating subsidies of $3.1 million each. In return for the subsidies, these 60 ships are to be made available to DOD in times of war or national emergency. The MSP vessels are designated as "militarily useful" by MARAD in consultation with DOD, and are funded from MARAD's budget. The size of the privately owned fleet fluctuates. As of August 2015, it was about the same size it was in 2000, but in the intervening period it reached a peak of 107 ships in 2011. During the first seven months of 2015, 10 ships left and eight ships joined the fleet. A vessel cannot be transferred to a foreign flag without MARAD's approval unless it no longer receives MSP subsidies or is being replaced with an equally capable vessel. Ships joining the U.S.-flag international fleet would seek a "registry endorsement" from the U.S. Coast Guard, submitting documentation demonstrating U.S. ownership, among other things. Over 30 of the U.S.-flag ships carrying preference cargoes (about 40% of the fleet) were built before 2000. If preference cargoes were not available, they might be scrapped, as likely being too old to be attractive to a foreign-flag carrier. About 60% of the 80 ships in the fleet are controlled by U.S. entities owned by four large foreign shipping lines (they are permitted as "documentation citizens," as explained below). The ships owned by these entities also make up the majority of the vessels receiving MSP subsidies. The largest operator of U.S.-flag international vessels, Maersk Line, which also owns Farrell Lines, owns 27 U.S.-flag vessels. Most of the U.S. owners not affiliated with a foreign parent company have small fleets under the U.S. flag. Three of them have between five and seven ships each, and about a dozen companies have one or two U.S.-flag ships each. By contrast, the leading foreign-flag containership lines operate hundreds of containerships each, and the largest foreign-flag tanker operators own more than 100 ships each. Information about the revenues and profits of U.S.-flag international maritime operations is not publicly available. However, it appears that the profitability of U.S.-flag international services is highly dependent on revenues from preference cargos, as many of the operators also use foreign-flag vessels to compete for commercial business. According to a MARAD study, "U.S.-flag carriers face a significantly higher cost regime than do foreign-flag carriers." This study found that a U.S.-flag containership in international trade, for example, has a daily operating cost that is more than twice that of a foreign-flag containership (see Table 1 ). According to the study, the largest cost difference comes from higher wage costs for U.S.-flag containerships. Several recent developments suggest that the volume of preference cargo may change in the coming years. U.S. food-aid policy has been increasing the use of cash payments and local or regional sourcing of food overseas, potentially reducing food-aid shipments from the United States. The drawdown of forces in Iraq and Afghanistan has reduced military shipments to these regions. The authorization of the Export-Import Bank that generated about 2% of U.S.-flag freight revenue from government-sponsored cargo in 2011 expired on July 1, 2015, although bills reauthorizing the Bank have passed both houses. On the other side of the ledger, an increased U.S. military presence in Asia and the Pacific, where voyages between stations are relatively long, could increase demand for U.S.-flag shipping. One of the long-standing tenets of U.S. maritime policy is that it is essential to sustain a merchant marine capable of serving military needs in the event of war. The trend toward highly specialized and larger ships in the commercial sector appears inconsistent with the military's shipping needs. In planning for war or national emergencies, the military seeks versatility in terms of where its cargo ships can go and what they can carry, so ships equipped to load and unload diverse cargos in shallow harbors lacking shoreside cranes are preferable. In the commercial sector, smaller mixed-cargo vessels of this sort are typically deployed on trade routes to less developed countries rather than on heavily trafficked routes. Roll-on/roll-off ships are particularly useful for the military, and they make up a disproportionate share of the vessels eligible for cargo preference. In the commercial market, however, this ship type has evolved into specialized vessel types that do not offer the flexibility the military requires. One example is "pure car carriers," ships designed around the weight and dimension of the passenger automobile and unable to accommodate the wider variety of equipment and supplies for which military sealift may be required. The military also seeks fast ships whose engines are fuel-inefficient relative to commercial carrier needs. Commercial vessels built during the past few years have generally been designed to operate at relatively slow speeds to conserve fuel, and this is potentially inconsistent with military needs. With these changes in commercial ship designs, the military utility of the U.S. merchant marine may now have more to do with the crews than with the ships themselves. In other words, while merchant ship design may be deviating from military needs, the knowledge and skills of their crews are still transferrable to manning the NDRF or other MSC ships. It may cost more to ship military cargo aboard U.S.-flag commercial vessels than aboard MSC vessels because of a cost differential between federal civilian and commercial mariners. While by law the pay for CivMars must be comparable to the pay of crews in the commercial maritime sector, CivMar compensation lags behind that of commercial crews in other respects. A 2001 study requested by the Navy found that commercial mariner leave earnings were significantly greater than those for CivMars. While commercial mariners typically work six months at sea and receive six months of shore leave during the course of a year, federal civilian mariners typically work at sea nine months and receive three months of shore leave. Thus, filling a billet (one shipboard position) requires two to 2.5 mariners in the commercial fleet and 1.25 in the MSC fleet. While the same unions that represent commercial mariners also represent civil service mariners, CivMars are not allowed to strike and are not obligated to join a union and pay dues. U.S.-flag shipping lines typically have exclusive contracts with specific maritime unions, and U.S. commercial mariners typically receive their ship assignments through a union hiring hall. The MSC does not negotiate wages and benefits with labor unions; civil service mariner wages and benefits are based on the federal government's General Schedule (GS) pay schedule. While crew costs are a significant factor in determining shipping costs, they are not the only factor. Vessel-related costs (such as depreciation, insurance, and interest payments) and administrative overhead are difficult to compare between the MSC and private vessel owners because the MSC generally does not account for these costs as the private sector does. The question of whether MSC or private U.S.-flag ships can provide the least-cost transport for military cargo is a significant one. Budgetary considerations aside, if the objective of sealift policy is merely to sustain the existence of U.S.-controlled and -crewed ships, rather than to maintain a U.S.-flag commercial fleet, that objective can be met equally well whether those ships are government-owned and crewed by federal employees or are privately owned and crewed. However, switching to an entirely government-owned fleet would require making fuller use of MSC-owned vessels or acquisition of additional vessels. Such a change in policy also might reduce the number of mariners available to serve in the RRF if activated. One rationale for supporting privately owned U.S.-flag vessels in international trade is that the government gains access to shipping space through the MSP program by paying only a portion of operating costs ($3.1 million per ship per year) rather than having to purchase and maintain the ships at government expense. In other words, revenue derived from private-sector commercial shippers was expected to finance much of the supply of vessels that DOD might need only intermittently. MARAD stopped tracking the amount of U.S. waterborne foreign trade carried by U.S.-flag ships in 2003, when it fell below 2% of total tonnage. If preference cargo is now supporting almost all of the costs of the U.S.-flag commercial fleet, then commercial shipments are no longer helping to minimize the government's costs. One rationale for maintaining a reserve of idle government-owned ships (the RRF and NDRF) is to limit the disturbance to U.S. foreign commerce when a surge in military sealift is needed. The reserve fleet can be activated and additional crew obtained from mariners on shore leave or otherwise inactive without removing commercial vessels from their regular service. However, if the commercial vessels are carrying little private-sector commerce, then the concern that their use for military sealift would disturb U.S. foreign commerce is unwarranted, potentially reducing the necessity for the reserve fleets. This argument presupposes that the capacity of the U.S.-flag international fleet is sufficient for projected military sealift needs and that foreign-flag vessels would not be interested in carrying military cargo. The small size of the U.S.-flag fleet may limit competition in bidding for preference cargoes. The 1954 act directs that the requirement that 50% of government-impelled cargoes travel by U.S.-flag ship be calculated separately for each of three vessel categories: dry bulk (e.g., ships carrying grain in bulk form), dry cargo liner (e.g., containerships), and tanker (e.g., ships carrying oil or other bulk liquids). It appears that only seven privately owned U.S.-flag vessels are capable of moving bulk food aid. Of these, four are more than 30 years old, older than the normal 20-year to 25-year economic life of oceangoing ships. The three newer ships are all owned by a single operator. Lack of competition in the U.S.-flag dry bulk sector has been a persistent concern. In 2000, a proposal to allow a temporary waiver from the three-year wait requirement for foreign-built dry bulk vessels to be eligible to carry preference cargoes was proposed but was not acted upon. In 1970, the ODS program was modified to include dry bulk vessels (since 1936, only liner carriers had been eligible) in order to increase the number of U.S.-flag operators. Dry bulk vessels do not receive MSP subsidies because the military does not ship this type of cargo. In the container sector, relatively little competition exists among U.S.-flag carriers eligible to carry preference cargos. Although there are three operators in this sector, one of them operates almost two-thirds of the fleet. Dry bulk operators provide limited competition to the containership operators in carrying bagged food aid. How rates are deemed "fair and reasonable" has a bearing on the cost of U.S.-flag shipping. For different types of preference cargo, Congress has specified whether or not a comparison with world market shipping rates is to be part of a rate reasonableness determination. Congress specified in the Military Transportation Act of 1904 that rates for military cargo cannot be "excessive or unreasonable" and that U.S.-flag operators cannot charge the military more than they charge private-sector customers for shipping like goods. Based on this language, the military routinely compares proposed U.S.-flag charges with those of foreign-flag operators to determine rate reasonableness. DOD regulations note that the purpose of the 1904 act is to provide a subsidy to U.S.-flag operators, and therefore U.S.-flag operators' charges can be higher than foreign-flag charges, but not excessively so. For foreign-aid bulk cargo, Congress specified in the Cargo Preference Act of 1954 that U.S.-flag vessels were to be used "to the extent such vessels are available at fair and reasonable rates for United States-flag commercial vessels " (italics added). The rate reasonableness standard does not incorporate a comparison with foreign-flag rates. Based on this language, MARAD determines reasonable rates based on its estimate of the cost to U.S.-flag operators for delivering the shipment, plus a reasonable profit. It assumes that the vessel will be returning empty, but makes a cost adjustment if the vessel does carry cargo on the return leg. Under this rate evaluation method, there may not be much incentive for carriers to be efficient—for instance, by investing in more efficient, modern vessels or seeking out commercial cargo, especially if the number of carriers bidding for the cargo, as discussed above, is limited. For liner carriers (namely containership lines), which, unlike dry bulk vessels, receive MSP operating subsidies to offset higher U.S.-flag operating costs, a comparison with foreign-flag rates is part of the rate reasonableness determination. U.S.-flag liner operators are allowed to earn freight revenues at least equal to what foreign-flag operators would earn for carrying preference cargo. Also, if a U.S.-flag liner operator's rates are published and filed with the Federal Maritime Commission (the agency with regulatory jurisdiction over international liner services), they are automatically considered to be fair and reasonable, irrespective of what a foreign-flag carrier might charge for the same service. While some U.S.-owned container shipping lines at one time were among the largest and most successful ship lines in the world, these companies with international operations have since been sold to foreign lines. In addition to carrying preference cargoes, most of the former U.S.-owned lines, such as Sea-Land, American President Lines, and Farrell Lines, had ships that participated in the MSP, a program that also has U.S. citizen ownership requirements. Therefore, when these U.S. lines were sold to foreign owners, the new owners set up U.S. entities so that these ships could continue participating in the MSP and cargo preference. Under U.S. shipping law, they qualify as "documentation citizens," which are companies located in the United States and operated by U.S. citizens but with a "foreign parent." The chief executive of the foreign parent company must submit an agreement stating that the parent will not influence the operation of the vessel in a manner adversely affecting the interests of the United States. However, concerns about whether these ships are, in effect, foreign-controlled have been persistent. In 2013, Liberty Maritime, which sought to enroll two more ships into the MSP program, sued MARAD, claiming that some MSP participants were masquerading as U.S.-owned entities. The U.S. District Court for the Eastern District of New York dismissed the suit, in part on the grounds that it was an inappropriate court of jurisdiction. One of the justifications for government support for a private U.S.-flag fleet is that foreign ships and foreign crews cannot be relied upon to sail into war zones. Several incidents of resistance or refusal involving foreign-flag vessels during and since the Vietnam War appear to support this concern. During the Vietnam War, DOD provided incentive pay for U.S. merchant mariners to sail into war zones. However, it may be the case that a U.S.-flag commercial operator carrying military supplies does not sail to the final port of destination. For instance, a U.S.-flag ship might sail to a hub port in the region of a war zone, where the cargo is transferred to a foreign-flag feeder vessel for movement to a port in, or next to, the war zone. While use of foreign-flag feeder vessels is allowed, to encourage full U.S.-flag service, a carrier that provides U.S.-flag service to the final destination port receives priority in the award of cargo preference bids over bidders that do not. The U.S.-flag carriers (particularly containership operators) that are affiliated with a large foreign-parent operator may be better equipped to arrange ground transport for U.S. military shipments overseas than the smaller U.S.-flag carriers not affiliated with a foreign parent. Large containership carriers with worldwide operations have been providing these sorts of arrangements for commercial customers since the 1980s, organizing overland transport and storage along with ocean carriage. They have established networks of ground transport providers and are otherwise familiar with peculiarities in moving freight in a particular region. MARAD's Administrator has noted that when Pakistan closed its border during the war in Afghanistan, it was the MSP carriers—that is, mainly the foreign parents of entities operating U.S.-flag vessels—that were able to set up an alternative route for U.S. military supplies, using their contacts with ground transport providers in the overseas region to move cargo to the war zone. Because they do little commercial business, U.S.-flag carriers without foreign parents are unlikely to be able to provide a similar level of service. The boom in U.S. shale oil and natural gas production has led to discussion, particularly in the House Committee on Transportation and Infrastructure, Subcommittee on Coast Guard and Maritime Transportation, about whether to require the use of U.S.-flag tankers for the export of oil and liquefied natural gas (LNG). U.S.-flag shipping interests, including labor unions representing U.S. mariners, have long sought a legal requirement that a portion of U.S. oil trade be shipped on U.S.-flag tankers. With the exception of Alaska oil (see below), cargo preference has never applied to purely private transactions. In the 1970s, the focus was whether to apply cargo preference requirements to the importation of oil. In 1974, the Energy Transportation Security Act (ETSA; H.R. 8193 , 93 rd Congress) would have required that 30% of imported oil be carried in U.S.-flag and U.S.-built tankers. The bill was pocket-vetoed by President Ford. In the 94 th Congress (1975), Congress created the Strategic Petroleum Reserve ( P.L. 94-163 ). Since the oil for the reserve is purchased by the federal government, half the oil shipped by vessel must be transported by U.S.-flag tankers pursuant to the Cargo Preference Act of 1954. In the 95 th Congress (1977), the ETSA was reintroduced ( H.R. 1037 , S. 61 ) with modifications. A version requiring that 9.5% of all U.S. oil imports be carried in U.S.-flag tankers passed the House by voice vote, but was then defeated in a recorded vote of 257 to 165. In the House floor debate, supporters of the bill primarily cited national security and the importance of boosting the domestic shipbuilding base. Members opposing the bill cited costs to consumers, potential retaliation from trading partners, and the political influence of the U.S.-flag shipping industry. That neither DOD nor the Department of State had testified in support of a national security rationale for the bill was also noted in the floor debate. The Senate never took up the measure. In 1983, a bill was introduced ( H.R. 1242 , 98 th Congress) to require both liquid and dry bulk import and export cargo be transported in U.S.-flag and U.S.-built ships, beginning with 5% the first year and increasing 1% per year until 20% was reached. This bill had 45 House cosponsors. Two hearings were held on the bill, but it received no further action. In 1995, when Congress lifted the export ban on Alaska North Slope oil ( P.L. 104-58 ), it required that the oil be exported on U.S.-crewed and -flagged tankers, but did not require that the tankers be U.S.-built. At that time, U.S. shipyards and U.S. mariners feared loss of ship repair business and sailing jobs in the absence of a U.S.-flag requirement. (U.S.-flag ships pay a 50% tariff on nonemergency repairs made in foreign yards). After the ban was lifted, roughly 5% to 7% of Alaskan oil was exported, mostly to South Korea, Japan, and China, before exports ceased in 2000. In 2006, when the United States was still expected to be an importer rather than an exporter of LNG, Congress specified that federal regulators give "top priority" to the processing of licenses for offshore LNG import terminals if they would be supplied by U.S.-flag tankers. LNG shippers contended that requiring U.S.-flag vessels on certain routes would hinder their ability to supply LNG under short-term contracts, which was how LNG was increasingly traded as the global market matured. The 113 th Congress directed MARAD to submit a national maritime strategy toward making U.S.-flag vessels more competitive in international shipping, identify federal regulations and policies that reduce U.S.-flag operators' competitiveness, and ensure compliance by federal agencies with cargo preference laws ( P.L. 113-281 , §603). This same law also required the Coast Guard to initiate a National Academies study of Coast Guard regulations that affect the ability of U.S.-flag vessels to compete effectively (§605). Among the reasons U.S.-flag shipping is not price-competitive with foreign-flag ships is crewing costs (see Table 1 ). For U.S.-flag ship operators, crewing costs account for about 68% of ship operating costs, compared to 35% for foreign-flag ship operators. From 2000 to 2013, U.S. ship crew wages and salaries roughly doubled in real terms, increasing at roughly three times the rate of all transportation workers. Another factor could be the size of crews. A 1990 study by the National Academies requested by the Coast Guard noted that crew size requirements mandated by statute date back to 1915, when vessels were powered by steam boilers and turbines that required round-the-clock attention. This same statute was also discussed in a 1984 National Academies study requested by MARAD. The statute is still in effect. MARAD's study comparing U.S.- and foreign-flag ship operating costs surveyed vessel operators and found that they perceive work rules as requiring larger crews on U.S.-flag vessels. However, MARAD compared the size of crews on ships calling at U.S. ports and found U.S.-flag vessels had slightly smaller crews than foreign-flag ships (but its analysis did not account for vessel size and age—factors in determining crew size). Congress is considering several bills that could significantly affect the volume of preference cargo. H.R. 1987 , as passed by the House, would increase MARAD's enforcement of food-aid cargo preference requirements. The bill would raise the share of food aid that must be carried in U.S.-flag ships from 50% to 75%, reversing the reduction that was enacted in the surface transportation act of 2012 (MAP-21). S. 525 , sponsored by Senator Corker, the chairman of the Foreign Relations Committee, takes the opposite approach. It would further reduce the U.S.-flag shipping requirement for food aid under Title II of the Food for Peace Act (7 U.S.C. 1721 et seq.) from 50% to 0%, and increase the amount of food aid supplied locally from overseas, thereby decreasing the amount of food aid shipped from the United States. The Administration also supports changes in food-aid policy that would have the effect of reducing U.S.-flag shipments, and sought $25 million in its FY2016 MARAD budget request to "otherwise retain" U.S. merchant mariners. Congress has not approved similar requests in recent years. Congress is also reauthorizing the Export-Import Bank, almost all of whose financed cargoes are carried on U.S.-flag ships. While the Bank's authorization expired on July 1, 2015, the House and Senate have passed reauthorization bills. The National Defense Authorization Act for FY2016 ( H.R. 1735 ), which passed the House and the Senate but was vetoed by President Obama on October 22, 2015, expressed concern for a recent decline in military and food-aid cargoes, and would have increased operating subsidies for MSP carriers from $3.1 million per ship to $3.5 million. H.R. 702 , as passed by the House, would increase MSP operating subsidies to about $5 million per ship. | Long-standing U.S. policy has treated the U.S.-flag international fleet as a naval auxiliary to be available in times of war or national emergency. When the United States is involved in an extended military conflict overseas, 90% or more of military cargoes are typically carried by ship. To support the U.S. merchant marine, Congress has required that "government-impelled" cargo sent overseas be carried on U.S.-flag ships. Government-impelled cargo (a.k.a. "preference cargo") is government-owned cargo, such as military supplies and food aid, and any cargo that is somehow financed by the federal government, such as by the Export-Import Bank. While export shipments account for the vast bulk of government-impelled cargo, in 2008 Congress extended the law to require that state and local governments and private entities importing goods with federal financial assistance ship at least 50% of such cargo in U.S.-flag vessels. Regulations to implement that requirement have not been issued. Historically, cargo preference law has been used to assure that a large proportion of government-impelled cargoes is shipped in privately owned U.S.-flag ships rather than in government-owned vessels such as those now controlled by the Military Sealift Command (MSC). Military cargo then, and more so now, accounts for the overwhelming bulk of preference cargoes. Since 1954, an agreement between U.S. government cabinet departments has restricted the size of the military-owned fleet and has required the military to turn first to the private fleet before using its own ships. The cost of employing U.S. citizens aboard U.S.-flag commercial vessels appears to be higher than the costs of employing the federal civilian mariners that crew government-owned ships. It appears preference cargo now accounts for almost all of the revenues of the U.S.-flag international fleet. U.S.-flag ships do not appear competitive with foreign-flag ships in carrying the overwhelming bulk of exports and imports transacted in the private sector. However, Congress has directed that the U.S. government pay the additional cost of U.S.-flag shipping in order to maintain the U.S.-flag international fleet as a naval auxiliary to be available in times of war or national emergency. This cost may be influenced by the level of competition among U.S.-flag carriers bidding for preference cargoes and the procedures for determining "fair and reasonable rates." The needs of the commercial market increasingly have diverged from those of the military, as the trend toward highly specialized and larger ships in the commercial sector appears inconsistent with the military's shipping requirements. However, the knowledge and skills of the mariners aboard U.S.-flag commercial ships are transferrable to manning a military reserve fleet of ships. In the 114th Congress, several disparate bills would have the effect of either increasing or decreasing the volume of preference cargo significantly. The bills involve the future of food-aid policy, the existence of the Export-Import Bank, and the level of operating subsidy provided to U.S.-flag carriers. The boom in domestic oil and gas production also has led to discussions in Congress about whether U.S.-flag tankers should be guaranteed a portion of the cargo if these products are exported. These issues are arising at a time when U.S.-flag operators face a potential decline in the amount of preference cargo due to overseas troop withdrawals and changes in food-aid policy. |
In the past several decades the practice of torture by public officials has been condemned by the international community through a number of international treaties and declarations, leading many commentators to conclude that customary international law now prohibits the use of torture by government entities. Perhaps the most notable international agreement prohibiting the use of torture is the United Nations Convention against Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment (Convention or CAT), which obligates parties to prohibit the use of torture and to require the punishment or extradition of torturers found within their territorial jurisdiction. Since opening for signature in December 1984, over 140 states, including the United States, have become parties to the Convention. CAT defines torture as "any act by which severe pain or suffering, whether physical or mental, is intentionally inflicted on a person ... by or at the instigation of or with the consent or acquiescence of a public official or other person acting in an official capacity." This definition does not include "pain or suffering arising only from, inherent in or incidental to lawful sanctions." According to the State Department's analysis of CAT, which was included in President Reagan's transmittal of the Convention to the Senate for its advice and consent, this definition was intended to be interpreted in a "relatively limited fashion, corresponding to the common understanding of torture as an extreme practice which is universally condemned." Indeed, CAT Article 16 further obligates signatory parties to take action to prevent "other acts of cruel, inhuman, or degrading punishment which do not amount to acts of torture.... " According to the State Department, this distinction reflected the belief by the drafters of CAT that torture must be "severe" and that rough treatment, such as police brutality, "while deplorable, does not amount to 'torture'" for purposes of the Convention. Further, CAT provides that offenses of torture require actual intent to cause severe pain and suffering; an act that results in unanticipated and unintended severity of pain and suffering is not torture for purposes of the Convention. In accordance with CAT Article 2, parties agree to take effective legislative, administrative, judicial, and other measures to prevent acts of torture from occurring within their territorial jurisdiction. Further, parties are required to ensure that all acts of torture, as well as attempts to commit torture and complicity or participation in torture, are criminal offenses subject to penalty. CAT Article 2 makes clear that "no exceptional circumstances whatsoever," including a state of war or any other public emergency, may be invoked to justify torture. The State Department has claimed that this explicit prohibition of all torture, regardless of the circumstances, was viewed by the drafters of CAT as "necessary if the Convention is to have significant effect, as public emergencies are commonly invoked as a source of extraordinary powers or as a justification for limiting fundamental rights and freedoms." CAT also imposes specific obligations upon signatory parties with respect to their transfer of individuals to other countries. CAT Article 3 requires that no state party expel, return, or extradite a person to another country where "there are substantial grounds for believing that he would be in danger of being subjected to torture." In determining whether grounds exist to believe an individual would be in danger of being subjected to torture, state parties are required to take into account "all relevant considerations including, where applicable, the existence in the state concerned of a consistent pattern of gross, flagrant or mass violations of human rights." The State Department has interpreted the words "where applicable" to indicate that competent authorities must decide whether and to what extent these considerations are a relevant factor in a particular case. CAT Article 3 does not expressly prohibit persons from being removed to countries where they would face cruel, inhuman, or degrading treatment not rising to the level of torture. The Committee Against Torture, the monitoring body created by the parties to the Convention, has interpreted the obligations of Article 3 as placing the burden of proof on an applicant for non-removal to demonstrate that there are substantial grounds to believe that he would be subjected to torture if removed to the proposed country. Further, the Committee has interpreted the non-removal provisions of Article 3 to refer to both direct and indirect removal to a state where the individual concerned would likely be tortured, meaning that a state cannot remove a person to a third country when it knows he would subsequently be removed to a country where he would likely face torture. The United States signed CAT on April 18, 1988, and ratified the Convention on October 21, 1994, subject to certain declarations, reservations, and understandings, including a declaration that CAT Articles 1 through 16 were not self-executing, and therefore required domestic implementing legislation. This section will discuss relevant declarations, reservations, and understandings made by the United States to CAT, and U.S. laws and regulations implementing the Convention. The Senate's advice and consent to CAT ratification was subject to the declaration that the Convention was not self-executing. With respect to Article 16 of the Convention, which requires states to prevent lesser forms of cruel and unusual punishment that do not constitute torture, the Senate's advice and consent was based on the reservation that the United States considered itself bound to Article 16 to the extent that such cruel, unusual, and inhumane treatment or punishment was prohibited by the Fifth, Eighth, and/or Fourteenth Amendments to the U.S. Constitution. The United States also opted out of the dispute-settlement provisions of CAT Article 30, though it reserved the right to specifically agree to follow its provisions or any other arbitration procedure in resolving a particular dispute as to the Convention's application. In providing its advice and consent to CAT, the Senate also provided a detailed list of understandings concerning the scope of the Convention's definition of torture. These understandings are generally reflected via the specific U.S. laws and regulations implementing the Convention. Importantly, under U.S. implementing legislation and regulations, CAT requirements are understood to apply to acts of torture committed by or at the acquiescence of a public official or other person acting in an official capacity. Thus, persons operating under the color of law do not necessarily need to directly engage in acts of torture to be culpable for them. For a public official to acquiesce to an act of torture, that official must, "prior to the activity constituting torture, have awareness of such activity and thereafter breach his or her legal responsibility to intervene to prevent such activity." Subsequent jurisprudence and administrative decisions have recognized that "willful blindness" by officials to torture may constitute "acquiescence" warranting protection under CAT. However, acquiescence does not occur when a government is aware of third-party torture but is unable to stop it, unless the government also breached its legal responsibility to intervene to prevent such activity. In addition, mere noncompliance with applicable legal procedural standards does not per se constitute torture. The Senate's advice and consent to CAT was also subject to particular understandings concerning "mental torture," a term that is not specifically defined by the Convention. The United States understands mental torture to refer to prolonged mental harm caused or resulting from (1) the intentional infliction or threatened infliction of severe physical pain and suffering; (2) the administration of mind-altering substances or procedures to disrupt the victim's senses; (3) the threat of imminent death; or (4) the threat of imminent death, severe physical suffering, or application of mind-altering substances to another. With respect to the provisions of CAT Article 3 prohibiting expulsion or refoulement of persons to states where substantial grounds exist for believing the person would be subjected to torture, the United States declared its understanding that this requirement refers to situations where it would be "more likely than not" that an alien would be tortured, a standard commonly used by the United States in determining whether to withhold removal of an alien for fear of persecution. The Foreign Affairs Reform and Restructuring Act of 1998 (FARRA) announced the policy of the United States not to expel, extradite, or otherwise effect the involuntary removal of any person to a country where there are substantial grounds for believing that the person would be in danger of being subjected to torture. FARRA also required relevant agencies to promulgate and enforce regulations to implement CAT, subject to the understandings, declarations, and reservations made by the Senate resolution of ratification. In doing so, however, Congress required that, "to the maximum extent consistent" with Convention obligations, these regulations exclude from their protection those aliens described in § 241(b)(3)(B) of the Immigration and Nationality Act (INA). INA § 241(b)(3)(B) acts as an exception to the general U.S. prohibition on the removal of otherwise removable aliens to countries where they would face persecution. An alien may be removed despite the prospect of likely persecution if the alien: participated in genocide, Nazi persecution, or any act of torture or extrajudicial killing; ordered, incited, assisted, or otherwise participated in the persecution of an individual because of the individual's race, religion, nationality, membership in a particular social group, or political opinion; having been convicted of a particularly serious crime, is a danger to the community of the United States; is strongly suspected to have committed a serious nonpolitical crime outside the United States prior to arrival; or is believed, on the basis of serious grounds, to be a danger to the security of the United States. Aliens who are described in the terrorism-related grounds for deportation, including those who have provided material support to terrorist organizations or have espoused terrorist activity, are considered a security threat covered under INA § 241(b)(3)(B), and are thus removable and excludable from entry into the United States despite facing prospective persecution abroad. FARRA generally specifies that no judicial appeal or review is available for any action, decision or claim raised under CAT, except as part of a review of a final order of alien removal pursuant to § 242 of the INA. The ability of a person to raise a CAT-based claim in non-removal proceedings (e.g., in the case of extradition), is the subject of debate and conflicting jurisprudence. The Ninth Circuit Court of Appeals held in one case that an individual subject to an extradition order may appeal under the Administrative Procedures Act (APA), when his surrender would be contrary to U.S. laws and regulations implementing CAT. The precedential value of this decision, however, is unclear. The Fourth Circuit Court of Appeals, in contrast, has held that judicial review (including habeas review) is unavailable with respect to CAT-based challenges to an extradition order and interpreted FARRA as barring judicial review of CAT-based actions in non-immigration proceedings. The requirements of CAT Article 3 take the form of a two-track system requiring the withholding or deferral of an alien's removal to a proposed receiving state if it is more likely than not that he would be tortured there. Reliance on these protections by aliens in removal proceedings has been frequent, though usually unsuccessful. In 2007, for example, immigration courts considered 28,130 claims for CAT-based relief, and granted such relief in 541 cases. DHS has estimated that in the first four years following the implementation of regulations implementing CAT Article 3, approximately 1,700 aliens were granted deferral or withholding of removal based on CAT protections. In 2007, deferral of removal was granted in 92 cases, compared to 173 cases in 2006 and 70 cases in 2005. CAT-implementing regulations concerning the removal of aliens from the United States are primarily covered under §§ 208.16-208.18 and 1208.16-1208.18 of title 8 of the Code of Federal Regulations (C.F.R.), and prohibit the removal of aliens to countries where they would more likely than not be subjected to torture. DHS has primary day-to-day authority to implement and enforce these regulations, with the DOJ, through the Executive Office of Immigration Review (EOIR), having adjudicative authority over detention and removal. For purposes of these regulations, "torture" is understood to have the meaning prescribed in CAT Article 1, subject to the reservations and understandings, declarations, and provisos contained in the Senate's resolution of ratification of the Convention. In accordance with this definition, indefinite detention in substandard prison conditions has been recognized as not constituting torture when there is no evidence that such conditions are intentional and deliberate. In at least certain circumstances, however, EOIR or courts reviewing EOIR rulings have found that rape, domestic violence permitted by local law enforcement, and intentional and repeated cigarette burns coupled with severe beatings, may constitute torture under the Convention and prevent an alien's removal to a particular country. Generally, an applicant for non-removal under CAT Article 3 has the burden of proving that it is more likely than not that he would be tortured if removed to the proposed country. If credible, the applicant's testimony may be sufficient to sustain this burden without additional corroboration. In assessing whether it is "more likely than not" that an applicant would be tortured if removed to the proposed country, all evidence relevant to the possibility of future torture is required to be considered, including, inter alia , (1) evidence of past torture inflicted upon the applicant; (2) a pattern or practice of gross human rights violations within the proposed country of removal; and (3) other relevant information regarding conditions in the country of removal. The Board of Immigration Appeals (BIA), the appellate administrative body within EOIR, has recognized that evidence concerning the likelihood of torture must be particularized; evidence of the torture of similarly-situated individuals is insufficient alone to demonstrate that it is more likely than not that an applicant would be tortured if removed to a proposed country. If the immigration judge considering a CAT application determines that an alien is more likely than not to be tortured in the country of removal, the alien is entitled to protection under the Convention. Protection will either be granted through the withholding of removal or deferral of removal. Unless the alien is of a class subject to mandatory denial of withholding of removal on security, criminal, or related grounds, as provided by INA § 241(b)(3)(B), CAT-based relief is granted in the form of withholding of removal. However, aliens falling under a category listed under INA § 241(b)(3)(B) cannot have their removal withheld, but only deferred. A number of courts has recognized that an alien's inability to establish a more general claim for asylum, which is based on a well-founded fear of persecution on account of belonging to one of five designated types of groups, does not necessarily preclude a separate claim of relief under CAT. Deferral of removal is a lesser protection than withholding of removal, and arguably reflects Congress's intent that aliens falling under a category established by INA § 241(b)(3)(B), "to the maximum extent possible," be excluded from protections afforded to other classes of aliens under regulations implementing CAT requirements. Aliens granted deferral of removal to a country where they would likely face torture may instead be removed at any time to another country where they would not likely face torture. Further, such aliens are subject to post-removal order detention for such periods as prescribed by regulation. Deferral may be terminated either (1) at the request of the alien; (2) following a determination by an immigration judge that the alien would no longer likely be tortured in the country to which removal had been deferred; or (3) following a determination by the Attorney General that deferral should be terminated on the basis of diplomatic assurances forwarded by the Secretary of State that indicate that the alien would not be tortured in the receiving country. U.S. law designates certain arriving aliens as inadmissible on security-related grounds, including for having engaged in terrorist activities. The regulatory framework for proceedings to remove such aliens, outlined in 8 C.F.R. § 235.8, is more streamlined than the general regulatory framework for alien removal, providing more discretion to the Attorney General or DHS Secretary with respect to the method in which CAT obligations are assessed. When a DHS Bureau of Customs and Border Protection (CBP) officer suspects that an arriving alien is inadmissible on security or related grounds, the officer is required to temporarily order the alien removed and report such action promptly to the CBP district director with administrative jurisdiction over the place where the alien has arrived or is being held. If possible, the relevant officer must take a brief statement from the alien, and the alien must be notified of the actions being taken against him and of his right to submit a written statement and additional information for consideration by the Attorney General, who has authority to assess whether grounds exist to remove the alien. The CBP district director's report is forwarded to the regional director for further action. Essentially, this process ensures that final decisions to remove aliens on security or related grounds are made at the highest levels. If the alien's designation as inadmissible is based on non-confidential information, however, the regional director has discretion to either conduct a further examination of the alien concerning his admissibility or refer the alien's case to an immigration judge for a hearing prior to ordering removal. The regional director's written, signed decision must be served to the alien unless it contains confidential information prejudicial to U.S. security, in which case the alien shall be served a separate written order indicating disposition of the case, but with confidential information deleted. The regional director has broad discretion in determining application of CAT Article 3 to removal decisions made under 8 C.F.R. § 235.8. The regulatory provisions concerning consideration or review of normal removal orders are explicitly deemed inapplicable in the cases described above. Instead, the regional director is generally required "not to execute a removal order under this section under circumstances that violate ... Article 3 of the Convention Against Torture." No further guidance is provided with respect to determining whether or not an alien is more likely than not to be tortured in the proposed country of removal. Unlike in cases involving CAT applications of non-arriving aliens, the regional director's decision for arriving aliens deemed inadmissible on security or related grounds is final when it is served upon the alien, with no further administrative right to appeal. U.S. immigration regulations implementing CAT include a provision concerning "diplomatic assurances," which may terminate deliberation of an alien's claim for non-removal. Pursuant to this provision, the Secretary of State is permitted to "forward ... assurances that the Secretary has obtained from the government of a specific country that an alien would not be tortured there if the alien were removed to that country." If such assurances are forwarded for consideration to the Attorney General or DHS Secretary, the official to whom this information is forwarded shall then determine, in consultation with the Secretary of State, whether such assurances are "sufficiently reliable" to permit the alien's removal to that country without violating U.S. obligations under CAT Article 3. If such assurances are provided, an alien's claims for protection under Article 3 "shall not be considered further by an immigration judge, the Board of Immigration Appeals, or an asylum officer" and the alien may be removed. In 2008, the Third Circuit Court of Appeals held that aliens who have shown a likelihood of facing torture have a right under the Due Process Clause of the Fifth Amendment to challenge the sufficiency of diplomatic assurances obtained by immigration authorities to effectuate their removal. It should be noted that CAT Article 3 provides little guidance as to the application of diplomatic assurances to decisions as to whether to remove an alien to a designated country. While Article 3 obligates signatory parties to take into account the proposed receiving state's human rights record, it requires the proposed sending state take into account "all relevant considerations" when assessing whether to remove an individual to the proposed receiving state. Further, Article 3 does not provide guidelines for how these considerations should be weighed in determining whether substantial grounds exist to believe an alien would be tortured in the proposed receiving state. Accordingly, it does not necessarily appear that the use of diplomatic assurances by the U.S. conflicts with its obligations under CAT. However, the United States has an obligation under customary international law to execute its Convention obligations in good faith, and is therefore required under international law to exercise appropriate discretion in its use of diplomatic assurances. It could be argued, for example, that if a country demonstrated a consistent pattern of acting in a manner contrary to its diplomatic assurances to the United States, the United States would need to look beyond the face of these assurances before permitting transfer to that country. For its part, the CAT Committee has opined that diplomatic assurances that provide no mechanism for enforcement do not adequately protect against the risk of torture, and therefore do not absolve the sending country of its responsibility under CAT Article 3. In 2006, the Committee recommended that the United States "establish and implement clear procedures for obtaining such assurances, with adequate judicial mechanisms for review, and effective post-return monitoring arrangements." CAT Article 3 also has implications upon the extradition policy of the United States. Pursuant to 18 U.S.C. chapter 209, the Secretary of State is responsible for determining whether to surrender a fugitive to a foreign country by means of extradition. Decisions on extradition are presented to the Secretary of State following a fugitive being found extraditable by a United States judicial officer. In cases where torture allegations are made or otherwise brought to the State Department's attention, appropriate Department officers are required to review relevant information and prepare for the Secretary a recommendation as to whether or not to extradite and whether to surrender the fugitive subject to certain conditions. As with U.S. regulations concerning the deportation of aliens, regulations concerning the extradition of fugitives reflect CAT requirements. Before permitting the extradition of a person to another country, the State Department must determine whether the person facing extradition is more likely than not to be tortured in the requesting state if extradited. For the purpose of determining whether such grounds exist, the State Department must take into account "all relevant considerations including, where applicable, the existence in the State concerned of a consistent pattern of gross, flagrant or mass violations of human rights." One consideration presumably taken into account is any diplomatic assurances obtained from the state requesting extradition. Extraditions are prohibited in cases where the State Department concludes that it is more likely than not that the person facing extradition would be tortured. However, courts have split on the availability of judicial review (including habeas review) of extradition decisions by the Secretary of State that allegedly violate CAT-implementing legislation. Articles 4 and 5 of CAT obligate each state party to criminalize torture and establish jurisdiction over offenses when such offenses are (1) committed within their territory or aboard a registered vessel or aircraft of the state; (2) committed by a national of the state; or (3) committed by a person within its territory and the state chooses not to extradite him. Following ratification of the Convention, the United States enacted chapter 113C of the United States Criminal Code to criminalize acts of torture occurring outside its territorial jurisdiction. Pursuant to 18 U.S.C. § 2340A, any person who commits or attempts to commit an act of torture outside the United States is subject to a fine and/or imprisonment for up to 20 years, except in circumstances where death results from the prohibited conduct, in which case the offender faces imprisonment for any term of years up to life or the death penalty. Persons who conspire to commit an act of torture outside the United States are generally subject to the same penalties faced by those who commit or attempt to commit acts of torture, except that they cannot receive the death penalty. The United States claims jurisdiction over these prohibited actions when (1) the alleged offender is a national of the United States or (2) the alleged offender is present in the United States, irrespective of the nationality of the victim or offender. The provisions of CAT Article 3 appear to protect all individuals from removal to a state where they are likely to be tortured, regardless of whether these individuals engaged in criminal practices themselves. However, while CAT obligates the United States not to remove aliens to countries where they are likely to be tortured, the Convention does not require the United States to permit such aliens' open presence in its territory. The question thus occurs as to what happens in the case of an otherwise inadmissible or deportable alien whose removal is effectively barred by CAT. In Zadvydas v. Davis , the Supreme Court concluded that the indefinite detention of deportable aliens (e.g., aliens who were admitted into the U.S., and thereafter committed an immigration violation that caused them to become removable) would raise significant due process concerns. The Court interpreted the applicable immigration statute governing the removal of deportable aliens as only permitting the detention of aliens following an order of removal for so long as is "reasonably necessary to bring about that alien's removal from the United States. It 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 and strong procedural protections are in place. Subsequently, the Supreme Court ruled that aliens who have been deemed inadmissible (i.e., arriving aliens who have not been granted legal entry, as well as those aliens who have been "paroled" into the country by immigration authorities) also could not be indefinitely detained, but the Court's holding was based on statutory construction of the applicable immigration law, and it did not consider whether such aliens were owed the same due process protections as aliens who had been legally admitted into the United States. It is important to note, however, that despite generally rejecting the practice of indefinite detention, the Zadvydas Court nevertheless suggested that the continued detention of particular aliens past the statutory period for removal might be warranted in limited cases where the alien was "specially dangerous." Though the Court only specifically mentioned mental illness as a special circumstance perhaps warranting indefinite detention, it appears that aliens detained on security or related grounds, such as terrorists, might also be considered "specially dangerous" and warrant indefinite detention as well. Following the Court's ruling in Zadvydas , new regulations were issued to comply with the Court's holding. After a six-month detention period, which the Zadvydas Court found to be presumptively reasonable, an alien's request for release from detention, accompanied by evidence that his removal would not otherwise be effected in the reasonably foreseeable future, may be reviewed by the DHS's Bureau of Immigration and Customs Enforcement (ICE). Following consideration of this evidence, the ICE is required to issue a written decision either ordering the alien released or continuing his detention. DHS regulations permit the continued detention of certain classes of aliens on account of special circumstances, including, inter alia , any alien who is detained on account of (1) serious adverse foreign policy consequences of release; (2) security or terrorism concerns; or (3) 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. As a result of the Zadvydas decision, some criminal aliens afforded non-refoulement protection under CAT may be required to be eventually released from detention, even though such aliens would otherwise be subject to removal from the United States. According to the DHS, "in all but the most serious cases, a criminal alien who cannot be returned—regardless of the reason—may be subject to release after six months." In 2003, the DHS stated that in practice less than one percent of criminal aliens who have received CAT protection have been released from custody following a final order of removal. However, given the Court's ruling in Zadvydas and subsequent jurisprudence suggesting that the use of indefinite detention may be severely limited, as well as the growing number of aliens who have been granted deferral of removal under CAT, the magnitude of this potential obstacle to alien removal may increase over time. It is important to note that CAT only prohibits signatory parties from expelling persons to states where they would likely to be tortured—it does not provide aliens with protection from removal to states where they would not be tortured, even if such aliens would face cruel, inhuman, or degrading treatment not rising to the level of torture. Reaching agreements with countries to permit the removal of criminal aliens to these countries (possibly for the purpose of prosecuting them), subject to the condition that they will not be tortured or perhaps face other harsh forms of treatment, could be one possible method for handling this potential problem, although it is unclear whether other states would be receptive to such agreements. When immigration officials identify a suspected foreign terrorist or similar security threat at a port of entry, the government's interest in the alien likely extends beyond simply assuring that the suspect does not enter the United States. Security and criminal law enforcement interests may also come into play. Controversy over how CAT applies in reconciling these diverse interests is illustrated by the case of Maher Arar. In September 2002, U.S. authorities arrested Mr. Arar, a Canadian citizen born in Syria, at John F. Kennedy Airport in New York while he was waiting for a connecting flight to Canada. According to news reports, U.S. officials allege that Arar was on a terrorist watch list after "multiple international intelligence agencies" linked him to terrorist groups, though Arar has denied any knowing connection to terrorism. Though the particulars remain unclear, Arar alleges that he was detained for several days of interrogation in the United States and asked to voluntarily agree to be transferred to Syria. Arar claims he refused to approve such transfer, but was nevertheless transferred to Jordan and then to Syria, where he was reportedly imprisoned for ten months. At the time of Arar's transfer, Syria was listed by the State Department as a regular practitioner of torture. Syria is not a party to CAT. Upon release and his subsequent return to Canada, Arar claims that he was tortured by Syrian officials in an effort to compel him to confess to terrorist activities. Canada subsequently ordered a public inquiry as to what role, if any, Canada played in Arar's transfer to Syria, and Arar filed civil suit in a U.S. federal court against various current and former U.S. officials for their role in his transfer and alleged subsequent torture. In late 2003, then-Attorney General John Ashcroft was quoted as stating, "In removing Mr. Arar from the U.S., we acted fully within the law and applicable treaties and conventions." The United States reportedly received assurances from Syria that Arar would not be tortured prior to removing him there, and Syria has reportedly stated that Arar was not tortured. It is unclear whether Arar's rendition complied with any legal procedures governing covert renditions that are not handled through either extradition or the general process for alien removal. Further, there appears to be no public information concerning what assurances, if any, were given by Syria to the United States prior to Arar's transfer. Arar's lawsuit claimed in part that his removal was in violation of regulations concerning the removal of arriving aliens, and U.S. officials have claimed that his removal was conducted pursuant to expedited removal procedures outlined in INA § 235(c). On the other hand, it is possible that Arar's rendition was conducted at least in part pursuant to a law-enforcement action relating to the war on terror rather than pursuant to U.S. immigration laws. Whether Arar's removal to Syria constituted a violation of U.S. obligations under CAT and CAT-implementing laws and regulations may require a finding of fact as to the particular nature of the assurances provided to the United States and the role they played in the decision to remove Arar. Whether such a finding will be made in the foreseeable future remains to be seen. On February 16, 2006, the U.S. District Court for the Eastern District of New York dismissed Arar's civil case on a number of grounds, including that certain claims raised against U.S. officials implicated national security and foreign policy considerations, and the propriety of those considerations was most appropriately reserved to Congress and the executive branch. The district court's dismissal was upheld by a three-judge panel of the Court of Appeals for the Second Circuit on June 30, 2008. A rehearing en banc was granted on August 12, 2008, but a ruling has yet to be issued. The final report of the commission established by the Canadian government to investigate Canada's role in Arar's transfer was released in September 2006. It concluded that Arar had not been a security threat to Canada, but Canadian officials provided U.S. authorities with inaccurate information regarding Arar that may have led to his transfer. For a detailed discussion concerning the legality of renditions under the laws on torture, including CAT, see CRS Report RL32890, Renditions: Constraints Imposed by Laws on Torture , by [author name scrubbed]. | The United Nations Convention Against Torture and Other Cruel, Inhuman, or Degrading Treatment or Punishment (CAT) requires signatory parties to take measures to end torture within their territorial jurisdictions. For purposes of the Convention, torture is defined as an extreme form of cruel and inhuman punishment committed under the color of law. The Convention allows for no circumstances or emergencies where torture could be permitted. Additionally, CAT Article 3 requires that no state party expel, return, or extradite a person to another country where there are substantial grounds to believe he would be subjected to torture. CAT Article 3 does not expressly prohibit persons from being removed to countries where they would face cruel, inhuman, or degrading treatment not rising to the level of torture. The United States ratified CAT subject to certain declarations, reservations, and understandings, including that the Convention was not self-executing, and therefore required domestic implementing legislation to take effect. In accordance with CAT Article 3, the United States enacted statutes and regulations to prohibit the transfer of aliens to countries where they would be tortured, including the Foreign Affairs Reform and Restructuring Act of 1998, and certain regulations implemented and enforced by the Department of Homeland Security (DHS), the Department of Justice (DOJ), and the Department of State. These authorities, which require the withholding or deferral of the removal of an alien to a country where he is more likely than not to be tortured, generally provide aliens already residing within the United States a greater degree of protection than aliens arriving to the United States who are deemed inadmissible on security- or terrorism-related grounds. Further, in deciding whether or not to remove an alien to a particular country, these rules permit the consideration of diplomatic assurances that an alien will not be tortured there. Nevertheless, under U.S. law, the removal or extradition of all aliens from the United States must be consistent with U.S. obligations under CAT. CAT obligations concerning alien removal have additional implications in cases of criminal and other deportable aliens. The Supreme Court's ruling in Zadvydas v. Davis suggests that certain aliens receiving protection under CAT cannot be indefinitely detained, raising the possibility that certain otherwise-deportable aliens could be released into the United States if CAT protections make their removal impossible. CAT obligations also have implications for the practice of "extraordinary renditions," by which the U.S. purportedly has transferred aliens suspected of terrorist activity to countries that possibly employ torture as a means of interrogation. For additional background on renditions and other CAT-related issues, see CRS Report RL32890, Renditions: Constraints Imposed by Laws on Torture, and CRS Report RL32438, U.N. Convention Against Torture (CAT): Overview and Application to Interrogation Techniques, both by [author name scrubbed]. |
The U.S. Constitution vests Congress with the "power of the purse," and funds may only be drawn from the Treasury in consequence of appropriations made by law. Enacted appropriations and other budgetary legislation may vary in the level of detail they provide regarding how agencies should spend the funds that have been provided. Even when the purpose of appropriations has been specified in great detail, agencies have often been provided with some flexibility to decide how they will use their available budgetary resources during the fiscal year. In some instances, agencies are provided with limited authority to shift funds from one appropriations account or fund account to another—commonly referred to as "transfer authority." In addition, agencies are generally permitted to shift funds from one purpose to another within an appropriations account. This practice, usually referred to as "reprogramming," may be restricted by statute. While the terms reprogramming and transfer are sometimes used interchangeably, the two terms each represent distinct budgetary actions with different statutory limitations. In order to differentiate between a reprogramming action and a transfer action, it may be necessary to understand the structure of the accounts involved and the range of activities and programs typically funded by each account. For example, in FY2013 there were more than 30 accounts within the Department of Justice Appropriations Act, including an account for "Federal Bureau of Investigation (FBI), Salaries and Expenses" and an account for "Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), Salaries and Expenses." Given the range of activities typically funded by these two accounts, a transfer would occur if funds originally appropriated for FBI salaries and expenses were moved and then used to pay for ATF salaries and expenses. The Department of Justice Appropriations Act also includes an account for "U.S. Attorneys, Salaries and Expenses." This account provides funding for a range of activities, including criminal litigation, civil litigation, and continuing legal education of U.S. attorneys. In this example, a reprogramming would occur if funds originally allocated for criminal litigation expenses were shifted and then used to pay for civil litigation expenses or for continuing legal education expenses. In the first example, funds are transferred from the "FBI, Salaries and Expenses" account to the "ATF, Salaries and Expenses" account, while in the second example funds are reprogrammed from one activity to another within the "U.S. Attorneys, Salaries and Expenses" account. In each example, whether the budgetary transaction is a transfer or a reprogramming depends, in part, on the structure and contents of the appropriations accounts involved. This report provides an overview of transfers and reprogramming, and describes the statutory limitations and requirements for congressional notification that are applicable to each. This report concludes with a brief discussion of the following possible issues for Congress: (1) agency reporting and congressional oversight of transfers and reprogramming actions, (2) the potential burden of transfer and reprogramming notifications, (3) excessive or improper use of transfer and reprogramming authorities, and (4) financial management and budgetary treatment of transferred funds. Transfers (i.e., the shift of budgetary resources from one appropriations or fund account to another) typically involve movement of funds within an agency or department, but may also involve movement of funds between two or more agencies or departments. An agency or department may only transfer budgetary resources if it has been provided the statutory authority to do so. A general restriction on transfers may be found in 31 U.S.C. Section 1532, which provides, in part, "An amount available under law may be withdrawn from one appropriation account and credited to another or to a working fund only when authorized by law." According to the Government Accountability Office (GAO), all transfers are prohibited without statutory authority, including "(1) transfers from one agency to another, (2) transfers from one account to another within the same agency, and (3) transfers to an interagency or intra-agency working fund. In each instance statutory authority is required." Without prior statutory authority, an agency may not use budget authority from one appropriations account to pay for programs, projects, or activities (PPAs) that are typically funded by another account. Without statutory authority, an agency may not use excess funds in one account to offset potential deficiencies in another account, or shift funds from a project it considers a low priority to a project funded by a different account that it considers a higher priority. Transfer authority may be broad or narrow in scope and it may apply to all agencies, to select agencies, or only to a single agency. Transfer authority may also be limited to a specific dollar amount. Alternatively, transfer authority may be "indefinite" (i.e., provided without a specific limit on the dollar amount that may be transferred). Indefinite transfer authority is typically provided with specific restrictions on the circumstances under which the authority may be used. Transfer authority may be provided either in authorizing statutes or in appropriations acts. In addition, statutory provisions that provide transfer authority will typically require the agency or department to notify Congress a certain number of days (often 15, 30, or 45 calendar days) prior to transferring funds. Transfer authority in annual appropriations acts provides agencies with limited discretion to shift budget authority from one appropriations account or fund account to another. Within annual appropriations acts, transfer authority may be provided to a specific department or agency. Transfer authority may also be provided for a specific account, program, or purpose. Department-wide and agency-wide transfer authorities are often found in the sections of appropriations acts titled "General Provisions." Department-wide and agency-wide transfer authorities are typically provided with specific limitations on the overall amount that a department or agency may transfer amongst its accounts in a given fiscal year. Additionally, there may be limits on the amount that any single account may be augmented by incoming transfers. For example, the FY2013 department-wide transfer authority provision for the Department of Commerce states "not to exceed 5 percent of any appropriation made available for the current fiscal year for the Department of Commerce in this Act may be transferred between such appropriations, but no such appropriation shall be increased by more than 10 percent by any such transfers." In the above example, 5% is the limit on how much may be transferred out in total. In other words, the total amount of transfers carried out by the Department of Commerce may not exceed 5% of the total amount the department was appropriated for FY2013. The 10% figure is the maximum amount that any single account may be augmented by incoming transfers. In other words, each account for the Department of Commerce may be increased by a maximum of 10% of its original appropriation. For example, an account that was originally appropriated $10 million may accept a maximum of $1 million in incoming transfers. Transfer authority may also be found in the paragraphs of an appropriations act that specify the amount of budget authority being provided to each account. Account-specific transfer authorities allow agencies to transfer funds among specific accounts. Account-specific transfer authority may be limited to a specific dollar amount. For example, in FY2012 the Secretary of the Interior and the Secretary of Agriculture were authorized to transfer up to $50,000,000 of funds appropriated for wildland fire management "when such transfers would facilitate and expedite wildland fire management programs and projects." Alternatively, account-specific transfer authority may be indefinite with respect to amount, and limited only to the amount of funds available. In such cases, the authority is often provided with specific restrictions on the purposes for which the authority may be used. For example, in FY2012 the Secretary of the Treasury was provided indefinite authority to "transfer funds from Financial Management Service, Salaries and Expenses to the Debt Collection Fund as necessary to cover the costs of debt collection." While transfer authority provided in annual appropriations acts is often limited to a specific dollar amount or percentage of the total budget authority provided, transfer authority in authorizing statutes is often broad or indefinite (i.e., provided without explicit caps on the amount of funds that may be transferred). Generally, when indefinite transfer authority is provided in authorizing statutes, it is accompanied by specific restrictions on the circumstances under which the authority may be used. In addition, restrictions on indefinite transfer authority may be imposed by subsequently enacted legislation, such as annual appropriations acts. Under 31 U.S.C. Section 1531(a), executive agencies may transfer funds when the responsibility to carry out the functions or activities for which the funds were provided is transferred from one agency to another. This provision also applies when a function or activity that was previously under the jurisdiction of a single agency becomes the shared responsibility of two or more agencies. The balance of an appropriation available and necessary to finance or discharge a function or activity transferred or assigned under law within an executive agency or from one executive agency to another may be transferred to and used (1) by the organizational unit or agency to which the function or activity was transferred or assigned; and (2) for a purpose for which the appropriation was originally available. It is important to note that the above provision provides executive agencies with authority to transfer funds only when there is a corresponding transfer of function authorized by law. In cases of governmental reorganization, the authority to transfer funds may be temporary, periodic, or both—whichever is best suited for the associated transfer of function authorized by law. Generally, the authority to transfer funds ceases when the associated transfer of function or transition period is complete. One recent example of government reorganization was the establishment of the Department of Homeland Security. The Homeland Security Act of 2002 (HSA, P.L. 107-296 ; 116 Stat. 2135) provided for the transfer of multiple functions to the newly created Department of Homeland Security (DHS). To facilitate the transfer of functions, the HSA included multiple provisions authorizing the transfer of funds from these departments and agencies to DHS. Transfer authority may be provided when there exists an ongoing need for coordinated funding of activities. When multiple agencies (or separately funded components of an agency) are responsible for achieving a specific policy objective over an extended period of time, permanent authority may be provided to facilitate ongoing, coordinated funding of certain activities. For example, the Central Intelligence Agency Act of 1949 allows the Central Intelligence Agency (CIA) to transfer or accept funds from any government agency if those transfers further the performance of certain functions, such as collection of intelligence through human sources, evaluation of intelligence related to national security, and coordination of intelligence collection activities outside the United States. The Intelligence Reform and Terrorism Prevention Act of 2004 gives the Director of National Intelligence authority to manage (and in some cases approve) transfers and reprogramming of certain intelligence-related funds, including funds made available under the National Intelligence Program and the Joint Military Intelligence Program. The Foreign Assistance Act of 1961, as amended, includes multiple provisions that allow the President to authorize transfers of select foreign assistance funds, if such transfers are "in the national interest." Reprogramming is the shifting of funds within an appropriations account "to use them for purposes other than those contemplated at the time of appropriation; it is the shifting of funds from one object class to another within an appropriation or from one program activity to another." Unlike transfers, reprogramming of funds is generally permitted unless such actions are otherwise restricted by statute, and an agency may not reprogram funds if doing so would violate any other provisions of law. According to GAO, reprogramming "is implicit in an agency's responsibility to manage its funds." GAO has also stated that Congress implicitly confers upon agencies the authority to reprogram whenever it enacts "lump-sum" appropriations without including statutory restrictions on the use of the funds provided. It is important to note, however, that an agency may not circumvent the general prohibition against transfers by characterizing the movement of funds from one account to another as a "reprogramming," either intentionally or unintentionally. According to GAO, "an agency's erroneous characterization of a proposed transfer as a 'reprogramming' is irrelevant," and such actions are prohibited without prior statutory authority. An agency's ability to reprogram may be restricted by including "limiting provisions" within its annual appropriations acts or other statutes. For example, provisions in the Department of Homeland Security Appropriations Act, 2013, established the following limitations and notification requirements on reprogramming actions by DHS: (a) None of the funds provided by this Act, provided by previous appropriations Acts to the agencies in or transferred to the Department of Homeland Security that remain available for obligation or expenditure in fiscal year 2013, or provided from any accounts in the Treasury of the United States derived by the collection of fees available to the agencies funded by this Act, shall be available for obligation or expenditure through a reprogramming of funds that: (1) creates a new program, project, or activity; (2) eliminates a program, project, office, or activity; (3) increases funds for any program, project, or activity for which funds have been denied or restricted by the Congress; (4) proposes to use funds directed for a specific activity by either of the Committees on Appropriations of the Senate or the House of Representatives for a different purpose; or (5) contracts out any function or activity for which funding levels were requested for Federal full-time equivalents in the object classification tables contained in the fiscal year 2013 Budget Appendix for the Department of Homeland Security, as modified by the joint explanatory statement accompanying this Act, unless the Committees on Appropriations of the Senate and the House of Representatives are notified 15 days in advance of such reprogramming of funds. Congress may also include restrictive language within the conference committee explanatory statements that accompany appropriations acts. These limitations and procedures, sometimes referred to as "nonstatutory understandings," may be developed in consultation with officials from the agencies to which they apply. Unlike language included in the text of appropriations and other statutes, these informal, nonstatutory understandings are typically not legally binding upon agencies. Nevertheless, nonstatutory understandings may be influential on an agency's behavior, and agencies may integrate these informal agreements into their internal budget execution policies and procedures. Further, certain nonstatutory information contained within an accompanying conference committee explanatory statement may be "incorporated by reference" by language in the appropriations act. For example, Section 301(c) of the Energy and Water Development and Related Agencies Appropriations Act, 2012, incorporated by reference the allocation tables in the accompanying joint explanatory statement, which specified the amounts and purposes for which funds should be spent within each appropriations account for the Department of Energy. Except as provided in this section, the amounts made available by this title shall be expended as authorized by law for the projects and activities specified in the "Conference" column in the "Department of Energy" table included under the heading "Title III—Department of Energy" in the joint explanatory statement accompanying this Act. This legislative method allows the specified nonstatutory materials, such as amounts allocated in a conference committee explanatory statement, to be treated as if they were part of the statutory text of the appropriations act. GAO has found that when statutory language "clearly and unambiguously expresses an intent to appropriate amounts as allocated in the explanatory statement" the referenced allocations become legally binding and "the affected agencies are required to obligate and expend amounts appropriated ... in accordance with the referenced allocations in the explanatory statement." In general, transferred and reprogrammed funds are subject to any limitations or conditions that were imposed by their original appropriations act. All original restrictions remain in effect on transferred funds regardless of whether the funds in the "receiving" appropriations account have different restrictions or characteristics than the funds being transferred. In other words, limitations and restrictions follow the funds. This general restriction is found in Title 31, Section 1532 of the U.S. Code . Except as specifically provided by law, an amount authorized to be withdrawn and credited [transferred] is available for the same purpose and subject to the same limitations provided by the law appropriating the amount. As a matter of appropriations law, there are three principles an agency must adhere to when obligating and expending appropriated funds. First, the amounts obligated and expended must be within the amounts appropriated by law. Second, funds may only be used for the purpose for which they were appropriated. Third, appropriated funds may only be used to pay for obligations made during the fiscal year(s) or other period of time for which they were provided. Unless otherwise provided by law, these same three principles—amount, purpose, and timing—apply to appropriated funds even after they are transferred or reprogrammed. Finally, additional restrictions are commonly imposed by the statutes that provide transfer or reprogramming authority. Selected examples of the types of limitations and restrictions that may accompany transfer authority or reprogramming provisions are discussed below using the three-principle framework (i.e., amount, purpose, and timing) as categories. Statutes that provide authority to transfer funds may place a cap on the amounts that may be transferred. Such caps are commonly referred to as "not-to-exceed" limitations. For example, in FY2012 the authority to transfer up to $300 million of certain appropriated funds was provided to the Environmental Protection Agency. The Administrator is authorized to transfer up to $300,000,000 of the funds appropriated for the Great Lakes Restoration Initiative under the heading "Environmental Programs and Management" to the head of any Federal department or agency, with the concurrence of such head, to carry out activities that would support the Great Lakes Restoration Initiative and Great Lakes Water Quality Agreement programs, projects, or activities. Alternatively, transfers may be limited to a certain percentage of the total amount of budget authority appropriated or available. For example, the Department of Justice Appropriations Act, 2012, included the following restriction on the amount of funds that maybe transferred between accounts. Not to exceed 5 percent of any appropriation made available for the current fiscal year for the Department of Justice in this Act may be transferred between such appropriations, but no such appropriation, except as otherwise specifically provided, shall be increased by more than 10 percent by any such transfers. Similar "not-to-exceed" limitations may also be imposed upon an agency's authority to reprogram funds. More frequently, however, the "not-to-exceed" limitations imposed on reprogramming are used to establish a threshold for congressional notification. Statutes may also mandate that a specific dollar amount (or no less than a specific dollar amount) be transferred from one account to another. Such provisions have been used to provide funds for special interagency fund accounts, where each participating agency is instructed to transfer a specific dollar amount or percentage of its appropriation to the fund. "No-less-than" provisions have also been used to transfer funds necessary for administrative expenses from a "program" account to the applicable "salaries and expenses" account. "No-less-than" provisions have also been used to provide funds for Inspectors General offices. Typically, these "mandatory" transfers happen automatically, under special accounting procedures established by OMB and Treasury, rather than by a transfer request initiated by an individual agency or department. Such authorities are typically provided for accounting or administrative purposes rather than for the purpose of providing additional budgetary flexibility. The general restriction in 31 U.S.C. Section 1532, whereby "an amount authorized to be withdrawn and credited is available for the same purpose and subject to the same limitations provided by the law," also applies to "policy restrictions," or language from an appropriations act that prohibits funds from being used for certain activities. For example, a provision of the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, 2012, states that "none of the funds appropriated or otherwise made available by this Act may be used for first-class travel by the employees of agencies funded by this Act in contravention of sections 301–10.122 through 301–10.124 of title 41, Code of Federal Regulations." Unless Congress explicitly provides otherwise, this policy restriction would remain in effect against the funds made available by this appropriations act even if those funds are transferred to a different account or reprogrammed within an account. New restrictions on the use of funds may be imposed by the provisions of law that provide transfer authority. For example, provisions granting transfer authority to the Department of Defense (DOD) have typically limited the use of transferred funds to items that are of a higher priority than the items for which the funds were originally appropriated. Other provisions have prohibited DOD from using its transfer authority to fund projects, programs, or activities for which Congress had previously denied funds. The general restriction in 31 U.S.C. Section 1532, whereby "an amount authorized to be withdrawn and credited is available for the same purpose and subject to the same limitations provided by the law," also applies to the period of time for which appropriated funds were originally provided. For example, funds provided for a single fiscal year (commonly referred to as "fixed-year" or "one-year" funds) remain available only for that fiscal year even if those funds are transferred to an account that contains "multi-year" or "no-year" funds. Transferring "one-year" funds in an attempt to keep those funds available beyond the fiscal year for which they were provided is referred to as "parking" or "banking" the funds. According to GAO, this practice is prohibited unless specifically authorized by law. In order to extend the period of availability of appropriated funds, transfer authority may be provided with a proviso stating that the transferred funds will be "available for the same time period" as the appropriations to which they are transferred. Agencies may be required by statute to notify Congress prior to (or shortly after) carrying out certain transfers and reprogramming transactions. Often, such requirements involve agencies notifying the relevant House and Senate Appropriations Committees a certain number of days (often 15, 30, or 45 calendar days) prior to transferring or reprogramming funds. Within annual appropriations acts, the requirements for congressional notification of transfer and reprogramming actions are often found in the "General Provisions" section that is applicable to each department or agency. For example, Section 7015(b) of the FY2012 Department of State, Foreign Operations, and Related Programs Appropriations Act restricted certain reprogramming actions, including those in excess of $1 million, "unless the Committees on Appropriations are notified 15 days in advance of such reprogramming of funds." Transfer authority provisions may also include language stating that transfers are to be treated as "reprogrammings" and are thereby subject to the same limitations and notification requirements imposed on reprogrammings by the applicable "General Provisions" section. For example, Section 103, Division B of P.L. 113-6 provides the Department of Commerce with limited authority to transfer funds between accounts provided that "any transfer pursuant to this section shall be treated as a reprogramming of funds under section 505 of this Act and shall not be available for obligation or expenditure except in compliance with the procedures set forth in that section." Typically, all account-to-account transfers will require prior notification to Congress. Reprogramming actions generally require notification only when they exceed a certain dollar amount or "threshold." Reprogramming actions that fall below the threshold are handled internally and, in some cases, without any notification or prior approval required by Congress. Agencies generally have internal procedures for determining when and how a transfer or reprogramming of funds will take place. Departments and agencies may be required to obtain approval from the head of the agency, from the department secretary (e.g., if the transfer or reprogramming were to take place across multiple components of a department), and in some cases, from the Director of the Office of Management and Budget (OMB) prior to transferring or reprogramming funds. In most instances these internal procedures are governed by agency directives and OMB guidance. Internal procedures for determining when and how to transfer or reprogram funds vary by department and agency. For example, transfer and reprogramming actions within the U.S. Air Force must be approved by the Deputy Assistant Secretary of the Air Force prior to notification of Congress. Transfers by agencies within the U.S. Department of Agriculture (USDA) are generally subject to a multi-stage process including preparation by USDA's Budget and Finance Division and approval by the USDA's Office of Budget and Program Analysis prior to submission to OMB and Congress. Finally, in some cases, specific department and agency procedures are required by statute. For example, the Director of National Intelligence may only transfer or reprogram National Intelligence Program funds (1) with the approval of the Director of OMB, and (2) after consulting with the heads of the affected agencies including the Director of the CIA if the adjustment involves CIA funding. Executive branch agencies are also subject to guidance and procedures established by OMB. For example, OMB Circular A-11 states "unless a specific exemption is approved by OMB" all reprogramming requests are "subject to OMB clearance." The circular instructs executive branch agencies to provide information to OMB five working days in advance to "allow adequate review time." According to the circular, "OMB review of reprogramming requests may take longer in some circumstances (e.g., if the request has not been coordinated or if supporting materials have not been provided concurrently)." An April 2013 OMB memorandum on agency implementation of the Joint Committee sequestration instructs executive agencies to "consult with their OMB Resource Management Office (RMO) to assess options for utilizing existing [transfer and reprogramming] authorities and ensure that any proposed actions appropriately balance short-term and long-term mission priorities." Transfers and reprogrammings may also trigger certain accounting or financial management procedures. For example, increases or decreases in budget authority resulting from a transfer of funds may require a reapportionment of appropriated funds. With certain exceptions, the Antideficiency Act requires that appropriated funds be apportioned (or divided)—by time period, function, or program—in order to prevent agencies from exhausting their appropriated funds prematurely. Funds appropriated to executive agencies are apportioned by OMB, and Circular A-11 instructs executive agencies to submit a reapportionment request to OMB when a transfer is over "$400,000 or two percent of the amount of total budgetary resources, whichever is lower." In addition, transfers must also be entered into agencies' budget data entry systems. Transfer and reprogramming of appropriations provide agencies with the ability to make budgetary adjustments throughout the fiscal year. These adjustments may be necessary due to changing or unforeseen circumstances. Under such conditions, authority to transfer or reprogram funds may provide agencies with the flexibility needed to carry out the essential functions of the programs and activities for which funds have been provided. When done so in accordance with the applicable authority, procedures, and limitations, transfers and reprogramming may enable agencies to operate more effectively or efficiently, while still adhering to congressional intent, thereby preserving Congress's "power of the purse." When transfers and reprogramming actions deviate from the applicable authorities, procedures, and limitations, however, it is possible that funds may be used in ways contrary to congressional intent. In addition, transfers and reprogramming of appropriated funds may have ramifications for congressional oversight of agency execution of enacted appropriations throughout the fiscal year. The sections below highlight some of the possible issues for Congress related to agency use of transfer and reprogramming authorities. Generally, agencies are required by statute to notify Congress prior to (or shortly after) transferring funds between appropriations accounts. Notification for reprogramming actions, however, is typically triggered only when the reprogramming exceeds a certain dollar amount or "threshold." Substantial transfers, such as a request by the Department of Defense (DOD) to transfer or reprogram nearly $7 billion in FY2012 budget authority, may be more visible and subject to congressional oversight, due to established procedures—both statutory and nonstatutory—for congressional notification. Transfers or reprogramming of relatively smaller amounts may be less evident, in part because smaller budgetary adjustments may have fewer or less restrictive notification requirements. In many cases, reprogramming actions that fall below a certain threshold are handled internally, without any notification or prior approval required by Congress. As a consequence, such transactions may be less subject to congressional oversight. Also, departments and agencies are typically required to submit reports related to transfers and reprogramming actions to the relevant House and Senate Appropriations Committees. While some departments and agencies make these reports publicly available, others do not. For this reason, Members not serving on the House and Senate Appropriations Committees may not have the same access to information on transfers and reprogramming actions. If Congress were interested in expanding agency reporting of transfers and reprogramming actions, Congress might consider options that would change existing statutory and nonstatutory procedures for congressional notification. Such options might include lowering the threshold for notification of reprogrammings, expanding notification to include authorizing committees, or requiring agencies to make information on transfer and reprogramming actions publicly available. Additional reporting of transfers and reprogramming actions may enhance congressional oversight and identification of improper use of appropriated funds. On the other hand, the ability to adequately review transfers or reprogramming actions might become more difficult if reporting requirements were expanded. If Congress were to expand or otherwise modify existing notification requirements, one issue to consider would be the effect that the change might have on the number of notifications submitted in a given fiscal year, and the resulting impact on congressional oversight. For example, a GAO report on ways to reduce the burden of reprogramming notification requirements found that modest changes to reporting thresholds could significantly alter the number of notifications submitted in a given fiscal year. The report also identified certain notification requirements that could be altered or eliminated without "significantly changing the current approach to congressional oversight." The report concluded, however, that "given the various needs and concerns of individual Members, there is no clear consensus on how best to change the system." Overreliance on transfers or reprogramming actions may increase the administrative burden on agencies or, possibly, the oversight burden on congressional committees. GAO has noted several instances of overreliance on reprogramming in response to unsound budgetary planning and financial management. For example, GAO found "in fiscal years 2003 and 2004, the [Army Corps of Engineers] reprogrammed funds over 7,000 times and moved over $2.1 billion among investigations and construction projects." In this instance, GAO recommended that the Army Corps of Engineers "eliminate the use of excessive reprogramming actions" and "provide better financial management of project funds." In addition, misuse of transfer or reprogramming authorities (including a failure to adhere to congressional notification requirements) may cause an agency to spend funds in excess of its available appropriations. For example, in FY2009 the Department of Homeland Security (DHS) failed to notify the House and Senate Appropriations Committees at least 15 days prior to reprogramming $5.1 million to cover a shortfall in the U.S. Secret Service Presidential Candidate Campaign Protection PPA. In 2010 GAO found that DHS had violated the notification requirements contained in its annual appropriations act, and as a result, the funds that DHS had reprogrammed and then spent for the U.S. Secret Service program were "unavailable for obligation." For this reason, GAO concluded that DHS had violated the Antideficiency Act, which prohibits agencies from incurring obligations in excess or in advance of the amount of funds legally available. Guidance from OMB and the Department of the Treasury provides agencies with standards for recording and tracking transactions involving transfers or reprogramming of funds. Accurate and timely recording of transfers or reprogramming transactions is central to ensuring that agencies do not make budgetary adjustments in excess of the statutorily allowed limits. In addition, sound financial management of these transactions is necessary to ensure that transactions are not double-counted by the agencies involved in the transactions, and that each account accurately reflects the amount of available budget authority. Failure to properly record transfers or reprogramming transactions could lead to under- or over-estimating the amount of budgetary resources available, miscalculations in budgetary planning, and overspending at either the account or the PPA level. This, in turn, may pose challenges for congressional oversight of budget execution and agency operations. Gradual or periodic transfers may pose additional challenges for financial management and auditing of both the parent and receiving agencies' accounts. For example, during a governmental reorganization, the transfer of multiple functions and their associated funds may take years to accomplish. The associated transfers of budgetary resources may be complex, particularly if funds will be transferred gradually throughout the transition period. This may pose unique problems for agencies as they develop and submit their budget requests in subsequent years. Transfers of Function and Governmental Reorganization Transfers of functions and activities (31 U.S.C. §1531) (a) The balance of an appropriation available and necessary to finance or discharge a function or activity transferred or assigned under law within an executive agency or from one executive agency to another may be transferred to and used— (1) by the organizational unit or agency to which the function or activity was transferred or assigned; and (2) for a purpose for which the appropriation was originally available. (b) The head of the executive agency determines the amount that, with the approval of the President, is necessary to be transferred when the transfer or assignment of the function or activity is within the agency. The President determines the amount necessary to be transferred when the transfer or assignment of the function or activity is from one executive agency to another. (c) A balance transferred under this section is— (1) credited to an applicable existing or new appropriation account; (2) merged with the amount in an account to which the balance is credited; and (3) with the amount with which the balance is merged, accounted for as one amount. (d) New appropriation accounts may be established to carry out subsection (c)(1) of this section. Withdrawal and credit (31 U.S.C. §1532) An amount available under law may be withdrawn from one appropriation account and credited to another or to a working fund only when authorized by law. Except as specifically provided by law, an amount authorized to be withdrawn and credited is available for the same purpose and subject to the same limitations provided by the law appropriating the amount. A withdrawal and credit is made by check and without a warrant. Transfer of funds and employees (10 U.S.C. §126) (a) When a function, power, or duty or an activity of a department or agency of the Department of Defense is transferred or assigned to another department or agency of that department, balances of appropriations that the Secretary of Defense determines are available and needed to finance or discharge that function, power, duty, or activity, as the case may be, may, with the approval of the President, be transferred to the department or agency to which that function, power, duty or activity, as the case may be, is transferred, and used for any purpose for which those appropriations were originally available. Balances of appropriations so transferred shall— (1) be credited to any applicable appropriation account of the receiving department or agency; or (2) be credited to a new account that may be established on the books of the Department of the Treasury; and be merged with the funds already credited to that account and accounted for as one fund. Balances of appropriations credited to an account under clause (1) are subject only to such limitations as are specifically applicable to that account. Balances of appropriations credited to an account under clause (2) are subject only to such limitations as are applicable to the appropriations from which they are transferred. (b) When a function, power, or duty or an activity of a department or agency of the Department of Defense is transferred to another department or agency of that department, those civilian employees of the department or agency from which the transfer is made that the Secretary of Defense determines are needed to perform that function, power, or duty, or for that activity, as the case may be, may, with the approval of the President, be transferred to the department or agency to which that function, power, duty, or activity, as the case may be, is transferred. The authorized strength in civilian employees of a department or agency from which employees are transferred under this section is reduced by the number of employees so transferred. The authorized strength in civilian employees of a department or agency to which employees are transferred under this section is increased by the number of employees so transferred. The Homeland Security Act of 2002 ( P.L. 107-296 ; 116 Stat. 2135) The Homeland Security Act of 2002 (HSA, P.L. 107-296 ; 116 Stat. 2135) provided for the transfer of multiple functions to the newly created Department of Homeland Security (DHS). In total, the functions of all or part of 22 different federal departments and agencies were transferred to DHS. The HSA also abolished certain government entities, such as the Office of Science and Technology and the Immigration and Naturalization Service, and transferred their functions to newly created entities within DHS (e.g., the Science and Technology Directorate and U.S. Immigration and Customs Enforcement). To facilitate the transfer of functions, the HSA included multiple provisions authorizing the transfer of funds from these departments and agencies to DHS. Most of the statutory authorizations to transfer funds applied only during the transition period, which the act defined as "the 12-month period beginning on the effective date of this Act." For example, in conjunction with the transfer of certain functions related to inspection of agricultural imports, the HSA provided for periodic transfer of funds from the Department of Agriculture to DHS. Out of funds collected by fees authorized under sections 2508 and 2509 of the Food, Agriculture, Conservation, and Trade Act of 1990 (21 U.S.C. 136, 136a), the Secretary of Agriculture shall transfer, from time to time in accordance with the agreement under subsection (e), to the Secretary funds for activities carried out by the Secretary for which such fees were collected. The HSA also provided authority for transfers of functions and funds from the Immigration and Naturalization Service to DHS. Title IV of the act reads, in part, unexpended balance[s] of appropriations, authorizations, allocations, and other funds employed, held, used, arising from, available to, or to be made available to, the Immigration and Naturalization Service in connection with the functions transferred by this subtitle ... shall be transferred to the Director of the Bureau of Citizenship and Immigration Services for allocation to the appropriate component of the Department. Unexpended funds transferred pursuant to this paragraph shall be used only for the purposes for which the funds were originally authorized and appropriated. Elsewhere, the HSA granted the Director of the Office of Management and Budget broad authority to make "incidental transfers." The "Transitional Provisions" section of the act (Title XV, Subtitle B) reads in part, The Director of the Office of Management and Budget, in consultation with the Secretary [of DHS], is authorized and directed to make such additional incidental dispositions of personnel, assets, and liabilities held, used, arising from, available, or to be made available, in connection with the functions transferred by this Act, as the Director may determine necessary to accomplish the purposes of this Act. Provisions for Interagency Coordination and Select Military and Intelligence Activities Operations for which funds are not provided in advance: funding mechanisms—transfer authority (10 U.S.C. §127a(c)) (1) Whenever there is an operation of the Department of Defense described in subsection (a), the Secretary of Defense may transfer amounts described in paragraph (3) to accounts from which incremental expenses for that operation were incurred in order to reimburse those accounts for those incremental expenses. Amounts so transferred shall be merged with and be available for the same purposes as the accounts to which transferred. (2) The total amount that the Secretary of Defense may transfer under the authority of this section in any fiscal year is $200,000,000. (3) Transfers under this subsection may only be made from amounts appropriated to the Department of Defense for any fiscal year that remain available for obligation, other than amounts within any operation and maintenance appropriation that are available for (A) an account (known as a budget activity 1 account) that is specified as being for operating forces, or (B) an account (known as a budget activity 2 account) that is specified as being for mobilization. (4) The authority provided by this subsection is in addition to any other authority provided by law authorizing the transfer of amounts available to the Department of Defense. However, the Secretary may not use any such authority under another provision of law for a purpose described in paragraph (1) if there is authority available under this subsection for that purpose. (5) The authority provided by this subsection to transfer amounts may not be used to provide authority for an activity that has been denied authorization by Congress. (6) A transfer made from one account to another under the authority of this subsection shall be deemed to increase the amount authorized for the account to which the amount is transferred by an amount equal to the amount transferred. Appropriations for Defense intelligence elements: accounts for transfers; transfer authority (10 U.S.C. §429) (a) Accounts for Appropriations for Defense Intelligence Elements.—The Secretary of Defense may transfer appropriations of the Department of Defense which are available for the activities of Defense intelligence elements to an account or accounts established for receipt of such transfers. Each such account may also receive transfers from the Director of National Intelligence if made pursuant to Section 102A of the National Security Act of 1947 (50 U.S.C. 403–1), and transfers and reimbursements arising from transactions, as authorized by law, between a Defense intelligence element and another entity. Appropriation balances in each such account may be transferred back to the account or accounts from which such appropriations originated as appropriation refunds. (b) Recordation of Transfers.—Transfers made pursuant to subsection (a) shall be recorded as expenditure transfers. (c) Availability of Funds.—Funds transferred pursuant to subsection (a) shall remain available for the same time period and for the same purpose as the appropriation from which transferred, and shall remain subject to the same limitations provided in the act making the appropriation. (d) Obligation and Expenditure of Funds.—Unless otherwise specifically authorized by law, funds transferred pursuant to subsection (a) shall only be obligated and expended in accordance with chapter 15 of title 31 and all other applicable provisions of law. (e) Defense Intelligence Element Defined.—In this section, the term "Defense intelligence element" means any of the Department of Defense agencies, offices, and elements included within the definition of "intelligence community" under section 3(4) of the National Security Act of 1947 (50 U.S.C. 401a(4)). Support from Central Intelligence Agency (10 U.S.C. §444) (a) Support Authorized.—The Director of the Central Intelligence Agency may provide support in accordance with this section to the Director of the National Geospatial-Intelligence Agency. The Director of the National Geospatial-Intelligence Agency may accept support provided under this section. (b) Administrative and Contract Services.— (1) In furtherance of the national intelligence effort, the Director of the Central Intelligence Agency may provide administrative and contract services to the National Geospatial-Intelligence Agency as if that agency were an organizational element of the Central Intelligence Agency. (2) Services provided under paragraph (1) may include the services of security police. For purposes of section 15 of the Central Intelligence Agency Act of 1949 (50 U.S.C. 403o), an installation of the National Geospatial-Intelligence Agency that is provided security police services under this section shall be considered an installation of the Central Intelligence Agency. (3) Support provided under this subsection shall be provided under terms and conditions agreed upon by the Secretary of Defense and the Director of the Central Intelligence Agency. (c) Detail of Personnel.—The Director of the Central Intelligence Agency may detail personnel of the Central Intelligence Agency indefinitely to the National Geospatial-Intelligence Agency without regard to any limitation on the duration of interagency details of Federal Government personnel. (d) Reimbursable or Nonreimbursable Support.—Support under this section may be provided and accepted on either a reimbursable basis or a nonreimbursable basis. (e) Authority To Transfer Funds.— (1) The Director of the National Geospatial-Intelligence Agency may transfer funds available for that agency to the Director of the Central Intelligence Agency for the Central Intelligence Agency. (2) The Director of the Central Intelligence Agency—(A) may accept funds transferred under paragraph (1); and (B) shall expend such funds, in accordance with the Central Intelligence Agency Act of 1949 (50 U.S.C. 403a et seq.), to provide administrative and contract services or detail personnel to the National Geospatial-Intelligence Agency under this section. Transfer of funds: procedure and limitations (10 U.S.C. §2214) (a) Procedure for Transfer of Funds.—Whenever authority is provided in an appropriation Act to transfer amounts in working capital funds or to transfer amounts provided in appropriation Acts for military functions of the Department of Defense (other than military construction) between such funds or appropriations (or any subdivision thereof), amounts transferred under such authority shall be merged with and be available for the same purposes and for the same time period as the fund or appropriations to which transferred. (b) Limitations on Programs for Which Authority May Be Used.—Such authority to transfer amounts— (1) may not be used except to provide funds for a higher priority item, based on unforeseen military requirements, than the items for which the funds were originally appropriated; and (2) may not be used if the item to which the funds would be transferred is an item for which Congress has denied funds. (c) Notice to Congress.—The Secretary of Defense shall promptly notify the Congress of each transfer made under such authority to transfer amounts. (d) Limitations on Requests to Congress for Reprogrammings.—Neither the Secretary of Defense nor the Secretary of a military department may prepare or present to the Congress, or to any committee of either House of the Congress, a request with respect to a reprogramming of funds— (1) unless the funds to be transferred are to be used for a higher priority item, based on unforeseen military requirements, than the item for which the funds were originally appropriated; or (2) if the request would be for authority to reprogram amounts to an item for which the Congress has denied funds. General Authorities of [Central Intelligence] Agency (50 U.S.C. §§3506(a)(1)-(3)) (a) In general, in the performance of its functions, the Central Intelligence Agency is authorized to— (1) Transfer to and receive from other Government agencies such sums as may be approved by the Office of Management and Budget, for the performance of any of the functions or activities authorized under section 3036 of this title, and any other Government agency is authorized to transfer to or receive from the Agency such sums without regard to any provisions of law limiting or prohibiting transfers between appropriations. Sums transferred to the Agency in accordance with this paragraph may be expended for the purposes and under the authority of this chapter without regard to limitations of appropriations from which transferred; (2) Exchange funds without regard to section 3651 of the Revised Statutes; (3) Reimburse other Government agencies for services of personnel assigned to the Agency, and such other Government agencies are authorized, without regard to provisions of law to the contrary, so to assign or detail any officer or employee for duty with the Agency. The Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ; 118 Stat. 3638) The Intelligence Reform and Terrorism Prevention Act of 2004 established the Office of the Director of National Intelligence (ODNI) and provided the Director with certain authorities to manage (and in some cases approve) transfers and reprogramming. Section 1011(d) of the act describes the role of Director of National Intelligence (DNI) in the transfer and reprogramming of intelligence fund, including multiple duties that had previously been the responsibility of the Secretary of Defense or the Director of the Central Intelligence Agency. No funds made available under the National Intelligence Program may be transferred or reprogrammed without the prior approval of the Director of National Intelligence, except in accordance with procedures prescribed by the Director of National Intelligence... (d)(2) Subject to the succeeding provisions of this subsection, the Director of National Intelligence may transfer or reprogram funds appropriated for a program within the National Intelligence Program to another such program. The Secretary of Defense shall consult with the Director of National Intelligence before transferring or reprogramming funds made available under the Joint Military Intelligence Program. The act also established the limits and restrictions on the transfer authority of the DNI. For example, under certain circumstances, the DNI must consultation with the Director of the CIA and the heads of other intelligence agencies. (3) The Director of National Intelligence may only transfer or reprogram funds referred to in subparagraph (A)—(A) with the approval of the Director of the Office of Management and Budget; and (B) after consultation with the heads of departments containing agencies or organizations within the intelligence community to the extent such agencies or organizations are affected, and, in the case of the Central Intelligence Agency, after consultation with the Director of the Central Intelligence Agency. The act also established "not-to-exceed" and programmatic restrictions on funds available for transfer and reprogramming. (4) The amounts available for transfer or reprogramming in the National Intelligence Program in any given fiscal year, and the terms and conditions governing such transfers and reprogrammings, are subject to the provisions of annual appropriations Acts and this subsection. (5)(A) A transfer or reprogramming of funds or personnel may be made under this subsection only if—(i) the funds are being transferred to an activity that is a higher priority intelligence activity; (ii) the transfer or reprogramming supports an emergent need, improves program effectiveness, or increases efficiency; (iii) the transfer or reprogramming does not involve a transfer or reprogramming of funds to a Reserve for Contingencies of the Director of National Intelligence or the Reserve for Contingencies of the Central Intelligence Agency; (iv) the transfer or reprogramming results in a cumulative transfer or reprogramming of funds out of any department or agency, as appropriate, funded in the National Intelligence Program in a single fiscal year—(I) that is less than $150,000,000, and (II) that is less than 5 percent of amounts available to a department or agency under the National Intelligence Program; and (v) the transfer or reprogramming does not terminate an acquisition program. (5)(B) A transfer or reprogramming may be made without regard to a limitation set forth in clause (iv) or (v) of subparagraph (A) if the transfer has the concurrence of the head of the department involved or the Director of the Central Intelligence Agency (in the case of the Central Intelligence Agency). The authority to provide such concurrence may only be delegated by the head of the department or agency involved to the deputy of such officer. (6) Funds transferred or reprogrammed under this subsection shall remain available for the same period as the appropriations account to which transferred or reprogrammed. Finally, the act established the following procedures for congressional notification of transfer or reprogramming of funds. (7) Any transfer or reprogramming of funds under this subsection shall be carried out in accordance with existing procedures applicable to reprogramming notifications for the appropriate congressional committees. Any proposed transfer or reprogramming for which notice is given to the appropriate congressional committees shall be accompanied by a report explaining the nature of the proposed transfer or reprogramming and how it satisfies the requirements of this subsection. In addition, the congressional intelligence committees shall be promptly notified of any transfer or reprogramming of funds made pursuant to this subsection in any case in which the transfer or reprogramming would not have otherwise required reprogramming notification under procedures in effect as of the date of the enactment of this subsection. Transfer Authority for the Coordination of Foreign Assistance and Development Activities The Foreign Assistance Act of 1961 (P.L. 87-195; 75 Stat. 424) The Foreign Assistance Act of 1961 (FAA), as amended, provides the President with the authority to transfer select foreign assistance funds. The Foreign Assistance Act of 1962 (P.L. 87-565; 76 Stat. 255) added the following provision to the FAA: Sec. 610. Transfer Between Accounts.—(a) Whenever the President determines it to be necessary for the purposes of this Act, not to exceed 10 per centum of the funds made available for any provision of this Act (except funds made available pursuant to title IV of chapter 2 of part I or for section 23 of the Arms Export Control Act) may be transferred to, and consolidated with, the funds made available for any provision of this Act, (except funds made available under chapter 2 of part II of this Act) and may be used for any of the purposes for which such funds may be used, except that the total in the provision for the benefit of which the transfer is made shall not be increased by more than 20 per centum of the amount of funds made available for such provision. (b) The authority contained in this section and in sections 451, 506, and 614 shall not be used to augment appropriations made available pursuant to sections 636(g)(1) and 637 or used otherwise to finance activities which normally would be financed from appropriations for administrative expenses. The Foreign Assistance Act of 1973 ( P.L. 93-189 ; 87 Stat. 714) The Foreign Assistance Act of 1973 amended the FAA, in part by adding a provision that provides the President with the authority to transfer select foreign assistance funds. This authority is in addition to the transfer authority already provided under Sections 610(a). This provision is now Section 109 of the FAA. Sec. 109. Transfer of Funds.—Whenever the President determines it to be necessary for the purposes of this chapter, not to exceed 15 per centum of the funds made available for any provision of this chapter may be transferred to, and consolidated with, the funds made available for any other provision of this chapter, and may be used for any of the purposes for which such funds may be used, except that the total in the provision for the benefit of which the transfer is made shall not be increased by more than 25 per centum of the amount of funds made available for such provision. The authority of sections 610(a) and 614(a) of this Act may not be used to transfer funds made available under this chapter for use for purposes of any other provision of this Act except that the authority of such sections may be used to transfer for the purposes of section 667 not to exceed five per centum of the amount of funds made available for section 667(a)(1). Finally, in a subsequent appropriations act, Congress added an additional reporting requirement that applies to funds transferred pursuant to select sections of the FAA. These additional reporting requirements were included in Section 509 of the FY2003 Foreign Operations Appropriations Act. (a) None of the funds made available by this Act may be transferred to any department, agency, or instrumentality of the United States Government, except pursuant to a transfer made by, or transfer authority provided in, this Act or any other appropriation Act. (b) Notwithstanding subsection (a), in addition to transfers made by, or authorized elsewhere in, this Act, funds appropriated by this Act to carry out the purposes of the Foreign Assistance Act of 1961 may be allocated or transferred to agencies of the United States Government pursuant to the provisions of sections 109, 610, and 632 of the Foreign Assistance Act of 1961. (c) None of the funds made available by this Act may be obligated under an appropriation account to which they were not appropriated, except for transfers specifically provided for in this Act, unless the President, not less than five days prior to the exercise of any authority contained in the Foreign Assistance Act of 1961 to transfer funds, consults with and provides a written policy justification to the Committees on Appropriations of the House of Representatives and the Senate. (d) Any agreement for the transfer or allocation of funds appropriated by this Act, or prior Acts, entered into between the United States Agency for International Development and another agency of the United States Government under the authority of section 632(a) of the Foreign Assistance Act of 1961 or any comparable provision of law, shall expressly provide that the Office of the Inspector General for the agency receiving the transfer or allocation of such funds shall perform periodic program and financial audits of the use of such funds: Provided, That funds transferred under such authority may be made available for the cost of such audits. Provisions Authorizing Transfers of Certain Unobligated Balances Department of Agriculture, Rural Development Disaster Assistance Fund (7 U.S.C. §6945) (a) Rural Development Disaster Assistance Fund—On and after September 30, 2008, there is established in the Treasury a fund entitled the "Rural Development Disaster Assistance Fund".... (e) Transfer of prior appropriations to Fund—The Secretary of Agriculture may transfer to the Rural Development Disaster Assistance Fund, and merge with other amounts generally appropriated to the Fund, the available unobligated balance of any amounts that were appropriated before September 30, 2008, for programs and activities of the Rural Development Mission Area to respond to a disaster and were designated by the Congress as an emergency requirement if, in advance of the transfer, the Secretary determines that the unobligated amounts are no longer needed to respond to the disaster for which the amounts were originally appropriated and the Secretary provides a certification of this determination to the Committees on Appropriations of the House of Representatives and the Senate. Department of Defense Acquisition Workforce Development Fund (10 U.S.C. §1705) (a) Establishment.—The Secretary of Defense shall establish a fund to be known as the "Department of Defense Acquisition Workforce Development Fund" (in this section referred to as the "Fund") to provide funds, in addition to other funds that may be available, for the recruitment, training, and retention of acquisition personnel of the Department of Defense.... (3) Transfer of certain unobligated balances.—To the extent provided in appropriations Acts, the Secretary of Defense may, during the 24-month period following the expiration of availability for obligation of any appropriations made to the Department of Defense for procurement, research, development, test, and evaluation, or operation and maintenance, transfer to the Fund any unobligated balance of such appropriations. Any amount so transferred shall be credited to the Fund. Department of State, Nondiscretionary personnel costs, currency fluctuations, and other contingencies (22 U.S.C. §2696) (b) Appropriations authorization based on currency fluctuations (1) In order to maintain the levels of program activity for the Department of State provided for each fiscal year by the annual authorizing legislation, there are authorized to be appropriated for the Department of State such sums as may be necessary to offset adverse fluctuations in foreign currency exchange rates, or overseas wage and price changes, which occur after November 30 of the earlier of—(A) the calendar year which ended during the fiscal year preceding such fiscal year, or (B) the calendar year which preceded the calendar year during which the authorization of appropriations for such fiscal year was enacted.... (7) (A) Subject to the limitations contained in this paragraph, not later than the end of the fifth fiscal year after the fiscal year for which funds are appropriated or otherwise made available for an account under "Administration of Foreign Affairs", the Secretary of State may transfer any unobligated balance of such funds to the Buying Power Maintenance account. (B) The balance of the Buying Power Maintenance account may not exceed $100,000,000 as a result of any transfer under this paragraph. (C) Any transfer pursuant to this paragraph shall be treated as a reprogramming of funds under section 2706 of this title and shall be available for obligation or expenditure only in accordance with the procedures under such section. (D) The authorities contained in this paragraph may be exercised only with respect to funds appropriated or otherwise made available after fiscal year 2008. Department of Labor, Working capital fund; establishment; availability; capitalization; reimbursement (29 U.S.C. §563) There is established a working capital fund, to be available without fiscal year limitation, for expenses necessary for the maintenance and operation of (1) a central reproduction service; (2) a central visual exhibit service; (3) a central supply service for supplies and equipment for which adequate stocks may be maintained to meet in whole or in part the requirements of the Department; (4) a central tabulating service; (5) telephone, mail and messenger services; (6) a central accounting and payroll service; and (7) a central laborers' service: Provided , That any stocks of supplies and equipment on hand or on order shall be used to capitalize such fund: Provided further, That such fund shall be reimbursed in advance from funds available to bureaus, offices, and agencies for which such centralized services are performed at rates which will return in full all expenses of operation, including reserves for accrued annual leave and depreciation of equipment: Provided further , That the Secretary of Labor may transfer annually an amount not to exceed $3,000,000 from unobligated balances in the Department's salaries and expenses accounts, to the unobligated balance of the Working Capital Fund, to be merged with such Fund and used for the acquisition of capital equipment and the improvement of financial management, information technology and other support systems, and to remain available until expended: Provided further , That the unobligated balance of the Fund shall not exceed $20,000,000. Department of the Treasury, Foreign Currency Fluctuations Account, American Battle Monuments Commission Account (36 U.S.C. §2109) (a) Establishment and Purpose.—There is an account in the Treasury known as the "Foreign Currency Fluctuations, American Battle Monuments Commission, Account". The Account shall be used to provide amounts, in addition to amounts appropriated for salaries and expenses of the Commission, to pay the cost of salaries and expenses that exceeds the amount appropriated for salaries and expenses because of fluctuations in currency exchange rates of foreign countries occurring after a budget request for the Commission is submitted to Congress. The Account may not be used for any other purpose.... (e) Unobligated Balances.—The unobligated balance of an appropriation for salaries and expenses may be transferred to the Account not later than the end of the second fiscal year following the fiscal year for which the appropriation was made. The unobligated balance shall be merged with, and be available for the same period and purposes as, the Account. Department of Justice, Working Capital Fund ( P.L. 102-140 ; 28 U.S.C. §527 note) In addition, for fiscal year 1992 and thereafter, at no later than the end of the fifth fiscal year after the fiscal year for which funds are appropriated or otherwise made available, unobligated balances of appropriations available to the Department of Justice during such fiscal year may be transferred into the capital account of the Working Capital Fund to be available for the departmentwide acquisition of capital equipment, development and implementation of law enforcement or litigation related automated data processing systems, and for the improvement and implementation of the Department's financial management and payroll/personnel systems: Provided, That any proposed use of these transferred funds in fiscal year 1992 and thereafter shall only be made after notification to the Committees on Appropriations of the House of Representatives and the Senate in accordance with section 606 of this Act. | Enacted appropriations and other budgetary legislation may vary in the level of detail they provide regarding how agencies should spend the funds that have been provided. Even when the purpose of appropriations is specified in great detail, agencies may be provided with some flexibility to make budgetary adjustments throughout the fiscal year. These adjustments may be necessary due to changing or unforeseen circumstances. In some instances, agencies are provided with transfer authority (i.e., authority to shift funds from one appropriations or fund account to another). In addition, agencies are generally permitted to shift funds from one purpose to another within an appropriations account. This practice, usually referred to as "reprogramming," is subject to statutorily imposed limitations. An agency may only transfer budgetary resources if Congress has provided the agency with the statutory authority to do so. Transfer authority may be provided either in authorizing statutes or in appropriations acts. Transfer authority may be broad or narrow in scope, and may apply to all agencies, to select agencies, or only to a single agency. Transfer authority may be limited to a specific dollar amount. Alternatively, transfer authority may be provided for an indefinite amount, but with specific restrictions on the circumstances under which the authority may be used. Reprogramming is generally permitted unless otherwise restricted or prohibited by statute. An agency's ability to reprogram may be restricted by including "limiting provisions" within its annual appropriations acts or other statutes. In addition, an agency may not reprogram funds if doing so would violate any other provisions of law. In general, transferred and reprogrammed funds are subject to any limitations or conditions that were imposed by their original appropriations act. Statutes that provide transfer and reprogramming authority will commonly impose additional limitations or conditions, such as "not-to-exceed" limits, which place a cap on the amount of funds that may be transferred or reprogrammed, and "purpose" restrictions, which prohibit transferred or reprogrammed funds from being used for certain activities. Agencies may be required by statute to notify Congress prior to (or shortly after) transferring or reprogramming funds. Such requirements usually involve notification to the relevant House and Senate Appropriations Committees a certain number of days (often 15, 30, or 45 calendar days) prior to transferring or reprogramming funds. Typically, all account-to-account transfers will require prior notification to Congress. Reprogramming actions generally require prior notification only when they exceed a certain dollar amount or "threshold." When done so in accordance with the applicable authorities and procedures, transferring or reprogramming funds may enable agencies to operate more effectively or efficiently, and in a manner that is consistent with congressional intent. When transfers or reprogramming actions deviate from the applicable authorities, procedures, and limitations, however, it is possible that funds may be used in ways contrary to congressional intent. This report provides an overview of transfers and reprogramming, and describes the statutory limitations and requirements for congressional notification that are applicable to each. This report concludes by discussing some of the challenges that transfers and reprogramming may pose for congressional oversight of budget execution. |
Programs under the Agricultural Trade Development and Assistance Act of 1954, referred to as P.L. 480, historically have been the main vehicles of U.S. international food aid. Title II of P.L. 480, administered by the U.S. Agency for International Development (USAID), is the largest U.S. international food aid program. Title II provides humanitarian donations of U.S. agricultural commodities to respond to emergency food needs or to be used in development projects. Funds available to Title II of P.L. 480 from both regular and supplemental appropriations have averaged $2 billion annually since enactment of the 2002 farm bill (2002-2007). Over time, however, other, smaller food aid programs, administered by the U.S. Department of Agriculture (USDA), have been authorized by Congress—Food for Progress in 1985, the Bill Emerson Humanitarian Trust in 1998, and the McGovern-Dole International School Feeding and Child Nutrition Program in 2003. For USDA-administered programs, the annual average funding over the 2002 farm bill period has been $356 million. Most of the farm bill food aid debate focused on P.L. 480 Title II commodity donations. The 2008 farm bill changes the name of the underlying P.L. 480 legislation from Agricultural Trade Development and Assistance Act to Food for Peace Act and deletes export market development as one of the objectives of the programs. This modification of objectives is intended to reflect the approach—de-emphasis of export market development for U.S. agricultural commodities and more emphasis on promoting food security—taken in operating the program in recent years. Issues addressed included policy objectives, funding levels, availability of food aid resources for non-emergency (development) projects, and using local/regional commodity purchases to respond more efficiently and effectively to food crises, among others. The 2008 farm bill amends the purposes of the Title II program to clarify that food deficits to be addressed include those resulting from manmade and natural disasters. Recognition that food deficits can be manmade brings the U.S. definition of disaster more in line with the definition used by United Nations agencies such as the World Food Program. The new farm bill adds promotion of food security and support of sound environmental practices to the objectives of Title II commodity donations, and requests that the administrator of USAID brief relevant congressional committees before responding to disasters that result mostly from poorly devised or discriminatory governmental policies. The new farm law also includes a Sense of Congress declaration that in international negotiations the President shall seek commitments of higher levels of food aid from other donors; ensure that food aid implementing organizations be eligible to receive food aid resources based on their own needs assessments; and ensure that options for providing food aid shall not be subject to limitation, on condition that the provision of the food aid is based on needs assessments, avoids disincentive effects to local production and marketing, and is provided in a manner that avoids disincentives to local production and marketing and with minimal potential to disrupt commercial markets. This declaration reflects a concern in Congress with the issue of how Doha Round multilateral trade negotiations on food aid could affect U.S. food aid policy and programs. The 2008 farm bill extends authorization of P.L. 480 programs through FY2012 and sets the annual authorization level for Title II at $2.5 billion. This level of funding would be $500 million more annually than has been provided for Title II under the 2002 farm bill each fiscal year through a combination of regular and supplemental appropriations. But as this authorization is discretionary, it will be up to appropriations bills to set the amount of annual Title II funding. With a view to providing more cash assistance to organizations—private voluntary organizations (PVOs), cooperatives, intergovernmental organizations—that implement Title II food aid programs, the farm bill increases the range of funds available for administrative and distributional expenses to between 7.5% and 13% of funds available each year to the program (appropriations, carry-over, and reimbursements) . (The range of available Title II funds for these purposes under the 2002 farm bill was 5% to 10%). Additionally, the 2008 farm bill provides $4.5 million for FY2009-FY2011 to study and improve food aid quality (e.g., eliminate spoilage). The new farm bill extends the requirement that the Administrator of USAID make a minimum level of 2.5 million metric tons (MMT) of commodities available each fiscal year through 2012 for distribution via Title II. Of that minimum, not less than 1.875 MMT is to be made available for non-emergency (development) projects. This mandated volume of commodities for development food aid has rarely been met. The requirement can be waived, and frequently has been, if the Administrator of USAID determines that such quantities of commodities cannot be used effectively or in order to meet an emergency food security crisis. In recent years, more Title II funds have been allocated to emergency relief than to non-emergency (development) projects. In FY2007, for example, USAID allocated $866.3 million to emergency food aid and $348.4 million to development food aid. The Administration has expressed concerns about the adequacy of food aid resources to respond to emergencies, while food aid organizations indicate concerns about the availability of food aid for use in development projects. The 2008 farm bill provides for a "safe box" for funding of non-emergency, development assistance projects under Title II. The argument in favor of the safe box is that it would provide assurances to the implementing organizations (PVOs, coops, intergovernmental organizations) of a given level of funds with which to carry out development projects. The Administration's principal objection to the safe box is that it will deprive the USAID Administrator of the flexibility needed to respond to emergency food needs. The new farm bill provides a safe box funding level beginning at $375 million in FY2009, ending in FY2012 at $450 million. The mandated funding level can be waived if three criteria are satisfied: (1) the President determines that an extraordinary food emergency exists; (2) resources from the Bill Emerson Humanitarian Trust (see below) have been exhausted, and (3) the President has submitted a request for additional appropriations to Congress equal to the reduction in safe box and Emerson Trust levels. The 2008 farm bill includes a scaled-down version of the Administration's only international food aid proposal for legislative authority to use up to $300 million of appropriated P.L. 480 Title II funds for local or regional purchase and distribution of food to assist people threatened by a food security crisis. The farm bill provides that the pilot project be conducted by the Secretary of Agriculture with a total of $60 million in mandatory funding (not P.L. 480 appropriations) during FY2009 and FY2012. The pilot project would entail a study of experiences with local/regional purchase followed by field-based projects that would purchase food commodities locally or regionally. The field-based projects would be funded with grants to PVOs, cooperatives, and intergovernmental organizations, such as the World Food Program. All of the field-based projects would be evaluated by an independent third party beginning in 2011; the Secretary of Agriculture would submit a report to Congress on the pilot project four years after the enactment of the bill. The new farm bill extends to 2012 the authority for the Food Aid Consultative Group (FACG), which advises the USAID Administrator on food aid policy and regulations. It requires that a representative of the maritime transportation sector be included in the Group. The 2008 farm bill reauthorizes the Micronutrient Fortification Program in which grains and other food aid commodities may be fortified with such micronutrients as vitamin A, iodine, iron, and folic acid. It adds new legislative authority to assess and apply technologies and systems to improve food aid. The farm bill also eliminates limitations on the number of countries in which this program can be implemented. The farm bill authorizes the use of up to $22 million annually to be used for the monitoring and assessment of non-emergency (development) food aid programs. No more than $8 million of these funds may be used for the Famine Early Warning System Network (FEWS-NET), but only if at least $8 million is provided for FEWS-NET from accounts appropriated under the Foreign Assistance Act of 1961. Up to $2.5 million of the funds can be used to upgrade the information technology systems used to monitor and assess the effectiveness of food aid programs. This provision is a response to criticism that monitoring of such programs by USAID has been inadequate due to such factors as limited staff, competitive priorities, and legal restrictions. The USAID Administrator can use these funds to employ contractors as non-emergency food aid monitors. The farm bill increases funding available annually (from Title II funds) from $3 million to $8 million for stockpiling and rapid transportation, delivery, and distribution of shelf-stable, prepackaged foods. Shelf-stable foods are developed under a cost-sharing arrangement that gives preference to organizations that provide additional funds for developing these products. The new bill also reauthorizes prepositioning of commodities overseas and increases the funding for prepositioning to $10 million annually from $2 million annually. USAID maintains that prepositioning (currently at two sites, New Orleans and Dubai, United Arab Emirates) enables it to respond more rapidly to emergency food needs. Critics say, however, that the cost effectiveness of prepositioning has not been evaluated. The 2008 farm bill reauthorizes the Farmer-to-Farmer program of voluntary technical assistance in agriculture funded with a portion of P.L. 480 funds. The bill provides an annual floor level of funding for the program of $10 million and extends it through 2012. It also increases the authorization of annual appropriations for specific regions (sub-Saharan Africa and the Caribbean Basin) from $10 million to $15 million. This title of P.L. 480 authorizes provision of long-term, low interest loans to developing countries for the purchase of U.S. agricultural commodities. The new farm bill makes some changes in the program, which has not received an appropriation since 2006 to reflect a food security rather than a market development emphasis of U.S. food aid. Thus the bill strikes references in Title I to recipient countries becoming commercial markets for U.S. agricultural products and the requirement that organizations seeking funding under this title prepare and submit agricultural market development plans. The bill gives Title I of P.L. 480, previously referred to as Trade and Development Assistance, a new name, Economic Assistance and Food Security. The Food for Progress Program (FFP) provides commodities to developing countries that have made commitments to expand free enterprise in their agricultural economies. The 2002 farm bill required that a minimum of 400,000 MT be provided under the FFP program. However, not more than $40 million of Commodity Credit Corporation (CCC) funds may be used to finance transportation of the commodities. This amount effectively caps the volume of commodities that can be shipped under the program. (In FY2007, for example, 342,000 MT were shipped under FFP.) The 2008 farm bill conference agreement extends the program without change through 2012, with the requirement that the Secretary of Agriculture establish a project in Malawi under the FFP. The McGovern-Dole food aid program provides commodities and financial and technical assistance to carry out preschool and school food for education programs in developing countries. The program is widely viewed as a model food aid program because of the flexibility with which it provides program components. By executive order of the President, the McGovern-Dole program is administered by the Secretary of Agriculture. The main issues in congressional debate about the future of the program were the manner and level of funding. Some argued for changing the funding from discretionary (as in current law) to mandatory and for ramping up funding to $300 million by 2012. Others proposed maintaining discretionary funding for the program with a substantial increase. The 2008 farm bill reauthorizes the program through 2012 and establishes the U.S. Department of Agriculture as the permanent home for the program. The new law maintains funding for McGovern-Dole on a discretionary basis without an increase, but does authorize $84 million in mandatory money for the program in FY2009, to be available until expended. The Bill Emerson Humanitarian Trust (BEHT) is a reserve of commodities and cash that is used to meet unanticipated food aid needs or to meet food aid commitments when U.S. domestic supplies are short. The BEHT can hold up to 4 MMT of grains (wheat, rice, corn, sorghum) in any combination, but the only commodity ever held has been wheat. USDA has recently sold the remaining wheat in the trust (about 915,000 MT) so that currently the BEHT holds only cash—about $294 million. The cash would be used, according to USDA, when USAID determines it is needed for emergency food aid. The 2008 farm bill reauthorizes the BEHT through FY2012. It removes the 4 million ton cap on commodities that can be held in the trust, and allows the Secretary to invest the funds from the trust in low-risk, short-term securities or instruments so as to maximize its value. The new law replaces the word "replenish" with the word "reimburse" throughout the language to reinforce the notion that resources of the BEHT may be held in cash as well as commodities. | Provision of U.S. agricultural commodities for emergency relief and economic development is the United States' major response to food security problems in developing countries. Title III in the omnibus farm bill enacted in June 2008, the Food, Conservation, and Energy Act of 2008 (P.L. 110-246, H.R. 6124), reauthorizes and makes a number of changes in U.S. international food aid programs. Farm bill debate over U.S. food aid programs focused generally on how to make delivery of food aid more efficient and more effective. While most of the debate focused on P.L. 480 Title II, the largest food aid program, the farm bill trade title also reauthorizes and modifies other, smaller U.S. food aid programs. One of the most contentious issues was that of using appropriated P.L. 480 funds to purchase commodities overseas, rather than U.S. commodities, to respond to emergency food needs. The Bush Administration had asked for this authority in its farm bill proposals, but many, though not all, of the private voluntary organizations and cooperatives that use U.S. commodities for development projects instead argued for a pilot project for local or regional purchases of commodities. |
Chapter 9 of the U.S. Bankruptcy Code provides a legal mechanism through which municipalities may be protected from their creditors as they attempt to develop and negotiate a plan to adjust their debts. Although chapter 9 was enacted as part of the Bankruptcy Code pursuant to Congress's power under Article I, § 8, clause 4, municipal bankruptcies are different from the bankruptcies of individuals and businesses. There is no provision for liquidation of a municipality's assets to satisfy creditors, there is no "bankruptcy estate," and the bankruptcy court has limited authority over the conduct of the municipality during the pendency of the case. Furthermore, creditors do not have the ability to file a petition for the municipality—an "involuntary case." Many of these limitations are in the code to preserve the states' autonomy under the Tenth Amendment to the U.S. Constitution. The recent recession has caused fiscal distress for states and municipalities as well as for individuals and businesses. In 2009, there were more filings by municipalities under chapter 9 of the Bankruptcy Code than in 2007 and 2008 combined. Despite this seemingly dramatic increase in chapter 9 filings, chapter 9 is, and has been, a relatively seldom used provision of the Bankruptcy Code, generally averaging fewer than 10 filings per year. Many of those filings have been by small government agencies such as municipal utilities, school districts, or single-purpose entities (e.g., a hospital or convention center). Reports of significantly decreased revenues and increased expenses in both cities and states as well as predictions of a significant number of municipal bond defaults in the coming years have sparked interest in municipal bankruptcy, as well as calls for allowing states to use the Bankruptcy Code as a means of adjusting their own debts. Under the current Bankruptcy Code, there is no provision that would allow states to file for bankruptcy protection; however, less than 100 years ago, municipalities were not eligible to file for bankruptcy protection. A brief legislative history is provided in the Appendix . Only municipalities may file under chapter 9 of the Bankruptcy Code, and it is the only chapter under which a municipality may file even if that municipality is incorporated. Not all municipalities can file. A municipality must be specifically authorized by its state to file under chapter 9. The municipality must be insolvent and must be willing to negotiate a plan to adjust its debts. It generally must also show that it has negotiated in good faith with its creditors. Challenges to an entity's eligibility to file under chapter 9 are a prime area for litigation by creditors following a chapter 9 filing. The municipality carries the burden of proving that it is eligible to file under chapter 9. If it is not, then the case will be dismissed. Litigation of challenges to chapter 9 eligibility can be a time-consuming process. Most people, hearing the term "municipality," probably think of cities and towns. However, under the Bankruptcy Code, the term encompasses a broader variety of entities. Section 101(40) of the Bankruptcy Code states that the term "means political subdivision or public agency or instrumentality of a State." Thus, although states are not included in the definition, counties are, since counties, like cities, towns, villages, etc., are political subdivisions of a state. Public agencies or instrumentalities of a state include such entities as school districts, water districts, and highway authorities. Since 1994, municipalities have only been eligible to file under chapter 9 if they were specifically authorized to do so by their states. Not all states authorize their municipalities to file under chapter 9. Georgia law explicitly prohibits the state's municipalities from filing. Iowa restricts chapter 9 authorization to those municipalities that become insolvent as a result of an involuntarily incurred debt. In 14 states, municipalities must get approval from a state authority before filing a chapter 9 petition. Twenty-three states have no law addressing authorization to file under chapter 9; therefore, unless a specific law were passed by the state explicitly authorizing their filing, municipalities in those states would be unable seek protection under chapter 9. Simply being a municipality that is authorized by its state to file under chapter 9 is not sufficient for being an eligible chapter 9 debtor. The municipality must also be insolvent. Insolvency in a municipal bankruptcy is determined on a cash flow basis rather than being defined as the condition where liabilities exceed assets; Section 101(32)(C) defines "insolvent" as the financial condition of either generally not paying undisputed debts as they become due or the inability to pay debts as they become due. However, fiscal distress is not sufficient if the municipality has the means of either increasing revenue or reducing costs. To be eligible for chapter 9 protection, an insolvent municipality must be filing for such protection in good faith. Although a municipality is no longer required to submit a plan of adjustment with its bankruptcy petition, it must evidence a desire to implement a plan of adjustment rather than filing under chapter 9 in an attempt to either evade or delay payments to its creditors. Unless it has reason to believe that a creditor may attempt to get an avoidable transfer, the municipality generally must show that it has negotiated with its creditors in good faith or that it is impractical to do so prior to filing the petition. The automatic stay goes into effect when the chapter 9 petition is filed. The stay generally prevents both the initiation and continuation of collection actions by creditors against the municipality. A creditor may, however, ask the bankruptcy court to provide relief from the stay, which the court shall grant in certain circumstances. Chapter 9 provides that the stay does not apply to application of pledged special revenues to the debt secured by those special revenues. Additionally, the stay will not prevent creditors from challenging the municipality's eligibility to file for chapter 9 protection. Filing for chapter 9 does not automatically eliminate the financial stress a municipality is experiencing. The municipality may need additional funds to provide services or to pay for expenses incurred in the administration of the chapter 9 case. By its incorporation of Section 364(c), chapter 9 provides the municipality with the ability to acquire debt that either has priority over administrative expenses or is secured by a lien on the municipality's property. However, some states will not allow their municipalities to borrow to cover operating expenses. Furthermore, unless the lender were to agree otherwise, the entire debt would need to be repaid by the effective date of the plan of adjustment, otherwise the plan could not be confirmed. There are several ways in which the municipal debtor retains control in a chapter 9 case. Generally, there is no trustee in a chapter 9 case. In this way it is similar to a chapter 11. However, in a chapter 9 case, if a creditor so requests, the court may appoint a trustee for the limited purpose of pursuing a cause of action using certain avoidance powers, such as fraudulent or preferential transfers, when a debtor has refused to do so. In a chapter 11, if a trustee is appointed, the trustee takes the place of the debtor in possession, with the same powers and duties. Generally, a trustee is appointed in a chapter 11 case only "for cause" such as fraud, dishonesty, incompetence, or gross mismanagement. Municipal property, including income other than special revenues, remains under the control of the municipality to use as it chooses. It does not become part of an estate that cannot be disposed of without the consent of the bankruptcy court. In a municipal bankruptcy, the municipality retains autonomy in most things. The bankruptcy court cannot interfere with the municipality's political or governmental powers, its property or revenues, or its use or enjoyment of its income-producing property. The municipality in chapter 9 remains subject to control by the state. The bankruptcy court's involvement is generally limited to a few areas. It may determine whether the municipality is eligible to file under chapter 9 and may dismiss cases when appropriate. Approval of assumptions or rejections of executory contracts and confirmation of the municipality's plan of adjustment are also within the purview of the bankruptcy court. Chapter 9 includes § 365 among the sections of the Bankruptcy Code that are applicable in a municipal case. As a result, the municipality, with the approval of the court, may assume executory contracts that are beneficial to the municipality and reject those that are too burdensome. Generally, the standard bankruptcy courts use in approving a debtor's assumption or rejection of an executory contract is the business judgment rule, a standard that generally defers to the debtor's judgment as to what is best for its operations. However, in evaluating assumption or rejection of a collective bargaining agreement (CBA), the courts use a higher standard. In a chapter 11 bankruptcy, rejection of a CBA is subject to the requirements of § 1113 of the Bankruptcy Code. This section requires that three conditions be met before a court can grant a motion to reject a CBA: (1) the debtor must meet the requirements of 11 U.S.C. § 1113(b)(1) by (a) presenting a proposal that both treats all parties equitably and proposes changes necessary for reorganization, and (b) providing the bargaining unit's representative with information needed to evaluate the proposal; (2) the representative must have refused to accept the debtor's proposal without good cause; and (3) "the balance of equities [must] clearly favor[] rejection." Section 1113, which is not among the Bankruptcy Code sections named in § 901(a) as applicable in chapter 9, was added to the Bankruptcy Code following the U.S. Supreme Court's 1984 holding in National Labor Relations Board v. Bildisco and Bildisco . Bildisco held that rejection of a CBA required a higher standard than the business judgment rule, but its requirements were not as stringent as those of § 1113. Under the Bildisco standard, a CBA may be rejected only if the court finds that the agreement is burdensome to the debtor and that, after balancing the equities, rejection is favored. This is the standard generally used for rejecting a CBA in chapter 9. In 1995, the bankruptcy court overseeing the Orange County, CA, chapter 9 case found that the standards established by the Bildisco decision were applicable when a municipality wanted to reject a CBA, but that those standards had not been met nor had the county established the necessity for unilateral abrogation of its employee CBAs. Recently the city of Vallejo, CA, was successful in rejecting CBAs in its chapter 9 case, with both the bankruptcy court and the district court finding that the Bildisco standard was applicable in the case. The district court, ruling in an appeal by the International Brotherhood of Electrical Workers, Local 2376, found that the Bildisco standard had been met. Sections 547 and 548 of the Bankruptcy Code are applicable in chapter 9 cases; therefore, the municipality can avoid (or "clawback") fraudulent transfers and preferential transfers. One exception to the latter is transfers to bondholders. In a chapter 9 case, only the debtor has the right to file a plan of adjustment. This is in contrast to chapter 11 reorganizations, in which the debtor initially has the exclusive right to file a plan of reorganization, but with the passage of time, may lose that exclusivity. In a chapter 9 case, if the plan is not filed with the petition, the court may determine a date by which the plan must be filed. To be confirmed, a plan generally must be accepted by each class of impaired creditors. However, chapter 9 incorporates the "cramdown" provision in chapter 11, thereby allowing confirmation if at least one class of impaired creditors accepts the plan and the plan "does not discriminate unfairly, and is fair and equitable, with respect to each class of claims or interests that is impaired under, and has not accepted the plan." Special revenue bonds are generally protected from adjustment in chapter 9. General obligation bonds do not enjoy such protection under bankruptcy law; however, a municipality's ability to adjust those debts may be limited by state law. To be confirmed, a plan cannot require the municipality to take an action that is prohibited by law. This provision may also limit a municipality's ability to adjust its existing pension obligations through chapter 9. Many states have either constitutional or statutory constraints regarding both general obligation debts and pensions. Section 943 directs the court to confirm a plan if it complies with the requirements of the Bankruptcy Code; the expenses incurred in connection with the case and the plan of adjustment are disclosed and are reasonable; the debtor is not legally prohibited from taking actions necessary to carry out the plan; holders of administrative claims receive cash equaling their claims, unless they agree otherwise; the debtor has, or will, obtain any regulatory or electoral approval required under nonbankruptcy law for carrying out the plan; and the plan is both feasible and in the best interest of creditors. As stated before, municipalities rarely file for bankruptcy protection. Although New York City experienced significant financial difficulty in 1975, it did not file for bankruptcy. Instead, the state created a financial watchdog: the New York City Emergency Financial Control Board, which held veto power over the city's budget until 1986. In 1991, the city of Bridgeport, CT, filed under chapter 9, but its case was dismissed after its eligibility to file was challenged by creditors. The court found that state law authorized the city to file, but found that it was not insolvent. In recent years, there have been two notable chapter 9 filings: Orange County, CA; and the city of Vallejo, CA. On December 6, 1994, Orange County, CA, filed under chapter 9. Its debt adjustment represents the largest municipal bankruptcy filing to date. The county was overseer of the Orange County Investment Pool (OCIP), comprising its funds and those belonging to a wide variety of additional municipal entities, such as school and irrigation districts. The county treasurer engaged in a high-risk investment strategy involving reverse repurchase agreements or "repos." The OCIP's $7.5 billion in investment equity was leveraged into $20 billion. The success of the investment strategy depended upon declining interest rates. When interest rates began to rise and creditors demanded increased collateral, the county's financial liquidity plummeted. It filed under chapter 9 and instituted many lawsuits against its investment bankers and others. A plan of adjustment became effective in June 1996. In February 2000, the presiding bankruptcy judge closed the case by approving the distribution of $816 million in litigation proceeds. Prior to filing under chapter 9 on May 23, 2008, the city of Vallejo attempted to resolve its financial issues by "reducing the number of its employees, cutting funding and services not controlled by contract, and severely reducing or completely cutting off funding for various community services … as well as infrastructure." It also "retained a consultant to identify potential sources of new and additional revenue, and implemented these recommendations where possible." However, its ability to generate new revenues was limited by California law. Through negotiations, the city was able to temporarily reduce employee costs, arriving at interim agreements to modify the collective bargaining agreements (CBAs) with its police and firefighters. The city was not successful in its attempts to negotiate long-term modifications to its CBAs with any of the four unions representing its employees. Prior to the expiration of the interim agreements, the city filed under chapter 9 and froze all employee compensation at its pre-petition level. This enabled the city to benefit from the interim agreements beyond their stated expiration dates as well as avoid upcoming salary increases provided for in the CBAs. It also filed a motion to reject its CBAs. Ultimately, the city was able to renegotiate all but one of its CBAs. The court allowed the city to reject the remaining CBA, using the Bildisco standard. The city's plan of adjustment was filed January 18, 2011, along with its disclosure statement. In the plan the city proposes paying its unsecured creditors less than the full amount of their claims. Estimates are that the claims would be paid between 5% and 20%. The disclosure statement prepared by the city must be approved by the court before the creditors have the opportunity to vote on the city's plan of adjustment. On March 1, 2011, Boise County, ID, filed a chapter 9 petition. Reportedly the impetus for the filing was a judgment against the county for $4 million. The annual budget for the county, which does not include the city of Boise, is less than $9.5 million. The judgment came as the result of a suit by Alamar Ranch, LLC, which asserted that its efforts to obtain a conditional use permit had been improperly blocked. Taxpayers in the county had opposed the proposed development—a residential treatment facility for 72 boys. Ultimately, the county was found to have violated the Fair Housing Act. After the judgment, the county attempted to negotiate a lower amount that it could afford, but was unsuccessful. Harrisburg considered filing under chapter 9, but ultimately its mayor, who opposed bankruptcy, chose to pursue a state-offered program for distressed cities. December 15, 2010, Harrisburg, PA, was accepted into the state's "distressed cities" program, also known as Act 47. The program was started in 1987. Harrisburg is the 20 th municipality in the program. Many have remained in the program for more than a decade. The city qualified for the program after missing $10.5 million in payments for bonds related to an incinerator project. It also had a junk-bond credit rating and lawsuits to force it to postpone paying operating expenses (including payroll) in favor of meeting debt obligations as well as a more than $19 million projected deficit in 2015. Some believe that chapter 9 would be a better alternative for the city than the state program and are considering appealing the state's decision to admit the city into its program. Jefferson County, AL, is the most populous county in Alabama. Most of the city of Birmingham is within its boundaries. It has been experiencing financial difficulties for several years. While there has been speculation about its filing for bankruptcy, it has not done so. If it does, it is believed that it would be the largest municipal bankruptcy in history. Jefferson County's financial troubles are due in part to the recession, but also due to a $3.2 billion debt load attributable to sewer bonds with a floating interest rate and a downgrading of those bonds to junk status in 2008 by both Moody's Investors Service and Standard and Poor's due to the projected inability of the county to meet interest payments on the debt. Most recently, the county has lost a source of revenue after the Alabama Supreme Court found the county's occupational tax unconstitutional for lack of sufficient notice. In 1934, legislation was enacted as "emergency temporary aid" for insolvent municipalities whose revenues had dropped during the Great Depression. The provisions were modified slightly by legislation enacted in April 1936 and were extended to January 1, 1940. Two years and one day after the original legislation was enacted, the U.S. Supreme Court, in a 5 to 4 opinion, found it to be unconstitutional. The next year, 1937, new legislation was enacted that established a new chapter of the Bankruptcy Code. The legislation expanded the definition of "municipality," but continued to require the entity to have the power to tax. The constitutionality of the new law was challenged, but the U.S. Supreme Court found the provisions to be constitutional, noting that a federal provision for municipal bankruptcy was needed because adequate relief could not be provided by the states due to the constitutional prohibition on enacting any law that would impair contracts. This legislation was also enacted as a temporary provision and was due to expire on June 30, 1940. It was extended for two years in 1940 and for four more years in 1942. In 1946, the provisions were amended and made permanent. Among the changes made in 1946 was the removal of "taxing" as an adjective in the lengthy definition of "municipality." This change allowed the definition of "municipality" to include public agencies that were authorized to either construct or acquire revenue-producing utilities and that issued bonds to finance those public improvements—revenue bonds, whose source of repayment was revenue from the utility that had been constructed or acquired. In the wake of New York City's 1975 financial crisis, the provisions for municipal bankruptcy were again revised. The existing provisions were believed to contain procedural obstacles that made them inadequate for the reorganization of a major municipality. In 1976, chapter IX of the Bankruptcy Act of 1898 (as amended) was amended to revise sections 81 through 83 and add sections 84 through 98. The revisions eliminated the need to have a plan of adjustment approved by the majority of creditors before the petition could be filed. Filing of the petition then triggered the automatic stay, providing protection from litigation of creditors' claims against the debtor. The revisions also extended to municipal debtors some provisions available to other debtors and allowed them to reject executory contracts with the approval of the court. Two years later, when Congress enacted the Bankruptcy Reform Act of 1978, establishing the current Bankruptcy Code, the 1976 revisions were incorporated into chapter 9. Since 1978, Congress has amended chapter 9 several times. In 1988, Congress passed amendments generally concerned with the definition of municipal "insolvency"; the rights of creditors as general obligation bondholders and special revenue bondholders; and the status of municipal financing leases. Section 109(c)(2) of the Bankruptcy Code was amended in 1994 to require that municipalities be "specifically authorized" by state law to be a debtor under chapter 9. Previously, the authorization under state law needed only to be general. The primary way in which the Bankruptcy Prevention and Consumer Protection Act of 2005 changed chapter 9 directly was by amending § 901 to make applicable in chapter 9 several additional sections from chapter 5 of the Bankruptcy Code, most of which involved exceptions to the automatic stay. An additional subsection from chapter 11 was also added to the sections of chapter 11 that are applicable in chapter 9. | As cities and states have experienced varying degrees of financial difficulties in recent years, "municipal bankruptcy" has been mentioned relatively often in the popular press. The term is somewhat misleading, both in the word "municipal" and in the word "bankruptcy." Many people think only of cities when they hear the word "municipal." Upon learning that in the context of the U.S. Bankruptcy Code the term means more than just cities, some think that states may use the provisions of the Bankruptcy Code for municipal debtors: chapter 9. However, states are currently not eligible to be debtors under the Bankruptcy Code. The Code's definition of "debtor" includes only persons and municipalities. Its definition of "municipality" includes cities and counties as well as other political subdivisions, public agencies, and instrumentalities of a state. However, a municipality may not file under chapter 9 unless specifically authorized to do so by its state. To be eligible for chapter 9, a municipality must be insolvent. Chapter 9 is titled "Adjustment of Debts of a Municipality." The Bankruptcy Code does not provide for the liquidation of a municipality's assets and distribution thereof to the creditors. Instead, it provides a legal mechanism through which municipalities may be protected from the claims of their creditors as they attempt to develop and negotiate a plan to adjust their debts. In this way, chapter 9 has similarities to chapter 11 reorganizations. However, a municipality retains more control in a chapter 9 case than does the debtor in a chapter 11. The oversight and involvement of the bankruptcy court is quite limited. The court cannot interfere with the municipality's political or governmental powers, its property or revenues, or its use or enjoyment of its income-producing property. There are only a few sections of the Bankruptcy Code that were specifically written in chapter 9; however, many other sections of the Code are explicitly made applicable to a chapter 9 case. Among these is § 365, which allows executory contracts to be assumed or rejected in a bankruptcy proceeding. Collective bargaining agreements (CBAs) are executory contracts. The expense incurred in meeting the obligations of CBAs may be a substantial budget consideration for many municipalities. While chapter 11 includes a section that specifically addresses the standards that must be met before a court can allow rejection of a CBA, no such section exists in chapter 9. Instead, based on two chapter 9 cases (In re County of Orange, California and In re City of Vallejo, California) it appears that municipalities may reject CBAs if they meet the less stringent standards established in National Labor Relations Board v. Bildisco and Bildisco. Although of current interest, chapter 9 is a provision of the Bankruptcy Code that is rarely used. Since 1979, the number of chapter 9 filings per year has averaged less than 10. Most of those have been by small government agencies such as municipal utilities, school districts, or single-purpose entities. Although chapter 9 has provided significant relief in the two major cases named above, it is not a panacea for a municipality's financial problems. It can be a lengthy and expensive procedure. Additionally, the debtor's ability to adjust debts, particularly pension or general obligation debt, may be limited by the state's constitutional or statutory restrictions since a plan of adjustment cannot require the municipality to take an action that is not lawful. |
Congressional interest in facilitating U.S. technological innovation led to the passage of P.L. 96-517 , Amendments to the Patent and Trademark Act. This legislation is commonly referred to as the "Bayh-Dole Act," after its two primary sponsors, former Senators Robert Dole and Birch Bayh. This 1980 legislation awards title to inventions that government contractors make with federal government support, if the contractor consists of a small business, a university, or other nonprofit institution. A subsequent presidential memorandum extended this policy to all federal government contractors. As a result, the contractor may obtain a patent on its invention, providing it with an exclusive right in the invention during the patent's term. The legislation is intended to use patent ownership as an incentive for private sector development and commercialization of federally funded research and development (R&D). The federal government retains certain rights in inventions produced with its financial assistance under the Bayh-Dole Act. The government retains a "nonexclusive, nontransferable, irrevocable, paid-up license" for its own benefit. The Bayh-Dole Act also provides federal agencies with "march-in rights." March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a "nonexclusive, partially exclusive, or exclusive license" to a "responsible applicant or applicants." If the patent owner refuses to do so, the government may grant the license itself. Members of Congress have recently taken note of the fact that march-in rights have never been exercised during the 35-year history of the Bayh-Dole Act. In particular, the National Institutes of Health (NIH) has received six march-in petitions and has denied each one. A 2016 exchange of correspondence between some Members of Congress and the Department of Health and Human Services has suggested a potential difference of views about the appropriate use of march-in rights. Some observers believe that march-in rights should be rarely, if ever invoked due to the significant investment the private sector investment may make to bring early-stage inventions into practical application. These commentators further assert that the use of march-in rights would discourage private enterprise from investing in the commercial development of any invention funded in part by the government. On the other hand, others believe that U.S. taxpayers should be protected from what they view as excessive profiteering on technologies developed with public funding. They consider march-in rights to constitute a long-available, but entirely unused mechanism for combatting the high and growing cost of health care. This report reviews the availability of march-in rights under the Bayh-Dole Act. It begins by providing a brief overview of the patent system and innovation policy. The report then introduces the Bayh-Dole Act. The specific details of the march-in authority provided to federal agencies are reviewed next. The report then considers past efforts to obtain march-in authorization from NIH. The report closes with an identification of potential issues for congressional consideration. The patent system is grounded in Article I, Section 8, Clause 8 of the U.S. Constitution, which states that "The Congress Shall Have Power ... To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries...." As mandated by the Patent Act of 1952, U.S. patent rights do not arise automatically. Inventors must prepare and submit applications to the U.S. Patent and Trademark Office (USPTO) if they wish to obtain patent protection. USPTO officials known as examiners then assess whether the application merits the award of a patent. The patent acquisition process is commonly known as "prosecution." In deciding whether to approve a patent application, a USPTO examiner will consider whether the submitted application fully discloses and distinctly claims the invention. The examiner will also determine whether the invention itself fulfills certain substantive standards set by the patent statute. To be patentable, an invention must be useful, novel, and nonobvious. The requirement of usefulness, or utility, is satisfied if the invention is operable and provides a tangible benefit. To be judged novel, the invention must not be fully anticipated by a prior patent, publication or other state-of-the-art knowledge that is collectively termed the "prior art." A nonobvious invention must not have been readily within the ordinary skills of a competent artisan at the time the invention was made. If the USPTO allows the patent to issue, the patent proprietor obtains the right to exclude others from making, using, selling, offering to sell, or importing into the United States the patented invention. Those who engage in these acts without the permission of the patentee during the term of the patent can be held liable for infringement. Adjudicated infringers may be enjoined from further infringing acts. The patent statute also provides for the award of damages "adequate to compensate for the infringement, but in no event less than a reasonable royalty for the use made of the invention by the infringer." The maximum term of patent protection is ordinarily set at 20 years from the date the application is filed. At the end of that period, others may employ that invention without regard to the expired patent. Patent rights are not self-enforcing. Patentees who wish to compel others to observe their rights must commence enforcement proceedings, which most commonly consist of litigation in the federal courts. Although issued patents enjoy a presumption of validity, accused infringers may assert that a patent is invalid or unenforceable on a number of grounds. The U.S. Court of Appeals for the Federal Circuit (Federal Circuit) possesses national jurisdiction over most patent appeals from the district courts. The U.S. Supreme Court enjoys discretionary authority to review cases decided by the Federal Circuit. The patent system is intended to promote innovation, which in turn leads to industry advancement and economic growth. The patent system in particular attempts to address "public goods problems" that may discourage individuals from innovating. Innovation commonly results in information that may be deemed a "public good," in that it is both nonrivalrous and nonexcludable. Stated differently, consumption of a public good by one individual does not limit the amount of the good available for use by others; and no one can be prevented from using that good. The lack of excludability in particular is believed to result in an environment where too little innovation would occur. Absent a patent system, "free riders" could easily duplicate and exploit the inventions of others. Further, because they incurred no cost to develop and perfect the technology involved, copyists could undersell the original inventor. Aware that they would be unable to capitalize upon their inventions, individuals might be discouraged from innovating in the first instance. The patent system corrects this market failure problem by providing innovators with an exclusive interest in their inventions, thereby allowing them to capture their marketplace value. The patent system potentially serves other goals as well. The patent law may promote the disclosure of new products and processes, as each issued patent must include a description sufficient to enable skilled artisans to practice the patented invention. In this manner the patent system ultimately contributes to the growth of information in the public domain. Issued patents may encourage others to "invent around" the patentee's proprietary interest. A patent proprietor may point the way to new products, markets, economies of production, and even entire industries. Others can build upon the disclosure of a patent instrument to produce their own technologies that fall outside the exclusive rights associated with the patent. The patent system also has been identified as a facilitator of markets. If inventors lack patent rights, they may have scant tangible assets to sell or license. In addition, an inventor might otherwise be unable to police the conduct of a contracting party. Any technology or know-how that has been disclosed to a prospective licensee might be appropriated without compensation to the inventor. The availability of patent protection decreases the ability of contracting parties to engage in opportunistic behavior. By lowering such transaction costs, the patent system may make transactions concerning information goods more feasible. Patent protection may also encourage enterprises to commercialize and market existing inventions. Even though a new technology has already been patented, a firm might have to make refinements, construct manufacturing facilities, establish distribution channels, comply with government safety and regulatory requirements, and educate consumers prior to marketing. Second entrants to the market may not have to bear all of the first mover's costs. As a result, the exclusive rights provided by a patent may encourage not just the invention of new technologies, but also their commercialization. Through these mechanisms, the patent system may act in a more socially desirable way than its chief legal alternative, trade secret protection. Trade secrecy guards against the improper appropriation of valuable, commercially useful, and secret information. In contrast to patenting, trade secret protection does not result in the disclosure of publicly available information. That is because an enterprise must take reasonable measures to keep secret the information for which trade secret protection is sought. Taking the steps necessary to maintain secrecy, such as implementing physical security measures, also imposes costs that may ultimately be unproductive for society. The patent system has long been subject to criticism, however. Some observers have asserted that the patent system is unnecessary due to market forces that already suffice to create an optimal level of innovation. The desire to obtain a lead time advantage over competitors may itself provide sufficient inducement to invent without the need for further incentives. Other commentators believe that the patent system encourages industry concentration and presents a barrier to entry in some markets. Additionally, while the patent incentive encourages the development of new medicines, some assert that it also contributes to the growing costs of healthcare. Each of these arguments for and against the patent system has some measure of intuitive appeal. However, they remain difficult to analyze on an empirical level. We lack rigorous analytical methods for studying the impact of the patent system upon the economy as a whole. As a result, current economic and policy tools do not allow us to calibrate the patent system precisely in order to produce an optimal level of investment in innovation at the lowest social costs. Even prior to the Bayh-Dole Act, the federal government considered the intellectual property implications of R&D projects financed by public funds. In 1963, the Kennedy Administration called for greater consistency in diverse agency practices regarding the disposition of rights to inventions made by government contractors. This early "Government Patent Policy" generally allowed the U.S. government to retain rights to inventions developed through government contracts. However, the contractor could obtain title in specified circumstances. For example: [W]here the purpose of the contract is to build upon existing knowledge or technology to develop information, products, processes, or methods for use by the government, and the work called for by the contract is in a field of technology in which the contractor has acquired technical competence (demonstrated by factors such as know-how, experience, and patent position) directly related to an area in which the contractor has an established nongovernmental commercial position, the contractor shall normally acquire the principal or exclusive rights throughout the world in and to any resulting inventions, subject to the government acquiring at least an irrevocable non-exclusive royalty free license throughout the world for governmental purposes. In those situations, the 1963 policy retained significant government rights in privately held patents that resulted from publicly funded projects. In a prelude to today's march-in rights, the 1963 policy further provided: Where the principal or exclusive (except as against the government) rights to an invention are acquired by the contractor, the government shall have the right to require the granting of a license to an applicant royalty free or on terms that are reasonable in the circumstances to the extent that the invention is required for public use by governmental regulations or as may be necessary to fulfill health needs, or for other public purposes stipulated in the contract. The 1980 enactment of the Bayh-Dole Act altered the intellectual property landscape with respect to patents and government-sponsored R&D. Congress instead accepted the proposition that the lack of patent title discouraged private enterprise from advancing early-stage technologies into the marketplace. For example, suppose that a university researcher identifies a promising chemical compound using funds provided by the National Institutes of Health (NIH). Some observers believed that under pre-Bayh-Dole Act practices, a brand-name pharmaceutical company would be unlikely to undertake costly and risky clinical trials in order to convert that early-stage research into a drug approved by the Food and Drug Administration. Absent patent protection, generic firms could quickly introduce competing products. This view accepts that patents provide incentives not just for individuals to invent, but also to commercialize completed inventions. Under the Bayh-Dole Act, each nonprofit organization (including universities) or small business is permitted to elect within a reasonable time to retain title to any "subject invention" made under federally funded R&D. The institution must commit to commercialization of the invention within a predetermined, agreed upon, timeframe. However, the government may keep title under "exceptional circumstances when it is determined by the agency that restriction or elimination of the right to retain title to any subject invention will better promote the policy and objectives of this chapter." Additionally, the government may withhold title if the contractor "is not located in the United States or does not have a place of business located in the United States or is subject to the control of a foreign government"; in situations associated with national security; or when the work is related to the naval nuclear propulsion or weapons programs of the Department of Energy. Certain other rights are reserved for the government. The government retains "a nonexclusive, nontransferable, irrevocable, paid-up license to practice or have practiced for or on behalf of the United States any subject invention throughout the world...." The government also retains "march-in rights" which enable the federal agency to require the contractor to license a third party to use the invention under certain circumstances. This report discusses march-in rights at greater length below. By its own terms, the Bayh-Dole Act applies only to nonprofit organizations (including universities) and small businesses. However, in a February 1983 memorandum concerning the vesting of title to inventions made under federal funding, then-President Ronald Reagan ordered all agencies to treat, as allowable by law, all contractors within the Bayh-Dole Act framework regardless of their size. This longstanding practice lacks a legislative basis, however. The Bayh-Dole Act authorizes the government to withhold public disclosure of information for a "reasonable time" until a patent application can be made. Licensing by any contractor retaining title under this act is restricted to companies that will manufacture substantially within the United States. This requirement may be waived if domestic manufacture is not commercially feasible, or if the contractor or its successors made reasonable but ultimately unsuccessful efforts to license domestic manufacturers. The Secretary of Commerce was provided the authority to issue regulations implementing the Bayh-Dole Act. The Bayh-Dole Act provides the government with the ability to "march in" and grant licenses for patents that resulted from publicly funded R&D. In particular, march-in rights allow the federal government, in specified circumstances, to require the contractor or successors in title to the patent to grant a "nonexclusive, partially exclusive, or exclusive license" to a "responsible applicant or applicants." If the patent owner refuses to do so, the government may grant the license itself. The terms of the license must be "reasonable under the circumstances." The Bayh-Dole Act specifies four circumstances under which march-in rights may be exercised. The federal agency that provided the funding arrangement under which the patented invention was made must reach one of the following determinations: (1) action is necessary because the contractor or assignee has not taken, or is not expected to take within a reasonable time, effective steps to achieve practical application of the subject invention in such field of use; (2) action is necessary to alleviate health or safety needs which are not reasonably satisfied by the contractor, assignee, or their licensees; (3) action is necessary to meet requirements for public use specified by Federal regulations and such requirements are not reasonably satisfied by the contractor, assignee, or licensees; or (4) action is necessary because the agreement required by section 204 [generally requiring that patented products be manufactured substantially in the United States unless domestic manufacture is not commercially feasible] has not been obtained or waived or because a licensee of the exclusive right to use or sell any subject invention in the United States is in breach of its agreement obtained pursuant to section 204. With respect to the first of these conditions, the Bayh-Dole Act further defines the term "practical application" as "to manufacture in the case of a composition or product, to practice in the case of a process or method, or to operate in the case of a machine or system; and, in each case, under such conditions as to establish that the invention is being utilized and that its benefits are to the extent permitted by law or Government regulations available to the public on reasonable terms." The Bayh-Dole Act states that any adversely affected "contractor, inventor, assignee, or exclusive licensee" may appeal a march-in rights petition to the United States Court of Federal Claims. The statute further explains that in cases described in paragraphs (1) and (3) above, march-in authority may not actually be exercised until all appeals or petitions are exhausted. The exercise of march-in rights does not invalidate or void the relevant patent. That patent remains extant and could presumably be enforced against entities that did not enjoy march-in rights. However, march-in rights grant a license—in other words, a permission—to the enterprise identified by the government. That entity may practice the patented invention without concern for infringement, so long as it satisfies the conditions stipulated in the march-in order, such as the payment of a royalty. March-in rights should be distinguished from the "nonexclusive, nontransferable, irrevocable, paid-up license" that the Bayh-Dole Act grants the U.S. government elsewhere. This license solely benefits the federal government. Should another entity—such as a generic drug company or other enterprise—wish to practice the patented invention, then march-in rights provide a possible legal mechanism. March-in rights are also distinct from the workings of another statute, 28 U.S.C. §1498(a). That provision states: Whenever an invention described in and covered by a patent of the United States is used or manufactured by or for the United States without license of the owner thereof or lawful right to use or manufacture the same, the owner's remedy shall be by action against the United States in the United States Court of Federal Claims for the recovery of his reasonable and entire compensation for such use and manufacture. 28 U.S.C. §1498(a) operates independently of the Bayh-Dole system. That statute applies to the use of a patented invention by the U.S. government, or one of its contractors with the authorization or consent of the U.S. government, without the permission of the patent proprietor. In such a case, the sole remedy for the patent owner is a suit in the U.S. Court of Federal Claims for monetary damages. An injunction is not available to the patent owner in such cases. Three significant distinctions exist between march-in rights under the Bayh-Dole Act and 28 U.S.C. §1498(a). First, march-in rights apply only to patented inventions that were developed with the support of public funding. 28 U.S.C. §1498(a) applies to every U.S. patent, no matter what the sources of funding were. Second, private enterprises may take the initiative in requesting march-in rights from the government. 28 U.S.C. §1498(a) applies when the federal government practices the patented invention on its own behalf or requests a contractor to do so. Finally, recipients of march-in rights are awarded licenses "upon terms that are reasonable under the circumstances" and would presumably pay royalties to the patent proprietor. In contrast, under 28 U.S.C. §1498(a) the patent proprietor commences litigation and may be awarded damages to compensate for the use of the government or its contractors. March-in rights have never been exercised during the 35-year history of the Bayh-Dole Act. Apparently the only federal agency that has even received a petition is the National Institutes of Health (NIH). In particular, six petitions have been filed requesting that the NIH "march in" with respect to a particular pharmaceutical. Each petition was denied. A common theme of each of the denials was the agency's views that concerns over drug pricing were not, by themselves, sufficient to provoke march-in rights. The six requests were: CellPro, Inc. (1997). CellPro requested that the government exercise march-in rights after being found to infringe patents held by the contractor. Although the NIH recognized that CellPro's device was the only FDA-approved product on the market, the agency observed that (1) the contractor and its licensees had not sought immediately to enjoin CellPro and (2) that they were making reasonable efforts to commercialize their own product. As a result, the agency declined to initiate march-in procedures. Norvir/ritonavir (2004). The petitioners, which included some Members of Congress, asked the NIH to exercise march-in rights due to perceived concerns over the high price of this HIV/AIDS treatment. The agency declined to initiate march-in proceedings because it deemed Abbott Laboratories, Inc., to have made the drug available to the public on a sufficient basis. Xalatan/latanoprost (2004). Petitioners asserted that the price of this glaucoma treatment was higher than that of other nations. The NIH declined to initiate march-in proceedings because the drug was readily available for use by the public. Fabrazyme/agalsidase beta (2010). This petition asked the NIH to grant an open license on certain patents relating to this treatment for Fabry disease. According to the petitioners, Genzyme Corporation was encountering difficulties in manufacturing sufficient quantities of the drug. The NIH did not initiate a march-in proceeding because (1) Genzyme was working diligently to resolve its manufacturing difficulties and (2) other enterprises were unlikely to obtain FDA marketing approval on agalsidase beta products before those problems were addressed. Norvir/ritonavir (2012). The second petition against this HIV/AIDS drug more specifically requested the NIH to invoke march-in rights when prices in the United States were greater than other high-income nations. The NIH did not initiate march-in right proceedings because, in the view of the agency, such pricing disparities did not trigger any of the four statutory criteria for marching in. Xtandi/enzalutamide (2016). The petitioner asserted both that the prostate cancer drug Xtandi had an average wholesale price of $129,269 per year; and that this price was much higher than in other high-income nations. The NIH declined to initiate a march-in investigation because sales of the product were increasing and no evidence suggested that the product was in short supply. The NIH has offered some observations about the role of march-in rights during these proceedings. In its response to the 1997 CellPro petition, the agency stated its reluctance to undermine the exclusivities offered by the patent system: We are wary, however, of forced attempts to influence the marketplace for the benefit of a single company, particularly when such actions may have far-reaching repercussions on many companies' and investors' future willingness to invest in federally funded medical technologies. The patent system, with its resultant predictability for investment and commercial development, is the means chosen by Congress for ensuring the development and dissemination of new and useful technologies. It has proven to be an effective means for the development of health care technologies. In exercising its authorities under the Bayh-Dole Act, NIH is mindful of the broader public health implications of a march-in proceeding, including the potential loss of new health care products yet to be developed from federally funded research. In the 2004 proceedings regarding Norvir/ritonavir, the agency spoke more specifically about drug pricing: Finally, the issue of the cost or pricing of drugs that include inventive technologies made using Federal funds is one which has attracted the attention of Congress in several contexts that are much broader than the one at hand. In addition, because the market dynamics for all products developed pursuant to licensing rights under the Bayh-Dole Act could be altered if prices on such products were directed in any way by NIH, the NIH agrees with the public testimony that suggested that the extraordinary remedy of march-in is not an appropriate means of controlling prices. The issue of drug pricing has global implications and, thus, is appropriately left for Congress to address legislatively. The NIH has also observed that another statute, the Drug Price Competition and Patent Term Restoration Act, P.L. 98-417 , plays a role in the public availability of medicines. Better known as the Hatch-Waxman Act, this legislation allows generic drug companies to develop their own products without incurring liability for patent infringement. It also allows generic drug companies to market their products prior to the expiration of relevant patents, although if they do so they may incur infringement liability at that time. Concerns over the lack of assertion of march-in rights have been expressed for the past two decades. In 2001, Peter S. Arno and Michael H. Davis published an article in the Tulane Law Review asserting that the Bayh-Dole Act "has had a powerful price-control clause since its enactment in 1980 that mandates that inventions resulting from federally funded research must be sold at reasonable prices." According to Arno and Davis, "the solution to high drug prices does not involve new legislation but already exists in the unused, unenforced march-in provision of the Bayh-Dole Act." Arno and Davis followed this article with a 2002 editorial published in the Washington Post , stating in part: Although Bayh-Dole has been in place for 20 years, the government has never enforced it—not even once. That, despite the AIDS crisis at home and abroad, despite the millions of elderly and chronically ill Americans in need of affordable prescription drugs and the 40 million others who have no health insurance coverage whatever—and despite the general hand-wringing over the skyrocketing costs of pharmaceuticals. Former Senators Birch Bayh and Robert Dole, as they were then, responded with an editorial published in the Washington Post less than a month later. The editorial states in part: Bayh-Dole did not intend that government set prices on resulting products. The law makes no reference to a reasonable price that should be dictated by the government.... The [Arno and Davis] article also mischaracterizes the rights retained by the government under Bayh-Dole. The ability of the government to revoke a license granted under the act is not contingent on the pricing of the resulting product or tied to the profitability of a company that has commercialized a product that results in part from government-funded research. The law instructs the government to revoke such licenses only when the private industry collaborator has not successfully commercialized the invention as a product. Dialogue over the use of march-in rights was renewed in 2016, resulting in several exchanges between some Members of Congress, on one hand, and the Department of Health and Human Services (HHS) on the other. In an undated letter that was reportedly sent on January 11, 2016, the Honorable Lloyd Doggett, joined by 51 Members of Congress, addressed a letter to Secretary Sylvia Matthews Burwell of HHS and NIH Director Francis S. Collins. The letter in part requested NIH to provide official guidance regarding the situations in which march-in rights should apply. Secretary Burwell responded by letter on March 2, 2016. Her letter states in part that the Bayh-Dole Act's march-in right was "strictly limited and can only be exercised if the agency conducts an investigation and determines that specific criteria are met, such as alleviating health or safety needs or when effective steps are not being taken to achieve practical application of the inventions." She also concluded that "the statutory criteria are sufficiently clear and additional guidance is not needed." Representative Lloyd Doggett sent an additional letter to Secretary Burwell and Director Collins on March 28, 2016. Signed by 11 other Members of Congress, the letter encourages the NIH to conduct a public hearing regarding the request of public interest groups to invoke march-in rights to the cancer drug Xtandi/enzalutamide. The letter explains: NIH was recently petitioned to exercise these march-in rights on Xtandi, a prostate cancer drug developed at the University of California, Los Angeles (UCLA) through taxpayer supported research grants from the U.S. Army and NIH grants. The petition states that a Japanese licensee, Astellas, is charging Americans $129,000 for this drug, which sells in Japan and Sweden for $39,000, and in Canada for $30,000. We do not think that charging U.S. residents more than anyone else in the world meets the obligation to make the invention available to U.S. residents on reasonable terms. As noted above, the NIH denied march-rights for Xtandi/enzalutamide on June 20, 2016. To date, no bills have been introduced in the 114 th Congress to address march-in rights under the Bayh-Dole Act. Therefore, if Congress deems the current situation to be acceptable, then no action need be taken. Other options include clarifications that further stipulate the circumstances under which march-in rights may be invoked, either by statutory amendment or the encouragement of regulatory refinements. Congress could, for example, define with greater clarity the precise circumstances under which a patented invention is deemed "available to the public on reasonable terms." Congress could also define with greater specificity when march-in rights are needed to "alleviate health or safety needs," particularly with respect to inventions that might be perceived as too costly for many consumers to afford. Other options include transfer of oversight of administering march-in rights. Currently the Bayh-Dole Act assigns the agency that provided funds that led to the patented invention responsibility for exercising these rights. Another entity might have distinct perspectives than the funding agency and might reach different conclusions on whether to exercise march-in rights. Transferring decisionmaking authority to a distinct entity might also eliminate any perceived conflicts of interest with respect to march-in rights. Former employees of federal agencies often wish to pursue careers within the private sector and may wish to maintain good relationships with those enterprises. In addition, agency officials may themselves be named inventors on patents to which march-in rights apply. These factors could conceivably lead to a perception of bias against the institution of march-in rights. Some commentators have also suggested that Congress should establish a centralized database of inventions subject to the Bayh-Dole Act. Such a record would potentially improve the ability of the public to track its R&D investments and observe the degree to which these investments have resulted in new products for the marketplace. If a further level of monitoring were desirable, one possibility would be to require licensees of patents subject to the Bayh-Dole Act to submit periodic reports disclosing both their efforts at introducing the patented inventions to the public and their pricing policies. Other commentators also have urged reconsideration of the statutory requirement that in certain cases all judicial appeals be exhausted before march-in authority may actually be exercised. Under current law, even though a federal agency has authorized march-in rights, they may at times not be used until the patent proprietor has taken his case as far as the Supreme Court of the United States. As Arti K. Rai and Rebecca S. Eisenberg assert, "the tolerance for protracted delays inherent in the current process is at odds with the time-sensitive nature of the interests reflected in the substantive standard, such as achieving practical application of the invention 'within a reasonable time' and 'alleviat[ing] health or safety needs.'" This possibility of delay could also possibly discourage march-in petitions in the first instance. Still other commentators have suggested that Congress should take further steps to ensure that the best candidate receives licenses for patents subject to the Bayh-Dole Act. Under current law, government contractors may choose to license their inventions to anyone. Such a system may not place these inventions in the most capable hands, either from the perspective of the contractor or of the public. Another option might be an open-bidding auction that might better ensure that patents on inventions developed through government funding are licensed to the most capable enterprise. Current dialogue over march-in rights involves a familiar policy debate in intellectual property law. On the one hand, the patent laws are intended to promote the labors that lead to innovation. Critics of the use of march-in rights believe that diluting the patent incentive will discourage private investment and ultimately work against the aims of the Bayh-Dole Act. But others say that the patent laws are also intended to distribute the fruits of those labors to the public. This goal is most visibly achieved when patents expire and previously proprietary technologies enter the public domain. However, some observers believe that march-in rights provide an unused mechanism for discouraging excessive profiteering and providing the public an appropriate return on its R&D investments during a patent's term. Striking a balance between these competing views regarding the commercialization of federally funded research remains a matter of congressional judgment. | Congress approved the Bayh-Dole Act, P.L. 96-517, in order to address concerns about the commercialization of technology developed with public funds. This 1980 legislation awards title to inventions made with federal government support if the contractor consists of a small business, a university, or other nonprofit institution. A subsequent presidential memorandum extended this policy to all federal government contractors. As a result, the contractor may obtain a patent on its invention, providing it an exclusive right in the invention during the patent's term. The Bayh-Dole Act endeavors to use patent ownership as an incentive for private sector development and commercialization of federally funded research and development (R&D). The federal government retains certain rights in inventions produced with its financial assistance under the Bayh-Dole Act. The government retains a "nonexclusive, nontransferable, irrevocable, paid-up license" for its own benefit. The Bayh-Dole Act also provides federal agencies with "march-in rights," codified at 35 U.S.C. §203. March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a "nonexclusive, partially exclusive, or exclusive license" to a "responsible applicant or applicants." If the patent owner refuses to do so, the government may grant the license itself. No federal agency has ever exercised its power to march in and license patent rights to others. In particular, the National Institutes of Health (NIH) has received six march-in petitions and has denied each one. A 2016 exchange of correspondence between Members of Congress and the Department of Health and Human Services suggests a difference of views related to agency authority under the march-in provision. Supporters of the use of march-in rights assert that they provide an unused mechanism for combatting high drug prices and ensuring that U.S. citizens enjoy the benefits of public R&D funding. Others assert that march-in rights do not provide such a broad authority, but rather are limited to four circumstances identified in the statute. They are also concerned that use of march-in rights might discourage private investment in the often considerable effort needed to bring early-stage technologies to the marketplace. Congress possesses a number of options with respect to march-in rights. If the current situation is deemed acceptable, then no action need be taken. Congress could also consider amending the Bayh-Dole Act by specifying in greater detail the precise circumstances in which march-in rights should be exercised. Congress may also take such steps as transferring authority over the administration of march-in rights, requiring government contractors to submit periodic reports regarding the commercialization of inventions achieved through public funding, creating a centralized database of inventions subject to the Bayh-Dole Act, and taking steps to ensure that patents on inventions developed through government funding are licensed to the most capable enterprise. |
For decades U.S. policymakers have connected U.S. national security and other core interests with the spread of democracy around the world. Reflecting this, the promotion of democracy has been a longstanding and multifaceted element of U.S. foreign policy, and one often interrelated with U.S. efforts to promote human rights. Congress has often played an important role in supporting and institutionalizing U.S. democracy promotion by passing key legislation, appropriating funds for foreign assistance programs and other democracy promoting activities, and conducting oversight of aspects of U.S. foreign policy relevant to democracy promotion. Widespread concerns exist among analysts and policymakers over the current trajectory of democracy around the world and multiple hearings in the 115 th Congress reflected bipartisan concern over this issue. For the past decade, experts have debated whether, and to what extent, the heretofore global expansion of democracy has halted or even begun to reverse. Many argue that the world has been in the midst of what has been termed a global "democratic recession" that began around 2006. Proponents of this view cite data from global measures of democracy as well as qualitative trends that have heightened concerns over the state of democracy, particularly in recent years. Frequently cited concerns include the rise of authoritarian populist and nationalist leaders, the potential negative influence on democracy from internationally assertive authoritarian states, questions over the enduring appeal of democracy as a political system, new tools nondemocratic governments are using to stifle potential democratizing forces, and others. Experts vary in their assessment of the impact of these and other perceived trends and in their appraisal of what current conditions may portend for the future trajectory of democracy around the world. With regard to U.S. policy, there are disagreements over the extent to which the United States should respond to negative trends, as well as over the U.S. capacity to influence them meaningfully and effectively. This report aims to provide Congress information, analysis, and a variety of perspectives on these issues. In particular, it provides brief conceptual background on democracy and on democracy promotion's historical role in U.S. policy, analyzes aggregate trends in the global level of democracy using data from two major democracy indexes, and discusses some of the key factors that may be broadly affecting democracy around the world. Finally, the report includes a synthesis of debates over democracy promotion in U.S. foreign policy and a selection of related policy issues and questions for Congress in the current period and beyond. In the most basic sense, democracy means "rule by the people." Attempts to elaborate on this definition in ways useful to policymakers and political scientists are longstanding and contested. Conceptions of democracy may vary across cultural contexts and across time, and ideological biases (conscious or otherwise) as well as the broader "political zeitgeist" of the times may play a significant role in influencing what features are considered essential to the definition of democracy. While competing conceptions of democracy vary in numerous ways, many can be differentiated by their relative "thickness" or "thinness." Relatively "thin" definitions generally emphasize minimum elements of electoral political competition and participation, such as free and fair elections, universal suffrage, and the right to join political organizations. More expansive "thick" definitions may include these minimum elements as well as broad protections for individual rights and civil liberties (and corresponding constraints on government power and majority rule), the rule of law, well-functioning and transparent government institutions, and/or a democratic political culture, among other elements. These more expansive definitions reflect the notion that democracy consists of more than just basic elements of democratic political competition, such as elections, a contention that is now generally accepted even as the outer boundaries of the concept of democracy remain unsettled. Thus while minimalist, "thin" definitions may suffer criticism for excluding elements that are thought by many to be essential to democracy, broader "thick" definitions may conversely be criticized for including elements that to some are beyond the bounds of its core conception. Various adjectives are also frequently employed to denote different conceptions or levels of democracy. The term electoral democracy , for instance, is typically understood to align with more minimalist conceptions of democracy, while liberal democracy refers to those minimalist elements plus elements found in more expansive definitions. As well, while democracy is frequently understood in contrast to authoritarianism or dictatorship , many modern definitions and measures recognize that political systems often exist in middle zones, and are therefore referred to using concepts such as hybrid regime s . Attempts to identify political systems on a continuum of a broader spectrum of concepts in this way may nonetheless require the use of relatively arbitrary divisions between these concepts, given that, as one scholar has argued, "democracy is in many ways a continuous variable," as are many of its key elements. The concept of democracy is not explicitly defined in U.S. policy or law. Nonetheless, U.S. law generally implicitly aligns with nonminimalist views or notions of democracy. For example, the ADVANCE Democracy Act of 2007 (Title XXI of P.L. 110-53 ) associated democratic countries with eight characteristics, including some elements found in broader, "thick" definitions of democracy, such as the rule of law and various civil liberties. Similarly, the scope of democracy promotion programs as defined in appropriations bills includes elements such as the rule of law and labor rights. In line with this, unless otherwise noted, the term democracy in this report refers to broader conceptions of democracy typically associated with the term liberal democracy . Encouraging the spread of democracy is a recurrent theme in U.S. foreign policy, though one that has been embraced unevenly given competing objectives and the differing foreign policy priorities and perspectives of presidential administrations. Congress has often advocated on a bipartisan basis for ensuring that support for democracy and human rights is an important component of U.S. policy, and has repeatedly taken legislative action to that effect. Beginning in the 1970s, in particular, Congress passed legislation to institutionalize support for democracy and human rights within the State Department, authorized and appropriated significant resources for democracy promotion programs (more than $2 billion annually in recent years), and sought to restrict aid to governments and to security forces responsible for gross human rights violations, among other measures. The means by which the United States promotes democracy, broadly defined, include bilateral and multilateral diplomacy, sanctions and other forms of conditionality, foreign assistance programs, educational and cultural exchange programs, and public diplomacy and international broadcasting. U.S. democracy promotion also sometimes has been associated with military intervention. Many democracy promotion experts today draw a distinction between peaceful democracy support and democracy imposition, with military force falling into the latter category. The traditional rhetorical and official policy embrace of democracy promotion by U.S. policymakers (see discussion below) has not always been reflected in U.S. foreign policy activities. For more information on the history of U.S. democracy promotion and congressional efforts in this area, particularly relating to foreign assistance programs, see CRS Report R44858, Democracy Promotion: An Objective of U.S. Foreign Assistance , by [author name scrubbed] and [author name scrubbed]. For over a century, U.S. policymakers have emphasized to varying degrees a connection between the state of democracy in the world and U.S. foreign policy and national security interests. An overarching theme in drawing this connection has been a perceived relationship between peace and world order and the existence of partnerships between democracies with shared values. In one of the early articulations of this sentiment, President Woodrow Wilson in 1917 advocated for U.S. entry into World War I in part by arguing that "a steadfast concert for peace can never be maintained except by a partnership of democratic nations." Particularly since World War II, U.S. belief in democratic peace and stability has arguably led to democracy promotion's inclusion in a broader, though not comprehensively articulated, U.S. "grand strategy" alongside other elements such as the promotion of free trade and the creation of new international institutions. The efforts of the United States and its allies to construct what some refer to as the post-World War II international order were, in the words of a recent report by the RAND Corporation, "based, in part, on the assumption that no order would be sustainable if not built on a foundation of democracies with shared values," with democracy regarded "as the foundation of other core elements of the order, particularly economic growth and sustainable peace." International relations scholars and policymakers debate, however, the conception and historical importance of the international order within U.S. strategy and as a perceived instrument for peace and stability. More broadly, debates continue over whether and to what extent democracy promotion should be part of U.S. foreign policy. (See " Debates over Democracy Promotion in U.S. Foreign Policy .") Recent presidential administrations of both parties have emphasized the view that democracies are more responsible international stakeholders and are more peaceful toward one another. President Bill Clinton's 1996 National Security Strategy (NSS) document, for instance, stated that "democratic states are less likely to threaten our interests and more likely to cooperate with the United States to meet security threats and promote free trade and sustainable development." President George W. Bush's 2006 NSS stated, "Because democracies are the most responsible members of the international system, promoting democracy is the most effective long-term measure for strengthening international stability; reducing regional conflicts; countering terrorism and terror-supporting extremism; and extending peace and prosperity." The Barack Obama Administration NSS documents included more general language connecting democracy promotion and U.S. interests. The 2010 NSS stated, for example, that "America's commitment to democracy, human rights, and the rule of law are essential sources of our strength and influence in the world," and that "our long-term security and prosperity depends on our steady support for universal values, which sets us apart from our enemies, adversarial governments, and many potential competitors for influence." All three Presidents argued for promoting democracy at times by directly invoking the logic of what has been called the democratic peace theory , or the contention that democracies are less likely to engage in armed conflict with other democracies. The historical relative lack of war between democracies is widely recognized by scholars, though they have debated the causes of this phenomenon and its significance. Unlike the NSS documents of previous administrations, the Trump Administration's December 2017 NSS does not articulate a general intention for the United States to actively promote democracy. The NSS does, however, include references to promoting related elements such as improved governance, anticorruption, and the rule of law, and states that the United States, "will continue to champion American values and offer encouragement to those struggling for human dignity in their societies." It also describes the United States as engaged in "political contests between those who favor repressive systems and those who favor free societies." Echoing to some degree the arguments from previous administrations, it states that "governments that respect the rights of their citizens remain the best vehicle for prosperity, human happiness, and peace," and conversely that "governments that routinely abuse the rights of their citizens do not play constructive roles in the world." Many argue that the Trump Administration has deemphasized democracy promotion relative to other foreign policy priorities, an issue that is discussed in the " Issues for Congress " section. Numerous global indexes attempt to measure respect for democracy-related factors in nearly every country. The following discussion analyzes trends as measured by two of the most frequently cited annual indexes: Freedom House's Freedom in the World report and the Economist Intelligence Unit's Democracy Index . Examining the trajectory of democracy as measured by these indexes may help quantify and characterize perceived global democratic declines as well as help place them in broader historical context. Background information about the methodology of each report, information on other global indexes not analyzed in this report, and discussion of some of the general critiques of democracy indexes can be found in Appendix A . Freedom House's Freedom in the World country ratings are often used as a proxy measure for the level of democracy. They may correspond with relatively "thick" definitions of democracy in that they include protections for various civil liberties, the rule of law, safeguards against corruption, and other elements associated with nonminimalist definitions. According to Freedom House's time series data, respect for political rights and civil liberties around the globe has increased substantially since the mid-1970s. Since the release of Freedom House's first report covering 1972, the combined average of global political rights and civil liberties was at its lowest point in 1975. By 2005, this combined measure had increased by 50% (according to CRS calculations) and stood at the highest point yet recorded. (See Figure 1 below.) Similarly, the percentage of countries categorized as "free" by Freedom House (as determined by their combined average of political rights and civil liberties) peaked in 2006 and 2007 at 46.63%. From 2005 to 2017, Freedom House has recorded an overall global decline in ratings for both civil liberties and political rights, with civil liberties having declined by a greater degree (but from a higher base). According to CRS calculations, the combined global average rating of political rights and civil liberties in the Freedom House index decreased by approximately 3.2% from 2005 to 2017. In terms of freedom gains and declines on a per-country basis, Freedom House data show that countries that have gained have been outnumbered by those that have declined every year since 2006, and the gap between these figures has grown wider since 2015. In 2017, 35 countries gained while more than double that (71) declined. Table 1 below compares Freedom House's country statuses for the report covering 2005, with the most recent report covering 2017. As illustrated in the table, the number and percentage of countries categorized as "not free" increased in this period. In population terms, according to Freedom House, 53% of the world's population lived in either a "not free" or "partly free" country in 2005, a figure that increased to 61% in 2017. The discussion below breaks down the average global score for both political rights and civil liberties by their subcategories, as measured by Freedom House. As illustrated by Figure 2 and Figure 3 , the average global score for every subcategory was lower in 2017 than it was in 2005; however, the size of these declines varied. In general, civil liberties subcategories showed greater decreases, with comparatively smaller declines in political rights subcategories. As shown above, within the political rights category, the "functioning of government" subcategory suffered the largest decline. This subcategory includes indicators relating to the extent to which freely elected officials exercise power (as opposed to nonelected actors or nonstate groups), whether there are effective safeguards against official corruption, and the extent of government transparency. The "electoral process" and "political pluralism and participation" categories, which declined more modestly, focus on the constituent components of fair elections and free political competition, including universal suffrage, fair election laws and procedures, freedom to join political parties, and other elements. As shown by Figure 3 above, with the exception of the "personal autonomy and individual rights" subcategory, there were larger declines in each of the civil liberties subcategories than there were in any of the political rights subcategories discussed above. This "personal autonomy and individual rights" subcategory includes indicators relating to freedom of movement, property rights, social freedoms, and equality of economic opportunity. The "freedom of expression and belief" subcategory, which declined by the greatest degree, includes indicators on the existence of free and independent media as well as respect for religious freedom, academic freedom, and freedom of expression. The "associational and organizational rights" subcategory includes indicators relating to freedom of assembly, the free operation of nongovernmental organizations, and freedom for labor organizations. The "rule of law" subcategory includes indicators that pertain to the existence of an independent judiciary, due process, freedom from the illegitimate use of physical force (including governmental torture, war, and violent crime), and equal treatment under the law. The Economist Intelligence Unit's (EIU's) Democracy Index is a relatively new global democracy measure, with the first released report covering the state of democracy around the world in 2006. The report indicates both an overall democracy score for each country, which is determined by aggregating scores for five related categories, as well as a corresponding regime type categorization. In addition to political rights and civil liberties-related measures similar to those examined by Freedom House, EIU's index includes more emphasis on the functioning of government as well as on elements such as the level of political participation and the level of public support for democracy and democratic norms. As illustrated by Figure 4 below, the global level of democracy as measured by EIU was slightly lower in 2017 than in 2006, but this decline has not been consistent or uniform. According to calculations by CRS, the global average level of democracy in 2017 was less than 1% lower than it was in 2006. Although the renewed downward trend beginning in 2015 may continue, some might characterize the broader trajectory since 2006 to this point as reflecting stagnation more than outright decline. The discrepancy in overall decline in EIU's index as compared to Freedom House's may be due to improvements in measures of political participation that are included in the EIU index but not measured by Freedom House (see discussion below). Table 2 below compares EIU's global regime type categorizations for the report covering 2006, with the most recent report covering 2017. The data indicate a decrease in the number of "full democracies," but also a smaller decline in the number "authoritarian regimes." Accordingly, the two middle regime types, "flawed democracies" and "hybrid regimes," both increased in number and percentage. The relatively modest movement at the global level in EIU's index may mask certain underlying trends. Disaggregating EIU's global average by category demonstrates that a comparatively large increase in the "political participation" category in 2017 as compared to 2006 helped balance out declines in every other category, with the "civil liberties" category particularly negatively affected (see Figure 5 below). The "political participation" category, which increased by a larger margin than any of the other categories declined, consists of numerous quantitative indicators not included in Freedom House's index. Many of these relate to the level of political engagement by citizens, such as voter participation rates, the rate of membership in political parties, and the level of interest in politics (as captured by public opinion polls). Some might argue that these indicators and some others included in this category, such as the level of adult literacy, while conducive to a healthy democracy, are peripheral to its core definition. EIU's "electoral process and pluralism" and "functioning of government" categories, which both declined slightly, contain many aspects in common with Freedom House's political rights category, with a focus on the elements of free and fair elections and free political participation as well as the exercise of power by elected officials, corruption, and government transparency, among other elements. EIU's "political culture" category, which suffered a slightly larger decline, consists of measures of the level of support for democratic (or antidemocratic) norms among the population, including the level of popular support for democracy and the level of support for "strong leaders" who bypass elections. Finally, EIU's "civil liberties" category decreased by the largest margin and includes numerous elements that are roughly analogous to those found in Freedom House's own civil liberties subcategories. These include indicators relating to free media and access to information, freedom of expression for individuals, associational rights, freedom from torture and the enjoyment of basic security, the independence of the judiciary, respect for religious freedom, equal treatment under the law, and others. Thus, similar to Freedom House's data, EIU's index might be characterized as reflecting relatively smaller declines in elections and political participation aspects of democracy while registering larger declines in civil liberties-related elements. As noted, in the aggregate these declines are in part counter-balanced by improvements in the "political participation" measure, which may indicate increasing levels of democratic political engagement, broadly defined. The above analysis appears to support the growing consensus that the global expansion of democracy has been halted for more than a decade. Freedom House's historical data indicates that the decline since 2005 is the most sustained setback to the gradual expansion of political rights and civil liberties since Freedom House began reporting on these measures in 1972. While declines in EIU's index have been less uniform, EIU's data also indicates that democracy has not advanced since 2006. Findings from another democracy index not analyzed here, the Varieties of Democracy Project (V-Dem), similarly show a lack of democratic progress at the global level in recent years. The magnitude of actual global backsliding during this period, however, is less clear. As noted above, according to the Freedom House data, the combined global average level of political rights and civil liberties was 3.2% lower in 2017 than the all-time high in 2005. According to EIU's data, the overall decline was more modest, with less than a 1% decrease in the global average level of democracy in 2017 as compared to 2006. These arguably modest declines are potentially more worrying for democracy proponents when examined in terms of relative population sizes. According to Freedom House, while the percentage of "free" countries decreased one percentage point from 2005 to 2017 (from 46% to 45%), the percentage of the world's population living in a "free" country declined by seven percentage points during this same period (from 46% to 39%). EIU's figures similarly indicate that the percentage of the world's population living in either a "full" or a "flawed" democracy was below 50% in 2017, with 4.5% living in the former. This appears to comport with findings from the aforementioned V-Dem measure, which indicate that the global level of democracy is lower when taking population size into account. This difference has become more pronounced in recent years because democratic declines may have disproportionately centered on countries with large populations, such as Brazil, India, and Russia, while many of the improving countries have been those with small populations such as Burkina Faso, Fiji, and Sri Lanka. Underlying trends in these indexes also point to some level of commonality in terms of what aspects of democracy may have seen the most pronounced declines. As the data disaggregation above illustrates, in both the Freedom House and EIU measures, the aspects of democracy relating to political competition and electoral processes appear to have suffered relatively modest declines as compared to the broader rights and institutions that are associated with well-functioning and truly "free" liberal democratic political systems, such as free and independent media, freedom of expression, freedom of association, and the rule of law. A potential explanation is that some governments may be inclined to focus on improving "what shows," such as elections, while neglecting or actively undermining less visible and less easily measured elements of democracy. This may also comport with research of longer-term trends indicating that "democratic backsliding" has over time become less overt and more incremental, consisting for instance of censorship and media restrictions, relatively subtle tactics to tilt the electoral playing field, or engineered deteriorations in judicial independence, as opposed to outright electoral fraud or blatant and sudden executive power grabs. Despite the negative direction of these indexes in recent years, the potential implications for the longer term trajectory of democracy remain unclear. Notably, some experts have previously critiqued the accuracy of measured declines. More broadly, and from a longer term historical perspective, analysts have noted that significant "reverse waves" against democratic expansion have been observed in prior periods before giving way once more to continued democratization. Samuel P. Huntington famously observed two prior such "reverse waves," the first lasting from 1922 to 1945 and the second from 1960 to 1975, during which the number of democracies in the world regressed significantly before giving way to renewed democratic expansion and eventual new highs in global levels of democracy around the world. Experts who have warned of challenges facing democracy in this current period concede that a comparable third such "reverse wave" has not yet manifested itself. Those who have cautioned against excessive pessimism about the present state of democracy argue that the number of democracies in the world remains near its all-time peak, and contend that the current alarm is partly the result of an inclination to focus on certain prominent cases of perceived decline while overlooking positive news, such as improvements in certain countries in Asia and Africa (according to EIU's index). Nonetheless, the negative trend lines particularly in the past few years have led to yet unresolved questions over whether democratic setbacks are best characterized as "localized and transitory" or whether a more significant global reversal is underfoot. A number of key factors that analysts believe may be affecting democracy in many countries around the world are discussed below. These broadly relevant, overarching factors may interact with relevant context-specific historical, political, social, and economic circumstances in particular regions or countries. (See Appendix B for a list of CRS reports that contain democracy-related discussions in particular contexts.) Many observers contend that democracy's prior periods of expansion in the 20 th century were due in part to the influence of the most powerful countries in the international system and their efforts to shape an international environment conducive to democracy. After World War II, the United States and other leading democracies sought to embed democratic norms within multilateral institutions, including the United Nations (U.N.), the North Atlantic Treaty Organization (NATO), the European Union (EU), and later the Organization for Security and Cooperation in Europe (OSCE), among others. Thus to a certain extent democracy was built into the operating system of the international order and was sometimes linked with security and economic benefits in a way that incentivized countries to meet democratic standards. Perhaps not coincidentally, the spread of democracy around the world since the mid-1970s in particular also coincided with an arguably greater emphasis on human rights and democracy in U.S. foreign policy. The economic dominance of the United States in this period also enhanced its cultural influence in ways that may have promoted democratization in closed societies. In the current period, however, the share of global income accounted for by countries rated "not free" by Freedom House has, according to one calculation, now reached over 30% (as compared to 12% in 1990). As these nondemocratic countries develop economically, their relative capacity to project power in their geographic neighborhoods and beyond is expected to continue to increase. If perceptions about the role of the United States and other liberal democracies in having created favorable conditions for democracy are accurate, this rising authoritarian power arguably has the potential to conversely move the international political environment in a direction less hospitable to democracy. Democracy scholars increasingly focus on the potentially widespread negative impacts to democracy from influential and "activist" authoritarian regimes. The growing international assertiveness of these countries, China and Russia foremost among them, is said to be putting the leading democracies "on the defensive." Many U.S. policymakers had hoped that Chinese and Russian engagement with the United States and other democracies, their membership in an array of international institutions, and their economic growth from participation in the international trading system might contribute to a gradual political liberalization in both countries, but these hopes have largely not come to fruition. Rather, both China and Russia, according to a RAND report, "resent key elements of the U.S. conception of postwar order, such as promotion of liberal values … viewing them as tools used by the United States to sustain its hegemony." According to a 2017 U.S. intelligence community assessment, Russia has a "longstanding desire to undermine the US-led liberal democratic order." Notably, the Trump Administration's December 2017 National Security Strategy (NSS) appears to emphasize some ideological aspects of U.S. competition with these countries. Some of the foreign policy activities of influential authoritarian countries may already be having negative impacts on democracy internationally, such as by attempting to undercut international support for democratic norms or related human rights norms; eroding democracy's appeal by serving as examples of economically successful alternative political systems; providing aid or other support that undermines democracy or the prospects for democratization in recipient countries; subverting democratic institutions or norms within existing democracies through "soft" and "sharp" power projection; and actively or indirectly supporting the diffusion of techniques or tools for repressing political dissent. Some aspects of these challenges are discussed in the sections that follow. The rising international influence of authoritarian states is being accompanied to a certain extent by challenges to the idea that international norms relating to democracy and human rights are universally applicable. Although concerning for democracy proponents, the overall scope and impact of these efforts to date is unclear. Both China and Russia in particular actively emphasize norms of state sovereignty and "noninterference" in international relations. Russia's emphasis on noninterference can take the form of defending respect for "traditional values." Within Russia, "traditional values" have been invoked to justify discriminatory policies against particular groups, such as lesbian, gay, bisexual, and transgender (LGBT) communities. Internationally, Russia has pushed for acceptance of its "traditional values" concept within the U.N. Human Rights Council. Russia's restrictive policies for civil society groups operating within Russia, justified on the basis of protecting against foreign influence, have also arguably engendered replication elsewhere (see discussion in the " Modern Methods of Political Control " section). China's general posture is characterized by one scholar as offering "a critique of Western-style capitalism, liberal democracy and 'so-called universal values,' while presenting itself as a pragmatic, nonjudgmental partner interested only in 'win–win cooperation.'" China's principles of noninterference and respect for what has been termed "civilizational diversity" are said to undergird its engagement with foreign aid recipients such that this aid is largely free of governance conditions. Notably, according to one analysis, the top recipients of Chinese aid from 2000 to 2014 were nearly all nondemocracies. Principles of noninterference also appear to be manifest in China's efforts to promote the concept of "cyber sovereignty," arguably implicit within which is the notion that countries should be free to censor or otherwise control internet content within their borders. As with Russia, China has begun to introduce resolutions and amendments at the U.N. Human Rights Council that some researchers and human rights advocates argue aim to undermine respect for universal human rights norms. The multilateral Shanghai Cooperation Organization (SCO), which includes China and Russia as influential member states, also operates according to these principles of respect for sovereignty and noninterference. A 2006 joint statement by the SCO reads: "Diversity of civilization and model of development must be respected and upheld. Differences in cultural traditions, political and social systems, values and model[s] of development formed in the course of history should not be taken as pretexts to interfere in other countries' internal affairs." Although the SCO has traditionally been a regional grouping with members composed of largely authoritarian states in Central Asia, India and Pakistan joined as member states in 2017. According to some analysts, SCO's promotion of "civilizational diversity" norms may be undermining regional respect for democratic principles and having a negative impact on the democracy-related work of the Organization for Security and Co-operation in Europe (OSCE). Although some of their foreign policy actions may be harmful to democracy, the intentions of particular authoritarian states as they relate to democracy are complex and contested. Many authoritarian leaders are understood to be driven by a desire to maintain power and ensure regime stability, goals that are believed to influence their foreign policy decisions. China's focus on ensuring continued Communist Party of China (CPC) rule, for instance, may influence its foreign policy decisionmaking; the foreign policy actions of other influential authoritarian governments such as Russia and Iran may also be shaped by regime threat concerns. These defensive regime threat imperatives may manifest themselves in the foreign policy of states differently and inconsistently, and thus with varying implications for democracy. In general, to date there is more evidence that some authoritarian governments may hope to "contain" the spread of democracy because of its potential threat to their own regime stability than there is of broad, affirmative agendas to promote authoritarianism. Some experts contend that authoritarian states often pursue narrow economic and geopolitical interests in their foreign policies, with support for autocrats or the undermining of democracy sometimes instrumental or incidental to the pursuit of these other ends. In this argument, Russia's support for authoritarian governments, for instance, has often been opportunistic, rooted in the desire for control over energy resources or other economic or geopolitical ends. It is also limited in scope by a cultural emphasis on the "Russian world." Some analysts, however, assert that Russia's desire to insulate itself against potential democratic political change does color its foreign policy in ways that include an interest in influencing the regime types of its neighbors. China's government is said to maintain a "regime-type neutral" approach to foreign policy by which it seeks good relations with countries where it has particular interests without regard to the nature of their political systems. In the words of one analyst, China to this point has exhibited "no missionary impulse to promote authoritarianism," even as its foreign policy efforts may sometimes undermine democracy or lend prestige to authoritarian systems. Should their capabilities and opportunities continue to expand, it is possible that powerful nondemocracies could gradually begin to undertake more explicit and affirmative efforts to promote authoritarian political systems. Analysts have noted that the democracy promotion goals adopted by the United States and other democracies emerged over a period of time and expanded in scope and ambition concomitant with the expansion of these countries' international power and influence. That said, those democracy promotion efforts, in the words of one analyst, have arguably been motivated by "a clear normative commitment to democracy as a universal value," and sustained in part by genuine enthusiasm for democratic norms across many societies. While authoritarian political systems may increasingly hold instrumental appeal, it is not clear that affirmative formulations of "authoritarian values" could garner similar normative enthusiasm. Notably, even the most politically repressive governments tend to continue to couch their own political systems in the language of democracy, using terms such as "socialist democracy," while maintaining elements, such as political parties and elections, that give the appearance of democracy. Moreover, efforts by China and Russia to promote norms of strong respect for noninterference and for differing political systems, while problematic for democracy promotion efforts, would seem to be at odds with more normatively ambitious and activist forms of authoritarianism promotion. Signs of backsliding within existing democracies in recent years have led some experts to question whether the appeal and prestige of democracy as a political system itself is eroding around the globe. Although political conditions are highly contextualized within individual countries, citizens in a geographically and culturally diverse set of democracies have shown apparent willingness to "cast votes in large numbers for candidates whose commitment to liberal democracy was highly questionable." Arguably authoritarian or authoritarian-leaning leaders are currently in power or have previously been elected in countries as varied as Venezuela, Turkey, the Philippines, and Peru. Aspects of liberal democracy such as respect for individual rights, freedom of the press, and the rule of law have come under particular attack in many countries. Within Western democracies such as Hungary and Poland, leaders and political parties who hold views contrary to democratic norms have also achieved electoral success. Notably, Hungary's Viktor Orbán, who was overwhelmingly elected in April 2018 to a third consecutive term as prime minister, has spoken of constructing an "illiberal state," a project alleged by critics to entail hollowing out pluralism and ensuring the dominance of the ruling party over the long term. Political scientists have traditionally viewed countries that have reached a certain level of wealth and have experienced peaceful democratic political transitions as being stable, "consolidated" democracies largely impervious to backsliding into nondemocratic forms of government. Arguably weakening support for democracy within some long-established democracies, however, has spurred an emerging and highly contested debate over whether democratic "deconsolidation" is more possible than previously believed. Support for democracy around the world may rest on a combination of its intrinsic and its instrumental appeal. Whereas democracy's intrinsic appeal is rooted in personal and political freedoms, its instrumental appeal is associated with perceived positive outputs resulting from democratic governance, such as economic growth and national prestige. Some analysts assert that particularly after the end of the Cold War, many countries pursued democratizing political reforms at least in part because democracy was seen as the only viable pathway to high economic growth, modernity, and national prestige. As discussed above, democratization was also associated with membership in international institutions that provided instrumental economic and security benefits. If traditionally high levels of support for democracy around the world have related at least in part to its instrumental appeal, then challenges within democracies in recent years (including within the United States) may be eroding support for democracy as a political system. According to the U.S. intelligence community, some of these challenges include poor governance, economic inequality, and "weak national political institutions." Many challenges facing newer democracies in particular may relate to difficulties in establishing modern states capable of providing services in line with the demands of their citizens. The connection between democracy and attainment of the economic and security rewards of certain international institutions may also be loosening. Apparent democratic backsliding among some member states in the EU (such as Hungary and Poland) and NATO (such as Turkey) have called into question the ability and inclination of these institutions to enforce democratic standards for countries that have already acceded to membership. Relatedly, a class of economically successful authoritarian capitalist states has emerged. To the extent that these countries, China foremost among them, are able to continue to grow at high rates while forestalling political liberalization, they may gradually be undermining the appeal of democracy as a political system by disconnecting it from its perceived association with economic success, modernity, and prestige. Recent statements by Xi Jinping have led some observers to assert that China is now openly embracing this role. In October 2017, Xi stated that China's model of "socialism with Chinese characteristics" could serve as a "new choice" for countries hoping to speed up their development and preserve their independence. Xi later stated, however, that China will not "export" its political model or ask that other countries copy China's methods. Many believe that democracy's appeal around the world has historically been enhanced by the capacity of the United States to serve as an attractive example. In recent years, some Members of Congress and others have argued that challenges in the U.S. political system are hampering the United States' ability to effectively project democratic values abroad. Experts point to problems such as polarization and polarizing rhetoric, institutional gridlock, and eroding respect for democratic norms as potentially undermining U.S. democracy promotion efforts. According to Freedom House, the United States has suffered a "slow decline" in political rights and civil liberties for several years, a deterioration that it says "accelerated" in 2017. The Economist Intelligence Unit (EIU) for the first time categorized the United States as a "flawed democracy" in its report covering 2017 (although, as noted earlier in this report, its score narrowly missed continued categorization as a "full democracy" according to EIU). Perhaps reflecting some of the dynamics discussed above, a Pew Research Center report summarizing 2017 polling data across a set of 38 geographically and economically diverse countries found mixed attitudes about the performance of democracy. Nonetheless, the same report indicated that support for democracy as a political system remains high, with support far exceeding most nondemocratic alternatives. A median of 78% of respondents approved of representative democracy, while more than 70% disapproved of either rule by a "strong leader" or rule by the military. The only nondemocratic alternative to garner plurality approval was "rule by experts." (See Figure 6 below.) Approximately 23% of respondents expressed support for representative democracy and rejected all three nondemocratic alternatives posed. Pew found that the proportion of these "committed democrats" in a country was correlated with its level of wealth as well as its level of democracy as measured by EIU, suggesting that support for democracy is highest within richer and more democratic countries. Beyond this broad snapshot, analyses of polling data measuring support for democracy over time and within individual countries does not appear to demonstrate a single, clear overall global negative trend. For instance, an analysis sought to gauge the trajectory of support for democracy across 134 countries since 1990 by statistically aggregating data from a large number of polls. The findings indicated that baseline levels of support for democracy differed between established democracies, new democracies, and nondemocracies (with levels of support generally highest within established democracies), but that recent trend-lines across each type varied across countries and regions. Some countries exhibited a distinct downward trajectory of support in recent years, while others showed marked increases during the same period. Many countries showed relatively stable levels of support. This mixed picture is also reflected in trends within regional polls. For instance, according to a 2014-2015 poll of 34 African countries, since 2012 support for democracy had increased in 10 countries, decreased in 14 countries, and had no statistically significant change in 10 countries. Among nine countries in the Middle East and North Africa region, polling data comparing levels of support for democracy in 2010-2011 versus 2012-2014 shows that support remained essentially unchanged in five countries, decreased in two countries, and increased in two countries. Within Latin America, although there have been considerable changes in levels of support within particular countries, the aggregate level of support across the region has reportedly remained largely unchanged since 1995. These varied trend-lines are perhaps unsurprising given the myriad distinct political, social, and economic contexts and developments within countries around the globe. Nonetheless, they may also indicate that support for democracy as a political system, at least among general publics, is not eroding to the degree that many democracy proponents fear. Rather, to the extent that public opinion polling is a reliable indicator (see text box below), support overall appears resilient to this point. This may buttress the claim, as articulated by one scholar, that "democracy may be receding in practice, but it is still ascendant in peoples' values and aspirations … few people in the world today celebrate authoritarianism as a superior moral system … [or] the best form of government." In addition to concerns over their international influence, nondemocracies are also using new and sophisticated tools to forestall the potential formation of democratizing forces within their own societies. Many of these modern tools may be less heavy-handed, and thus less likely to engender societal backlash, than traditional forms of repression. They may also be less resource intensive. These methods, some of which are discussed below, are thus potentially contributing to more durable forms of nondemocratic governance. Civil society organizations (CSOs), which are often viewed as an important component of sustainable democracy, are confronting growing limitations on their ability to operate around the world. From restrictions on the types of funding they are allowed to receive to stringent registration requirements, the measures targeting CSOs are increasingly putting pressure on the entire civil society sector in certain countries. These restrictions are most commonly, but not exclusively, imposed by authoritarian and hybrid regimes seeking to limit the influence of nongovernmental actors. This phenomenon is commonly referred to by researchers and advocates as the "closing space" for civil society work around the world. The origins of the closing space phenomenon vary and are often country-specific. That said, scholars have pointed to several factors that have contributed to the spread of civil society restrictions. After the end of the Cold War era, Western governments, including the United States, substantially increased funding for pro-democracy CSOs. Concurrently, a number of events caused some governments to view the civil society sector warily, including the color revolutions in Georgia, Ukraine, and Kyrgyzstan, the later Arab Spring movements, and others. Publicly, many states have sought to justify civil society restrictions on national security and counterterrorism grounds; critics argue that such measures are merely pretexts for cracking down on certain civil society sectors or activities. Some countries have also justified civil society restrictions, particularly those concerning foreign funding, on the basis of sovereignty. Experts cite Russia's suppression of civil society in particular as a model that other states may have sought to emulate. Russian government measures restricting civil society have included requiring groups that receive foreign funding and engage in "political activity," broadly defined, to register as foreign agents. Later measures granted the Russian government the authority to unilaterally declare a CSO a foreign agent, as well as the discretion to shut down or limit the activities of CSOs deemed a threat to national security. A broad range of other governments have imposed similar restrictions on civil society. According to the International Center for Not-for-Profit Law (ICNL), between 2012 and 2015, 60 countries enacted a total of over 120 laws to constrain the freedom of association or assembly (see Figure 7 below). In some cases, restrictions render the structure, funding streams, or activities of CSOs illegal or otherwise impossible to sustain, forcing organizations to cease operations. CSOs that depend on foreign funding or staff are particularly vulnerable, as are those that focus on social or political issues that can be deemed subversive or threatening to national interests pursuant to vaguely written laws. In other cases, governments initiate investigations or legal proceedings against CSOs for alleged violations of laws related to CSO registration, funding, or activities. Such cases may be intended to drain CSOs of resources and/or to intimidate other groups into compliance. Optimism about the potential democratizing power of new information technologies, the internet, and social media has been tempered in recent years as nondemocratic governments have grown more adept at using technological means to censor, monitor, distort, or otherwise repress potential social and political opposition. In general, many emerging technologies are perhaps best understood as "dual use" in the sense that, depending on how they are utilized, they have the potential for both positive and negative impacts on democracy. Authoritarian governments appear to have shown an ability to mitigate many of the politically threatening aspects of these new technologies, and over time may increasingly have the capacity to actively leverage them in service of social and political control. Efforts to restrict free expression online have accelerated in some countries since the aforementioned color revolutions and the Arab Spring movements, which saw activists and citizens share information and organize mass protests via social media in an unprecedented fashion. According to Freedom House, internet freedom restrictions can be divided into three main categories: obstacles to access, limits on content, and violations of user rights. Obstacles to access may relate to poor infrastructure or high costs, but also to blanket and deliberate outages, such as during politically sensitive periods or in politically sensitive areas. Content limitations consist of proactive efforts to shape the information environment online such as through technical filters or censors to block websites and/or certain content. In some cases, governments may also use forms of offline punishment such as criminal or extralegal detention to deter individuals from engaging in certain online speech or political organizing. Relatedly, government-sponsored cyberattacks on media outlets, opposition leaders, and activists are also reportedly on the rise. Increasingly, government efforts also extend to active manipulation of online discourse through automated bots or paid commentators, which artificially spread pro-government messages or use misinformation to distract or confuse online audiences, thereby "drowning out" the online speech of individuals seen as threatening to the government. According to the U.S. intelligence community, the use of these tactics by governments around the world has "increased dramatically in the past 10 years." Human rights organizations argue that well-resourced and technologically advanced authoritarian states are also developing and deploying advanced technologies to more comprehensively track the online and offline activities of their citizens in ways that may be aimed, at least in part, at anticipating and repressing sources of political dissent. China's efforts are foremost among these and include facial recognition-enhanced public surveillance and the use of "big data" information collection and aggregation technologies. These and other emerging technologies may increasingly use efficient and scalable forms of artificial intelligence (AI) that could lower the costs required for maintaining social control. Although the most advanced of these technologies are being developed in a small number of countries, they may increasingly spread to other governments over time. Analysts have noted, for instance, reports of Chinese-developed facial recognition technologies having already been marketed and sold to some foreign government customers. Some analysts contend that the lack of global democratic expansion in recent years, and its arguably modest backsliding, is rooted in unfavorable conditions for democratization in many of the world's remaining nondemocracies. These arguments draw on academic research indicating that structural conditions such as wealth, international linkages, and levels of inequality may have considerable impact on a country's likelihood of sustained democratization. Thus, according to some analysts, challenges in the current period are not particularly surprising, and might be expected to continue, because "nearly every country with minimally favorable conditions for democracy" had already democratized by the mid-2000s. These arguments may be buttressed by the fact that many factors that were previously understood by scholars to support democratization are increasingly believed to have more ambiguous effects. Increasing levels of wealth, for instance, may not be as closely associated with democratization as previously believed, and may contribute to regime stability for democracies and some authoritarian states alike. Relatedly, the relationship between state capacity and democracy is complex and, according to some experts, not necessarily mutually supportive. Within authoritarian regimes, strong state capacity may help forestall democratization by enhancing what scholars call "performance legitimacy" through the government's ability to provide valued public goods, as well as its capacity to monitor and respond to dissent. Some research also supports what has been referred to as the "oil curse," or the notion that countries with natural resource wealth are less likely to democratize. This may be because their governments can use abundant revenues from these resources to similarly undercut societal demands for democracy (among other theorized causal factors). How much any of these or other factors alone or together may affect the prospects for democratization in a given country is a complex and contested question. Experts who have emphasized these factors as helping to explain the challenges to democracy in the current period concede that favorable conditions are not always necessary for democratization, but contend that they are causally important. Some analysts argue against excessive emphasis on these conditions and point to prior examples of democratization in countries where the scholarship would indicate this to be unlikely. Rationales for U.S. democracy promotion are varied. As noted, U.S. leaders have long drawn links between the state of global democracy and U.S. national security and economic interests. In addition, Members of Congress and others have sometimes asserted that the United States has a moral obligation to promote democracy and human rights, and some scholars argue that an inclination within U.S. foreign policy for "values promotion" derives from fundamental aspects of American political culture. Nonetheless, analysts continue to debate the extent to which the United States should promote democracy and what the proper balance of emphasis is between this objective and other foreign policy priorities. Some have questioned the appropriateness of democracy promotion at a basic level, such as by asserting that it constitutes an imposition of American values on other societies. There are also debates over whether these efforts constitute violations of sovereignty or improper interference in the politics of other countries. Supporters of democracy promotion have defended these activities as legitimate and generally argue that aspirations for, and values reflecting, democratic freedoms are universal. More broadly, many disagreements over the proper placement of democracy promotion within U.S. foreign policy tend to relate to the extent to which democracy promotion is seen as supportive of U.S. national interests, the extent of its potential tension with the pursuit of other objectives, and whether the United States has the means and capacity over the long-term to effectively support the spread of democracy and prevent backsliding. These thematic trends are summarized below. Scholars, democracy promotion advocates, and U.S. policymakers have associated the spread of democracy around the world with U.S. interests in various ways. As noted earlier, the rationale for democracy promotion has rested on the contention that democracies are generally more reliable and trustworthy international partners of the United States, and on the argument that democracies are considerably less likely to go to war with one another. Regarding the former argument, some argue that democratic transparency may make democracies particularly conducive to supporting the international agreements and institutions that populate the current international order. Accordingly, many believe that greater numbers of democracies supports the resilience of this order, which has arguably brought myriad economic and security benefits to the United States. Scholars continue to debate, however, the order's importance as compared to traditional relative power dynamics between countries. With regard to democratic peace, most scholars agree that, as a historical matter, democracies have rarely engaged in major military conflict with one another. Some of the potential (and potentially mutually supportive) explanations for this include that the democratic and rights-respecting character of liberal democracies inculcates genuine mutual shared respect among democracies and also makes war against such a government less easily justified; and that democratic leaders operate within political systems that make them more inclined to peaceful resolution of conflicts, and expect leaders of other democracies to be similarly predisposed. That said, scholarly debate remains over the purported causal explanations for the democratic peace theory, with some arguing that these explanations have not been convincingly evidenced in the historical record, as well as other critiques of the theory. Moreover, observers note that existing threats to U.S. security, including "rogue" or revisionist governments and terrorist organizations, tend to be associated with or emanate from nondemocracies. Some claim that liberal democratic political systems may be inherently less likely to suffer from internal armed conflicts or terrorism. Democracy promotion may in some instances conflict with the pursuit of other U.S. foreign policy objectives, and the United States may thus face difficult trade-offs in its democracy promotion agenda. At a general level, U.S. emphasis on democracy promotion may contribute to greater levels of tension and distrust between the United States and nondemocratic governments, which can hamper the prospects for cooperation toward other objectives. For instance, the United States must often choose whether and to what extent to partner with and support nondemocratic governments such as those of Egypt and Saudi Arabia in the pursuit of shared counterterrorism or regional geopolitical goals. Similarly, in the midst of arguably growing geopolitical competition in Asia between the United States and China, some analysts argue that nondemocratic governments of key third countries such as Vietnam may be less inclined to align with the United States if it insists on strong adherence to democratic standards. On the other hand, some argue that the United States' shared democratic values with its allies, as contrasted with the repressive political systems of its major authoritarian competitors, can be powerfully emphasized in its efforts to compete geopolitically with these countries. Scholarly research indicates that new democracies or countries in political transition may for a period be more nationalistic, less stable, and more likely to engage in conflict than other countries. New democratically elected governments may also in some instances be accountable to electorates that possess anti-American views, and may thus be less likely than the governments they replaced to see their interests as aligned with other U.S. objectives. Although democracies are generally believed to perform better at protecting human rights than nondemocracies, in some cases the introduction of democratic political competition in the absence of strong protections for individual rights may negatively affect the treatment of ethnic and religious minorities or other marginalized communities. Conversely, unwavering support for repressive authoritarian governments in the pursuit of security interests can create anti-American resentments among the populations of these countries. This may create significant long-term negative impacts on relations in the event that these governments are toppled. Moreover, some argue that support for democracy may in many instances have an underappreciated role in addressing security concerns over the longer term. For instance, promoting political inclusion and pluralism and the rule of law may help address the root causes of terrorism. Democracy promotion skeptics question the capacity of the United States to spread democracy in other countries whose societal, historical, and cultural contexts can differ markedly from the United States. They cite unsuccessful, and sometimes counterproductive, efforts to promote democracy, particularly after military interventions, such as those undertaken in Afghanistan and Iraq. Among democracy promotion supporters and detractors alike, there has been increasing understanding that democratization is a protracted, uncertain, and nonlinear process, with often considerable constraints on the ability of the United States (or others) to positively influence the process. Democracy promotion experts acknowledge that democratic transitions should be largely driven by internal forces, but contend that the United States or other external actors can in some instances play a productive supporting role. They cite numerous instances in which U.S. support may have done so, although attempting to evaluate the precise impact of U.S. democracy promotion efforts in specific instances is challenging given the complex factors affecting democracy in any given country at a given time. Congress plays a key role in influencing and shaping many aspects of U.S. policy and programs relating to democracy promotion. As it carries out its legislative and oversight responsibilities, Congress may consider a number of questions in the current period and beyond. The Trump Administration's views on democracy promotion may conflict with those of Members of Congress who support democracy promotion as a priority in U.S. foreign policy. Statements by the President and senior administration officials arguably have indicated a preference for downgrading democracy and human rights promotion in favor of greater emphasis on economic and security issues in U.S. foreign relations. Former Secretary of State Rex Tillerson, in articulating the Administration's "America First" policy as it relates to foreign affairs, drew a distinction between U.S. foreign policies and U.S. values, the latter of which he described as relating to "freedom, human dignity, the way people are treated." He argued that "in some circumstances, if you condition our national security efforts on someone adopting our values, we probably can't achieve our national security goals or our national security interests … it really creates obstacles to our ability to advance our national security interests, our economic interests." This stated distinction between U.S. policies and values, and the absence of an explicit democracy promotion goal within the Administration's National Security Strategy (NSS), may represent a shift from recent prior administrations. The Administration has also proposed significant cuts to democracy promotion foreign assistance programs (specific figures are discussed in the following section) that have drawn criticism from some Members of Congress. More broadly, some scholars and analysts charge that the Administration is failing to adequately defend the institutions of the international order, which, as discussed in earlier portions of this report, may support and/or be supported by shared democratic values. In light of these and other developments, some observers contend that the Trump Administration may intend to move away from a U.S. leadership role in promoting democracy overseas. The Administration's degree of interest regarding democracy promotion may evolve over time, however, as has arguably been the case with prior administrations. The White House's February 2018 decision to cut foreign aid to the Cambodian government because of setbacks to democracy there led one analyst to assert that the Trump Administration's approach to democracy promotion is "not so clear cut." Tillerson's successor, Secretary of State Mike Pompeo, has indicated support for democracy promotion. At his nomination hearing in April 2018, Pompeo stated that "if we do not lead the calls for democracy, for prosperity, and for human rights around the world, who will? No other nation is so equipped with the same blend of power and principal." At the same hearing, when asked, he affirmed that promoting democracy is in the national interest of the United States. Also, as the Trump Administration has continued to develop and expound on its particular foreign policy strategies, some officials have emphasized democracy-related elements within these strategies. The Administration has also emphasized democracy with regard to countries seen as hostile to the United States such as Venezuela and Iran. Nonetheless, there may continue to be points of tension between the Administration's approach to and prioritization of democracy promotion as compared to the preferences of some Members of Congress. S upporters of democracy promotion have argued that challenges in the current period necessitate greater U.S. efforts and commitment in order to help forestall a more protracted decline. Some contend that democracy promotion can usefully play a greater role in top-level U.S. foreign policy as it arguably has during some prior periods by seeking "transformative change in strategically important countries," and complementing and reinforcing ongoing U.S.-funded democracy promotion programs. This could conceivably entail tools such as high-level diplomacy, significant trade or aid conditionality, or multilateral initiatives, and could potentially involve modifications of U.S. relations with certain non democracies . Such efforts might to a certain extent tie into broader efforts to defend the norms and institutions of the international order. Some of these issues are noted in subsequent questions below. Given arguments that democracy promotion may entail trade-offs with regard to other U.S. interests, however, some analysts advocate a "triage" approach that weighs potential downside risks when determining which countries the United States should prioritize for democracy promotion. Those particularly critical of democracy promotion tend to argue that the United States should curtail these efforts in pursuit of a foreign policy that, in their view, more closely reflects U.S. capacity and the pursuit of vital U.S. interests . Given present challenges in the U.S. political system , some also assert that one of the best means of promoting democracy abroad is for the United States to focus on shoring up democracy at home. Given that democratic declines in recent years may relate particularly to erosions in respect for freedom of expression and association, media freedom, and rule of law-related elements (see " Interpreting the Declines "), the United States may consider prioritizing new or continuing diplomatic, programmatic, or other tools that focus on these democracy elements. Toward this end, Congress may take stock of U.S. efforts to date to combat the impacts of closing space for civil society in countries around the globe. While the United States has engaged with and promoted civil society in other countries for decades, the U.S. government during the Obama Administration began to take specific actions aimed in part at addressing the closing space challenge. This included a Presidential Memorandum that directed executive departments and agencies to work with CSOs even when there are restrictive local laws and to oppose restrictions on civil society and fundamental freedoms (among other directives), funding for new CSO assistance programs, and other initiatives. Other new or existing tools might also focus on countering international efforts by nondemocratic governments in the media space that are corrosive to democracy. Notably, Congress in 2016 broadened the mandate of the State Department's Global Engagement Center (GEC) to include countering state-sponsored propaganda and disinformation (Section 1287 of P.L. 114-328 ). GEC is in the process of awarding Public Diplomacy (PD) grants that are part of an "Information Access Fund," which the department says will "support public and private partners working to expose and counter propaganda and disinformation from foreign nations." Also potentially relevant is the work of U.S. international broadcasting entities overseen or funded by the U.S. Agency for Global Media (formerly the Broadcasting Board of Governors, BBG). Congress may also consider whether and how to directly promote democracy through capacity building partnerships with other legislatures such as those carried out under the auspices of the House Democracy Partnership. The House Democracy Partnership was established in 2005 and is composed of 20 Members of the House of Representatives. It aims to promote "responsive, effective government and strengthening democratic institutions by assisting legislatures in emerging democracies." As of 2018, it has worked with partner legislatures in Afghanistan, Burma, Colombia, Georgia, Haiti, Indonesia, Iraq, Kenya, Kosovo, Kyrgyzstan, Lebanon, Liberia, Macedonia, Mongolia, Pakistan, Peru, Sri Lanka, Timor-Leste, and Ukraine. Congress may consider whether the current challenges to democracy have implications for the amount of funding appropriated for democracy promotion programs. In determining funding levels, Members of Congress may weigh a potential desire to respond to these challenges against the opportunity costs of these resources in light of numerous other funding priorities. On average, Congress has appropriated more than $2 billion annually in the past decade for democracy programs, broadly defined. The Trump Administration's FY2018 request proposed $1.689 billion for democracy promotion assistance, an estimated 32% decrease as compared to FY2017-enacted levels. The Consolidated Appropriations Act, 2018 ( P.L. 115-141 ), ultimately specified approximately $2.479 billion for democracy promotion programs. The Administration's FY2019 budget has proposed $1.480 billion in democracy promotion assistance, an approximately 40% decrease from FY2018-enacted levels. Difficult to measure objectives, long time horizons, and other factors may make democracy promotion programs inherently more difficult to measure than many other foreign assistance programs. Moreover, according to one democracy aid expert, aid providers "too rarely fund the sort of in-depth, independent studies that examine the underlying assumptions, methods, and outcomes in a sector of democracy aid." Although an evaluation commissioned in 2006 by the U.S. Agency for International Development (USAID) found that USAID and democracy and governance programs had a positive impact on democracy, no comparable study has been conducted since. Many analysts have argued for what they consider to be more strategic targeting of democracy promotion resources, particularly in light of funding constraints. Some argue that such targeting is important because of perceived competing and more narrowly concentrated democracy-eroding external influences in some countries. A broader policy of "triage," as mentioned above, could potentially help inform funding allocations. Analysts contend that these allocations may be usefully informed by criteria such as whether programs can be coupled with broader diplomatic efforts and/or whether conducive structural conditions are present. Given recent democratic backsliding within existing democracies, some scholars have also warned against prematurely cutting off aid to new democracies. Researchers have found that democracy programs are more effective when their goals align with broader U.S. policy and are supported by the use of diplomatic tools such as sanctions or aid conditionality. Congress has a direct role in shaping these tools. Some experts have also argued for a more differentiated allocation of democracy promotion resources between the major funders (including USAID, the State Department, and the National Endowment for Democracy) based on the particular strengths of their funding models in relation to the type of project to be funded and the extent of political openness in the target country. Scholars have noted that many programs carried out under the banner of promoting democracy may relate more closely to arguably tangential goals such as good governance, and some have questioned the assumption that these goals support democratization. In the view of some analysts, the more challenging international terrain for democracy and the growing influence of authoritarian countries in the current period calls for renewed and more robust international collaboration in defense of democracy and democratic norms. To that end, the United States might consider new initiatives among like-minded democracies, potentially including those outside of Western Europe and North America. Multilateral initiatives may usefully combat perceptions among some abroad that democracy promotion is linked to narrow U.S. geostrategic interests. Relevant existing democracy-focused initiatives that might be utilized include the Community of Democracies and the Open Government Partnership. Some argue that the United States and other democracies should focus on countering efforts by nondemocracies to contest the universal applicability of democratic norms within international institutions. Various U.N. bodies, the OSCE, and others should be increasingly viewed, in the words of one analyst, as "arenas of competition over democracy norms," and the United States should "do more to build up explicit democracy caucuses within these institutions" while also placing greater emphasis on the democracy elements of organizations such as NATO. Relatedly, some analysts have argued for establishing multilateral groupings of democracies centered on combating political interference activities by authoritarian countries. Multilateral efforts may face limitations, however, because they are inherently complex and must account for differing ideas and interests among participating nations. They may entail participation from many newer democracies that have arguably not shown the same inclination to defend or promote democracy abroad as have the United States and other older democracies. Some also contend that shared democratic principles alone may be insufficient as an organizing principle for collective action among nations. Notably, in withdrawing from the U.N. Human Rights Council and pledging to cut funding to the council and to the Office of the U.N. High Commissioner for Human Rights, the Trump Administration has arguably exhibited a preference against promoting "values" issues within certain multilateral venues. Relatedly, the withdrawal from the council also removes the ability of the United States to vote against resolutions that are perceived to be aimed at undermining respect for democracy or human rights norms. Looking forward, the trends analyzed and described in this report likely portend continued near-term constraints on democratic expansion around the world, and in some cases have the potential to pose a range of persistent challenges for policymakers. Congress may continue to grapple with policy considerations within and in light of this difficult context in the near future. As the above discussion illustrates, some of these considerations may relate to the overarching strategic orientation of U.S. foreign policy and democracy promotion's place within that, while others concern second order questions about particular means, resources, and resource allocation. To the extent that there are differences in interest in democracy promotion between Members of Congress and the executive branch, these considerations may also entail questions about the institutional role of Congress in democracy promotion and in U.S. foreign policy generally. Appendix A. Background Information on Democracy Indexes Background on Freedom House's Freedom in the World Report Freedom House's Freedom in the World report has measured the level of civil liberties and political rights in each country annually since 1972. Freedom House reporting has also rated a varying number of territories each year; the ratings for these are not included in the data discussions in this report. According to Freedom House, its methodology is derived largely from the United Nations (U.N.) Universal Declaration of Human Rights and "operates from the assumption that freedom for all people is best achieved in liberal democratic societies." Freedom House uses both in-house and external analysts and advisers to determine country ratings. Scores in each category, which are tabulated to determine overall political rights and civil liberties ratings, are guided by a set of methodological questions. For instance, under civil liberty's rule of law category, one of the questions is "Is there an independent judiciary?" along with associated sub-questions, such as "Do executive, legislative, and other governmental authorities comply with judicial decisions, and are these decisions effectively enforced?" Analysts use a range of sources including news articles, scholarly analysis, NGO reports, and in-country research. Background on the Economist Intelligence Unit's Democracy Index The Economist Intelligence Unit's (EIU's) Democracy Index began coverage in 2006; new reports were issued biannually until the report covering 2010, and have been issued on an annual basis since then. EIU's index is based on an array of 60 indicators, some of which are may be at the outer bounds of democracy's core definition. For instance, its political participation category includes indicators that measure rates of participation in political parties or political nongovernmental organizations, the rate at which adults follow politics in the news, and public confidence in the government and political parties, among other measures. In addition to assessments by experts, many indicators are also determined by public opinion surveys, such as the World Values Survey and others. For example, an indicator in the political participation category measuring citizens' political engagement uses a measure of the "percentage of people who are very or somewhat interested in politics" as measured by the World Values Survey, if available. Other Democracy Indexes Numerous other democracy-related indexes and databases, some expansive in scope and others focused on particular regions or on particular components of democracy, are also used by policymakers and scholars. A relatively new global democracy measure, the Varieties of Democracy Project, or V-Dem, consists of over 350 indicators covering five indexes associated with differing conceptions of democracy. Another measure, Polity IV, is frequently cited in the academic literature and has been characterized as a relatively minimalist measure that focuses on procedural aspects of democracy. Despite this, it has been shown to be highly correlated with Freedom House's measure; this correlation is attenuated when countries at the democratic/authoritarian extreme are excluded, indicating (sometimes wide) disagreement over more middling countries. Other major indexes or aggregation of indexes include (but are not limited to) Freedom House's Nations in Transit report, the Bertelsmann Transformation Index, the Electoral Integrity Project, The World Bank's Worldwide Governance Indicators (particularly the Voice and Accountability indicators), and International IDEA's Global State of Democracy report. Critiques of Global Democracy Indexes Experts note that different indexes are organized around overlapping but different conceptions of democracy, and they sometime disagree widely on the state of democracy in a particular country, especially with regard to middling "hybrid regimes." Differences between indexes may also be exacerbated by the use of differing sources and methods of evaluation, differing and contested aggregation methods, the selection of flawed or redundant indicators, flaws or inconsistencies related to the use of expert coding, and other factors. Some have also argued that popular indexes may suffer from ideological biases or may sometimes favor advocacy at the expense of scientific rigor. Organizations that produce the indexes have emphasized processes designed to reduce political bias and ensure methodological rigor. CRS does not endorse the value or accuracy of any particular index. Appendix B. Selected CRS Reports This appendix presents a list of selected CRS reports that are referenced elsewhere in this report or that include significant discussions of democracy-related developments in a particular region or country context. CRS Report R44858, Democracy Promotion: An Objective of U.S. Foreign Assistance , by [author name scrubbed] and [author name scrubbed] CRS Report R44891, U.S. Role in the World: Background and Issues for Congress , by [author name scrubbed] and [author name scrubbed] CRS Report R44775, Russia: Background and U.S. Policy , by [author name scrubbed] CRS Report R41007, Understanding China's Political System, by [author name scrubbed] and [author name scrubbed] CRS Report R44897, Human Rights in China and U.S. Policy: Issues for the 115th Congress , by [author name scrubbed] CRS Report R45200, Internet Freedom in China: U.S. Government Activity, Private Sector Initiatives, and Issues of Congressional Interest , by [author name scrubbed] CRS Report R44037, Cambodia: Background and U.S. Relations , by [author name scrubbed] CRS Report R43132, Human Rights, Civil Unrest, and Political Reform in Burma in 2013 , by [author name scrubbed] CRS Report R44017, Iran's Foreign and Defense Policies, by [author name scrubbed] CRS Report R44793, Sub-Saharan Africa: Key Issues, Challenges, and U.S. Responses , by [author name scrubbed] et al. CRS Report R43166, Democratic Republic of Congo: Background and U.S. Relations , by [author name scrubbed] CRS Report R45120, Latin America and the Caribbean: Issues in the 115th Congress , coordinated by [author name scrubbed] CRS Report R44841, Venezuela: Background and U.S. Relations , coordinated by [author name scrubbed] CRS Report R44822, Cuba: U.S. Policy in the 115th Congress , by [author name scrubbed] CRS Report R43888, Cuba Sanctions: Legislative Restrictions Limiting the Normalization of Relations , by [author name scrubbed] and [author name scrubbed] CRS Report R43311, Iran: U.S. Economic Sanctions and the Authority to Lift Restrictions , by [author name scrubbed] CRS Report R43521, U.S. International Broadcasting: Background and Issues for Reform , by [author name scrubbed] CRS Report RL32427, Millennium Challenge Corporation , by [author name scrubbed] | Widespread concerns exist among analysts and policymakers over the current trajectory of democracy around the world. Congress has often played an important role in supporting and institutionalizing U.S. democracy promotion, and current developments may have implications for U.S. policy, which for decades has broadly reflected the view that the spread of democracy around the world is favorable to U.S. interests. The aggregate level of democracy around the world has not advanced for more than a decade. Analysis of data trend-lines from two major global democracy indexes indicates that, as of 2017, the level of democracy around the world has not advanced since around the year 2005 or 2006. Although the degree of democratic backsliding around the world has arguably been modest overall to this point, some elements of democracy, particularly those associated with liberal democracy, have receded during this period. Declines in democracy that have occurred may have disproportionately affected countries with larger population sizes. Overall, this data indicates that democracy's expansion has been more challenged during this period than during any similar period dating back to the 1970s. Despite this, democratic declines to this point have been considerably less severe than the more pronounced setbacks that occurred during some earlier periods in the 20th century. Numerous broad factors may be affecting democracy globally. These include (but are not limited to) the following: The growing international influence of nondemocratic governments. These countries may in some instances view containing the spread of democracy as instrumental toward other goals or as helpful to their own domestic regime stability. Thus they may be engaging in various activities that have negative impacts on democracy internationally. At the same time, relatively limited evidence exists to date of a more affirmative agenda to promote authoritarian political systems or norms as competing alternatives to democracy. The state of democracy's global appeal as a political system. Challenges to and apparent dissatisfaction with government performance within democracies, and the concomitant emergence of economically successful authoritarian capitalist states, may be affecting in particular democracy's traditional instrumental appeal as the political system most capable of delivering economic growth and national prestige. Public opinion polling data indicate that democracy as a political system may overall still retain considerable appeal around the world relative to nondemocratic alternatives. Nondemocratic governments' use of new methods to repress political dissent within their own societies. Tools such as regulatory restrictions on civil society and technology-enhanced censorship and surveillance are arguably enhancing the long-term durability of nondemocratic forms of governance. Structural conditions in nondemocracies. Some scholars argue that broad conditions in many of the world's remaining nondemocracies, such as their level of wealth or economic inequality, are not conducive to sustained democratization. The importance of these factors to democratization is complex and contested among experts. Democracy promotion is a longstanding, but contested, element of U.S. foreign policy. Wide disagreements and well-worn policy debates persist among experts over whether, or to what extent, the United States should prioritize democracy promotion in its foreign policy. Many of these debates concern the relevance of democracy promotion to U.S. interests, its potential tension with other foreign policy objectives, and the United States' capacity to effectively promote democratization. Recent developments pose numerous potential policy considerations and questions for Congress. Democracy promotion has arguably not featured prominently in the Trump Administration's foreign policy to this point, creating potential continued areas of disagreement between some Members of Congress and the Administration. Simultaneously, current challenges around the world present numerous questions of potential consideration for Congress. Broadly, these include whether and where the United States should place greater or lesser emphasis on democracy promotion in its foreign policy, as well as various related questions concerning the potential tools for promoting democracy. |
The Food and Drug Administration (FDA) has approved for adult use many drugs that have been tested for adults but not for children. Yet clinicians often prescribe adult-approved drugs for children, a practice known as off-label prescribing, (1) because most drugs have not been tested in children, and (2) because clinicians presume that the safety and effectiveness demonstrated with adults generally means that the drugs are also safe and effective for children. However, research shows, as described later in this report and in Table 1 , that this is not always true. Children may need higher or lower doses than adults, may experience effects on their growth and development, and may not respond to drugs approved for adults. Congress passed the Best Pharmaceuticals for Children Act (BPCA) of 2002 and the Pediatric Research Equity Act (PREA) of 2003 to encourage drug manufacturers to develop and label drugs for pediatric use. BPCA offers manufacturers incentives to conduct pediatric-specific research. PREA requires certain pediatric use information in products' labeling. The Food and Drug Administration Amendments Act of 2007 (FDAAA, P.L. 110-85 ) reauthorized and strengthened the programs' authorizing legislation. The FDAAA authority for these two programs is set to end on October 1, 2012, unless Congress reauthorizes the efforts. This report describes how and why Congress developed these initiatives. Specifically, the report describes why research on a drug's pharmacokinetics, safety, and effectiveness in children might be necessary; presents why the marketplace has not provided sufficient incentives to manufacturers of drugs approved for adult use to study their effects in children; describes how BPCA provides extended market exclusivity in return for FDA-requested studies on pediatric use, and how PREA requires studies of drugs' safety and effectiveness when used by children ( Appendix B analyzes how BPCA and PREA evolved from FDA's administrative earlier efforts); analyzes the impact BPCA and PREA have had on pediatric drug research; and discusses issues, some of which Congress considered leading up to FDAAA, that may form the basis of oversight and evaluative activities along with reauthorization efforts in 2012. A drug cannot be marketed in the United States without FDA approval. A manufacturer's application to FDA must include an "Indication for Use" section that describes what the drug does as well as the clinical condition and population for which the manufacturer has done the testing and for which it seeks approval for sale. To approve a drug, FDA must determine that the manufacturer has sufficiently demonstrated the drug's safety and effectiveness for the intended indication and population specified in the application. The Federal Food, Drug, and Cosmetic Act (FFDCA) allows a manufacturer to promote or advertise a drug only for uses listed in the FDA-approved labeling—and the labeling may list only those claims for which FDA has reviewed and accepted safety and effectiveness evidence. Once FDA approves a drug, a licensed physician may—except in highly regulated circumstances—prescribe it without restriction. When a clinician prescribes a drug to an individual whose demographic or medical characteristics differ from those indicated in a drug's FDA-approved labeling, that is called off-label use , which is considered accepted medical practice. Most prescriptions that physicians write for children fall into the category of off-label use. In these instances, because FDA has not been presented with data relating to the drugs' use in children, no labeling information is included to address indications, dosage, or warnings related to use in children. Faced with an ill child, a clinician must decide whether the drug might help. The doctor must also decide what dose and how often the drug should be taken, all to best balance the drug's intended effect with its anticipated and unanticipated side effects. Such clinicians face an obstacle: children are not miniature adults. At different ages, a body may handle a given amount of an administered drug differently, resulting in varying bioavailability. This occurs, in part, because the rate at which the body eliminates a drug (after which the drug is no longer present) varies, among other things, according to changes in the maturation and development of organs. Clearance (elimination from the body) can be quicker or slower in children, depending on the age of child, the organs involved, and body surface area. FDA scientists have described how drugs act differently in children, noting the kinds of unsatisfactory results that can occur when drugs are prescribed without the pediatric-specific information. These results include unnecessary exposure to ineffective drugs; ineffective dosing of an effective drug; overdosing of an effective drug; undefined unique pediatric adverse events; and effects on growth and behavior. Table 1 includes examples of drugs for which research has identified different responses between children and adults. Such examples illustrate why some in Congress believe in the value of conducting studies in children of a drug's pharmacokinetics—the uptake, distribution, binding, elimination, and biotransformation rates within the body. Such studies can help determine whether children need larger or smaller doses than adults. They can also establish whether doses should differ among children of different ages. Clinicians could use pediatric-specific information in the FDA-approved labeling of drugs to help them decide which, if any, drug to use; in what amount; and by what route to administer the drug. Furthermore, well-designed, -conducted, and -disseminated studies in children can reveal information about potential adverse events, thereby allowing clinicians and patients' family members to make better decisions. Most drugs—65%-80%—have not been tested in children. Manufacturers face many obstacles—economic, mechanical, ethical, and legal—that make them reluctant to conduct these tests. The market for any individual drug's pediatric indications is generally small, resulting in a relative economic disincentive for manufacturers to commit resources to pediatric testing compared to drugs for adults. Because young children cannot swallow tablets, a manufacturer might have a mechanical hurdle in developing a different formulation (such as a liquid). The existing ethical and legal requirements encountered in recruiting adult participants for clinical trials may present even greater obstacles when researchers recruit children. Specifically, both the Department of Health and Human Services (HHS) and FDA have issued regulations concerning the protection of human subjects and direct particular attention to the inclusion and protection of vulnerable subjects such as children (see textbox). Recruiting pediatric study subjects can be difficult because many parents do not want their children in experiments. Also, drug manufacturers face liability concerns that include not only injury but difficult-to-calculate lifetime compensation, made even more difficult regarding a child whose earning potential has not yet been established. Congress has offered incentives to manufacturers for pediatric research for two main reasons. First, doctors prescribe drugs approved for adults despite insufficient pediatric-use studies. Second, enough Members of Congress have believed that, despite the difficulty in conducting such studies, children could be better served once the research was done. Although Congress has designed other laws (such as those affecting drug development, safety and effectiveness efforts, and general health care and consumer protection) to promote or protect the health of the entire population (including children), the Best Pharmaceuticals for Children Act and the Pediatric Research Equity Act (both sections of the Federal Food, Drug, and Cosmetic Act) authorize programs focused specifically on pediatric drug research. Congress first enacted BPCA and PREA in late 2002 and early 2003, respectively. In 2007, Congress authorized their continuation for another five years. When presenting information about the pediatric research provisions in law, more than one FDA representative has referred to "the carrot and the stick." BPCA offers a carrot—extending market exclusivity in return for specific studies on pediatric use—and PREA provides a stick—requiring studies of a drug's safety and effectiveness when used by children. This section describes BPCA and PREA and compares them on key dimensions. This section covers the main provisions in the Best Pharmaceuticals for Children Act. The law addresses two circumstances: (1) when a drug is on-patent and a manufacturer might benefit from pediatric marketing exclusivity and (2) when a drug is off-patent or a manufacturer does not want additional marketing exclusivity. For drugs that are under market exclusivity based on patents or other intact extensions, FFDCA Section 505A (21 U.S.C. 355a) gives FDA the authority to offer manufacturers an additional six-month period of marketing exclusivity in return for FDA-requested pediatric use studies (including preclinical studies) and reports. Marketing exclusivity extends the time before which FDA grants marketing approval for a generic version of the drug. The provision applies to both new drugs and drugs already on the market (except a drug whose other exclusivity is set to expire in less than nine months). Before FDA sends a manufacturer a written request for pediatric studies, the law requires that an internal review committee, composed of FDA employees with specified expertise, review the request. It also requires that the internal review committee, with the Secretary, track pediatric studies and labeling changes. In addition, it establishes a dispute resolution process, which must include referral to the agency's Pediatric Advisory Committee. Exclusivity is granted only after (1) a manufacturer completes and reports on the studies that the Secretary had requested in writing, (2) the studies include appropriate formulations of the drug for each age group of interest, and (3) any appropriate labeling changes are approved—all within the agreed upon time frames. The law requires that the manufacturer propose pediatric labeling resulting from the studies. A manufacturer must provide supporting evidence when declining a request for studies on the grounds that developing appropriate pediatric formulations of the drug is not possible. Applicants for pediatric marketing exclusivity must submit, along with the report of requested studies, all postmarket adverse event reports regarding that drug. The law also has several public notice requirements for the Secretary, including the following: notice of exclusivity decisions, along with copies of the written requests; public identification of any drug with a developed pediatric formulation that studies had shown were safe and effective for children that an applicant has not brought to market within one year; that, for a product studied under this section, the labeling include study results (if they do or do not indicate safety and effectiveness, or if they are inconclusive) and the Secretary's determination; dissemination of labeling change information to health care providers; and reporting on the review of all adverse event reports and recommendations to the Secretary on actions in response. Extended marketing exclusivity may be an attractive incentive to a manufacturer with a product that is being sold under patent or other types of exclusivity protections. It is not, however, relevant in two cases: (1) when products are no longer covered by patent or other marketing exclusivity agreements and (2) when a patent-holding manufacturer declines to conduct the FDA-requested study and, therefore, the exclusivity. To encourage pediatric research that extends beyond FDA's authority to influence manufacturers' research plans, BPCA includes provisions to encourage pediatric research in products that involve the National Institutes of Health (NIH). BPCA 2002 addressed the first group, which it described as "off-patent," by adding a new Section 409I (42 U.S.C. 284m) to the Public Health Service Act (PHSA). The new section established an off-patent research fund at NIH for these studies and authorized appropriations of $200 million for FY2002 and such sums as necessary for each of the five years until the provisions were set to sunset on October 1, 2007. Congress repeated the authorization of appropriations in the 2007 legislation. BPCA 2002 originally required the Secretary, through the NIH director and in consultation with the FDA commissioner and pediatric research experts, to list approved drugs for which pediatric studies were needed and to assess their safety and effectiveness. The 2007 reauthorization changed the specifications from an annual list of approved drugs to a list, revised every three years, of priority study needs in pediatric therapeutics , including drugs or indications. The Secretary is to determine (in consultation with the internal committee) whether a continuing need for pediatric studies exists. If so, the Secretary must refer those drugs for inclusion on the list. When the Secretary determines that drugs without pediatric studies require pediatric information, the Secretary must determine whether funds are available through the Foundation for the NIH (FNIH). If yes, the law requires the Secretary to issue a grant to conduct such studies. If no, it requires the Secretary to refer the drug for inclusion on the list established under PHSA Section 409I. For on-patent drugs whose manufacturers declined FDA's written requests for studies, BPCA 2002 amended the FFDCA Section 505A to allow their referral by FDA to FNIH for pediatric studies, creating a second avenue of FDA-NIH collaboration. The law requires the Secretary, after deciding that an on-patent drug requires pediatric study, to determine whether FNIH has sufficient money to fund a grant or contract for such studies. If it does, the Secretary must refer that study to FNIH and FNIH must fund it. If FNIH has insufficient funds, the Secretary may require the manufacturer to conduct a pediatric assessment under PREA (described in the Pediatric Research Equity Act section). If the Secretary does not require the study, the Secretary must notify the public of that decision and the reasons for it. BPCA 2002 also established an FDA Office of Pediatric Therapeutics, defined pediatric age groups to include neonates, and gave priority status to pediatric supplemental applications. BPCA 2007 includes requirements for the Secretary. It expanded the Secretary's authority and, in some cases, requires action. For example, the Secretary must publish within 30 days any determination regarding market exclusivity and must include a copy of the written request that specified what studies were necessary. The Secretary must also publicly identify any drug with a developed pediatric formulation that studies have demonstrated to be safe and effective for children if its manufacturer has not introduced the pediatric formulation onto the market within one year. BPCA 2002 also required two outside reports. First, it required a report from the Comptroller General, in consultation with the HHS Secretary, on the effectiveness of the pediatric exclusivity program "in ensuring that medicines used by children are tested and properly labeled." By law, the report was to cover specified items such as the extent of testing, exclusivity determinations, labeling changes, and the economic impact of the program. GAO released its report in March 2007. BPCA 2007 requires another report that GAO released in May 2011. Second, BPCA 2002 directed the HHS Secretary to contract with the Institute of Medicine (IOM) for a review of regulations, federally prepared or supported reports, and federally supported evidence-based research, all relating to research involving children. The IOM report to Congress was to include recommendations on best practices relating to research involving children. IOM released its report in 2004. BPCA 2007 requires another IOM report. After passing BPCA, Congress acted to provide statutory authority for actions FDA had been trying to achieve through regulation. ( Appendix B provides a brief history of those attempts.) The goal was to have pediatric-appropriate labeling for all FDA-approved drug products. The Pediatric Research Equity Act of 2003 (PREA, P.L. 108-155 ) added to the FFDCA a new Section 505B (21 U.S.C. 355c): Research into Pediatric Uses for Drugs and Biological Products. It includes requirements for both new applications and products already on the market. According to PREA, a manufacturer must submit a pediatric assessment whenever it submits an application to market a new active ingredient, new indication, new dosage form, new dosing regimen, or new route of administration. Congress mandated that the submission be adequate to assess the safety and effectiveness of the product for the claimed indications in all relevant pediatric subpopulations, and that it support dosing and administration for each pediatric subpopulation for which the product is safe and effective. If the disease course and drug effects were sufficiently similar for adults and children, the HHS Secretary is authorized to allow extrapolation from adult study data as evidence of pediatric effectiveness. The manufacturer must document the data used to support such extrapolation, typically supplementing the evidence with other data from children, such as pharmacokinetic studies. The law specifies situations in which the Secretary might defer or waive the pediatric assessment requirement. For a deferral, an applicant must include a timeline for completion of studies. The Secretary must review each approved deferral annually, and applicants must submit documentation of study progress. All information from that review must promptly be made available to the public. In other situations, a waiver may be granted; for example, when the Secretary believes that doctors already know that a drug should never be used by children. In those cases, the law directs that the product's labeling include any waiver based on evidence that pediatric use would be unsafe or ineffective. If the Secretary waives the requirement to develop a pediatric formulation, the manufacturer must submit documentation detailing why a pediatric formulation could not be developed. The Secretary must promptly make available to the public all material submitted for granted waivers. PREA authorizes the Secretary to require the manufacturer of an approved drug or licensed biologic to submit a pediatric assessment. PREA 2002 and 2007 described the circumstances somewhat differently. The original provision applied to a drug used to treat a substantial number of pediatric patients for the labeled indications, and for which the absence of adequate labeling could pose significant risks to pediatric patients. PREA 2007, however, amended the provision so the Secretary could require a pediatric assessment of a drug for which the presence of adequate pediatric labeling "could confer a benefit on pediatric patients." PREA also applies when a drug might offer a meaningful therapeutic benefit over existing therapies for pediatric patients for one or more of the claimed indications. Such situations could arise when the Secretary finds that a marketed product is being used by pediatric patients for indications labeled for adults, or that the product might provide children a meaningful therapeutic benefit over the available alternatives. The Secretary could require an assessment only after issuing a written request under FFDCA Section 505A (BPCA, pediatric exclusivity) or PHSA Section 409I (NIH funding mechanisms). Further, the manufacturer must not have agreed to conduct the assessment, and the Secretary had to have stated that the NIH funding programs either did or did not have enough funds to conduct that study. If the manufacturer does not comply with the Secretary's request, the Secretary may consider the product misbranded. Because Congress wanted to protect adult access to a product under these circumstances, the law sets limits on FDA's enforcement options, precluding, for example, the withdrawal of approval or license to market. Under PREA, the Secretary must establish an internal committee, composed of FDA employees with specified expertise, to participate in the review of pediatric plans and assessments, deferrals, and waivers; track assessments and labeling changes and make that information publicly accessible; and establish a dispute resolution procedure, which would allow the commissioner, after specified steps, to deem a drug to be misbranded if a manufacturer refused to make a requested labeling change. The law includes review and reporting requirements for adverse events, and requires reports from both the IOM and the GAO. Seeing PREA and BPCA as complementary approaches to the same goal, Congress, in 2003 and again in 2007, linked PREA to BPCA (a discussion of this linkage appears later in the " Issues for Reauthorization of BPCA and PREA " section). Therefore, rather than specify a sunset date, Congress authorized PREA to continue only as long as BPCA was in effect. BPCA sunsets on October 1, 2012, and current law authorizes PREA only as long as BPCA is in effect. As Congress considers a 2012 reauthorization, issues may emerge that were contentious in the 2007 reauthorization discussions. Those include the relationship between the two laws, cost, measuring the impact of the programs, labeling, and enforcement. This section reviews each. Although BPCA and PREA were developed separately, they are usually discussed—by policy analysts in FDA, Congress, and other interested organizations—in tandem. Their 2007 reauthorizations were paired in committee hearings and legislative vehicle (FDAAA) and Congress will likely consider them together in discussions of their 2012 reauthorizations. Now that BPCA and PREA have each been in effect for about a decade, it may be time to consider the rationale—whether planned or coincident—for two distinct approaches to encouraging pediatric drug research and product labeling. BPCA rewards pharmaceutical companies with extended market exclusivity for conducting studies on drugs for pediatric populations. In contrast, PREA requires pediatric studies. Legal analysts and some Members of Congress have speculated on this "carrot and stick" approach: Why Congress rewards the drug industry for something it requires the industry to do. After reviewing the history of pediatric exclusivity when Congress was considering reauthorizing the FDAMA exclusivity provisions, one legal analyst wrote, in 2003: If Congress had codified the FDA's power to require testing in all new and already marketed drugs, the notion of an incentive or reward for testing would appear ludicrous. In fact, Congress did exactly that: provided an incentive for something that is already a requirement. During the debate on PREA in 2003, Members of the Senate differed on this issue. In the Committee on Health, Education, Labor, and Pensions' report, Chair Judd Gregg wrote, "The Pediatric Rule was intended to work as a ... backstop to ... pediatric exclusivity." Disagreeing, Senator Clinton and others wrote in the report's "Additional Views" section: Neither the intent conveyed by FDA nor FDA's implementation of the [Pediatric] [R]ule supports the report's contention that the rule was intended to work as a "backstop" to pediatric exclusivity or to be employed only to fill the gaps in coverage left by the exclusivity. Three years later, in its draft guidance on "How to Comply with the Pediatric Research Equity Act," FDA wrote that "[t]he Pediatric Rule was designed to work in conjunction with the pediatric exclusivity provisions of section 505A of the Act." However, development of the Pediatric Rule pre-dated development of the exclusivity provisions. The unclear relationship between voluntary studies for marketing exclusivity in BPCA and mandatory studies in PREA remained, continued by FDAAA 2007. At some point Congress may want to resolve this apparent paradox. If, however, Congress were to consider eliminating pediatric market exclusivity or to somehow combine BPCA and PREA provisions, it might need to realign what the provisions cover. A recent FDA committee report describes one such difference. It noted that, because PREA "requires studies only in the specific indication or indications" addressed in the new drug application (NDA), PREA assessments would not include potential uses of the drug that would be unique to a pediatric population and therefore not be noted as an adult indication. If, however, the manufacturer sought pediatric market exclusivity for that drug, the studies required under BPCA would cover all uses of the active drug component. Not every law contains a sunset provision. BPCA does, and, although Congress did not use the term, it structured PREA 2003 to cease if and when BPCA did, reflecting the majority approach discussed regarding " Relationship Between BPCA and PREA " above—that these are coordinated programs. Therefore, both BPCA and PREA are now set to end on October 1, 2012. By including an end date or another indication of a predetermined termination date, Congress provides "an 'action-forcing' mechanism, carrying the ultimate threat of termination, and a framework ... for the systematic review and evaluation of past performance." The sunset provision for BPCA's exclusivity incentive to manufacturers has not yet engendered congressional debate. However, during PREA consideration in 2003, some Members had objected, unsuccessfully, to linking PREA's safety and effectiveness assessment and resulting pediatric labeling to the BPCA sunset. By the committee markups of PREA in 2007, some Members advocated making the mandatory pediatric assessments permanent. If Congress intended the PREA sunset to trigger regular evaluation of the law's usefulness, other legislative approaches may achieve that result more directly, such as by requiring periodic evaluations. If, however, the intent was to test the idea of requiring pediatric assessments, the years between PREA 2003 and consideration of PREA in 2007 had provided four years of evidence. The House-passed bill for PREA 2007 would have eliminated PREA's link to the BPCA sunset provision; the Senate-passed bill continued it. The enacted bill included the linkage written in the 2003 legislation. As it approaches the 2012 reauthorization of these pediatric research provisions and with another five years of evidence, Congress may wish to evaluate the usefulness and effect of that link before it decides whether to continue it. In assessing the value of BPCA's offering of pediatric market exclusivity, it may be useful to identify the intended and unintended effects—both positive and negative—of its implementation. When FDA grants a manufacturer a six-month exclusivity, who might benefit and who might be harmed? Congress could consider the cost implications as it sets policy in the reauthorization. The manufacturer. The manufacturer holding pediatric exclusivity incurs the research and development expenses related to the FDA-requested pediatric studies. It then enjoys six months of sales without a competitor product and a potentially lucrative head start on future sales. Some researchers have examined the financial costs and benefits faced by manufacturers that receive pediatric exclusivity. One 2007 study calculated the net economic benefit (costs minus benefits, after estimating and adjusting for other factors) to a manufacturer that, in 2002-2004, responded to an FDA request for pediatric studies and received pediatric exclusivity. The median net economic benefit of six-month exclusivity was $134.3 million. The study found a large range, from a net loss of $9 million to a net benefit of over half a billion dollars. Other manufacturers. Manufacturers that do not hold the exclusivity must wait six months, during which time they cannot launch competing products. After that, however, they may be able to market generic versions of a drug that has been assessed for pediatric use and has had six months' experience in the public's awareness. Government. Nonfinancial benefits to government include its progress in protecting children's health. Financial costs to the government include administrative and regulatory expenses. Because the government also pays for drugs, both directly and indirectly, it must pay the higher price that exclusivity allows by deferring the availability of lower-priced generics for six months. The improved pediatric information, however, may yield future financial savings by avoiding ineffective and unsafe uses. Private insurers. Private payers also face similar financial costs and benefits as public payers, without the regulatory costs of administering the program. Children and their families. If the six-month exclusivity incentives effectively encourage manufacturers to study their drugs in children, some children may incur risks as study subjects; conversely, they and others might benefit from more appropriate use of drugs, including accurate dosing. Pediatric studies can produce valuable information about safety, effectiveness, dosing, and side effects when a child takes a medication. Such information benefits children only when it reaches clinicians and others who care for children (including parents). BPCA 2002, PREA 2003, and their 2007 reauthorizations, therefore, included labeling provisions to make the information available. As Congress drafts language to continue BPCA and PREA, it could address whether FDA has adequate tools with which to assess, encourage, require, and enforce the development and dissemination of the information clinicians could use to reach better treatment decisions. Before examining some specific questions for congressional consideration, this report reviews the current requirements for pediatric labeling. FDA now requires, by law, pediatric usage information labeling in the following three sets of circumstances: 1. the manufacturer has successfully applied (via an original new drug application [NDA] or a supplement) for approval to list a pediatric indication; 2. the manufacturer has received pediatric exclusivity after conducting appropriate studies; or 3. the manufacturer has submitted the safety and effectiveness findings from pediatric assessments required under PREA (added by the 2007 reauthorization). By regulation, FDA requires pediatric-specific labeling in the following circumstances: (B) If there is a specific pediatric indication different from those approved for adults that is supported by adequate and well-controlled studies in the pediatric population, … (C) If there are specific statements on pediatric use of the drug for an indication also approved for adults that are based on adequate and well-controlled studies in the pediatric population, … (D)(1) When a drug is approved for pediatric use based on adequate and well-controlled studies in adults with other information supporting pediatric use, … (E) If the requirements for a finding of substantial evidence to support a pediatric indication or a pediatric use statement have not been met for a particular pediatric population, … (F) If the requirements for a finding of substantial evidence to support a pediatric indication or a pediatric use statement have not been met for any pediatric population, … (G) … FDA may permit use of an alternative statement if FDA determines that no statement described in those paragraphs is appropriate or relevant to the drug's labeling and that the alternative statement is accurate and appropriate. (H) If the drug product contains one or more inactive ingredients that present an increased risk of toxic effects to neonates or other pediatric subgroups, … The PREA and BPCA reauthorizations in 2007 added the third set of circumstances of required pediatric labeling. When the Secretary determines that a pediatric assessment or study does or does not demonstrate that the subject drug is safe and effective in pediatric populations or subpopulations, the Secretary must order the label to include information about those results and a statement of the Secretary's determination. That is true even if the study results were inconclusive. If studies suggest that safety, effectiveness, or dosage reactions vary by age, condition to be treated, or patient circumstances, then detailed information could be included in the labeling. BPCA 2007 also strengthened the effect of labeling requirements by mandating the dissemination of certain safety and effectiveness information to health care providers and the public. Although not included in the pediatric sections, another provision in FDAAA 2007 may yield benefits for pediatric labeling. Regarding television and radio direct-to-consumer (DTC) drug advertisements, the law required that major statements relating to side effects and contraindications be presented in a clear, conspicuous, and neutral manner. It further required that the Secretary establish standards for determining whether a major statement meets those criteria. The fruits of such inquiry could be applied throughout FDA communication. Finally, BPCA 2003 had required HHS to promulgate a rule within one year of enactment regarding the placement on all drug labels of a toll-free telephone number for reporting adverse events. Because FDA had not yet finalized a proposed rule it had issued in 2004, BPCA 2007 required that it take effect on January 1, 2008. Labeling is useful if its statements are clear and applicable to the decision at hand. The labeling must also, however, be available and read—at least by prescribing clinicians. While an improvement over no mention at all, a statement such as "effectiveness in pediatric patients has not been established" still deprives a clinician of available information. The statement does not distinguish among studies in children found the drug to be ineffective;studies in children found the drug to be unsafe;studies in children were not conclusive regarding safety or effectiveness; and no studies had been conducted concerning pediatric use. With BPCA and PREA, Congress has acted to encourage more informative labeling and the research that would make that possible. Having observed a decade of experience with these requirements, Congress may want to ask follow-up questions to help determine whether the laws need amending. Have the dissemination provisions mandated by BPCA 2007 been adequate? Has FDA been able to enforce the labeling changes that the agency deems necessary based on results of pediatric studies under BPCA and PREA? Should Congress consider strengthening enforcement provisions in the reauthorization bill? Now that the law requires all labeling to require a toll-free number for reporting adverse events, might Congress want to explore how that is implemented and whether it has had any effect? Have the pediatric research encouragement programs had an effect? Is more research done on pediatric safety and effectiveness? Is more detail on age-group pharmacodynamics and dosing added to labeling? In general, is more information available to clinicians that could help them make appropriate prescribing decisions? BPCA and PREA have created a measurable change in the numbers of drugs with labeling that includes pediatric-specific information. Still, not all drugs used by children have labeling that addresses pediatric use. FDA approved more than 1,000 new drug and biologics license applications from the beginning of 2003 through 2009. Yet, the PREA (and its predecessor Pediatric Rule) and BPCA statistics note 394 pediatric labeling changes since 1998. FDA, through BPCA, has granted pediatric exclusivity for pediatric studies for 178 drugs. Those drugs make up 45% of the drugs for which FDA had sent written requests to manufacturers for pediatric studies. FDA did not grant exclusivity for 14 drugs for which manufacturers had submitted studies in response to requests, but manufacturers did not pursue exclusivity for most of the other drugs. As described earlier, BPCA 2007 shifted the level at which NIH set pediatric research priorities. Rather than creating a drug-specific list, NIH creates a condition-specific list. Accordingly, NIH (coordinated by the Obstetric and Pediatric Pharmacology Branch of the National Institute of Child Health and Human Development [NICHD]) listed 34 "priority needs in pediatric therapeutics," basically medical conditions, and interventions for each. Of the 45 drugs mentioned, 5 were still covered by their manufacturers' patents. Also listed were a few non-drug interventions: drug delivery systems (for asthma, for nerve agent exposure), health literacy (for over-the-counter drug use), and devices used in dialysis (for chronic liver failure). It may be interesting to see whether this shift in priorities from drugs to conditions affects the funding of specific research and ultimate availability of pediatric-specific drug labeling. Since BPCA and PREA were reauthorized in FDAAA, several reports have examined how FDA has implemented their requirements. GAO and the FDA Pediatric Review Committee (PeRC) that FDAAA established have offered assessments and recommendations for improvement. Congress may be interested in exploring those findings and crafting those recommendations into possible amendments to current law. In May 2011, GAO reported to Congress, as required by PREA 2007, a description of the effects of BPCA and PREA since their 2007 reauthorization. Along with a description of the procedures required by the provisions, GAO notes an area in which FDA needs to improve data resources in order to better manage the programs. Although FDA can report the number of completed PREA assessments, it was unable to provide a count of applications subject to PREA. GAO points out that, without that information, it is difficult for FDA to manage its timetables and for others to assess PREA's effect. In describing concerns of stakeholders, GAO mentions "confusion about how to comply with PREA and BPCA due to a lack of current guidance from FDA" and difficulties in coordinating the differing content and timetables of U.S. and European Union pediatric study requirements. As required by PREA 2007, FDA created an internal expert committee—the Pediatric Review Committee (PeRC)—that, among other things, conducted a retrospective review of assessments, waivers, and deferrals under PREA through September 2007. The required PeRC report found that, although the pediatric assessments were "generally of good scientific quality," if FDA provided more detailed advice on what it wanted, the assessments could be more consistent and useful. In a related observation, PeRC noted that "where there is evidence of specific discussion and documentation of the studies need to fulfill the PREA requirements ..., the PREA assessments generally were of higher quality." Inconsistency in decisions about waivers and deferrals were seen in the earlier years of PREA and the report noted that with the PREA 2007-required PeRC, a higher level of pediatric drug development expertise was now available to support all 17 review divisions, some of which had no pediatricians on staff. PeRC recommended that plans for and conduct of pediatric studies should begin early in the process of NDA development. This would be useful, in particular, to "correct problems in consistency between pediatric assessments in response to a Written Request [for BPCA] and those only in response to the PREA requirement." In keeping with its concern over varied scope and quality of research designs, PeRC recommended that (1) FDA review divisions discuss plans in detail approaching what they would cover in a BPCA Written Request to "be better able to assess the scope of studies need to provide adequate data for dosing, safety, and efficacy for use in the appropriate pediatric populations;" and (2) FDA provide more extensive descriptions of PREA postmarketing study requirements in its approval letters. PeRC recommended that when assessments come after an application is approved, FDA should ask the manufacturer to submit a labeling supplement as required by PREA 2007. Furthermore, finding that "[r]esults from pediatric assessments were not consistently incorporated into labeling," PeRC suggested that "[c]onsistency in placement and language may increase the ability of clinicians and patients/guardians to find information in the label" and recommended that FDA issue a pediatric labeling guidance. FDA's postmarket authority regarding pediatric drug use labeling has been limited. Congress had given FDA the authority to use its most powerful enforcement tool—deeming a product to be "misbranded" and thereby being able to pull it from the market—but has not given the agency authority to require less drastic actions, such as labeling changes. Of interest to Congress may be whether the current authority is appropriate and sufficient to ensure safety and, therefore, whether FDA should have a wider range of options. Pulling from the market a drug that many consumers rely on could, according to some health care analysts, do more harm than good. In its report accompanying its PREA 2003 bill, the Senate committee noted its intent that the misbranding authority regarding pediatric use labeling not be the basis for criminal proceedings or withdrawal of approval, and only rarely result in seizure of the offending product. The 2007 reauthorization continued this limitation on misbranding authority. The FDAAA, which encompassed BPCA 2007 and PREA 2007, included a provision outside its pediatric-specific sections to create a new enforcement authority for FDA: civil monetary penalties. Framed in the context of giving FDA tools to create meaningful incentives for manufacturer compliance with a range of postmarket safety activities, the provision listed labeling within its scope. In 2007 Senate and House committee discussions of what maximum penalties to allow, proposed one-time penalties were as low as $15,000 and proposed upper levels ranged up to $50 million. The enacted bill (FDAAA) states that an applicant violating certain requirements regarding postmarket safety, studies or clinical trials, or labeling is subject to a civil monetary penalty of not more than $250,000 per violation, and not to exceed $1 million for all such violations adjudicated in a single proceeding. If a violation continues after the Secretary provides notice of such violation to the applicant, the Secretary may impose a civil penalty of $250,000 for the first 30 days, doubling for every subsequent 30-day period, up to $1 million for one 30-day period, and up to $10 million for all such violations adjudicated in a single proceeding. The Secretary must, in determining the amount of civil penalty, consider whether the manufacturer is attempting to correct the violation. What options should FDA have if a manufacturer that has already received the six-month pediatric exclusivity then refuses or delays making an appropriate labeling change? For studies that result in labeling changes, when should FDA make study results available to the public? In considering whether to strengthen FDA's enforcement authority within the context of pediatric research and labeling, Congress can address manufacturers' actions at many points in the regulatory process, if and when, for example, FDA notes a manufacturer's reluctance to accept the agency's requested study scope, design, and timetable; that a study's completion is clearly lagging or overdue; that a manufacturer does not complete such a study; or does not release its results to FDA, peer-reviewed publications, or the public; or that procedures to incorporate pediatric study results into a drug's labeling have not proceeded appropriately. Congress has repeatedly acted to encourage research into the unique effects of FDA-regulated drugs on children—with both "carrots" of financial incentive and "sticks" of required action. It has also required that drug labeling reflect the findings of pediatric research, whether positive, negative, or inconclusive. And, most recently, it has given FDA broader authority to enforce these requirements. With each step of legislative and regulatory action over the years, Congress and FDA have tried to balance often conflicting goals: drug development to address needs unique to children; tools to encourage drug manufacturers to test drugs for use in children, despite the expense, opportunity costs, and liability risk; protection of children as subjects of clinical research; public access to up-to-date and unbiased information on drug safety and effectiveness; and prioritizing agency activities in light of available resources. Concerns remain, though, about many of the issues discussed during the 2007 reauthorizations—as well as issues presented in the last section of this report. Such issues may surface when reauthorizations are due in 2012 or in the broader context of congressional interest in drug safety and effectiveness. Appendix A. Acronyms Appendix B. Current Law Evolved from Earlier Attempts Before BPCA 2002 and PREA 2003, FDA attempted to spur pediatric drug research through administrative action. Table B -1 shows the administrative and statutory efforts to encourage pediatric drug research. The following discussion highlights selected FDA-specific rules and statutes that relate to discussions in this report. Rule on Drug Labeling: 1979 In a 1979 rule on drug labeling (21 C.F.R. Part 201), FDA established a "Pediatric use" subsection. The rule required that labeling include pediatric dosage information for a drug with a specific pediatric indication (approved use of the drug). It also required that statements regarding pediatric use for indications approved for adults be based on "substantial evidence derived from adequate and well-controlled studies" or that the labeling include the statement, "Safety and effectiveness in children have not been established." Despite the 1979 rule, most prescription drug labels continued to lack adequate pediatric use information. The requirement for adequate and well-controlled studies deterred many manufacturers who, apparently, did not understand that the rule included a waiver option. FDA, therefore, issued another rule in 1994. Revised Rule: 1994 The revised rule attempted to make clear that the "adequate and well-controlled studies" language did not require that manufacturers conduct clinical trials in children. The new rule described how FDA would determine whether the evidence was substantial and adequate. If, for example, clinicians would use the drug to treat a different condition in children than its FDA-approved use in adults, FDA would require trials in children. However, if the drug would be used in children for the same condition for which FDA had approved its use in adults, the labeling statement regarding effectiveness could be based on adult trials alone. In such instances, FDA might also require pediatric study-based data on pharmacokinetics or relevant safety measures. The 1994 rule continued the 1979 requirement that manufacturers include statements regarding uses for which there was no substantial evidence of safety and effectiveness. It added a requirement that labels include information about known specific hazards from the active or inactive ingredients. Food and Drug Administration Modernization Act of 1997 Three years later, Congress provided another approach to increasing pediatric labeling. FDAMA ( P.L. 105-115 ), incorporating the provisions introduced as the Better Pharmaceuticals for Children Act, created a Section 505A (21 U.S.C. 355a) in the FFDCA: Pediatric Studies of Drugs. It provided drug manufacturers with an incentive to conduct pediatric use studies on their patented products. If a manufacturer completed a pediatric study according to FDA's written request, which included design, size, and other specifications, FDA would extend its market exclusivity for that product for six months. The law required that the Secretary publish an annual list of FDA-approved drugs for which additional pediatric information might produce health benefits. FDAMA also required that the Secretary prepare a report examining whether the new law enhanced pediatric use information, whether the incentive was adequate, and what the program's economic impact was on taxpayers and consumers. Pediatric Rule: Proposed 1997, Finalized 1998, Effective 1999-2002 Also in 1997, FDA issued a proposed regulation that came to be called the Pediatric Rule. The Pediatric Rule mandated that manufacturers submit pediatric testing data at the time of all new drug applications to FDA. The rule went into effect in 1999, prompting a lawsuit against FDA by the Competitive Enterprise Institute and the Association of American Physicians and Surgeons. The plaintiffs claimed that the agency was acting outside its authority in considering off-label uses of approved drugs. In October 2002, a federal court declared the Pediatric Rule invalid, noting that its finding related not to the rule's policy value but to FDA's statutory authority in promulgating it: The Pediatric Rule may well be a better policy tool than the one enacted by Congress (which encourages testing for pediatric use, but does not require it).... It might reflect the most thoughtful, reasoned, balanced solution to a vexing public health problem. The issue here is not the Rule's wisdom.... The issue is the Rule's statutory authority, and it is this that the court finds wanting. | Update: On June 20, 2012, the House of Representatives passed, by voice vote and under suspension of the rules, S. 3187 (EAH), the Food and Drug Administration Safety and Innovation Act, as amended. This bill would reauthorize the FDA prescription drug and medical device user fee programs (which would otherwise expire on September 30, 2012), create new user fee programs for generic and biosimilar drug approvals, and make other revisions to other FDA drug and device approval processes. It reflects bicameral compromise on earlier versions of the bill (S. 3187 [ES], which passed the Senate on May 24, 2012, and H.R. 5651 [EH], which passed the House on May 30, 2012). The following CRS reports provide overview information on FDA's processes for approval and regulation of drugs: CRS Report R41983, How FDA Approves Drugs and Regulates Their Safety and Effectiveness, by [author name scrubbed]. CRS Report RL33986, FDA's Authority to Ensure That Drugs Prescribed to Children Are Safe and Effective, by [author name scrubbed]. CRS Report R42130, FDA Regulation of Medical Devices, by [author name scrubbed]. CRS Report R42508, The FDA Medical Device User Fee Program, by [author name scrubbed]. (Note: The rest of this report has not been updated since November 10, 2011.) With the Best Pharmaceuticals for Children Act (BPCA) and the Pediatric Research Equity Act (PREA), Congress authorized the Food and Drug Administration (FDA) to offer drug manufacturers financial and regulatory incentives to test their products for use in children. Congress extended both programs with the FDA Amendments of 2007 (FDAAA) and, because of the programs' sunset date, must act before October 1, 2012, to continue them. This report presents the historical development of BPCA and PREA, their rationale and effect, and FDAAA's impact. The report also discusses pediatric drug issues that remain of concern to some in Congress. Most prescription drugs have never been the subject of studies specifically designed to test their effects on children. In these circumstances, clinicians, therefore, may prescribe drugs for children that FDA has approved only for adult use; this practice is known as off-label prescribing. Although some clinicians may believe that the safety and effectiveness demonstrated with adults would hold for younger patients, studies show that the bioavailability of drugs—that is, how much gets into a patient's system and is available for use—varies in children for reasons that include a child's maturation and organ development and other factors. The result of such off-label prescribing may be that some children receive ineffective drugs or too much or too little of potentially useful drugs; or that there may be side effects unique to children, including effects on growth and development. Drug manufacturers are reluctant to test drugs in children because of economic, ethical, legal, and other obstacles. Market forces alone have not provided manufacturers with sufficient incentives to overcome these obstacles. BPCA and PREA represent attempts by Congress to address the need for pediatric testing. FDA had tried unsuccessfully to spur pediatric drug research through administrative action before 1997. With the FDA Modernization Act of 1997 (FDAMA, P.L. 105-115), Congress provided an incentive: if a manufacturer completed pediatric studies that FDA requested, the agency would extend the company's market exclusivity for that product for six months, not approving the sale of another manufacturer's product during that period. In 2002, BPCA (P.L. 107-109) reauthorized this program for five years. In 1998, to obtain pediatric use information on the drugs that manufacturers were not studying, FDA published the Pediatric Rule, which required manufacturers to submit pediatric testing data at the time of all new drug applications. In 2002, a federal court declared the rule invalid, holding that FDA lacked the statutory authority to promulgate it. Congress gave FDA that authority with PREA (P.L. 108-155). PREA covers drugs and biological products and includes provisions for deferrals, waivers, and the required pediatric assessment of an approved marketed product. In extending BPCA and PREA in 2007, Congress considered several issues: Why offer a financial incentive to encourage pediatric studies when FDA has the authority to require them? How does the cost of marketing exclusivity—including the higher prices paid by government—compare with the cost of the needed research? What percentage of labeling includes pediatric information because of BPCA and PREA? Do existing laws provide FDA with sufficient authority to encourage pediatric studies and labeling? Is FDA doing enough with its current authority? The 112th Congress will likely consider those questions as well as others: What information do clinicians and consumers need and how could industry and government develop and disseminate it? How can Congress balance positive and negative incentives to manufacturers for developing pediatric information to use in labeling? How could Congress consider cost and benefit when it deals with reauthorizing legislation in 2012? |
Alternative fuel and advanced technology vehicles face significant barriers to wider acceptance as passenger and work vehicles. Alternative fuel vehicles include vehicles powered by nonpetroleum fuels such as natural gas, electricity, or alcohol fuels. Advanced technology vehicles include hybrid vehicles, which combine a gasoline engine with an electric motor system to boost efficiency. Often, these vehicles are more expensive than their conventional counterparts. Further, fueling the vehicles is often inconvenient because the number of refueling stations for alternative vehicles is negligible compared with the number of gasoline stations nationwide; in some regions, the infrastructure is nonexistent. However, many of these vehicles perform more efficiently and are better for the environment than conventional vehicles. There has been significant interest in promoting these vehicles as a response to environmental and energy security concerns. The Energy Policy Act of 1992 ( P.L. 102-486 , §1913) established individual and business tax incentives for the purchase of alternative fuel and advanced technology vehicles and for the installation of alternative fuel infrastructure. The Energy Policy Act of 2005 ( P.L. 109-58 ) expands these existing tax incentives and creates new ones. Incentives existing prior to P.L. 109-58 include the Electric Vehicle Tax Credit; the Clean Fuel Vehicle Tax Deduction; and tax deduction for the installation of alternative fuel infrastructure. For 2005, a federal tax credit is available worth 10% of the purchase price of an electric vehicle, up to a maximum of $4,000 (26 U.S.C. 30). The credit, which was not extended by the Energy Policy Act of 2005, will be reduced to a maximum of $1,000 in 2006 and will be phased out completely after 2006. For the purchase of alternative fuel vehicles, as well as hybrid electric vehicles, a Clean Fuel Vehicle Tax Deduction (26 U.S.C. 179A) is available. The amount of the deduction is based on the weight of the vehicle. Vehicles under 10,000 pounds gross vehicle weight (i.e., cars and light trucks) qualify for a $2,000 deduction in 2005; those between 10,000 and 26,000 pounds qualify for a $5,000 deduction. Vehicles above 26,000 pounds qualify for a $50,000 deduction. The Energy Policy Act of 2005 terminates this deduction after December 31, 2005, and replaces it with a tax credit (see below). Prior to 2002, hybrid electric vehicles were not considered "clean-fuel vehicles" because the primary fuel for the vehicles is gasoline. However, in May 2002, the Internal Revenue Service (IRS) announced that taxpayers can claim the deduction for qualified hybrids. As of December 2005, eight hybrid models are eligible for the deduction. Businesses that install alternative fuel refueling infrastructure can claim a tax deduction of up to $100,000 (26 U.S.C. 179A). The Energy Policy Act of 2005 eliminates this deduction at the end of 2005 and replaces it with a tax credit (see below). The Energy Policy Act of 2005 expanded and extended the existing tax incentives for nonconventional vehicles. These new incentives are similar to those proposed in the Clean Efficient Automobiles Resulting from Advanced Car Technologies Act (CLEAR ACT, S. 971 ) and the Volume Enhancing Hardware Incentives for Consumer Lowered Expenses Technology Act (VEHICLE Technology Act, H.R. 626 ), as well as legislation discussed in the 108 th Congress. Among other provisions, Sections 1341 and 1342 of the Energy Policy Act of 2005 contain several tax incentives for alternative fuel and advanced technology vehicles. For example, the act replaces the existing clean-fuel vehicle tax deduction with a new tax credit for hybrid vehicles; creates a tax credit for the purchase of lean-burn passenger vehicles; creates a new tax credit for the purchase of fuel-cell vehicles; replaces the existing clean-fuel vehicle tax deduction with an alternative fuel vehicle tax credit; and replaces the existing deduction for the installation of refueling infrastructure with a tax credit. Each of these credits is discussed below; Table 4 summarizes each one. Under the Energy Policy Act of 2005, the existing clean-fuel vehicle deduction for hybrid electric vehicles is replaced with a tax credit after 2005. The amount of the credit is based on several factors. For passenger vehicles, these factors are the fuel economy increase and the expected lifetime fuel savings when compared with a conventional vehicle of comparable weight. To qualify for the credit, a hybrid vehicle must meet certain emissions standards and technical specifications. For heavy-duty vehicles (more than 8,500 pounds), the credit is based on the fuel economy relative to a comparable vehicle, as well as the incremental cost of the hybrid vehicle above the cost of the conventional vehicle. The range of potential credits for each vehicle weight are shown in Table 1 . The hybrid vehicle credit is scheduled to expire at the end of 2009. The American Council for an Energy-Efficient Economy estimates that 2006 tax credits for hybrid passenger vehicles will range from $0 (Honda Insight) to $3,150 (Toyota Prius). However, the IRS has not yet announced the value of the credits for 2006. The Energy Policy Act of 2005 established a tax credit for the purchase of passenger vehicles with "lean-burn" engines. For the most part, diesel-powered vehicles that meet certain emissions and fuel economy standards would qualify for the tax credit, which is structured like the hybrid tax credit and ranges from $400 to $3,400, based on fuel economy and fuel savings. The credit is scheduled to expire at the end of 2010. However, no lean-burn passenger vehicles are available that meet the emission standard. Consequently, no vehicles on the market qualify for the credit, although many observers expect automakers to look for ways to reduce the emissions of such vehicles in future years so that the vehicles can qualify. The Energy Policy Act of 2005 provides a tax credit for the purchase of fuel-cell vehicles. The credit increases with gross vehicle weight, as shown in Table 1 . Passenger vehicles that achieve at least 50% better fuel economy than a comparable conventional vehicle also qualify for an additional tax credit of between $1,000 and $4,000, depending on overall fuel economy. The credit expires at the end of calendar year 2014. However, because of technical and cost concerns, no fuel-cell vehicles are commercially available, and the development of a mass-market fuel-cell vehicle in the near future seems unlikely. The Energy Policy Act of 2005 replaces the existing clean-fuel vehicle tax deduction with a credit for the purchase of a new alternative fuel vehicle (AFV). The new credit is equal to a percentage of the incremental cost of the AFV, subject to certain maximum dollar amounts. The incremental cost is the difference between the higher cost of the AFV and its conventional counterpart. Under the act, the applicable percentage is 50% of the incremental cost plus an additional 30% if the vehicle meets certain emissions requirements. The maximum credit is based on the weight of the vehicle, as shown in Table 3 . The credit expires at the end of 2010. To qualify for the credit, the vehicle is required to be a "dedicated" AFV, meaning that it must not be capable of operating on conventional fuel. This provision is a response to criticisms of previous AFV policies that included "dual-fuel" vehicles. In many cases, dual-fuel vehicles operate solely on gasoline. Because some alternative fuels must be blended with a small amount of gasoline (e.g., ethanol, methanol), vehicles using these fuels qualify for a prorated tax credit. The Energy Policy Act of 2005 replaces the existing deduction for the installation of alternative fuel infrastructure with a tax credit. The credit is equal to 30% of the purchase or installation cost of the refueling property, subject to a maximum dollar amount. For retail property, the maximum credit is $30,000. For residential property, the maximum is $1,000. The credit expires after 2014 for hydrogen infrastructure; the credit for all other fuels expires after 2009. | Alternative fuel and advanced technology vehicles face significant market barriers, such as high purchase price and limited availability of refueling infrastructure. The Energy Policy Act of 2005 (P.L. 109-58) expands and establishes tax incentives that encourage the purchase of these vehicles and the development of infrastructure needed to support them. Among the new provisions are tax credits for the purchase of hybrid vehicles (replacing an existing tax deduction), tax credits for the purchase of advanced diesel vehicles (although it is unclear whether any current vehicles will qualify), and tax credits to expand refueling infrastructure. This report discusses current federal tax incentives for alternative fuel and advanced technology vehicles. It also outlines how the Energy Policy Act of 2005 changes those incentives. This report will be updated as events warrant. |
On December 15, both the House and the Senate approved a conference agreement on theLabor-HHS-Education appropriations bill, H.R. 4577 , which also incorporates otherappropriations measures. The bill makes an across-the-board cut of about $520 million in FY2001defense funding but also provides about $300 million more for some defense programs. Earlier, onOctober 6, House and Senate conferees announced an agreement on the FY2001 defenseauthorization bill, H.R. 4205 / S. 2549 . The House approved theagreement by a vote of 382-31 on October 11, and the Senate approved the measure by a vote of90-3 on October 11. By a vote of 84-9, the Senate waived a point of order that the cost of the bill'sretiree health care provisions exceeds limits on long-term mandatory spending. The Presidentsigned the bill into law ( P.L. 106-398 ) on October 30. On August 9, the President signed theFY2001 defense appropriations bill, H.R. 4576 , into law ( P.L. 106-259 ), and on July13, the President signed the FY2001 military construction appropriations bill, H.R. 4425 ( P.L. 106-246 ). The military construction bill incorporates FY2000 supplementalappropriations for military operations in Kosovo and elsewhere, for counterdrug assistance toColombia, and for some other defense programs. Congress provides funding for national defense programs in several annual appropriationsmeasures, the largest of which is the defense appropriations bill. Congress also acts every year ona national defense authorization bill, which authorizes programs funded in all of the regularappropriations measures. The authorization bill addresses defense programs in almost precisely thesame level of detail as the defense-related appropriations, and congressional debate about majordefense policy and funding issues usually occurs mainly in action on the authorization. Because thedefense authorization and appropriations bills are so closely related, this report trackscongressional action on both measures. The annual defense appropriations bill provides funds for military activities of the Department of Defense (DOD) -- including pay and benefits of military personnel, operation and maintenanceof weapons and facilities, weapons procurement, and research and development -- and for otherpurposes. Most of the funding in the bill is for programs administered by the Department ofDefense, though the bill also provides (1) relatively small, unclassified amounts for the CentralIntelligence Agency retirement fund and intelligence community management, (2) classified amountsfor national foreign intelligence activities administered by the CIA and by other agencies as well asby DOD, and (3) very small amounts for some other agencies. Five other appropriations bills alsoprovide funds for national defense activities of DOD and other agencies including: the military construction appropriations bill, which finances construction of military facilities and construction and operation of military family housing, all administered byDOD; the energy and water development appropriations bill, which funds atomicenergy defense activities administered by the Department of Energy; the VA-HUD-independent agencies appropriations bill, which finances civil defense activities administered by the Federal Emergency Management Agency, activities of theSelective Service System, and support for National Science Foundation Antarctic research; the Commerce-Justice-State appropriations bill, which funds national security-related activities of the FBI, the Department of Justice, and some other agencies; and the transportation appropriations bill, which funds some defense-related activities of the Coast Guard. The Administration's FY2001 budget includes $305.4 billion for the national defense budget function, of which $284.3 billion is requested in the defense appropriations bill. See Table A4 inthe appendix for a breakdown of the Administration national defense budget function request byappropriations bill. Action on major defense funding bills is coming to a close this year. So far, the President hassigned into law the FY2001 defense appropriations, the FY2001 military construction appropriations,and, as part of the military construction bill, FY2000 supplemental appropriations. A conferenceagreement on the annual defense authorization has not yet been reached, but it is expectedimminently. Action on major defense bills to date includes the following: FY2001 congressional budget resolution: The House Budget Committee marked up its version of the annual budget resolution, H.Con.Res. 290 , on March 14,and the full House passed a modified version on March 23. The House measure recommended$306.3 billion in budget authority ($307.3 billion in discretionary funding) for the national defensebudget function. The Senate Budget Committee ordered its version of the bill, S.Con.Res. 101 , to be reported on March 30, recommending $305.8 billion for nationaldefense. On the floor, the Senate approved an amendment that added $4 billion to the total, and theSenate passed the amended measure, recommending $309.8 billion for defense, on April 7. On April13, both the House and the Senate approved a conference agreement on the budget resolution whichincludes $309.9 billion for national defense. FY2000 supplemental appropriations: By early March, the Administration had requested $5.3 billion of FY2000 supplemental appropriations, including $2.3 billion for theDepartment of Defense, of which $2.0 billion was for peacekeeping operations in Kosovo and $98million for support of counter-drug activities in Colombia. On March 9, the House AppropriationsCommittee marked up a bill, H.R. 3908 , that provided $9.1 billion in supplementalappropriations, including $5.0 billion for DOD. The additional money for DOD included $1.6billion for petroleum price increases and $854 million for increased defense health program costs. On March 29, the full House approved an amendment to the bill that provided an additional $4billion for defense programs, all of which was made available through September 30, 2001. TheSenate, however, declined to consider the bill and decided to fold supplemental appropriations forFY2000 into regular FY2001 appropriations bills. Under the conference agreement on the FY2001budget resolution, the extra $4 billion that the House provided for defense could be incorporated intothe regular FY2001 defense appropriations bills. On June 29, the House, and on June 30, the Senate,approved a conference agreement on the FY2001 military construction appropriations bills, H.R. 4425 , which includes supplemental appropriations for military operations inKosovo and elsewhere and for counterdrug assistance to Colombia, and the President signed themeasure into law ( P.L. 106-246 ) on July 13. For a table showing congressional action on DODprograms in the supplemental, see Table A8 in the Appendix. For a full discussion of thesupplemental, see CRS Report RL30457(pdf) , Supplemental Appropriations for FY2000: Plan Colombia,Kosovo, Foreign Debt Relief, Home Energy Assistance, and Other Initiatives , by [author name scrubbed] etal. House version of the defense authorization bill: On May 10, the House Armed Services Committee marked up and ordered to be reported its version of the annual defenseauthorization bill, H.R. 4205 . The bill was considered on the floor on May 17 and 18,and the House approved the measure on May 18. House and Senate conferees announced anagreement on the measure on October 6, and the House approved the conference report by a vote of382-31 on October 11, and the Senate approved it on October 12 by a vote of 90-3. The Presidentsigned the bill into law on October 30 ( P.L. 106-398 ). Senate version of the defense authorization bill: On May 10, the Senate Armed Services Committee marked up and ordered to be reported its version of the FY2001 defenseauthorization bill, S. 2549 . Floor action began on June 6, and the Senate approved themeasure on July 13. House version of the defense appropriations bill: On May 11, the HouseDefense Appropriations Subcommittee marked up its version of the FY2001 defense appropriationsbill ( H.R. 4576 ), and on May 25, the full Appropriations Committee completed itsmarkup ( H.Rept. 106-644 ). The House approved the measure on June 7. A conference agreementon the bill was filed on July 17 ( H.Rept. 106-754 ), the House approved the agreement on July 19,the Senate approved it on July 27, and the President signed the bill into law on August 9 ( P.L.106-259 ). Senate version of the defense appropriations bill: The Senate Appropriations Committee reported its version of the FY2001 Defense appropriations bill, S. 2593 on May 18. The Senate began to consider the bill on the floor on June 8 whenit took up the House version, H.R. 4576 and substituted the text of S. 2593 . The Senate approved the measure on June 13. Military construction appropriations: On May 9, the House and Senate Appropriations Committees marked up different versions of the military construction appropriationsbill - S. 2521 in the Senate and H.R. 4425 in the House. The House passedthe bill on May 16, and the Senate on May 18. The House agreed to a conference report on the billon June 29, and the Senate on June 30. The President signed the bill into law ( P.L. 106-246 ) on July13. For a full discussion, see CRS Report RL30510 , Appropriations for FY2001: MilitaryConstruction , by Mary Tyszkiewicz. Table 1. Status of FY2001 Defense Appropriations The Administration requested a total of $305.4 billion in new budget authority for the national defense budget function in FY2001. There are several ways to putthe overall request into context - one is to compare the request to the amountCongress provided for defense in FY2000; a second is to calculate theinflation-adjusted growth or decline in projected spending from year to year; and athird is to compare the amount the Administration requested for FY2001 with theamount it planned a year earlier to request for FY2001. Compared to FY2000 appropriations for defense: In 1999, Congress appropriated a total of $289.7 billion for national defense in FY2000. Thetotal includes amounts provided in the regular appropriations bills (both as regularappropriations and as emergency appropriations) and $3.8 billion FY2000 funds fora pay raise in the FY1999 Kosovo supplemental appropriations measure ( P.L.106-31 ), offset by an across-the-board reduction of 0.38% imposed by the FY2000consolidated appropriations bill ( P.L. 106-113 ). Compared to the FY2000 enactedlevel, the Administration request represented an increase of $15.7 billion for thenational defense budget function, and of $14.8 billion for the Department ofDefense. The rate of real growth or decline: As Table 2 shows, the Administration plan represented real growth of about 1.3% above inflation comparedto the Administration's estimate of the FY2000 defense funding level (whichincluded, among other things, a $2.3 billion supplemental appropriations request.) The Administration projected that defense spending would decline modestly,adjusted for inflation, in FY2002 and would then be essentially level, again adjustedfor inflation, through FY2005. Longer term White House projections, not shownhere, assume that national defense budget authority will remain flat, adjusted forinflation, through FY2009. Although this represents an end to the decline in defensespending that had been underway since the mid-1980s, many argue that the defensebudget should increase, at least at a modest pace, over the next few years in order tomaintain readiness and permit an increase in weapons modernization (see below fora further discussion). Indeed, Secretary Cohen and other senior officials have agreedthat weapons procurement budgets, in particular, should turn up substantially in thefuture. Long-term Administration defense plans, however, still assumed that budgetswould be flat for the foreseeable future. Compared to the previous year's Administration plan for FY2001: In February 1999, when it presented its FY2000 budget request toCongress, the Administration projected FY2001 funding of $300.5 billion for thenational defense budget function and of $286.4 billion for the Department ofDefense. The February 2000 FY2001 request was $4.9 billion higher for the nationaldefense budget function and $4.7 billion higher for DOD. The funding increasesincluded $2.2 billion to cover increased costs of military contingency operations(mainly peacekeeping in Kosovo) and $1.4 billion to cover increased fuel costs. Inthe past, the Defense Department has often had to absorb such increased costs withinits planned budget, and the decision to add money to cover such expenses representsa significant change in policy. (1) Table 2. National Defense Budget Function andDepartment of Defense Budget, Administration Projections, FY1998-2005 (current and constant FY2001dollars in billions) Sources : U.S. Office of Management and Budget, Historical Tables: Budget of the United States Government, Fiscal Year 2001 , Feb. 2000; CRS calculations based ondeflators from Department of Defense Comptroller. *Note: The FY2000 level represents an Administration estimate that assumes congressional enactment of proposed supplemental appropriations of $2.3 billion. With some notable exceptions, the FY2001 defense request, and the FY2001-2005 long-term plan, reflected the continuation of DOD priorities that hadbeen in place for several years. Significant aspects of the Administration request,including changes from earlier plans, include: Army National Guard and Reserve force levels: Secretary of Defense Cohen decided not to complete reductions in Army National Guard andReserve troop levels that were planned following the 1997 Quadrennial DefenseReview (QDR). The QDR called for a reduction of 45,000 Army Guard and Reservepositions, of which 20,000 were implemented by the end of 1999. As a result, adecision on the remaining 25,000 positions will be deferred pending the outcome ofthe next QDR, to be carried out in 2001. Secretary Cohen explained that ArmyGuard and Reserve forces have taken on much greater responsibility forpeacekeeping and other missions recently. Army "transformation:" The Army has undertaken a major effort to develop and field a more flexible and more easily deployed "mediumweight" force structure. This entails, (1) as an interim step, buying an existingmedium-weight armored vehicle to equip redesigned brigades; (2) acceleratingseveral other weapons programs, such as the Line-of-Sight Anti-Tank missile, theHigh Mobility Artillery Rocket System, the Tactical Unmanned Aerial Vehicle, anda number of command, control, and communications programs; and (3) acceleratingdevelopment of the Future Combat Vehicle (FCV). It also entails reducing otherprograms to offset at least part of the increased costs. Major program reductions,which were a matter of congressional scrutiny, included slowing and redesigning theCrusader artillery program, and eliminating, among other things, the Grizzly engineervehicle and the Wolverine Heavy Assault Bridge. Submarines and other ship-building programs: DOD also made some adjustments in Navy shipbuilding programs - though they were not asextensive as some Members of Congress had expected in the autumn of 1999. Following a Joint Chiefs of Staff review of attack submarine (SSN) force levels,DOD agreed to maintain 55 SSNs in the force, rather than shrink to 50, as had beenplanned. The new FY2001-2005 shipbuilding plan included a reserve of $1.1 billionfor either refueling overhauls of existing SSNs or to convert Trident missilesubmarines into attack submarines carrying large numbers of cruise missiles. Regarding surface combatant ships, the Navy extended development of the newDD-21 destroyer by one year, through FY2005, and it stretched out procurement ofremaining, current-generation, DDG-51 destroyers until then. In a program ofcontinuing interest to Congress, DOD requested no money for LHD amphibious shipprocurement, even though Congress provided partial funding of $356 million for oneship, the LHD-8, in the FY2000 budget. Aircraft programs: DOD made no major changes in fighter aircraft programs, but changes in cargo aircraft procurement were significant. DODrequested 12 C-17 aircraft, rather than 15, as had been planned. Officials expectedthat the decline in U.S. purchases could be made up by British procurement. DODalso requested funds for 4 C-130 aircraft in order, officials said, to avoid temporarilyshutting down the production line, which would cost an estimated $600 million torestart. Some have argued that this vindicates Congress's decision to add funds forC-130s in recent years. The Navy also restructured its trainer aircraftprograms. Missile defense: In its revised long-term budget plan, the Defense Department increased projected funding for National Missile Defense by$2.3 billion over the FY2001-2005 period, to a total of $10.4 billion, saying this willfully support the option of deploying an initial system in Alaska beginning in 2005. DOD also made some changes in theater missile defense (TMD) programs, the mostsignificant being a cut of $859 million, over five years, in the Air Force AirborneLaser (ABL) program. As Congress directed in the FY2000 defense bills, DODincluded separate funding lines for the Theater High-Altitude Area Defense(THAAD) system and for the Navy Theater Wide (NTW) program - both are highaltitude, long-range TMD programs for defense against short- to intermediate-rangemissiles. In presenting the FY2001 defense plan to Congress, Secretary Cohen and other senior officials emphasized one key aspect of the request - the request includes $60.3billion for weapons procurement. The $60 billion weapons budget is particularlyimportant because it has become a litmus test of support for a strong defense. In1995, the Joint Chiefs of Staff urged an increase in procurement funding - then atabout $45 billion - to $60 billion a year beginning in FY1998. This was, theyargued, the minimum level necessary over time to "recapitalize" an inventory ofweapons that would otherwise begin to age very rapidly. The Administrationoriginally committed to reach that level by FY2000, but fell short as money wasreallocated to maintain short-term readiness. Achieving the $60 billion target inFY2001, therefore, became a matter of some political significance. As it has turned out, the $60 billion procurement level is now seen by many defense proponents in Congress as wholly inadequate. In the congressional defensecommittees the issue has been how far short of necessary levels the budget remains,with answers ranging from $20 or $30 billion a year at the low end to $100 billionshort of what is needed at the high end. Early in the year, much of the discussion wasshaped by a study by the Center for Strategic and International Studies (CSIS),entitled Averting the Defense Train Wreck in the Next Millennium , (2) which calculatedthat procurement budgets would have to average $164 billion per year (in FY2000prices) over the next decade to replace the weapons in the current inventory withmore advanced versions as systems reach the ends of their planned service lives. The CSIS study made a number of assumptions that have been questioned. Not all parts of the weapons stock will be replaced any time soon (strategic nuclearmissiles and bombers, for example, are not projected to be upgraded in theforeseeable future, and some will be retired if there is a START III agreement); Armytanks may be replaced some time after 2010, but possibly not with similar types ofweapons; costs of tactical aircraft and of Navy ships may be unlikely to grow as fastin the future as CSIS assumes, since the services will be required to reduce weaponsperformance if necessary to stay within budget constraints; modern precisionmunitions ought to be able to replace older ones on much less than a one-for-onebasis, and many of the newer munitions are much cheaper than older ones; and manyweapons may simply be kept in the inventory much longer than nominal service lifeestimates call for, perhaps with upgrades that are less costly than buying newsystems. Several less extreme estimates of required procurement levels, however, still show a shortfall of some magnitude. The Center for Strategic and BudgetaryAssessments calculated that the Administration's procurement program would costabout $80 billion a year (in FY1999 prices) by the later part of the decade. (3) TheCongressional Budget Office testified in 1999 that it would cost about $90 billion ayear (also in FY1999 prices) to sustain a "steady state" procurement rate - i.e., a rateat which enough major weapons would be bought every year to maintain roughly thecurrent number of weapons in the stock, on the assumption that parts of the force willbe allowed to grow older than has historically been the goal. (4) Most recently, CBOcompleted a broader study of what it called a "steady state" budget - i.e., the amountneeded over the long term to maintain a force of the current size and composition. (5) CBO estimates that a "steady state" budget over the next 15 years would have toaverage about $340 billion a year, in FY2000 prices, of which, as CBO calculated ayear earlier, about $90 billion a year would be for procurement. For its part, the Defense Department has acknowledged that procurement budgets may have to grow further in the future, but senior civilian officials havedisputed the various projections by outside analysts. In congressional testimony inFebruary 2000, Secretary of Defense Cohen stipulated that procurement budgets willhave to grow substantially beyond $70 billion a year in the period after FY2008,when several planned weapons programs are scheduled to begin full scaleproduction. But in testimony before the House Armed Services Committee onSeptember 21, DOD Comptroller William Lynn insisted that the CBO overstatesrequirements because it assumes a one-for-one replacement of current generationweapons with like systems in the future, which is not likely given efforts to transformthe force. (6) A corollary issue concerns whether it will be possible to increase funding for weapons procurement over the next several years without a substantial increase inoverall defense spending. The Clinton Administration assumes that spending onoperation and maintenance (O&M) will level off over the next several years and thatsavings from improved efficiency will be allocated to weapons procurement. Historically, however, projected O&M savings have seldom materialized, and O&Mcosts have continued to grow from year to year. It remains possible that increasedprocurement spending could be financed by reducing the size of the force. For thepresent, however, each of the military services has complained that it is beingoverstretched by the demands of the post-Cold War international environment -debate has focused on whether and how much to increase selected elements of theforce, rather than on where to make cuts. For the past several years, the military services have submitted to the congressional defense committees lists of programs that would be candidates for anyadditional funds made available. These lists have substantially guided congressionaladditions to the defense budget. In 2000, the services submitted "unfunded prioritieslists" amounting to more than $16 billion in FY2001 and well over $80 billion in theFY2001-2005 period - the Ballistic Missile Defense Organization submitted its ownlist. As in the past, priorities were about evenly divided between readiness-relatedaccounts and weapons programs. The FY2001 congressional budget resolution approved by the House on March 23, 2000, provided only $1 billion more for national defense than the Administrationrequested, which would not leave much room for additions to service budgets laterin the process. The House approved $4 billion more for defense as part of theFY2000 supplemental appropriations bill, H.R. 3908 , however. All ofthe extra $4 billion was made available through September 30, 2001, so it wouldrepresent, in effect, an addition to the FY2001 defense budget. Later, the Senateadded $4 billion to its version of the FY2001 budget resolution. These amounts,together with other measures appropriators took subsequently, provided more roomfor Congress to add funds for major weapons programs. Some of the items on service unfunded priorities lists have been particular matters of discussion in Congress. The Army, for example, included proposals torestore funds for programs that were trimmed in order to provide money for themedium-weight force, including Wolverine and Grizzly. The Air Force included aproposal to restore funds for the Airborne Laser, a program that has historically beena matter of congressional interest. Several key issues emerged in Congress over the course of the FY2001 defensedebate, including several matters that carried over from debates in recent years. The Administration requested $305.4 billion in new budget authority for national defense programs - an amount reestimated by CBO to total $305.3 billion.Of this total, $284.5 billion was requested in the defense appropriations bill. Ininitial committee action on the congressional budget resolution, neither the House northe Senate appeared inclined to add much to the Administration request - instead, thepriority in both chambers was to limit total discretionary spending to something lessthat a freeze with growth for inflation. The original House-passed budget resolutionprovided $306.3 billion in budget authority for national defense, just $1 billion morethan the request. The Senate Budget Committee recommended a level of $305.8billion, $500 million above the request. Pressure from defense advocates to provide more for defense was growing in both chambers, however. The House responded by adding $4 billion for defense tothe pending supplemental appropriations bill - in effect an addition to the FY2001funding level. Subsequently, the Senate agreed to an amendment to the budgetresolution to increase the FY2001 level by $4 billion, to $309.8 billion. Theconference agreement provides $309.9 billion, $4.6 billion above the Administrationrequest. See Table A6 in the Appendix for detailed figures through FY2005. The $4.6 billion added to the Administration request allowed Congress some room, at least, to provide funds for selected programs of special interest. Theconference agreement also included a provision that establishes a point of order inthe Senate against measures that would exceed specified levels of funding for defenseand for non-defense discretionary spending - in effect reestablishing so-called"fire-walls" between defense and non-defense appropriations. In the end, thisprovision was, in effect, moot, because Congress later lifted caps on discretionaryspending to accommodate both defense and non-defense increases. Congressional Action: In the past two years, the appropriations committees used a number of devices to increase defense spending substantially while formallyadhering to caps on total discretionary spending. In final action on FY1999appropriations bills, for example, appropriators included in the FY1999Omnibus Consolidated Appropriations Act, P.L. 105-277 , about $21 billion inemergency supplemental appropriations, of which $8.3 billion was for theDepartment of Defense. Last year, in action on FY2000 bills, appropriatorstook several steps to provide additional funds for defense and non-defenseprograms, including (1) providing $1.8 billion in funding for FY2000 pay raisesas emergency appropriations in an FY1999 supplemental appropriations bill; (2)moving the last pay day of the fiscal year for military personnel into FY2001;and (3) designating $7.2 billion in the FY2000 defense appropriations bill asemergency funding. This year, appropriators have taken some similar steps. As noted above, the House added $4 billion in emergency defense funds to the FY2000supplemental appropriations bill, H.R. 3908 , all of which wasmade available through FY2001 - in effect, an addition to the FY2001 defensebudget. The conference agreement on the supplemental (which is included in H.R. 4425 , the FY2001 military construction appropriations bill),includes $1.8 billion of that amount along with some additional funds - see Table A8 in the Appendix for a detailed account of all DOD funds in thesupplemental. The conference agreement on the supplemental also moves thepay date for military personnel back into FY2000, thus freeing up additionaloutlays within the FY2001 discretionary spending caps. Senator Grammobjected to this step and some other related provisions in the supplemental andinsisted that they be reversed. This held up final Senate action on the FY2001defense appropriations bill. The conference agreement on the FY2001 defense appropriations bill also includes additional measures to squeeze extra money into the budget withoutformally violating spending caps. In particular, the bill provides $1,779 millionin emergency FY2000 appropriations. Of this amount, $1.1 billion is for theOverseas Contingency Operations Transfer Fund that provides money foroperations in Kosovo, Bosnia, Southwest Asia and elsewhere, and the remaining$679 million is mainly for programs that were in the House-passed version ofthe FY2000 supplemental but that were removed in conference. The bill alsoincludes a general provision that eliminates $1.1 billion in FY2001 funds for theOverseas Contingency Operations Transfer Fund. So, in effect, the bill providesFY2001 money for contingency operations as in the form of FY2000 emergencyappropriations. If the FY2000 emergency funding is not counted as part of theFY2001 appropriations bill, the conference agreement provides $3.3 billionmore for DOD than the Administration requested. If supplemental funding iscounted, the bill provides an increase of $5.1 billion. Table 3 provides anoverview of the bill by title. Later, however, Congress made an across-the-board cut of 0.22% in all FY2001 discretionary appropriations, including defense, in H.R. 4577 , theLabor-HHS-Education appropriations bill that became a vehicle for severalother appropriations measures at the end of the session. The across-the-boardcut exempted funding for military personnel. In all, the defense reductionamounts to $521 million according to CBO estimates. H.R. 4577 also provided some additional FY2001 funds for defense programs. The majordefense additions are $150 million to repair bomb damage to the USS Cole,$100 million for classified programs in funded through the OverseasContingency Operations Transfer Fund, and $43.5 million for militaryconstruction programs. The bill also includes a measure to facilitate planningfor expansion of the Army's National Training Center at Fort Irwin, California. Table 4 provides an estimate of total FY2001 funding for the National DefenseBudget Function, including amounts provided in H.R. 4577 . Table 3: FY2001 Defense Appropriations, Congressional Action by Title (thousands of dollars) Sources: H.Rept. 106-754 , House Appropriations Committee. a. Senate and Conference levels for procurement do not include C-17 procurement, which was provided instead in Title V, Revolving & Management Funds - the Senate provided$2,478,723,000 and the Conference agreement provides $2,428,723. When C-17 funding isincluded, the appropriations conference agreement provides about $2.5 billion more thanrequested for weapons procurement. b. Includes Defense Health Program, Chemical Weapons Demilitarization, Drug Interdiction, andOffice of the Inspector General. Table 4: FY2001 National Defense Funding by Appropriations Bill (budget authority in millions of dollars) Sources: CRS based on appropriations tables from House Appropriations Committee in the Congressional Record and Congressional Budget Office estimates. Last year, the Administration requested an extensive set of improvements in military pay and benefits, and Congress responded by approving a somewhat moregenerous package. This year, Administration officials focused on fixing perceivedshortcomings in defense health care, and Congress again considered some moreexpansive alternatives. Two inter-related sets of issues have been particular mattersof attention: (1) adjustments in the "TRICARE" program of health benefits formilitary dependents and (2) military retiree health care. The Administration supported two TRICARE reform measures, one to eliminate co-payments for families enrolled in the TRICARE HMO program, called TRICAREPrime, and another to extend a managed care option, called TRICARE PrimeRemote, to family members of military personnel serving more than 50 miles froma military base. The Administration did not formally propose any changes in medicalprograms for military retirees, though the Joint Chiefs and other senior DefenseDepartment officials informally supported at least two measures. One is to extendnationally a test program, called TRICARE Senior Prime, which provides HMO-typecoverage to retirees with Medicare paying part of the cost for those eligible. Asecond is to provide mail-order pharmacy benefits and Medigap coverage to retireesover age 64 where TRICARE Senior Prime is not available. A number ofdemonstration projects to test alternative ways of providing retiree health care areongoing. (7) In Congress, several measures to reform defense health care programs were proposed. (8) The Senate-passed version of the annualdefense authorization billincluded a guarantee that the Defense Department will provide health care for life tomilitary retirees. (For a discussion of current military medical programs and of somealternatives see CRS Issue Brief IB93103, Military Medical Care Services: Questionsand Answers , by Richard A. Best; CRS Report 98-1006 , Military Health Care: TheIssue of "Promised" Benefits , by David Burrelli; and U.S. General AccountingOffice, Statement of Stephen P. Backhus on "Defense Health Care: Observations onProposed Benefit Expansion and Overcoming TRICARE Obstacles" before theHouse Armed Services Committee Military Personnel Subcommittee, GAO ReportT-HEHS/NSIAD-00-129, March 15, 2000.) Congressional Action: The conference agreement on the congressional budget resolution included a section that reserved funds for a possible increase inmilitary retiree health benefits. The amount available, however, was limited to$50 million in FY2001 and $400 million over the FY2001-2005 period. Thisamount was not enough to cover a substantial expansion of retiree health carebenefits. In its version of the defense authorization bill, however, the Senateapproved a guarantee that DOD would provide care benefits to all retirees. Thiswas a key issue in the authorization conference. The House Armed Services Committee (HASC) version of the defense authorization approved expansion of TRICARE Prime Remote, made someadministrative changes in TRICARE, and added some other benefits forTRICARE participants, including a lower limit on catastrophic costs andpayment of some travel expenses. On retiree health care, the HASC billextended current demonstration programs, established a TRICARE Seniorpharmacy program, and recommended an independent panel to propose a"roadmap" for retiree health care that would establish a permanent benefit byFY2004. The Senate Armed Services Committee (SASC) version of theauthorization also extended TRICARE Remote, and it established an extensivepharmacy benefit for all retirees, including those eligible for Medicare, with noenrollment fee or deductible. In floor action on June 7, the Senate approved an amendment to the authorization bill by Senator Warner that would eliminate a provision in currentlaw that makes military retirees eligible for Medicare - i.e., all those over age64 - ineligible for military medical care. The provision would take effect onOctober 1, 2001. In effect, this is a guarantee that the Defense Department willprovide full health coverage for life to retirees. Because this measure wouldexceed limits on mandatory spending if extended beyond the end of FY2004,Senator Warner added a provision that would terminate the program after then- but his intention clearly was that the program, if finally approved by Congress,would continue, with an adjustment in caps on mandatory spending being madeto extend it permanently. The Warner amendment also extended the TRICARESenior Prime demonstration program. The authorization conference agreement makes permanent the guarantees provided by the Warner amendment in the Senate bill, and it establishes aseparate trust fund from which costs of the program will be paid. Once the fundis established, the Defense Department will be required to pay into the fund theactuarily determined cost of future benefits for current personnel. Theconference agreement also provides a nation-wide pharmacy benefit for allbeneficiaries, extends TRICARE remote, eliminates co-payments for TRICAREPrime for active duty family members, and extends the TRICARE Senior Primedemonstration program. The budget effects of increased health care benefits are complex and have been a matter of some confusion, in part because some costs for military retireehealth care benefits that the Defense Department now pays out of annualappropriations will be shifted to a new, "mandatory" account. Table 5 providesthe most recent, though still preliminary, Congressional Budget Office estimateof the budgetary impact of the retiree health care provisions in the conferenceagreement. To summarize: (1) Under current law, the Defense Department is projected to provide $24.8 billion in benefits to military retirees over the ten years from FY2001 throughFY2010, all of which would have to be absorbed within total discretionaryappropriations for DOD. (2) The authorization conference agreement provides an additional $40.4 billion of benefits for retirees, of which $200 million in FY2001 and $1.7 billion inFY2002 will be paid for through regular, "discretionary" DOD appropriations. (3) The remaining $38.5 billion in additional benefits, plus $21.4 billion of the amount that DOD is already providing to retirees (i.e., a total of $59.9 billion),will be provided for retiree benefits as "mandatory" spending, in small partthrough Medicare, but mainly, beginning in FY2003, through a new"Department of Defense Medicare-Eligible Retiree Health Care Fund." (4) Also beginning in FY2003, the Defense Department will make payments to the new fund to reflect the cost of future benefits for current uniformedpersonnel. Through FY2010, these payments will total $29.0 billion. Thisfunding mechanism is known as "accrual accounting," and it has been usedsince FY1985 to finance military retirement costs and has long been used tofinance federal civilian retirement. (5) In all, "discretionary" DOD appropriations will pay $1.9 billion more than under current law in FY2001-2002 for increased retirement benefits, $29.0billion more for health care retirement benefits accrual from FY2003-2010, but$21.4 billion less from FY2003-2010 to reflect the shift of spending on healthcare for retirees beginning in FY2003 to mandatory accounts, for a net increaseof $9.5 billion in discretionary funding over FY2001-2010. (6) Total mandatory spending in the federal budget will increase by $59.9 billion from FY2001 through FY2010 - an amount that has not been offset andthat therefore triggered a point of order against the measure in the Senate undercurrent "pay-as-you-go" budget rules - the Senate waived the point of order bya vote of 84-9. For its part, the appropriations conference agreement provides $963 million above the request for the Defense Health Program - enough, appropriatorsexplained, to implement expanded pharmacy access for retirees as approved inthe House-passed version of the defense authorization bill. The $200 millioncost in FY2001 of the health care provisions in the authorization conferenceagreement was not provided in the appropriations bill, but it may be financedin a number of ways - it could simply be absorbed within the Defense HealthCare program, financed through reprogramming of other DOD funds, or paidfor by later supplemental appropriations by Congress. Table 5: Estimated Costs of Military Retiree Health Care Provisions (current year dollars inmillions) Source : Congressional Budget Office Draft Estimates. *Notes : Non-DOD uniformed personnel include Coast Guard, Public Health Service, andNational Oceanographic and AtmosphericAdministration. DOD will make payments to the Department of Defense Medicare-Eligible Retiree Health CareFund to reflect the costof future benefits for current uniformed personnel. In 1996, the Clinton Administration announced a revised NMD development program, know as the "three-plus-three" plan. Under the plan, development andtesting of a missile defense system would proceed for three years, after which adecision would be made on whether to deploy a system. Then, if a decision wasmade to go ahead, the system could begin operation another three years later. As theplan evolved, the so-called "Deployment Readiness Review" (DRR) was scheduledfor June 2000, and the potential date for an initial deployment was pushed back tocalendar year 2005. This year's debate over national missile defense focused mainlyon whether the President should go ahead with the formal DRR as scheduled orwhether, in view of a series of test failures, the President should leave a decision tohis successor. After a test failure in January and some delays in other parts of theprogram, the DRR was pushed back to late in the summer. Another test failure onJuly 7 further intensified the debate. Finally, on September 1, 2000, PresidentClinton announced that he would leave a decision on the program to his successor. Early in the year, much of the discussion in Congress was shaped by two official reports that raised serious questions about the pace of the NMD developmentprogram. The "National Missile Defense Review," a panel study headed by formerAir Force Chief of Staff General Larry Welch, warned last November that the NMDprogram continues to be a high risk development effort and that additional delayscould further compress the decision-making schedule. The Welch panel did notrecommended deferring the DRR, however. The annual report of the Pentagon'sDirector of operational testing, released in February, was more critical, saying thatthe NMD program was being driven by an "artificial decision point." More recently,a bitter debate arose about the adequacy of planned tests of the planned NMDsystem's ability to discriminate between warheads and decoys. MIT scientist TedPostol and others have argued that the test program has been deliberately "dumbeddown" to avoid challenging tests of discrimination. The international reaction to the U.S. NMD deployment plan was also a matter of debate. The Administration has pursued negotiations with Russia on changes inthe 1972 Anti-Ballistic Missile (ABM) Treaty that would be necessary to permit adeployment without abrogating the agreement. The new Russian leadership hascontinued to oppose deployment, however, and some congressional leaders havepromised to resist any measure that would extend the ABM Treaty. TheAdministration has also had a hard time persuading key allies of the wisdom of anNMD deployment. (For an overview of these and other NMD issues, see CRS Issue Brief IB10034, National Missile Defense: Issues for Congress , by [author name scrubbed]and [author name scrubbed].) The cost of the system also remains an issue. A recent review by the Congressional Budget Office projects somewhat higher deployment costs than theAdministration has estimated. CBO estimates that the initial, limited system that theAdministration is planning would cost about $30 billion, in FY2000 prices, todeploy and operate through FY2015 - a comparable Administration cost estimate,according to CBO, is about $26 billion. CBO also estimates that the expanded"Capability 2" and "Capability 3" systems that the Administration is planning wouldincrease total costs to about $49 billion through FY2015, with an additional $10-11billion needed for a space-based infrared sensor system that has other uses as well - there is no comparable Administration projection. (9) Congressional Action: HASC added $85 million for NMD risk reduction measures, and SASC added $129 million. HASC also included a measure totransfer management of the Space-Based Infrared System-Low (SBIRS-Low)from the Air Force to the Ballistic Missile Defense Organization. This reflectsongoing criticism of Air Force management of the program by some missiledefense advocates. The House Appropriations Committee did not increaseNMD funding. The Senate Appropriations Committee added $129 million forNMD risk reduction and another $10 million to accelerated radar development. The conference agreement on the appropriations bill provides $135 millionmore for risk reduction. The authorization conference agreement provides $129million for risk reduction. This year's key congressional debate about NMD, however, concerned the adequacy of the test program rather than money. On July 13, by a 52-48 vote,the Senate rejected an amendment to the defense authorization bill offered bySenator Durbin that would have required operationally realistic testing againstcountermeasures and an independent assessment of such testing by the Welchpanel. Last year, Congress rejected an Administration proposal to combine funding for the land-based Theater High-Altitude Area Defense (THAAD) system and the NavyTheater-Wide (NTW) program, and the status of the two programs was an issue inCongress again this year. Under the current Administration plan, THAAD will bepursued first, followed by NTW, unless the THAAD program experiencesunexpected problems. Congress has traditionally supported an acceleration of theNTW program, however, and some Navy officials claim that the program is ready toproceed more rapidly than the Administration is planning. Ballistic Missile DefenseOrganization (BMDO) officials have proposed a program to accelerate NTW thatwould cost an additional $2.2 billion over the next five years. Other TMD programs have also been a focus of attention, including the Medium Extended Air Defense System (MEADS) and the Patriot Advanced Capability-3(PAC-3) system. MEADS is a cooperative program with allies, and somecongressional committees have been doubtful about the long-term affordability of theprogram. Costs of PAC-3 have increased dramatically, and DOD is trying torestructure the program to reduce the price, a matter of some interest in Congress. See Table A4 , in the appendix, for a complete list of TMD and NMD programs andrequested funding. Funding for the Air Force Airborne Laser (ABL) program wasalso be an issue. (For an overview of TMD programs see CRS Issue Brief IB98028, Theater Missile Defense: Issues for Congress , by [author name scrubbed]. For an overviewof the ABL program, see CRS Report RL30185(pdf) , The Airborne Laser Anti-MissileProgram , by [author name scrubbed] and [author name scrubbed].) Congressional action: HASC, SASC, the House Appropriations Committee (HAC), and the Senate Appropriations Committee (SAC) all added money forthe Navy Theater Wide program, though in varying amounts - HASC added $25million, SASC and SAC $60 million, and HAC $130 million. Theappropriations conference agreement adds $80 million, as does the authorizationconference agreement. HASC, SASC, and SAC also added funds for theAirborne Laser to restore the program to about the level planned last year, butHAC added no funds. The appropriations conference agreement adds $85million, and a general provision specifically earmarks $233.6 million, the totalprovided, for the ABL; the authorization conference also adds $85 million forABL. HASC also approved an amendment offered by Representative CurtWeldon to transfer management of the ABL to the Ballistic Missile DefenseOrganization. The appropriations conference agreement provides ABL fundingto the Air Force. On a potentially controversial related program, SASC added$41 million for Army space control technology development, including theKinetic Energy Anti-Satellite program. HASC, SASC, HAC, and SAC alladded money for laser R&D programs. On MEADS, the appropriationsconference agreement follows the House bill, which cut funding by $10 million- Administration officials lobbied against the cut, warning that it would disruptadministration of the program and endanger allied funding. The Administration requested funds to procure 12 C-17 cargo aircraft in FY2001, rather than the 15 that had been planned. The hope was that the gap couldbe made up by reaching a purchase or lease agreement with Britain for severalaircraft. Congress has added funds for C-130 aircraft in recent years, but this year theAdministration requested funding for 4 aircraft. (For a discussion of the C-17program, see CRS Issue Brief IB93041, C-17 Cargo Aircraft Program , by[author name scrubbed].) Congressional Action: HASC and HAC added $76 million to procure one additional KC-130J aircraft for the Marine Corps. SASC and SAC added $165million for one additional KC-130J and one additional EC-130J for the AirForce, and the appropriations conference agreement provides the same amounts. All of the committees approved continued funding for the C-17, though SACproposed establishing a "National Defense Airlift Fund" and provided the C-17funding in that account rather than in the Air Force Aircraft Procurementaccount. SAC intends the new airlift fund to operate like the long-establishedNational Defense Sealift Fund, to which money to procure and operate sealiftships is appropriated. HAC made some relatively minor adjustments in theallocation of C-17 funds. The appropriations conference agreement establishesthe National Defense Airlift fund, as SAC recommended, and provides fundingfor C-17 procurement and contractor support in that new account. The Administration did not request funds to purchase additional F-15 and F-16 aircraft. In the past, Congress has added funds for both aircraft to ensure thatproduction lines continue. Recently, Lockheed has received a large order for F-16sfrom the United Arab Emirates, and sales elsewhere are substantial. Foreign F-15orders have not been so strong, however, and the production line in St. Louis mayshut down without additional purchases. Under similar conditions, Congress addedfunds for 5 aircraft last year. Congressional action: HASC added funds for two F-15s and three F-16s. HAC added funds for five F-15s. SASC did not provide funds to procure eitheraircraft, while SAC added funds for 6 F-16s. All committees added somemoney for aircraft modifications and R&D. The appropriations conferencereport provides $400 million to procure five F-15s and $122 million to procurefour F-16s. The authorization conference agreement provides $150 million fortwo F-15s and $52 million for two F-16s. The big three theater aircraft modernization programs are the Navy F/A-18E/F, the Air Force F-22, and the multi-service Joint Strike Fighter. The F-22 was a focusof extensive debate last year. This year, the Administration has requested funds toprocure 10 aircraft, though the status of the testing program remains a matter ofcongressional interest. Now the JSF is becoming a focus of particular attention inCongress as development proceeds. The General Accounting Office has raisedquestions about the development schedule, but program managers insist that theschedule is appropriate. (10) This summer, DODofficials reportedly were consideringwhether to split orders for the aircraft between Boeing and Lockheed, no matterwhich one wins the design competition currently underway, but finally decided notto split the program. Senator Feingold has continued to raised questions about theF/A-18E/F program. (For an overview of all three programs and references to otherCRS products, see CRS Issue Brief IB92115, Tactical Aircraft Modernization: Issues for Congress , by [author name scrubbed].) Congressional action: The Joint Strike Fighter (JSF) program was a focus of considerable attention in all of the defense committees. The SASCSubcommittee on Airland Forces initially considered measures that might havereduced JSF funding if the program continued to experience delays. Aftermeeting with Secretary Cohen, however, the full committee decided not toimpose any legislative language limiting the program. The committee-approvedbill eliminated $596 million requested for engineering and manufacturingdevelopment (EMD) - the final stage in a weapon's design - and increasedfunding for demonstration and validation - the earlier R&D stage - by $424million. HASC provided requested funding for EMD, but included languagerequiring the Secretary of Defense to certify that JSF technology is matureenough to warrant beginning EMD. HAC reduced EMD funding by $300million and increased demonstration and validation funding by $150 million. SAC followed the SASC approach, though it provided slightly less money fordemonstration and validation. The appropriations and authorization conferenceagreements provide $203 million for EMD, $393 million below the request, and$486 million for demonstration and validation, $225 million above the request. Appropriations conferees explained that this simply reflects an acknowledgeddelay of three months in beginning the EMD phase. The authorizationconference approved the same shift of funding from EMD to DEM/VAL. (See Table 6 for a summary of congressional action on JSF funding). On otherprograms, HASC reduced requested F/A-18E/F procurement by three aircraft(from 42 to 39). All of the committees supported F-22 funding as requested,and SASC included a provision that would raise the legislatively mandated costcap on F-22 R&D by 1%. The appropriations and authorization conferencesagreements provide funds for 42 F-18s, as requested, and match the request forF-22 procurement and R&D. The authorization conference agreement alsoraises the cost cap on F-22 R&D by 1.5%. Table 6: Congressional Action on FY2001 Joint Strike Fighter Funding (budget authority in millions of dollars) Notes : Dem/Val refers to "Demonstration and Validation." EMD refers to "Engineering and Manufacturing Development." The status of the V-22 tilt-rotor aircraft, a system being built mainly for the Marine Corps, has been a matter of some discussion in the wake of a disastrousaccident on April 8 in which 19 Marines were killed. During the BushAdministration, Congress resisted efforts by the Office of the Secretary of Defense- against the wishes of the Marine Corps - to terminate the program. Subsequently,the Clinton Administration has continued the development program, and Congresshas remained supportive, occasionally adding money to Administration requests. Congressional action: None of the committees reduced V-22 funding, except for a minor reduction by SAC. The appropriations conference report makes noreduction from the request. The authorization conference also approves plannedprocurement. A key issue early this year was whether Congress would continue to provide funds on an "incremental" basis to purchase LHD-8, a large-deck amphibious ship. Last year, Congress provided $356 million as a down-payment for the $1.8 billionship, but the Administration did not request any money in the FY2001 budget, andalso did not include funds in future Navy budget projections. Later in the year, a keyissue became whether to provide requested funds for two LPD-17-class amphibiousships. Submarine production was also an issue, with a decision pending on whetherto convert 4 Trident missile submarines into cruise missile carriers, and the Navybeginning to argue that 68 submarines are needed to fulfil current requirements. (Fora general discussion of attack submarine issues, see CRS Report RL30045, NavyAttack Submarine Programs: Background and Issues for Congress , by RonaldO'Rourke.) The Navy has also begun to argue more and more explicitly for anincrease in the overall size of the force beyond the planned 300 ships, and therecontinues to be some sentiment on the congressional defense committees to the effectthat planned shipbuilding rates are too low. (For a discussion of shipbuilding issues,see CRS Report RS20535, Navy Ship Procurement Rate and the Planned Size of theNavy: Background and Issues for Congress , by [author name scrubbed].) Congressional action: SASC and SAC added $460 million in incremental funding for LHD-8. SAC also eliminated $1.5 billion buy two LPD-17-classamphibious ships, complaining that the design is not stable and that costs areclimbing. Instead, SAC provided $179 million in advance procurement for twoships to be purchased in FY2002 and $285 million for cost growth in the firstfour ships that have already been ordered. Both HASC and SASC authorizeda five-year block purchase of New Attack Submarines, reflecting a desire toensure adequate funding for the current program to split work between NewportNews Shipbuilding in Virginia and General Dynamics Electric Boat Divisionin Connecticut. The appropriations conference agreement provides $460million for LHD-8, and, in a major change to the Administration request, itlargely follows the Senate on the LPD-17 - i.e., it eliminates $1.5 billion toprocure two ships and instead provides $560 million only for advanceprocurement. The conference report also specifically authorizes continuedincremental funding for LHD-8. The authorization conference agreement alsoapproves $460 million in incremental funding for LHD-8, but, in contrast to theappropriators, authorizers approved the full $1.5 billion requested to procuretwo LPD-17s. The Army plan to develop a new medium weight force has been a matter of some scrutiny in congressional hearings. Some legislators have asked whether alighter, more deployable force can also possess the firepower and survivabilitynecessary for higher intensity conflicts. The main questions, however, concernwhether planned programs have been adequately thought through and reviewed,whether the schedule is achievable, and whether adequate funds are available. Armyleaders acknowledge a shortfall in long-term funding for the program. Somelegislators have urged that funds be restored for programs the Army trimmed in itseffort to find money for the medium weight force. On an indirectly related issue, Congress has been particularly interested in helicopter procurement plans. The Comanche scout helicopter continues to be a highpriority for the Army - Congress has, in the past, supported the program in the faceof efforts by the Office of the Secretary of Defense to slow it down, and thereremains some concern that the program may again be slowed by funding constraints. Congress has also, in the past, supported higher than requested production ofBlackhawk (UH-60) utility helicopters. Congressional action: HASC and SASC both restored funds for the Army "Grizzly" and "Wolverine" programs - i.e., programs that were cut to fund themedium weight force. HAC and SAC restored funds for the Wolverine programin the FY2001 defense appropriations, and the House added funds for Grizzlyto FY2000 supplemental appropriations. Though it did not revise funding,SASC expressed concern about potential delays in the Crusader self-propelledartillery program - an effort to lighten the Crusader is a part of the Armytransformation program. SAC went much further, reducing funding for theCrusader program from $355 million to $200 million, and instructing that theprogram be redirected to develop an entirely new, lighter vehicle compatiblewith the Army transformation initiative. On the whole, Congress has proved tobe very supportive of the Army transformation effort. HASC, SASC, and SACadded some funds for Army transformation-related programs, while HAC addedmuch more, including $800 million to equip a second brigade withmedium-weight equipment. SASC, however, included a provision that theArmy strongly opposed requiring a side-by-side evaluation of alternativearmored vehicles for the interim medium-weight brigade. The appropriations conference agreement (1) restores funds for the Wolverine Heavy Assault Bridge, and another bill provides funds for Grizzly as FY2000supplemental appropriations; (2) provides the full $355 million requested forCrusader, but prohibits obligation of the funds until 30 days after DOD submitsan analysis of alternatives to Congress; (3) following HAC, provides $800million above the request for a second Army medium-weight brigade andincludes other funds to accelerate acquisition of a light-weight armored vehicle;and (4) adds funds for 8 UH-60 Blackhawk helicopters and fully fundsComanche. The authorization conference agreement provides $750 million foradditional procurement and R&D on medium-weight armored vehicles. Theauthorization conference also follows SASC, however, in requiring the Armyto carry out a test program to compare currently deployed armored vehicles withnew wheeled vehicles that the Army wants to buy before a third medium weightbrigade can be outfitted. Congressional support for an acceleration of theArmy's transformation program is perhaps the biggest single story in this year'sdefense debate, though SASC's insistence that the Army evaluate currenttracked armored vehicles for the medium-weight force may slow the program. Last year, in the wake of evidence of security lapses at Department of Energy (DOE) facilities, Congress included in the defense authorization bill a measureestablishing an independent agency, called the National Nuclear SecurityAdministration (NNSA), within DOE to oversee counterintelligence and security. Though it initially objected to the proposal, the Administration has now selected adirector for the agency. Congress has continued to review implementation of the newsecurity regime, and DOE security may remain an issue this year. (For a discussionof nuclear weapons security issues, see CRS Report RL30143 , China: SuspectedAcquisition of U.S. Nuclear Weapon Data , by [author name scrubbed]. For a discussion ofDOE reorganization, see CRS Issue Brief IB10036, Restructuring DOE and ItsLaboratories: Issues in the 106th Congress , by William C. Boesman.) Congressional action: HASC imposed some new constraints on DOE funding under its jurisdiction, pending submission of a detailed program forimplementation of the NNSA. The SASC version of the bill included a separatetitle, Title XXXI, that would establish regulations governing the NNSAintended to ensure the agency's independence from the Secretary of Energy. Among other things, provisions would (1) set a specific term for the first headof the agency, (2) permit the President to dismiss the agency head only forinefficiency, neglect of duty, or malfeasance, (3) limit the ability of theSecretary of Energy to reorganize, abolish, alter, consolidate, or discontinue anyorganizational unit or component of the NNSA, and (4) prohibit pay of anyDOE employee assigned duties both within NNSA and within the rest of DOE. Several Senators objected to these restrictions, but subsequent further securitybreaches at the Los Alamos lab headed off any challenges on the floor. Theauthorization conference agreement includes the Senate-passed provisions withsome very slight, technical revisions. The Administration has requested $458 million in the Defense Department for the Cooperative Threat Reduction (CTR) program that provides demilitarizationassistance to states of the former Soviet Union. The Department of Energy budgetalso includes almost $200 million for related DOE programs - $150 million for theMaterials Protection, Control, and Accounting (MPC&A) program, $22.5 million forInitiatives for Proliferation Prevention (IPP), and $17.5 million for the Nuclear CitiesInitiative (NCI). In the past, Congress has scrutinized the CTR and related programsclosely. Last year, Congress reduced funds for IPP and NCI and prohibited the useof CTR funds to construct chemical weapons destruction facilities in Russia andinstead provided that funds should be used only to improve the security of chemicalweapons stocks. This year, the Administration is again requesting funds for chemicalweapons destruction facilities. (For an overview, see CRS Report 97-1027 , Nunn-Lugar Cooperative Threat Reduction Programs: Issues for Congress , by AmyF. Woolf.) Congressional action: HASC eliminated $35 million requested for chemical weapons destruction in Russia, while SASC approved the funding providedRussia guarantees long-term financing for the program and meets some otherconditions. SASC also imposed some conditions on Nuclear Cities Initiativefunding. SAC directed that $25 million of the funds provided be used continuea program to dismantle and dispose of Russian nuclear submarines. Theappropriations conference agreement provides $443 million for CTR, and,following SAC, allocates $25 million for submarines. The conferenceagreement also follows the House authorization and eliminates the $35 millionrequested for chemical weapons demilitarization. The authorization conferenceagreement also approves $443 million for CTR. In all, the FY2001 budget request includes $4.2 billion for ongoing military contingency operations in Kosovo, Bosnia, and the Persian Gulf. The $2 billionincluded for Kosovo was potentially a matter of some debate. Allied burdensharingin Kosovo, in particular, has been a contentious issue. (For an extensive discussion,see CRS Report RL30457(pdf) , Supplemental Appropriations for FY2000: PlanColombia, Kosovo, Foreign Debt Relief, Home Energy Assistance, and OtherInitiatives , by [author name scrubbed], et al.; CRS Issue Brief IB98041, Kosovo and U.S.Policy, by [author name scrubbed] and [author name scrubbed]; CRS Report RL30398(pdf) , NATOBurdensharing and Kosovo: A Preliminary Report , by [author name scrubbed]; CRS Issue Brief IB10027, Kosovo: U.S. and Allied Military Operations , by Steven R. Bowman; andCRS Issue Brief IB94040, Peacekeeping: Issues of U.S. Military Involvement , byNina Serafino. Congressional action: In the Senate, FY2000 funding for Kosovo peacekeeping was added to FY2001 Military Construction bill, and that became the focusdebate over the mission. On May 18, however, the Senate eliminated from thebill a measure sponsored by Sen. Byrd to require the withdrawal of U.S. troopsfrom Kosovo after July 1, 2001, unless Congress authorizes continueddeployment. In the House, the issue was addressed in action on the defenseauthorization bill. On May 17, the House approved an amendment sponsoredby Representatives Kasich, Shays, Frank, Condit, and Bachus that would requirethe withdrawal of U.S. troops from Kosovo by April 1, 2001 unless thePresident certifies that U.S. allies have met certain burdensharing commitments. This appears to be a major issue in the authorization conference. All of theFY2001 defense bills, however, have approved requested funding forcontingency operations in Kosovo and elsewhere. The appropriationsconference agreement provides requested funding, with minor adjustments toreflect reduced force levels in Bosnia, though $1.1 billion of the total providedfor contingency operations is designated as FY2000 emergency appropriations. The authorization conference agreement does not include the House-passedmeasure that would require troop withdrawals from Kosovo, though it doesinclude extensive reporting requirements concerning allied burdensharing. Conferees also warned that Congress may mandate troop withdrawals in thefuture if allies fail to meet their commitments. In January, the White House announced an agreement with the government of Puerto Rico to resolve the issue of Navy live-fire testing on the island of Vieques. The plan calls for holding a referendum sometime between August 2000 and January2001 on the future of Navy activities on the island, a $40 million economicdevelopment program for the island, and, depending on the outcome of thereferendum, either transfer of Navy property to the General Services Administrationfor cleanup and disposal or an additional $50 million economic developmentprogram. Implementing the President's plan would require congressional approvalof land-transfer legislation, the initial $40-million funding request for Vieques, and(if the referendum supports continued training on the island) the additional$50-million funding request for Vieques. The House Appropriations Committeeincluded $40 million for Vieques in its version of the FY2000 supplementalappropriations bill ( H.R. 3908 ). (For a further discussion see CRS Report RS20458 , Vieques, Puerto Rico Naval Training Range: BackgroundInformation and Issues for Congress , by [author name scrubbed].) Congressional action: SASC supported most elements of the Administration's agreement on Vieques, but HASC did not. SASC authorized both the $40million development program and, with conditions, the additional $50 million,though it did address a part of the agreement transferring land on the oppositeside of the island from the firing range to Puerto Rico. HASC approved therequested $40 million, but not the additional $50 million, and it included aprovision prohibiting transfer of land on the opposite side of the island if thereferendum rejects continued live-fire training. On May 18, however, the fullHouse approved an amendment by Representative Skelton repealing the HASCprovisions. The authorization conference agreement includes measures toimplement the Administration plan. Social issues, such as abortion, gays in the military, and the role of women in the armed forces, have frequently been matters of debate in defense funding bills inrecent years. Two years ago, gender integrated training was a major issue. Last yearCongress debated whether to lift a ban on abortions in military hospitals overseas. This year, gays in the military is again a focus of attention, though there has not beenany specific proposal in Congress to revise current policy. Congressional action: The HASC military personnel subcommittee failed, on a tie vote, to approve an amendment by Representative Sanchez to remove theprohibition on abortions in military hospitals abroad, and the full committeelater rejected the same amendment. On May 18, the full House rejected asimilar Sanchez amendment. HASC also approved an amendment offered byRepresentative Bartlett to require Congress to be notified 120 days beforeimplementation of any plan to allow women to serve on Navy submarines. OnJune 20, the Senate tabled, by a 50-49 vote, an amendment to the authorizationbill by Senators Murray and Snowe to repeal the restriction on use of militaryfacilities for privately funded abortions. Secretary of Defense Cohen has again urged Congress to approve more rounds of military base closures, now starting in 2003. Officials argue that cuts in thedefense infrastructure have lagged far behind cuts in the size of the force and thatfunding for major weapons programs in the future depends on improving efficiencyover the next few years. For the past three years, Congress has rejected additionalbase closure rounds. In part, opponents have complained that the White Housepoliticized the base closure process in 1995 when it acted to keep aircraftmaintenance facilities in Texas and California open as privately run operations afterthe Base Closure Commission had recommended their closure. (For a discussion, see CRS Report RL30440 , Military Base Closures: Where Do We Stand?, by David E.Lockwood; and CRS Report RL30051 , Military Base Closures: Time for AnotherRound? , by [author name scrubbed].) Congressional action: Neither SASC nor HASC addressed the issue of base closures, and on June 7, by a vote of 35-63, the Senate rejected an amendmentto the authorization bill by Senators Levin and McCain to authorize additionalclosure rounds in 2003 and 2005. In recent years, must-pass defense bills, particularly the defense authorization, have been used as a vehicle for measures regarding technology transfers to China andother China policy matters, and it was widely expected that security relations withTaiwan, in particular, could be a matter of debate this year. Earlier this year, theHouse approved H.R. 1838 , the Taiwan Security Enhancement Act, thatwould require expanded U.S.-Taiwan military exchanges and establishment of directmilitary communications and that would mandate annual reports on the securitysituation in the Taiwan Strait. The bill as passed did not mandate sale of particularkinds of weapons to Taiwan, but China reacted very negatively to the measure andwarned that it would "respond strongly" if advanced weapons were sold to Taiwan. The Senate has not yet taken up its version of the bill, S. 693 . OnFebruary 21, the PRC government issued a White Paper, "The One-China Principleand the Taiwan Issue," which offered a mix of conciliatory gestures and a newominous-sounding threat that if Taiwan authorities indefinitely delay cross-Straittalks, this may prompt use of force. (For an overview, see CRS Issue Brief IB98018, China-U.S. Relations , by Kerry B. Dumbaugh; CRS Issue Brief IB98034, Taiwan:Recent Developments and U.S. Policy Choices , by Kerry B. Dumbaugh; CRS Report RS20365 , Taiwan: Annual Arms Sales Process , by [author name scrubbed]; CRS Report RS20483, Taiwan: Major U.S. Arms Sales Since 1990 , by [author name scrubbed]; CRS Report RL30341 , China/Taiwan: Evolution of the "One China" Policy - KeyStatements from Washington, Beijing, and Taipei , by [author name scrubbed]; and CRS Report RL30379(pdf) , Missile Defense Options for Japan, South Korea, and Taiwan: AReview of the Defense Department Report to Congress , by [author name scrubbed], ShirleyA. Kan, and [author name scrubbed].) Congressional action: HASC urged the Administration to establish a Center for the Study of Chinese Military Affairs at the National Defense University, as wasauthorized last year. But China policy in general was not addressed this year'sdefense bills. All of the military services have been pursuing changes in military technology that have been loosely described as elements of a "revolution in military affairs." Periodically, some Members of Congress have urged greater efforts to pursue radicalchanges in weaponry and in military doctrine, but with few specific proposals. Thisyear, Senate Armed Services Committee Chairman John Warner has joined thediscussion, urging the services to pursue development of unmanned systems, both forground and for aerial combat. In statements to the press, Senator Warner has saidthat he plans to set a goal of having one-third of all deep strike aircraft unmanned by2010 and one-third of all ground combat vehicles unmanned by 2015. (11) This wouldrequire dramatic changes in current military R&D programs. Congressional action: SASC cited its interest in harnessing new technologies as a rationale for several measures, including increased funding for unmannedaerial vehicles for surveillance and related missions (though not for combat),increased funding for counter-terrorism and protection against cyber-warfare,an increased R&D funding. SASC also included a provision requiring theDefense Department to develop a plan aimed at meeting the ambitious goals foruse of unmanned combat systems that Senator Warner laid out - i.e., thatunmanned systems will constitute one-third of deep-strike aircraft by 2010 andone-third of ground combat vehicles by 2015. The authorization conferenceagreement approves funds for a number of programs designed to strengthendomestic defenses against terrorism, biological weapons, and informationwarfare and to encourage development of advanced technologies. Theconference agreement also includes the Senate provisions on the use ofunmanned combat systems. H.Con.Res. 290 (Kasich) A concurrent resolution establishing the congressional budget for the UnitedStates government for FY2001, revising the congressional budget for the UnitedStates government for FY2000, and setting forth appropriate budgetary levels foreach of fiscal years 2002 through 2005. Ordered to be reported, March 14, andreported by the House Budget Committee ( H.Rept. 106-530 ), March 20, 2000. Approved by the House, with amendments, (211-207), March 23, 2000. Taken up bythe Senate, which substituted the text of S.Con.Res. 101 , and passed bythe Senate (51-45), April 7, 2000. Conference report filed ( H.Rept. 106-577 ), April12, 2000. Conference report approved by the House (220-208) and the Senate(50-48), April 13, 2000. S.Con.Res. 101 (Domenici) An original concurrent resolution setting forth the congressional budget for theUnited States government for fiscal years 2001 through 2005. Ordered favorablyreported by the Senate Budget Committee, March 30, 2000. Considered by theSenate, April 4-7, 2000. Incorporated as a substitute amendment into H.Con.Res. 290 and approved by the Senate (51-45), April 7, 2000. H.R. 3908 (C.W. Bill Young) An original bill making emergency supplemental appropriations for the fiscalyear ending September 30, 2000, and for other purposes. Reported by the HouseCommittee on Appropriations ( H.Rept. 106-521 ), March 14, 2000. Approved by theHouse of Representatives, with amendments (263-146), March 30, 2000. H.R. 4205 (Spence) A bill to authorize appropriations for FY2001 for military activities of theDepartment of Defense and for military construction, to prescribe military personnelstrengths for FY2001, and for other purposes. Ordered to be reported by the ArmedServices Committee, May 10, 2000. Reported by the Armed Services Committee( H.Rept. 106-616 ), May 12, 2000. Considered by the full House, May 17-18, 2000. Approved by the House (353-63), May 18, 2000. Senate took up H.R. 4205 , substituted the text of S. 2549 , as amended, and approved H.R. 4205 (97-3), July 13, 2000. Conference agreement ordered to bereported ( H.Rept. 106-945 ), October 6, 2000. Conference report approved by theHouse (382-31), October 11, 2000. Conference report approved by the Senate (90-3),October 12, 2000. President signed the bill into law ( P.L. 106-398 ), October 30,2000. S. 2549 (Warner) A bill to authorize appropriations for FY2001 for military activities of theDepartment of Defense and for military construction, to prescribe military personnelstrengths for FY2001, and for other purposes. Ordered to be reported by the ArmedServices Committee, May 9, 2000. Reported by the Senate Armed ServicesCommittee ( S.Rept. 106-292 ), May 12, 2000. Considered by the Senate, June 6, 7,8, 14, 19, 20, and 30, and July 12 and 13, 2000. Senate took up H.R. 4205 , substituted the text of S. 2549 , and approved H.R. 4205 (97-3), July 13, 2000. H.R. 4576 (Jerry Lewis) Making appropriations for FY2001 for the Department of Defense and for otherpurposes. Approved by the House Defense Appropriations Subcommittee, May 10,2000. Approved and ordered reported by the House Appropriations Committee( H.Rept. 106-644 ), May 25, 2000. Approved by the House (367-58), June 7, 2000. Senate took up H.R. 4576 , deleted all after the enacting clause andsubstituted the text of S. 2593 as reported by the Senate AppropriationsCommittee, June 8, 2000. Considered by the full Senate June 8-9, and 12-13, 2000. Approved by the Senate (95-3), June 13, 2000. Conference agreement filed ( H.Rept.106-754 ), July 17, 2000; approved by the House (367-58), July 19, 2000; approvedby the Senate (91-9), July 27, 2000. President signed the bill into law ( P.L. 106-259 ),August 9, 2000. S. 2593 (Stevens) An original bill making appropriations for the Department of Defense for thefiscal year ending September 30, 2001, and for other purposes. Reported by theSenate Appropriations Committee ( S.Rept 106-298 ), May 18, 2000. Senatesubstituted the text of S. 2593 into H.R. 4576 , June 8,2000. CRS Issue Brief IB93056. Bosnia: U.S. Military Operations , by Steven R. Bowman. CRS Issue Brief IB96022. Defense Acquisition Reform: Status and Current Issues , by [author name scrubbed]. CRS Issue Brief IB98018. China-U.S. Relations, by Kerry B. Dumbaugh. CRS Issue Brief IB92056. Chinese Proliferation of Weapons of Mass Destruction: Current Policy Issues , by [author name scrubbed]. CRS Issue Brief IB87111. F-22 Aircraft Program , by [author name scrubbed]. CRS Issue Brief IB10012. Intelligence Issues for Congress , by Richard A. Best. CRS Issue Brief IB98041. Kosovo and U.S. Policy, by [author name scrubbed] and JulieKim. CRS Issue Brief IB10027. Kosovo: U.S. and Allied Military Operations ; by Steven R. Bowman. CRS Issue Brief IB93103. Military Medical Care Services: Questions and Answers , by Richard A. Best. CRS Issue Brief IB85159. Military Retirement: Major Legislative Issues , by Robert Goldich. CRS Issue Brief IB10034. National Missile Defense: Issues for Congress , by [author name scrubbed] and Amy Woolf. CRS Issue Brief IB98038. Nuclear Weapons in Russia: Safety, Security, and Control Issues , by [author name scrubbed]. CRS Issue Brief IB94040. Peacekeeping: Issues of U.S. Military Involvement , by Nina Serafino. CRS Issue Brief IB10036. Restructuring DOE and Its Laboratories: Issues in the 106th Congress ; by William C. Boesman. CRS Issue Brief IB92115. Tactical Aircraft Modernization: Issues for Congress , by [author name scrubbed]. CRS Issue Brief IB98034. Taiwan: Recent Developments and U.S. Policy Choices , by Kerry B. Dumbaugh. CRS Issue Brief IB98028. Theater Missile Defense: Issues for Congress , by [author name scrubbed]. CRS Issue Brief IB86103. V-22 Osprey Tilt-Rotor Aircraft , by Bert H. Cooper. CRS Issue Brief IB81050. War Powers Resolution: Presidential Compliance , by [author name scrubbed]. CRS Report 95-387 . Abortion Services and Military Medical Facilities , by [author name scrubbed]. CRS Report RL30185(pdf) . The Airborne Laser Anti-Missile Program , by [author name scrubbed] and [author name scrubbed]. CRS Report 98-485 . China: Possible Missile Technology Transfers from U.S. Satellite Export Policy-background and Chronology , by [author name scrubbed]. CRS Report RL30143 . China: Suspected Acquisition of U.S. Nuclear Weapon Data , by [author name scrubbed]. CRS Report RL30341 . China/Taiwan: Evolution of the "One China" Policy-Key Statements from Washington, Beijing, and Taipei , by [author name scrubbed]. CRS Report 95-1126. Congressional Use of Funding Cutoffs since 1970 Involving U.S. Military Forces Withdrawals from Overseas Deployments , by Richard F.Grimmett. CRS Report 98-756 . Defense Authorization and Appropriations Bills: A Chronology, FY1970-1999 , by Gary K. Reynolds. CRS Report RL30447(pdf) . Defense Budget for FY2001: Data Summary , by Mary Tyszkiewicz and [author name scrubbed]. CRS Report RL30002(pdf) . A Defense Budget Primer , by Mary Tyszkiewicz and [author name scrubbed]. CRS Report RL30392. Defense Outsourcing: The OMB Circular A-76 Program , by Valerie Grasso. CRS Report RL30574(pdf) . Defense Outsourcing: OMB Circular A-76 Policy and Options for Congress - Proceedings of a CRS Seminar , by Valerie Grasso. CRS Report 97-316(pdf) . Defense Research: A Primer on the Department of Defense's Research, Development, Test and Evaluation (RDT&E) Program , by John D.Moteff. CRS Report 98-873. Department of Defense Anthrax Vaccination Program , by Steven R. Bowman. CRS Report RL30639(pdf) . Electronic Warfare: EA-6B Aircraft Modernization and Related Issues for Congress , by [author name scrubbed]. CRS Report RS20203(pdf) . The Expanded Threat Reduction Initiative for the Former Soviet Union: Administration Proposals for FY2000 , by Amy Woolf and CurtTarnoff. CRS Report RL30113 . Homosexuals and U.S. Military Policy: Current Issues , by [author name scrubbed]. CRS Report RL30172. Instances of Use of United States Armed Forces Abroad, 1798-1999 , by [author name scrubbed]. CRS Report RL30563 . Joint Strike Fighter (JSF) Program: Background, Status, and Issues , by [author name scrubbed]. CRS Report RS20125. Kosovo: Issues and Options for U.S. Policy , by Steven J. Woehrel. CRS Report RL30624 . Military Aircraft, the F/A-18E/F Super Hornet Program: Background and Issues for Congress , by [author name scrubbed]. CRS Report RL30051 . Military Base Closures: Time for Another Round? , by [author name scrubbed]. CRS Report 98-823(pdf) . Military Contingency Funding for Bosnia, Southwest Asia, and Other Operations: Questions and Answers , by [author name scrubbed]. CRS Report RL30184(pdf) . Military Interventions by U.S. Forces from Vietnam to Bosnia: Background, Outcomes, and "Lessons Learned" for Kosovo , by NinaM. Serafino. CRS Report 98-765(pdf) . Military Youth Programs: ChalleNGe and STARBASE , by [author name scrubbed]. CRS Report RL30379(pdf) . Missile Defense Options for Japan, South Korea, and Taiwan: A Review of the Defense Department Report to Congress , by RobertD. Shuey, [author name scrubbed], and [author name scrubbed]. CRS Report 98-751(pdf) . Missile Defense: Theater High Altitude Area Defense (THAAD) Flight Testing , by [author name scrubbed]. CRS Report RL30427 . Missile Survey: Ballistic and Cruise Missiles of Foreign Countries , by [author name scrubbed]. CRS Report 98-955. National Guard & Reserve Funding, FY1990-1999 , by Mary Tyszkiewicz. CRS Report RS20062. National Missile Defense and the ABM Treaty: Overview of Recent Events , by [author name scrubbed]. CRS Report RS20052. National Missile Defense: The Alaska Option , by [author name scrubbed]. CRS Report RL30398(pdf) . NATO Burdensharing and Kosovo: a Preliminary Report , Coordinated by [author name scrubbed]. CRS Report RL30045. Navy Attack Submarine Programs: Background and Issues for Congress , by [author name scrubbed]. CRS Report 98-359. Navy CVN-77 and CVX Aircraft Carrier Programs: Background and Issues for Congress , by [author name scrubbed]. CRS Report 97-700. Navy DD-21 Land Attack Destroyer Program: Background Information and Issues for Congress , by [author name scrubbed]. CRS Report RS20535. Navy Ship Procurement Rate and the Planned Size of the Navy: Background and Issues for Congress , by [author name scrubbed]. CRS Report 97-1027 . Nunn-Lugar Cooperative Threat Reduction Programs: Issues for Congress , by [author name scrubbed]. CRS Report RL30457(pdf) . Supplemental Appropriations for FY2000: Plan Colombia, Kosovo, Foreign Debt Relief, Home Energy Assistance, and Other Initiatives ,by Larry Q. Nowels, [author name scrubbed], [author name scrubbed], Nina Serafino, and MelindaT. Gish. CRS Report RS20483. Taiwan: Major U.S. Arms Sales Since 1990 , by [author name scrubbed]. CRS Report RS20370 . The Taiwan Security Enhancement Act and Underlying Issues in U.S. Policy , by Kerry B. Dumbaugh. CRS Report RL30231. Technology Transfer to China: An Overview of the Cox Committee Investigation Regarding Satellites, Computers, and DOE LaboratoryManagement , by Marcia Smith, Glenn McLoughlin, and William Boesman. CRS Report 98-767(pdf) . U.S. Military Participation in Southwest Border Drug Control: Questions and Answers , by [author name scrubbed]. CRS Report RL30345(pdf) . U.S. Nuclear Weapons: Policy, Force Structure, and Arms Control Issues , by [author name scrubbed]. CRS Report RS20412. Weapons of Mass Destruction-The Terrorist Threat , by Steven R. Bowman and Helit Barel. Congressional Budget Office, "Aging Military Equipment," Statement of Lane Pierrot, Senior Analyst, National Security Division, before the Subcommitteeon Military Procurement, Committee on Armed Services, United States Houseof Representatives, February 24,1999. Congressional Budget Office, An Analysis of the President's Budgetary Proposals for Fiscal Year 2001: A Preliminary Report , March 2000. Congressional Budget Office, Budgetary and Technical Implications of the Administration's Plan for National Missile Defense , by Geoffrey Forden, April2000. Congressional Budget Office, Budgeting for Defense: Maintaining Today's Forces , by Lane Pierrot, September 2000. Congressional Budget Office, Budget Options for National Defense , March 2000. Congressional Budget Office, Cooperative Approaches to Halt Russian Nuclear Proliferation and Improve the Openness of Nuclear Disarmament , by DavidMosher and Geoffrey Forden, May 1999. Congressional Budget Office, The Drawdown of the Military Officer Corps , November 1999. Congressional Budget Office, Making Peace While Staying Ready for War: The Challenges of U.S. Military Participation in Peace Operations , December 1999. Congressional Budget Office, "Modernizing Tactical Aircraft," Statement of Christopher Jehn, Assistant Director, National Security Division, before theSubcommittee on Airland Forces, Committee on Armed Services, United StatesSenate, March 10, 1999. Congressional Budget Office, Paying for Military Readiness and Upkeep: Trends in Operation and Maintenance Spending , by [author name scrubbed], September 1997. Congressional Budget Office, Review of "The Report of the Department of Defense on Base Realignment and Closure ," July 1998. Congressional Budget Office, What Does the Military "Pay Gap" Mean? , June 1999. U.S. General Accounting Office, Cooperative Threat Reduction: DOD's 1997-98 Reports on Accounting for Assistance Were Late and Incomplete ,GAO/NSIAD-00-40, Mar. 15, 2000. U.S. General Accounting Office, "Defense Health Care: Observations on Proposed Benefit Expansion and Overcoming TRICARE Obstacles," by Stephen P.Backhus, Director of Veterans' Affairs and Military Health Care Issues, beforethe Subcommittee on Military Personnel, House Committee on Armed Services,GAO/T-HEHS/NSIAD-00-129, Mar. 15, 2000. U.S. General Accounting Office, F-22 Aircraft: Development Cost Goal Achievable If Major Problems Are Avoided , GAO/NSIAD-00-68, Mar. 14, 2000. U.S. General Accounting Office, "Joint Strike Fighter Acquisition: Development Schedule Should Be Changed to Reduce Risks," by Louis J. Rodrigues, Directorof Defense Acquisitions Issues, before subcommittees of the House Committeeon Armed Services. GAO/T-NSIAD-00-132, Mar. 16, 2000. Information regarding the defense budget, defense programs, and congressional action on defense policy is available at the following web or gopher sites. Congressional Sites/OMB House Committee on Appropriations http://www.house.gov/appropriations Senate Committee on Appropriations http://www.senate.gov/~appropriations/ House Armed Services Committee http://www.house.gov/hasc/ Senate Armed Services Committee http://www.senate.gov/~armed_services/ CRS Appropriations Products http://www.loc.gov/crs/products/apppage.html Congressional Budget Office http://www.cbo.gov General Accounting Office http://www.gao.gov Office of Management and Budget http://www.whitehouse.gov/OMB/ FY2000 Federal Budget Publications http://w3.access.gpo.gov/usbudget/index.html Defense Department and Related Sites Defense LINK http://www.defenselink.mil/ Defense Issues (Indexed major speeches) http://www.defenselink.mil/speeches/ Under Secretary of Defense (Comptroller) FY2001 Budget Materials http://www.dtic.mil/comptroller/fy2001budget/ Army Link -- the U.S. Army Home Page http://www.army.mil/ Navy On-Line Home Page http://www.navy.mil/index-real.html Navy Budget Resources http://navweb.secnav.navy.mil/pubbud/01pres/db_u.htm Navy Public Affairs Library http://www.navy.mil/navpalib/.www/subject.html United States Marine Corps Home Page http://www.usmc.mil/ AirForceLINK http://www.af.mil/ Air Force Financial Management Home Page http://www.saffm.hq.af.mil/ Air Force Budget Resources http://www.saffm.hq.af.mil/FMB/pb/2001/afpb.html Table A1. Defense Appropriations, FY1997 toFY2001 (budget authority in billions of current year dollars) a Sources: Office of Management and Budget, Budget of the United States Government, Fiscal Year 2001 , Feb. 2000, and prior years. a. These figures represent current year dollars, exclude permanent budget authoritiesand contract authority, and reflect subsequent rescissions and transfers. Table A2. Congressional Action on Major Weapons Programs, FY2001:Authorization (amounts in millions of dollars) * Notes : All amounts exclude initial spares and military construction. For Ballistic MissileDefense, the military construction requestis $103.5 million, which is often reported as part of the total elsewhere. For a full breakdown of Ballistic MissileDefense funding,see Table A4 below. House authorization provides funds for the Airborne Laser program in theBallistic Missile Defense program. Table A3. Congressional Action on Major Weapons Programs,FY2001:Appropriations (amounts in millions of dollars) * Notes : All amounts exclude initial spares and military construction. For Ballistic MissileDefense, the military construction requestis $103.5 million, which is often reported as part of the total elsewhere. For a full breakdown of Ballistic MissileDefense funding,see Table A4 below. The conference agreement provides C-17 procurement funds in Title V,Revolving and Management Funds,rather than in Title III, Procurement. Table A4. Ballistic Missile DefenseFunding (budget authority in millions of dollars) Sources: H.Rept. 106-616 ; S.Rept. 106-292 ; S.Rept. 106-298 ; H.Rept. 106-754 ; H.Rept. 106-945 . * Note : The House authorization adds $241 million for SBIRS-Low to PE 63871C, National Missile Defense. Table A5. National Defense Budget Request byAppropriations Bill (millions of dollars) Source: Department of Defense Comptroller, National Defense Budget Estimates for FiscalYear 2001 , March 2000. Table A6. National Defense Budget FunctionFunding in the Congressional Budget Resolution (current year dollars in billions) Sources : H.Con.Res. 290 ; S.Con.Res. 101 . Table A7. Administration National Defense Budget Function Projection by Appropriations Title, Budget Authority, FY1999-2005 (current year dollars inbillions) Sources : U.S. Office of Management and Budget, Historical Tables: Budget of the UnitedStates Government, Fiscal Year 2001 , Feb. 2000. Table A8: FY2000 Supplemental Appropriations for the Department of Defense (millions of dollars) Sources : Office of Management and Budget, Budget of the United States Government for FiscalYear 2001: Appendix, Feb. 2000; House Appropriations Committee; House Rules Committee; H.Rept. 106-521 ; S.Rept. 106-290 ; H.Rept. 106-710 . | House and the Senate action on annual FY2001 defense funding was completed in December when Congress approved the FY2001 omnibus appropriations bill. In all, Congress provided about$310.0 billion for national defense, including $287.8 billion in the Department of DefenseAppropriations bill. The national defense total is about $4.7 billion above the Administration'srequest. The conference agreement on the FY2001 Labor-HHS-Education Appropriations/Omnibus appropriations bill, H.R. 4577 , approved in the House and Senate on December 15,provides some additional FY2001 funds for the Department of Defense, including $150 million torepair the USS Cole, $100 million for classified programs related to operations overseas, and $43.5million for military construction. Section 1403 of the bill also makes an across-the-board cut of0.22% in all FY2001 discretionary funds, including defense, though military personnel funding isexempted from the reduction. In all, this will reduce FY2001 defense funding by $520 million. On October 11, the House approved an a conference agreement on the FY2001 defense authorization bill, H.R. 4205 , by a vote of 382-31. The Senate approved the agreementon October 12 by a vote of 90-3. The President signed the bill into law on October 30 ( P.L.106-398 ). A conference agreement on the defense appropriations bill, H.R. 4576 , wasapproved in the House on July 19 and in the Senate on July 27, and the President signed the bill onAugust 9 ( P.L. 106-259 ). Earlier the House and the Senate approved a conference agreement on theFY2001 military construction appropriations bill, H.R. 4425 , and the President signedthe measure into law on July 13 ( P.L. 106-246 ). This bill includes supplemental appropriations forFY2000 military operations in Kosovo and Colombia, for increased fuel and medical care costs, andfor some other defense programs. In action on key issues, authorization conferees agreed to (1) provide a permanent guarantee of health care for Medicare-eligible military retirees that was included in the Senate bill, but thatexpired after two years; (2) provide compensation for workers made ill by exposure to toxicmaterials in the nation's nuclear weapons program; (3) drop a House-passed provision mandatingtroop withdrawals from Kosovo if allies do not meet burdensharing commitments (though the billincludes extensive reporting requirements); and (4) drop anti-hate crimes legislation that wasattached to the Senate-passed bill. The retiree health care measure will make all military retireeseligible for health care through the military health care system. Conferees also agreed to acomprehensive retail and mail-order pharmacy benefit. According to preliminary CBO estimates,the bill's retiree health care provisions will cost $40 billion more over the next 10-years than benefitsDOD currently provides. Several major weapons programs also received attention in this year's defense debate. The authorization and appropriations conference agreements reduced funding for the Joint Strike Fighterbecause of program delays. The authorization and appropriations bills also approved additionalfunding for the Army's "transformation" plan, including funds to equip a second medium-weightbrigade in FY2001. The authorization conference, however, included a requirement that the Armycarry out additional comparative testing of armored vehicles before outfitting a third brigade. Key Policy Staff Abbreviations: FDT = Foreign Affairs, Defense, and Trade Division G&F = Government and Finance Division RSI = Resources, Science, and Industry Division |
The IGs' four principal responsibilities are (1) conducting and supervising audits and investigations relating to the programs and operations of the agency; (2) providing leadership and coordination and recommending policies to promote the economy, efficiency, and effectiveness of these; (3) preventing and detecting waste, fraud, and abuse in these; and (4) keeping the agency head and Congress fully and currently informed about problems, deficiencies, and recommended corrective action. To carry out these purposes, IGs have been granted broad authority to: conduct audits and investigations; access directly all records and information of the agency; request assistance from other federal, state, and local government agencies; subpoena information and documents; administer oaths when taking testimony; hire staff and manage their own resources; and receive and respond to complaints from agency employees, whose confidentiality is to be protected. In addition, the Homeland Security Act of 2002 gave law enforcement powers to criminal investigators in offices headed by presidential appointees. IGs, moreover, implement the cash incentive award program in their agencies for employee disclosures of waste, fraud, and abuse (5 U.S.C. 4511). IGs have reporting obligations regarding their findings, conclusions, and recommendations. These include reporting: (1) suspected violations of federal criminal law directly and expeditiously to the Attorney General; (2) semiannually to the agency head, who must submit the IG report (along with his or her comments) to Congress within 30 days; and (3) "particularly serious or flagrant problems" immediately to the agency head, who must submit the IG report (with comments) to Congress within seven days. The Central Intelligence Agency (CIA) IG must also report to the Intelligence Committees if the Director or Acting Director is the focus of an investigation or audit. By means of these reports and "otherwise" (e.g., testimony at hearings), IGs are to keep the agency head and Congress fully and currently informed. In addition to having their own powers (e.g., to hire staff and issue subpoenas), IG independence is reinforced through protection of their budgets (in the larger establishments), qualifications for their appointment, prohibitions on interference with their activities and operations (with a few exceptions), and fixing the priorities and projects for their offices without outside direction. An exception to the IGs' rule occurs when a review is ordered in statute, although inspectors general, at their own discretion, may conduct reviews requested by the President, agency heads, other IGs, or congressional offices. Other provisions are designed to protect the IGs' independence and ensure their neutrality. For instance, IGs are specifically prohibited from taking corrective action themselves. Along with this, the Inspector General Act prohibits the transfer of "program operating responsibilities" to an IG. The rationale for both is that it would be difficult, if not impossible, for IGs to audit or investigate programs and operations impartially and objectively if they were directly involved in making changes in them or carrying them out. IGs serve under the "general supervision" of the agency head, reporting exclusively to the head or to the officer next in rank if such authority is delegated. With but a few specified exceptions, neither the agency head nor the officer next in line "shall prevent or prohibit the Inspector General from initiating, carrying out, or completing any audit or investigation, or from issuing any subpoena...." Under the IG Act, the heads of only six agencies—the Departments of Defense, Homeland Security, Justice, and the Treasury, plus the U.S. Postal Service (USPS) and Federal Reserve Board—may prevent the IG from initiating, carrying out, or completing an audit or investigation, or issuing a subpoena, and then only for specified reasons: to protect national security interests or ongoing criminal investigations, among others. When exercising this power, the head must explain such action within 30 days to the House Government Oversight and Reform Committee, the Senate Homeland Security and Governmental Affairs Committee, and other appropriate panels. The CIA IG Act similarly allows the director to prohibit or halt an investigation or audit; but he or she must notify the House and Senate intelligence panels of the reasons, within seven days. Presidentially appointed IGs in the establishments—but not in designated federal entities (DFEs)—are granted a separate appropriations account (a separate budget account in the case of the CIA) for their offices. This restricts agency administrators from transferring or reducing IG funding once it has been specified in law. Under the Inspector General Act, IGs in the larger establishments are appointed by the President, subject to Senate confirmation, and are to be selected without regard to political affiliation and solely on the basis of integrity and demonstrated ability in relevant fields. Two other IGs appointed by the President operate under similar but distinct requirements. The CIA IG is to be selected under these criteria as well as experience in the field of foreign intelligence. And the Special Inspector General for Afghanistan Reconstruction (SIGAR) is the only IG appointed by the President alone. Presidentially nominated and Senate-confirmed IGs can be removed only by the President; when so doing, he must notify Congress of the reasons. By comparison, IGs in the DFEs are appointed by and can be removed by the agency head, who must notify Congress in writing when exercising this power. The USPS IG is the only IG with removal "for cause" and then with the written concurrence of at least seven of the nine governors, who also appoint the officer. Terms of office are set for three IGs, but with the possibility of reappointment: in the Postal Service (seven years), AOC (five years), and U.S. Capitol Police (five years), with selection by the Capitol Police Board. Indirectly, the Peace Corps IG faces an effective term limit, because all positions there are restricted to five to 8½ years. With regard to Special Inspector General for Iraq Reconstruction (SIGIR) and SIGAR, each post is to end 180 days after its parent entity's reconstruction funds are less than $250 million. Several presidential orders govern coordination among the IGs and investigating charges of wrongdoing by high-echelon officers. Two councils, governed by E.O. 12805, issued in 1992, are the President's Council on Integrity and Efficiency (PCIE) and a parallel Executive Council on Integrity and Efficiency (ECIE). Chaired by the Deputy Director of the Office of Management and Budget (OMB), each is composed of the appropriate IGs plus officials from other agencies, such as the Federal Bureau of Investigation (FBI) and Special Counsel. Investigations of alleged wrongdoing by IGs or other top OIG officials (under the IG act) are governed by a special Integrity Committee, composed of PCIE and ECIE members and chaired by the FBI representative (E.O. 12993), with investigations referred to an appropriate executive agency or to an IG unit. Other coordinative devices have been created administratively. Statutory offices of inspector general have been authorized in 67 current federal establishments and entities, including all 15 cabinet departments; major executive branch agencies; independent regulatory commissions; various government corporations and boards; and five legislative branch agencies. All but nine of the OIGs are directly and explicitly under the 1978 Inspector General Act. Each office is headed by an inspector general, who is appointed in one of three ways: (1) 30 are nominated by the President and confirmed by the Senate in "establishments," including all departments and the larger agencies under the IG act, plus the CIA ( Table 1 ). (2) 36 are appointed by the head of the entity in 29 "designated federal entities"—usually smaller boards and commissions—and in seven other units, where the IGs operate under separate authority: SIGIR, ONDI, and five legislative agencies ( Table 2 ). (3) One (in SIGAR) is appointed by the President alone (Sec. 1229, P.L. 110-181 ). Initiatives in response to the 2005 Gulf Coast Hurricanes arose to increase OIG capacity and capabilities in overseeing the unprecedented recovery program. These include IGs or deputies from affected agencies on a Homeland Security Roundtable, chaired by the DHS IG; membership on a Hurricane Katrina Contract Fraud Task Force, headed by the Justice Department; an office in the DHS OIG to oversee disaster assistance activities nationwide; and additional funding for the OIG in Homeland Security. In the 110 th Congress, the IGs in DOD and in other relevant agencies have been charged with specific duties connected with combating waste, fraud, and abuse in wartime contracting ( P.L. 110-181 ). A new IG has been instituted in the AOC, in the GAO, and in the Afghanistan reconstruction effort, while other legislative action requires that full-agency websites link to the separate OIG "hotline" websites. Separate recommendations have arisen in the recent past, such as consolidating DFE OIGs under presidentially appointed IGs or under a related establishment office (GAO-02-575). Pending proposals in the 110 th Congress include the following: requiring IG annual reviews to report on program effectiveness and efficiency ( H.R. 6639 ); and establishing IGs for the Judicial Branch ( H.R. 785 and S. 461 ) and the Washington Metropolitan Area Transit Authority ( H.R. 401 ). The Intelligence Authorization Act for FY2009 ( H.R. 5959 and S. 2996 ) would create an inspector general for the entire Intelligence Community, a provision opposed by the Bush Administration; and would grant statutory recognition to specified OIGs in the Defense Department. Other bills— H.R. 928 and 2324 , whose earlier versions incurred objections from OMB—have been reconciled and await chamber action. These proposals are designed to increase the IGs' independence and powers. Different versions have called for providing specifics on initial OIG budget estimates to Congress; removing an IG only for "cause"; setting a term of office for IGs; establishing a Council of Inspectors General for Integrity and Efficiency in statute; revising the pay structure for IGs; allowing for IG subpoena power in any medium; and granting law enforcement powers to qualified IGs in DFEs. | Statutory offices of inspector general (OIG) consolidate responsibility for audits and investigations within a federal agency. Established by public law as permanent, nonpartisan, independent offices, they now exist in more than 60 establishments and entities, including all departments and largest agencies, along with numerous boards and commissions. Under two major enactments—the Inspector General Act of 1978 and its amendments of 1988—inspectors general are granted substantial independence and powers to carry out their mandate to combat waste, fraud, and abuse. Recent initiatives have added offices in the Architect of the Capitol Office (AOC), Government Accountability Office (GAO), and for Afghanistan Reconstruction; funding and assignments for specific operations; and mechanisms to oversee the Gulf Recovery Program. Other proposals in the 110th Congress are designed to strengthen the IGs' independence, add to their reports, and create new posts in the Intelligence Community. [Note: 5 U.S.C. Appendix covers all but nine of the statutory OIGs. See CRS Report RL34176, Statutory Inspectors General: Legislative Developments and Legal Issues, by [author name scrubbed] and [author name scrubbed]; U.S. President's Council on Integrity and Efficiency, A Strategic Framework, 2005-2010 http://www.ignet.gov; Frederick Kaiser, "The Watchers' Watchdog: The CIA Inspector General," International Journal of Intelligence (1989); Paul Light, Monitoring Government: Inspectors General and the Search for Accountability (1993); U.S. Government Accountability Office, Inspectors General: Office Consolidation and Related Issues, GAO-02-575, Highlights of the Comptroller General's Panel on Federal Oversight and the Inspectors General, GAO-06-931SP, and Inspectors General: Opportunities to Enhance Independence and Accountability, GAO-07-1089T; U.S. House Subcommittee on Government Management and Organization, Inspectors General: Independence and Accountability, hearing (2007); U.S. Senate Committee on Homeland Security and Governmental Affairs, Strengthening the Unique Role of the Nation's Inspectors General, hearing (2007); Project on Government Oversight, Inspectors General: Many Lack Essential Tools for Independence (2008).] |
In 2005, the most recent year for which data are available, approximately $2.0 trillion was spent on health care and health-related activities. This amount represents a 6.9% increase over 2004 spending. The majority of health spending (84%) went towards paying for health care goods and services provided directly to individuals. These goods and services are referred to as personal health care. The remaining amount covered administrative expenses, public health activities, health research, construction of health facilities and offices and medical capital equipment. Table 1 indicates how much was spent on various categories of health care goods and services in 2005 and how much these amounts increased over 2004 levels. This report focuses on expenditures for personal health care, since these goods and services constitute most spending on health-related activities. The latter half of the 1990s experienced historically low growth in personal health care spending. From the beginning of 1994 to the end of 1999, health spending increased at an average annual rate of 5.6%. This low growth is attributable to changes in both the private and public sectors. In the private sector, the increased use of managed care limited cost growth during the mid-1990s. Vigorous fraud-and-abuse investigation and the Balanced Budget Act of 1997 (which slowed growth in hospital, home health, and nursing home payments) constrained health expenditures in the late 1990s. The effect of these changes in public and private sector have subsided; in 2000, personal health expenditures grew at 6.7%, 1.1 percentage points higher than the average rate over the previous six years. Personal health expenditures grew at even higher rates in 2001 (8.7%) but have fallen steadily since then. Looking from a broader historical perspective, spending growth in recent years is still much lower than that in most years since 1960 (see Figure 1 ). In particular, the years 1979 through 1981 experienced growth rates between 13.8% and 15.9%. Figure 1. Growth in Nominal Personal Health ExpendituresSource: Congressional Research Service (CRS) calculations using data from the Centers for Medicare and Medicaid Services, Office of the Actuary. Figure 1 depicts growth in nominal personal health expenditures. Three factors contribute to growth in nominal health spending: higher population, higher prices, and higher real per capita expenditures, which some experts label the "intensity" of care. Real per capita expenditures indicate qualitative and quantitative increases in the amount of care received by individuals. Figure 2 depicts the role of population, prices, and real per capita expenditures in nominal health expenditure growth. Caution should be used when interpreting data on real health expenditures, however. Real expenditures are estimated using price indexes for medical care goods and services, but such price indexes are imperfect. As a result of these imperfections, it is difficult to isolate prices and real per capita health expenditures from nominal health spending. Spending on personal health care in 2005 increased relative to the overall economy. In 2005, personal health care expenditures accounted for 13.3% of gross domestic product (GDP), up from 13.2% of GDP in 2003 and 2004, 12.8% of GDP in 2002 and 12.2% of GDP in 2001. These increases mark a departure from the experience of the previous nine years, when health spending as a percent of GDP was relatively constant. Between 1992 and 2000, personal health care expenditures averaged 11.6% of GDP (see Figure 3 ). Four categories of medical goods and services compose more than 84% of personal health care expenditures: hospital care, physician and clinical services, prescription drugs, and long-term care (which includes nursing home and home health care). In 2005, home health care was the fastest growing category of health expenditures, increasing 11.1% above 2004 expenditures (see Table 1 ). However, growth rates of individual categories of services can be deceptive at indicating how much a particular category of medical care contributed to overall spending growth. As indicated in Table 1 , the category with the largest dollar increase was hospital care. In 2005, spending on hospital care was $44.7 billion higher than in 2004, an increase of 7.9%. Home health care expenditures were $4.7 billion higher in 2005 than they were in 2004, an increase of 11.1%. Thus, even though home health care increased more than hospital care in terms of percentage growth, hospital care grew more than home health care in dollar terms. That is, growth in hospital care contributed most to increased personal health care expenditures in 2005. The $44.7 billion increase in hospital expenditures in 2005 accounted for 41% of the $110.1 billion increase in overall personal health care spending. Figure 4 shows how much dollar growth in each category of personal health care contributed to total growth in personal health expenditures. Much attention has been directed at spending on prescription drugs. The share of personal health expenditures devoted to prescription drugs has more than doubled since 1981, when drugs accounted for only 5.4% of personal health expenditures. Yet, 1981 represented the trough of a 20-year decline in spending on prescription drugs, as a share of personal health expenditures. While the percent of personal health expenditures spent on prescription drugs has grown significantly over the past two decades, prescription drug spending represented only a slightly greater share of personal health expenditures in 2005 as it did in 1960. This trend is illustrated in Figure 5 . Long-term care, which includes nursing home and home health care, composes a larger share of health care than in the past. In 1960, about 4% of personal health care expenditures were spent on nursing home and home health care. In 2005, about 10% of personal health spending was directed towards providing nursing home and home health care. In 2005, 85% of personal health expenditures were in the form of third-party payments. Private health insurance was the largest payer of personal health care in 2005; it paid 36% of personal health expenditures. The federal government, the second largest payer, accounted for 34% of all personal health spending. The health care system underwent a shift over the last four decades from one financed primarily by out-of-pocket expenditures to one financed primarily by private insurance. Figure 6 shows how the funding of personal health care has changed from 1960 to 2005. Ultimately, all health care is funded by individuals through out-of-pocket expenditures (including insurance deductibles and co-payments), insurance premiums, taxes, and charitable contributions. Although private insurance and the federal government are the largest payers of overall personal health expenditures, their role in financing health care varies by type of medical care. Figure 7 illustrates how major categories of health care were funded in 2005 (detailed numbers for Figure 7 are provided in Table 2 ). The two largest categories of personal health care, hospital care and physician services, were financed primarily by private insurance and the federal government. A small share of these services were paid out-of-pocket. Conversely, almost all expenditures on non-durable medical goods (which includes mostly over-the-counter drugs) were paid out-of-pocket, although this category represents only a small share of all personal health care expenditures. Private insurance plays a relatively small role in financing nursing home and home health care. These services were funded mostly by the federal government and out-of-pocket expenditures. Dental services and prescription drugs are funded mostly by private insurance and out-of-pocket expenditures; the federal government plays a relatively small role in the financing of these services. State and local funds account for a small share of expenditures in all categories. The contribution of theses funds is largest in nursing home and home health care, and in hospital care. | In 2005, the most recent year for which data are available, just under $2 trillion was spent on health care and health-related activities. This amount represents a 6.9% increase over 2004 spending. The majority of health spending (84%) went towards paying for health care goods and services provided directly to individuals. These goods and services are referred to as personal health care. The remaining 16% of health spending covered research, public health activities, administrative costs, structures, and equipment. Personal health care expenditures grew 7.1% in 2005, continuing a downward trend in the growth of expenditures that peaked in recent times in 2001 at 8.7%. From the beginning of 1992 to the end of 2000, personal health expenditures grew at an average annual rate of 5.8%, historically low levels not seen since 1960. Compared with spending increases over the past 40 years, the 7.1% increase that occurred in 2005 is relatively moderate. In particular, the years 1979 through 1981 experienced growth rates between 13.8% and 15.9%. Relative to the overall economy, personal health expenditures increased in 2005. In 2005, personal health expenditures accounted for 13.3% of gross domestic product (GDP), up from 13.2% of GDP in 2004 and 2003, 12.8% of GDP in 2002, and 12.2% in 2001. For the nine years prior to 2001, health spending as a percentage of GDP was relatively constant. From 1992 to 2000, personal health expenditures, as a percentage of GDP, stayed between 11.5% and 11.7%. During the three decades prior to the 1990s, personal health expenditures, as a percentage of GDP, increased almost every year. Home health care spending was the fastest growing category of personal health care in 2005. Home health care spending in 2005 was 11.1% higher than the amount spent in 2004. Yet, because home health care represents about 3% of personal health expenditures, it was one of the smallest contributors to overall growth in personal health spending. Hospital care, which grew 7.9% in 2005 and accounts for more than one-third of personal health expenditures, contributed the most to overall growth in personal health spending. Spending on physician and clinical services, which grew at 7.0% in 2005 and accounts for one-fourth of personal health expenditures, was the second largest contributor to overall growth in personal health spending. Over 85% of personal health expenditures in 2005 were financed by third-party payers. The largest payer, private health insurance, financed 36% of all personal health expenditures. The second-largest payer, the federal government, accounted for 34% of all personal health spending. Certain categories of health care are funded primarily by third-party payers, whereas other categories are financed almost entirely out-of-pocket. The federal government is the largest payer of hospital care and nursing home and home health care. Private health insurance is the largest payer of dental services and prescription drugs. Out-of-pocket expenditures are the largest source of funding for non-durable medical goods (which include over-the-counter drugs) and durable medical goods (which include eyeglasses). |
Debate continues in the United States over whether and how the federal government should address human-relat ed climate change. A large majority of scientists and governments accept that stabilizing the concentrations of greenhouse gases (GHG) in the atmosphere and avoiding further GHG-induced climate change would require concerted effort by all major emitting countries. Toward this end, 195 governments attending the 21 st Conference of Parties (COP) to the United Nations Framework Convention on Climate Change (UNFCCC) in Paris, France, adopted an agreement in 2015 outlining goals and a structure for international cooperation to address climate change and its impacts over decades to come. The "Paris Agreement" (PA) is subsidiary to the UNFCCC, a treaty that the United States ratified with the advice and consent of the Senate and that entered into force in 1994. The PA entered into force on November 4, 2016, 30 days after at least 55 countries representing at least 55% of officially reported global GHG emissions had deposited their instruments. On behalf of the United States, President Obama signed an instrument of acceptance of the PA on August 29, 2016, and deposited it with U.N. Secretary General Ban-Ki Moon on September 3, 2016. As of April 1, 2017, 142 additional nations have become Parties. On June 1, 2017, President Donald Trump announced his intent to withdraw the United States from the PA. He also stated that his Administration would seek to reopen negotiations on the PA or on a new "transaction." As discussed later, a Party may withdraw from the PA if it chooses to do so. Article 28 allows a Party to give written notice of withdrawal to the U.N. depositary after three years from the date on which the agreement has entered into force for that Party. The withdrawal could take effect one year later. The United States could give notice of withdrawal as soon as November 4, 2019, with withdrawal taking effect as soon as November 4, 2020. The President did not indicate how the United States might participate in PA procedures until withdrawal should take effect. The PA creates a structure for nations to pledge to abate their GHG emissions, adapt to climate change, and cooperate toward these ends, including financial and other support. The PA is intended to be legally binding on Parties, though not all provisions are mandatory. The Parties in Paris also adopted a Decision to help implement the PA, and the specified processes to define rules, methods, and other tasks are underway. Members of Congress have expressed diverse views about the PA and may have questions about its content, process, and obligations. This report is intended to answer some of the primary factual and policy questions about the PA and its implications for the United States. It touches on nearly all of the 29 articles in the 16-page agreement, as well as some in the accompanying decision of the Parties to give effect to the PA. Other CRS products, available by request or on the CRS website, may provide additional or deeper information on specific questions. The UNFCCC is a "framework" treaty. (See text box.) The PA is subsidiary to the UNFCCC, meaning that it is understood to exist within the scope and terms of the UNFCCC. As such, only Parties to the UNFCCC are eligible to become Parties to the PA (PA Article 20.1). The PA is the outcome of the so-called Durban Mandate: The Conference of the Parties (COP) to the UNFCCC agreed at its 2011 meeting in Durban, South Africa, "to develop a protocol, another legal instrument or an agreed outcome with legal force under the Convention applicable to all Parties," which could be adopted by the COP in December 2015 and come into effect and be implemented by 2020. The PA may take advantage of many rules and processes that currently support Parties' implementation of their UNFCCC obligations (e.g., to submit and review national GHG inventories). UNFCCC processes will continue in parallel with new ones under the PA unless Parties modify them. In developing implementation of the PA, the Parties may elect to make use of existing UNFCCC or Kyoto Protocol processes and agreed rules—such as to promote adaptation to climate change or to account for emissions from land use change—rather than beginning new ones. Some processes may be streamlined or merged under the related agreements. While the PA is only 16 pages long, it contains a number of complex mechanisms—many of which will require further definition by the negotiating Parties. Some experts and observers, noting the PA's largely procedural nature and lack of binding quantitative GHG obligations, have questioned whether the PA marks significant change. Others note a number of substantive differences from prior commitments, specifically for some Parties. Below are several ways in which the PA embodies change under the UNFCCC. Common process for all Parties . For the first time under the UNFCCC, all Parties will participate in a common framework with common guidance, although some Parties will have flexibility in line with their capacities. The commonality largely supersedes the bifurcation into wealthier and developing countries that has held the negotiations in often-adversarial stasis for many years. Ratcheting process to ward quantified objective . The PA defines a quantitative (though collective) long-term objective to hold the GHG-induced increase in temperature to well below 2 o Celsius (C) and pursue efforts to limit the temperature increase to 1.5 o C above the pre-industrial level. The PA establishes a process, with a "ratchet mechanism" in five-year increments, for countries to set and achieve GHG abatement targets until the long-term goal is met. Greater subsidiarity . The PA embodies greater decentralization than, for example, the Kyoto Protocol. The PA increases reliance on decisionmaking and strategy by individual countries or countries cooperating among themselves, not necessarily through central decision mechanisms. Examples of subsidiarity include the nationally determined contributions (pledges) that set countries' GHG targets, and recognition that Parties will use market-based mechanisms (e.g., emissions trading) to transfer emission reduction credits to meet their commitments. Growing role of non-state entities . The negotiations leading to the Paris conference and the PA grew more inclusive of non-state entities (including the private sector) as observers and influencers. Parties recognized them as key decisionmakers and implementers of activities expected to be necessary to achieve the GHG abatement and increased resilience to climate change envisioned in the PA. The government of France established a website for non-state actors to make pledges and share information. Moderate compliance incentives for all. For the first time, all countries agreed to a single system for transparency, accountability, and public accessibility to emissions and policy information to promote compliance with the PA. The UNFCCC lacks universal obligations for transparency and review; the Kyoto Protocol's more intrusive non-compliance provisions may have discouraged participation in commitments by some Parties. To promote compliance, the PA works to balance accountability necessary to build and maintain trust (if not certainty) with the potential for public and international pressure ("name-and-shame"). A compliance mechanism is defined to be expert-based and facilitative rather than punitive. Many Parties and observers will closely monitor the effectiveness of this strategy. The PA states its purpose in Article 2: to enhance implementation of the UNFCCC and "to strengthen the global response to the threat of climate change." Parties to the UNFCCC adopted the PA "in pursuit of the objective of the Convention" —to stabilize GHG concentrations in the atmosphere at a level to avoid dangerous anthropogenic interference in the climate system. Although stabilizing GHG concentrations would require eventually reducing human-related net emissions to near zero, the UNFCCC did not state when or at what levels stabilization should occur. The levels at which GHG atmospheric concentrations stabilize ultimately determines the degree of GHG-induced temperature change. The PA quantifies the intent of Parties in this regard in Article 2, stating that it aims to [hold] the increase in the global average temperature to well below 2°C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change. Article 2 also calls for, inter alia , increasing the ability to adapt to climate change and making financial flows consistent with a pathway toward low GHG emissions and climate-resilient development. In order to achieve the PA's "long-term temperature goal," Parties aim to make their GHG emissions peak as soon as possible and then reduce them rapidly "so as to achieve a balance between anthropogenic emissions by sources and removals by sinks of greenhouse gases in the second half of this century." In other words, the PA envisions achieving net zero anthropogenic GHG emissions within a defined time period. While this is arguably synonymous with the UNFCCC's objective of stabilizing GHG atmospheric concentrations, the PA puts a time frame on the objective for the first time. The objective, however, is collective. It remains unclear whether the PA could hold an individual Party accountable if the collective objective were not met. The PA establishes a single framework under which all Parties shall: communicate every five years and undertake Nationally Determined Contributions (NDCs) to mitigate GHG emissions, reflecting the "highest possible ambition"; participate in a single "transparency framework" that includes communicating Parties' GHG inventories and implementation of their obligations—including financial support provided or received—not less than biennially (with exceptions to a few least-developed states); and be subject to international review of their implementation. The requirements are procedural. There are no legal targets and timetables for reducing GHG emissions. All Parties will eventually be subject to common procedures and guidelines. However, developed country Parties should provide NDCs stated as economy-wide, absolute GHG reduction targets, while developing country Parties are exhorted to enhance their NDCs and move toward similar targets over time in light of their national circumstances. Further flexibility in the transparency framework is allowed to developing countries (depending on their capacities) regarding the scope, frequency, and detail of their reporting. Many observers consider this flexibility key to gaining the participation of many low-income countries, while some observers note that the flexibility may allow reticent Parties to resist more stringent commitments. The administrative Secretariat of the UNFCCC will record the NDCs and other key reports in a public registry. The PA also requires "as appropriate" that Parties prepare and communicate their plans to adapt to climate change. Adaptation communications, too, will be recorded in a public registry. The PA reiterates the obligation in the UNFCCC for developed country Parties to provide public and private financial support to assist developing country Parties with mitigation and adaptation efforts. It also urges scaling up of financing. The Parties agreed to set, prior to their 2025 meeting, a new collective quantified goal for mobilizing financial resources of not less than $100 billion annually to assist developing country Parties. Financing is not restricted to public funds, and many stakeholders expect that most would flow through private investment. The PA permits Parties to participate in cooperative approaches (implicitly, emissions markets ) that "involve the use of internationally transferred mitigation outcomes." Additional mechanisms for cooperative activities, and efforts to incentivize private sector participation, are identified. Further, the PA establishes a committee that will address compliance issues under the PA in a facilitative and non-punitive manner. Finally, the PA contains provisions for voluntary withdrawal by Parties. The Department of State in 2016 communicated to Congress that, in its view, some elements of the PA are legal and binding: "Once the Agreement enters into force for the United States, the legally binding provisions of the Agreement … will apply to the United States." Negotiators intended the PA to be a legal instrument, though not all provisions in it are mandatory. Some are recommendations or collective commitments to which it would be difficult to hold an individual Party accountable. As explained in CRS Report RL32528, International Law and Agreements: Their Effect upon U.S. Law : 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." The PA was negotiated as a subsidiary agreement to the UNFCCC, which is a legally binding treaty among its Parties under international law. Pursuant to enhancing implementation of the UNFCCC, the negotiators adopted the Durban Mandate for "a protocol, another legal instrument or an agreed outcome with legal force" applicable to all Parties. As negotiations under the Durban Mandate neared their resolution, many Parties stated their intentions that the PA be legally binding in many respects. The text contains provisions consistent with the form of an agreement intended to be governed by international law, such as entry into force, the depositary for the agreement, dispute settlement, and withdrawal from the agreement. As discussed above, the PA also contains specific obligations intended to be binding on Parties to it. Many of the mandatory obligations appear to be distinguishable by use of the imperative verb shall , although some are qualified in ways (e.g., "as appropriate") that soften the potential obligation. Not all provisions in the PA are mandatory. Some provisions exhort but would not legally require Parties (individually or collectively) or the Secretariat to undertake actions or to conform to norms under the PA. Some provisions are facilitative. The principal mandatory provisions for individual Parties are procedural. Among the most important of these is PA Article 4.2: [E]ach Party shall prepare, communicate, and maintain successive nationally determined contributions that it intends to achieve. Parties shall pursue domestic mitigation measures, with the aim of achieving the objectives of such contributions. While the PA obligates Parties to submit NDCs to mitigate GHG emissions—with certain characteristics and frequency of those submissions identified in the PA or to be determined in guidance of the Parties—the contents of the NDCs are not intended to be enforceable under the PA. The Department of State has stated: Even after the United States deposits its instrument and the Agreement enters into force, the U.S. 26-28 percent contribution will not, by the terms of the Agreement, be legally binding. Neither Article 4, which addresses mitigation efforts, nor any other provision of the Agreement obligates a Party to achieve its contribution. Article 4.8 requires that Parties' communications of their NDCs shall provide the information necessary for clarity, transparency, and understanding in accordance with guidance on reporting and NDCs to be developed by the APA for adoption by the CMA in its first session. Each Party must communicate an NDC every five years. Each shall also account for its NDC post-submission in accordance with CMA guidance, including reporting on its progress in achieving its NDC. Each Party must also, "as appropriate," engage in adaptation planning processes and implementation of adaptation-related actions. While the PA contains many additional requirements, such as to provide "continuous and enhanced support … to developing country Parties" for required adaptation efforts, those provisions are collective obligations. There is currently no mechanism by which an individual Party could be held accountable for collective shortcomings. The PA contains a multitude of obligations for governments that are Parties to it, but few experts have suggested that there are substantive, legal obligations for the United States in the PA beyond those in the UNFCCC. The Obama Administration articulated its view: "The elements that are binding are consistent with already approved previous agreements." Some of the PA's provisions are, arguably, new obligations for other Parties, such as the (mostly low-income) Parties not listed in the UNFCCC's Annex I. One example is the provision requiring all Parties to ultimately be held to common transparency and review guidelines. All Parties to the UNFCCC, including the United States, have a host of obligations under the treaty. These existing obligations require Parties to: inventory, report, and control their human-related GHG emissions, including from land use; cooperate in preparing to adapt to climate change; seek to mobilize financial resources; and assess and review, through the COP, the effective implementation of the UNFCCC, including the commitments therein. The industrialized countries listed in Annex I of the UNFCCC, including the United States, took on stronger obligations than other countries with regard to reporting, communicating, and international review. In addition, the then-highest income countries, listed in Annex II of the UNFCCC, also agreed to provide financial, technological, and capacity-building assistance to help developing country Parties meet their obligations. For countries not listed in Annex I, some obligations under the PA will be new or stronger than those under the UNFCCC. The PA and Decision establish a single framework under which all Parties would: communicate every five years and undertake NDCs to mitigate GHG emissions, reflecting the "highest possible ambition" (Article 4.3), participate in a single transparency framework that includes communicating their GHG inventories and implementation of their obligations—including financial support provided or received—not less than biennially (with exceptions to a few least developed states), and be subject to international review of their implementation. The United States, as a Party listed in Annex I of the UNFCCC, has already taken on the PA's general obligations under the UNFCCC. In contrast, Parties not listed in Annex I were not subject to UNFCCC provisions that required detailed reporting of policies and measures and their effects, among other requirements. Additional provisions subjected Annex I Parties to certain reviews not applicable to other Parties. The PA expands reporting and reviews for non-Annex I Parties. All Parties to the PA will eventually be subject to common procedures and guidelines under it. However, while developed country Parties must provide NDCs stated as economy-wide, absolute GHG reduction targets, developing country Parties are exhorted to enhance their NDCs (i.e., deepen their GHG reductions) and move toward similar targets over time in light of their national circumstances. Article 4 states that "each Party's successive nationally determined contribution will represent a progression beyond the Party's then current nationally determined contribution." Many view this as a ratchet mechanism that would result in progressively deeper GHG emission reductions. This may be more an expectation than an obligation. Article 9 of the PA reiterates the obligation in the UNFCCC for developed country Parties, including the United States, to mobilize financial support to assist developing country Parties with mitigation and adaptation efforts (Article 9.1). Also, for the first time under the UNFCCC, the PA encourages all Parties to provide financial support voluntarily, regardless of their economic standing (Article 9.2). The agreement states that developed country Parties should take the lead in mobilizing climate finance and that the mobilized resources may come from a wide variety of sources—noting the significant role of public funds. It adds that the mobilization of climate finance "should represent a progression beyond previous efforts" (Article 9.3). The COP Decision to adopt the PA uses exhortatory language to restate the collective pledge by developed countries in the 2009 Copenhagen Accord of $100 billion annually by 2020 and calls for continuing this collective mobilization through 2025. In addition, the Parties to the COP agreed to set, prior to their 2025 meeting, a new collective quantified goal for mobilizing financial resources of not less than $100 billion annually to assist developing country Parties. The Decision strongly urges developed country Parties to scale up their current financial support—in particular to significantly increase their support for adaptation. The Decision recognizes that "enhanced support" will allow for "higher ambition" in the actions of developing country Parties (1/CP.21§114). This is a collective commitment to which it would be difficult to hold an individual Party accountable. The Decision recognizes the Green Climate Fund (GCF) as one of the entities entrusted with the operation of the financial mechanism of the UNFCCC (1/CP.21§58) and, thus, as one channel through which official UNFCCC financing may flow. In general, the Decision recognizes that adequate and predictable financial resources will flow from, inter alia , "public and private, bilateral and multilateral sources, such as the Green Climate Fund, and alternative sources" (1/CP.21§54). The GCF is a multilateral trust fund intended to operate at arm's length from the UNFCCC with an independent board, trustee, and secretariat. The GCF was proposed during the 2009 COP in Copenhagen, Denmark; accepted by Parties as an "operating entity of the financial mechanism under Article 11 of the Convention" during the 2011 COP in Durban, South Africa; and made operational in the summer of 2014. The governing instrument for the GCF states that the GCF is to be "accountable to and function under the guidance of the Conference of Parties" (3/CP.17§A4)—that is, similar in legal structure to the Global Environment Facility—as opposed to "accountable to and function under the guidance and authority of the Conference of Parties" (i.e., similar in legal structure to the Adaptation Fund). A key issue for some Parties in the PA negotiations was "loss and damage" due to climate change. Parties that perceived themselves as vulnerable to climate change have long sought commitments from the historically high-emitting countries to provide liability or funds to compensate for loss and damage that vulnerable Parties may suffer. The UNFCCC Secretariat defined loss and damage, at least temporarily, as "the actual and/or potential manifestation of impacts associated with climate change in developing countries that negatively affect human and natural systems." Loss and damage may occur even with preparation and adaptation to anticipated climate change. The United States and other historically high-emitting nations opposed new programs or commitments addressing loss and damage. In response to the interests of many countries, the Warsaw International Mechanism on Loss and Damage ("Warsaw Mechanism") was agreed under the UNFCCC in 2013 at COP19 in Decision 3/CP.19. The Warsaw Mechanism is procedural in nature. Despite strenuous negotiations, the UNFCCC Parties did not adopt proposals that could have established legal remedies—such as liability or compensation for loss and damage. Instead, the negotiators agreed in Article 8 to continue the existing process under the authority of the CMA to explore cooperation and facilitation that could include early warning systems, emergency preparedness, comprehensive risk assessment and management, and improved resilience. Article 6 of the PA recognizes that Parties may use market-based mechanisms that generate and allow international transfer of GHG reduction credits that can be used to meet NDCs. The Decision calls for a work program that would govern market mechanisms and the additional mechanisms under the PA. Article 6 covers four distinct (but not mutually exclusive) opportunities for Parties to the PA to voluntarily cooperate to mitigate GHG emissions in ways that can lead to transfers of emission reduction credits between Parties: Cooperative approaches , acknowledging that Parties may choose, on a voluntary basis, to cooperate in the implementation of their NDCs. This provision may be read as broad, potentially encompassing the other means included in the article as well as additional approaches that may emerge through the duration of the PA. Transfers of mitigation outcomes between Parties are recognized as a means to meet Parties' NDCs. "Internationally transferred mitigation outcomes" will need to be consistent with future CMA guidance on their GHG accounting, intended to ensure "environmental integrity"—that is, that there is no double counting or other misaccounting that could undermine the abatement pledged by Parties. The language is explicit that the transfers occur under the authorities of the participating Parties, not the CMA. This contrasts with the provisions in the Kyoto Protocol that required exchanges of credits to occur under—and with the prior approval of—Kyoto-established institutions (i.e., the Clean Development Mechanism). A m echanism to contribute to mitigation and support sustainable development is established under the CMA that could establish credit for cooperative programs that mitigate GHG emissions and development of a Party. Those credits could be used to meet one Party's NDC. A share of the proceeds from activities under this mechanism will help defray administrative expenses and assist developing countries. A framework for non-market approaches is defined but not "established." The provisions make clear that the framework should promote sustainable development; synergies across mitigation, adaptation, finance, and technology transfer; and capacity-building, along with additional purposes. But the nature and processes of this framework remain to be developed. Collectively, these four mechanisms encompass a diversity of interests and preferred approaches among Parties. They may be viewed as broadly inclusive, not suggesting preferences in the PA for one approach over another. The PA is silent regarding the anthropogenic gases and sectors potentially covered, leaving the scope bounded by the UNFCCC's scientific definition of what constitutes a GHG. The UNFCCC includes all human-related GHGs and all sectoral sources of them. It also includes removals of GHGs from the atmosphere by "sinks" and reservoirs, including land uses (i.e., photosynthesis by vegetation and soils). Article 5 explicitly exhorts Parties to "reduce emissions from deforestation and forest degradation, and conservation (REDD+), including through results-based payments." To support the PA negotiations, most UNFCCC Parties submitted Intended Nationally Determined Contributions (INDCs) during 2015, constituting country-driven intentions of what each would do to address GHG emission mitigation and, in some cases, adaptation. Each Party decided and communicated which GHG and sectors it covered in its INDC, and a wide diversity of scopes were identified across nations. A continuing task for the UNFCCC Secretariat will be to try to put those INDCs into a common metric and assess the aggregate effects of the INDCs. It began this task with an analysis released in October 2015 updated on May 2, 2016. The COP Decision giving effect to the PA requested the APA to develop guidance for the CMA to consider and adopt at its first session. The process of negotiating guidance will likely consider methods and approaches for estimating and accounting for anthropogenic GHG emissions and sinks in the NDCs. (See paragraphs 28 and 27 of Decision 1/CP.21.) This process will build on extensive but flexible guidance already adopted under the UNFCCC for estimating and reporting GHG inventories, but challenging issues—such as reporting of sinks—may arise as they have in the past. In accordance with Article 21 of the PA, the agreement entered into force on November 4, 2016, on the 30 th day after at least 55 countries representing at least 55% of officially reported global GHG emissions deposited their instruments. Entry into force of the PA entailed four steps by Parties: 1. Signature by individual national governments; 2. Governments' processes of ratification, acceptance, approval, or accession, according to their domestic laws and practices; 3. Deposition of those instruments of ratification, acceptance, approval, or accession with the United Nations depositary; and 4. Passing a threshold of 55 countries, representing at least 55% of GHG emissions, that have deposited their instruments. The threshold in step 4, above, was passed on October 5, 2016, initiating the 30-day clock. The PA has legal force only for those nations that are Parties to it—those that have deposited their instruments. The Durban Mandate for the PA envisioned the PA taking effect in 2020. The entry into force four years sooner than anticipated poses some challenges to the Parties. In particular—as discussed later in " Next Steps for the PA "—Parties are pressed to develop and adopt many procedures and methods to guide their compliance with the PA's provisions. Some procedures were envisioned in the PA as being ready for adoption in the first COP serving as the meeting of the Parties to the PA (CMA). That first meeting began in November 2016 rather than in 2020, and development of rules and procedures are ongoing. More than 170 governments (including the United States and EU) signed the agreement on April 22, 2016. This set a new record for signatures on a U.N. treaty in a single day. As of June 1, 2017, the PA had received 195 signatures. Signatories included all major emitting countries and the EU; only Nicaragua and Syria had not signed. The PA remained open for signature until April 21, 2017. Signature alone did not trigger entry into force of the agreement, but was a first step in the process for a UNFCCC Party to become Party to the PA. The PA is explicit in Article 20 that signature is further subject to ratification, acceptance, approval, or accession by the signing state or regional economic integration organization (REIO) before the agreement has legal force on that signatory. After signing, a state that seeks to become Party to the PA proceeds with its own domestic processes, defined by its laws, to ratify, accept, approve, or (for nations that do not sign before April 21, 2017) accede to the agreement. Finally, to become a Party, a national government or an REIO (e.g., the EU) must deposit an instrument of ratification, acceptance, approval, or accession with the U.N. depositary. On April 22, 2016, 15 nations deposited their ratifications with the United Nations, and others pledged to do so as quickly as possible. By October 5, 2016, 72 nations had deposited their ratifications , acceptances , or approvals of the PA , accounting for more than 56% of global GHG emissions, passing the threshold for the PA to enter into force. In synchrony, the United States and China deposited their instruments with U.N. Secretary General Ban-Ki Moon on September 3, 2016. As of June 23, 2017, 149 Parties had joined the PA, including the major emitters Brazil, the EU and seven of its members, India, Indonesia, Japan, Mexico, South Africa, South Korea, and Ukraine. Additional Parties represent a spectrum of emissions and economies, from Albania to Vanuatu. Among the top 20 emitting countries, only Iran and Russia are not yet Parties. In 2016, Russia pledged to join the PA as quickly as possible. The United States completed a number of steps necessary to become a Party to the PA. First, the United States became a Party to the umbrella treaty, the UNFCCC, when it entered into force in 1994. The United States participated as a UNFCCC Party in the 21 st meeting of the COP when it adopted the PA by consensus, on December 12, 2015. The United States became a signatory of the PA when Secretary of State John Kerry signed the PA on behalf of the United States on April 22, 2016. On August 29, 2016, President Obama, on behalf of the United States, signed an instrument of acceptance of the PA, effectively providing U.S. consent to be bound by the PA. He deposited that instrument of acceptance directly with U.N. Secretary General Ban-Ki Moon on September 3, 2016. The United States became a Party to the PA when it entered into force on November 4, 2016. Whether the United States legally could—or should—have become a Party to the PA as a treaty with Senate advice and consent, or as an executive agreement , has been a matter of interest for some in Congress and the public. The PA is intended by its negotiators to be an international treaty as defined in the Vienna Convention on the Law of Treaties. Nonetheless, under U.S. law, the term treaty refers to agreements that receive Senate advice and consent in conformance with Article II of the Constitution. President Obama accepted the PA as an executive agreement rather than seeking the advice and consent of the Senate to ratify it; executive agreements may be made pursuant to congressional authorization, pursuant to authority granted to the executive in a prior treaty, or "solely on the basis of the constitutional authority of the President." This process has been used for other international treaties. At least one other international environmental agreement, the 2013 Minamata Convention on Mercury , was entered into as an executive agreement. The State Department's Handbook on Treaties and Other International Agreements identifies considerations for the executive branch's determination of the type of agreement and the constitutionally authorized procedures to be followed by the United States in joining an agreement. The determination depends on a number of considerations , including whether the PA was negotiated pursuant to a ratified treaty (e.g., the UNFCCC), its content and importance, whether it requires additional legislative authorizations for the United States to comply, related congressional resolutions, and other factors. As examples of application of these considerations, if the PA were to contain new legal obligations for the United States, or if the United States were unable to meet its obligations without additional authority from Congress, those factors would favor regarding the PA as requiring congressional action. Senior officials of the executive branch asserted that the PA is an executive agreement that does not require submission to the Senate because of the way it is structured. State Department officials stated that they had "a standard State Department exercise that [they were] going through for authorizing an executive agreement, which this is." The State Department's Handbook states, following its listing of considerations, that "[i]n 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 Senate, Congress as a whole, or the President." It also states that consultations on the type of agreement to be used "will be held with congressional leaders and committees as may be appropriate." The 2016 White House statement upon deposit of the U.S. instrument of acceptance provided little insight into the decision. The Senate Legislative Counsel in 1975 stated its position that "the scope of presidential authority to make executive agreements is unclear." Congress has interests in both the substance of the agreement and protecting its constitutional authorities. In 2015, Members of the 114 th Congress introduced several resolutions (e.g., S.Res. 329 , S.Res. 290 , H.Res. 544 , S.Con.Res. 25 ) to express the sense that the PA should be submitted for the advice and consent of the Senate. Additionally, resolutions were introduced in the House ( H.Con.Res. 97 , H.Con.Res. 105 , H.Res. 218 ) to oppose the PA or set conditions on its signature or ratification by the United States. None received further action. In the 115 th Congress, a number of resolutions have also been introduced to oppose or support U.S. participation in the PA (e.g., H.Con.Res. 55 , H.Res. 85 , H.Res. 390 , S.Con.Res. 17 ). Again, no further action has occurred. The 1997 Byrd-Hagel Resolution ( S.Res. 98 , 105 th Congress, adopted 98-0) expressed the Sense of the Senate opposing an agreement pursuant to the UNFCCC that would (A) mandate new commitments to limit or reduce greenhouse gas emissions for the Annex I Parties, unless the protocol or other agreement also mandates new specific scheduled commitments to limit or reduce greenhouse gas emissions for Developing Country Parties within the same compliance period, or (B) would result in serious harm to the economy of the United States. The PA could be seen to satisfy the first clause, as all Parties have the same obligation to submit NDCs to abate GHG emissions, with all Parties pledging to achieve their contributions by 2030. (The U.S. opted for a target date of 2025.) The substance of the NDCs is not binding for any Party. In the second clause, determining whether the agreement could cause "serious harm" to the U.S. economy would require analysis and judgment. Stakeholders have weighed in with their views regarding the appropriate legal form and process for the PA in the United States. Some commentators consider that the PA is appropriately an executive agreement because it does not contain new, specific legal obligations for the United States beyond those in the UNFCCC and already authorized under U.S. law. The United States and other Parties to the UNFCCC accepted legally binding obligations when they ratified the UNFCCC, including addressing GHG emissions (Articles 4.1 and 4.2), preparation to adapt to climate change (Article 4.1), financial assistance to developing countries (Articles 4.3-4.5), international cooperation and support (Article 4.1), and regular reporting of emissions and actions (Article 12) with international review (Article 4.2, 7). Some commentators note that the obligation to submit Nationally Determined Contributions (NDCs) is procedural, because the Parties would not have a legal obligation to comply with the content of the NDC. In other words, a Party could be held to account under the compliance provisions of the PA for not submitting an NDC, but it could not be held accountable under the compliance provisions should that Party not, for example, achieve a GHG emissions target it specified in its NDC. (See discussion in " Are PA requirements new for some Parties? ") Other commentators argued that the PA is a treaty that should have been submitted to the Senate. Some gave reasons such as historical practice, the potential costs and benefits, or other factors. At least one commentator argued that the PA could, in future decades, result in stronger obligations for the United States than the Senate anticipated when it gave its consent to ratifying the UNFCCC. The PA—typical of modern international agreements, including the UNFCCC—includes provisions for Parties to withdraw if they choose to do so. Article 28 spells out a procedure by which a Party may give written notice of withdrawal to the U.N. depositary after three years from the date on which the agreement has entered into force for that Party. The soonest date the United States may submit that intent would be November 4, 2019. The withdrawal would take effect after one year, as soon as November 4, 2020 for the United States, or later if so specified in the notification of withdrawal. On June 1, 2017, President Donald Trump announced his intent to withdraw the United States from the PA. As the PA is an executive agreement, U.S. historical practice suggests that the President may withdraw from the PA, without prior approval by Congress, by submitting notification of withdrawal from the PA to the U.N. Depositary. Some have suggested that the United States could withdraw more quickly by exercising the right to withdraw from the UNFCCC under its Article 25. Article 28(3) of the PA specifies: "Any Party that withdraws from the Convention shall be considered as also having withdrawn from this Agreement." Because the UNFCCC received the Senate's advice and consent in 1992, an effort by the executive to terminate that treaty unilaterally could invoke the historical and largely unresolved debate over the role of Congress in treaty termination. The Constitution sets forth a definite procedure for the President to make treaties with the advice and consent of the Senate, but it does not describe how they should be terminated. There are proponents on both sides of the debate over the executive's power of unilateral treaty determination. On the one hand, the Restatement of the Foreign Relations Law of the United States (Third) concludes that the President has the power to terminate or suspend a treaty by virtue of the executive's powers related to foreign affairs. On the other hand, some contend that the Founders could not have intended the executive to be the "sole organ" of treaty powers, because the Treaty Clause expressly provides a role for the Senate formation of treaties. The Senate must, by this reasoning, also approve the termination of a treaty that it previously ratified. Given the diverse past practices and the unsettled state of the law relating to Congress's role in this process, it is unclear whether the executive would be required to receive congressional or senatorial approval should it decide to withdraw from the UNFCCC. It is also unclear whether the courts would resolve a dispute between the legislative and executive branches over termination of the UNFCCC should a disagreement arise. Congress has power to influence U.S. commitments and performance under the UNFCCC and the PA. As with other actions of the executive branch, Congress retains its powers of appropriations and oversight, as well as of giving (or withdrawing) authorizations regarding implementation of the PA. Appropriations or prohibition of use of funds for certain purposes have been used on numerous occasions in the context of the UNFCCC with regard to supporting the UNFCCC processes, providing technical or financial assistance to lower capacity countries in furtherance of the treaties, and cooperative activities of particular interest, such as enhancing monitoring of compliance with treaty obligations or promotion of key technologies, such as carbon capture and sequestration. Members of Congress and their staff routinely consult with the executive branch and conduct oversight with respect to the UNFCCC before and after multilateral sessions and while attending as part of congressional delegations. Letters to executive officials may convey views or request specific information, and legislative resolutions may express majority views more strongly. Congressional hearings provide more public settings for receiving testimony and exchanges of views with the Administration. Committee chairs have requested reviews of particular issues by the Government Accountability Office and others. All of these may continue under the UNFCCC and the PA. Some key issues that may attract oversight, should the United States proceed with the President's intent to withdraw from the agreement include: Options for withdrawing from the PA; The degree and content of U.S. participation in the PA activities while the United States is a Party and after withdrawal occurs; Objectives and options for renegotiation of the PA, or of a new "transaction," should other Parties be willing to engage; The possible implications for the United States of decisions Parties make following U.S. withdrawal (for example, regarding technology cooperation and trade); or Evaluation of bilateral cooperation in areas such as development of advanced technologies and information-sharing. As long as the United States remains a Party, issues include the following: Development of methods and guidance to which PA Parties will be expected to conform concerning reporting on and achievement of NDCs; Protection of intellectual property and opportunities for market access in technology-related provisions; Balancing and evaluating outcomes of appropriations, partnership programs, regulations, and other federal activities to advance technologies, inform the public, and influence GHG emissions and adaptation to climate change; Use and outcomes of any appropriated funding, such as for operations of the Secretariat, bilateral cooperation with other Parties, or the GCF; and Overall outcomes of Parties' actions in light of the objectives of the UNFCCC and PA and in view of domestic concerns about potential economic and trade implications and climate effectiveness of the agreement. Intended NDCs (INDCs)—and, now for Parties, Nationally Determined Contributions (NDCs) —embody the pledges of countries to abate their GHG emissions, and, in some, to adapt to climate change. They are thus critical to considering the overall effect of the PA. To support the negotiations, most UNFCCC Parties submitted statements or INDCs of the contributions they intended to make to the global effort to mitigate GHG emissions and, in some cases, adapt to climate change. The PA requires formal, country-driven pledges from its Parties as NDCs, though Parties are not bound to achieve the targets or take the actions the NDCs contain. On March 31, 2015, the State Department communicated its INDC, a U.S. pledge to reduce U.S. GHG emissions by 26-28% by 2025 compared to 2005 levels ( Figure 1 ). The United States stated that it will "make best efforts to reduce its emissions by 28%." The U.S. INDC was not explicitly conditional on other countries' actions, as some other Parties' were. The United States noted that its INDC was supported by domestic policy actions that placed the nation on a course to reduce GHG emissions by 17% by 2020 below 2005 levels. The INDC also stated that the U.S. 2025 target is consistent with a straight-line emission reduction path to "deep decarbonization" of 80% or more by 2050. Having communicated the U.S. INDC to the UNFCCC Secretariat in 2015 before joining the PA, the United States is considered, in accordance with paragraph 22 of the Decision, to have satisfied the PA's requirement to submit a first NCD under PA Article 4.2. The Secretariat has now registered the U.S. pledge in the interim NDC Registry in accordance with PA Article 4.12 and Decision paragraph 30. Once a government becomes a Party to the PA, its INDC may be registered by the Secretariat as the Party's NDC, unless the Party requests otherwise. The question has arisen as to whether, once a Party's NDC has been submitted and registered, that Party may rescind it and submit a new one. This question is pertinent to the United States for several reasons. President Trump, in announcing his intent to withdraw from the PA, stated that "this includes ending the implementation of the nationally determined contribution." In addition, some U.S. stakeholders have expressed concern that the ambition of the U.S. NDC GHG emission reduction target may be too little or too great. Those seeking a less ambitious target may assert that there is not parity in the levels of effort being contributed across countries, especially among competitive nations, or that the costs of achieving the target may harm the U.S. economy or fossil fuel interests. Some have suggested that the United States remain Party to the PA but rescind its NDC and possibly submit a less ambitious substitute. These views and President Trump's statement have raised legal and political questions, including how to interpret related provisions in the PA. The U.S. NDC has been registered by the Secretariat. Unless the United States rescinds its NDC, the NDC presumably remains in effect. Its content is not binding, and, indeed, achievement of its content could not be definitively determined until at least two years after the 2025 target date. Most Parties stated their NDC with a target date of 2030; their GHG emissions data would become available for review by Parties and the public in 2032 or later (depending on the capacity of the country and rules developed under the PA). Formal accounting of actions Parties are taking to achieve their NDCs would probably not be required until the next biennial national report (BNR) under the UNFCCC is due in 2018, and perhaps not even then. This communication is due under the Convention, not the PA, and so will be expected regardless of U.S. intent to withdraw from the PA. The United States may expect that other Parties will pay particular attention to U.S. explanation of its policies, actions, and GHG trajectories, as required in such reports, when the BNR is published. The United States may have an interest in supporting rigorous reporting and transparency under the UNFCCC and PA and generally to be viewed as compliant with its international procedural obligations. The United States may therefore have broader considerations than strictly the legal terms of the PA and the UNFCCC. There are no provisions in the PA permitting a Party to rescind its NDC or express prohibitions. Possible withdrawal of the existing U.S. NDC raises two aspects of compliance with the PA: (1) the requirement that each Party must submit a NDC; and (2) provisions suggesting that each NDC must include a more ambitious pledge, a ratcheting mechanism for ambition in GHG emission reductions. As noted above, the U.S. NDC has already been registered. Should the United States withdraw its NDC without submitting another, it would arguably no longer be in compliance with PA Article 4.2 as long as the United States' withdrawal has not taken effect (in late 2020 or later). There is no clear time by which a Party must have an initial NDC in place. Deadlines may be decided by the PA Parties as they develop rules under the PA. Subsequent NDCs must be submitted every five years. In light of President Trump's stated intent to withdraw, Parties may or may not pursue non-compliance processes should the United States rescind its NDC and not submit a new one. Article 4.3 states that "each Party's successive nationally determined contribution will represent a progression beyond the Party's then current nationally determined contribution and reflect its highest possible ambition." Article 4.11 of the PA states that "a Party may at any time adjust its existing nationally determined contribution with a view to enhancing its level of ambition, in accordance with guidance adopted by the [CMA]." Various legal advisers and diplomatic officials, in the United States and other countries, have asserted differing opinions regarding whether the "ratcheting" mechanism is legally obligatory. The language appears permissive and not prohibitive. During the negotiations, countries disagreed regarding whether Parties should be obligated to submit NDCs that are progressively more ambitious. As is often the case in difficult negotiations, the differences were resolved by language that may be ambiguous. Whether a less ambitious NDC would be noncompliant would entail further legal interpretation and diplomatic discussion among Parties. The provisions' uses of the words will and may , rather than shall , may undermine the argument that they could be legally mandatory. Nonetheless, a less ambitious NDC would likely be inconsistent with the express intent in multiple provisions aimed at peaking global emissions with reductions thereafter and could be seen as undermining the intent of the agreement overall. The advantages and disadvantages for the United States of invoking a compliance question may depend on expectations of diplomatic repercussions in light of President Trump's stated intention to withdraw from the PA. It may also be influenced by the possibility that the United States might meet the existing NDC target under expected market conditions and public policies, including those at state and local levels, as a few observers suggest. Whether the United States will meet the GHG reduction targets in its NDC is uncertain but does not appear likely. A Party's achievement of its GHG emissions target is not a legal obligation but likely has broader diplomatic and public opinion implications in the PA's "name and shame" compliance system. President Trump announced on June 1, 2017, that the United States would, as of that date, "cease all implementation" of the U.S. NDC. The likelihood that the United States would meet its target would be further reduced should the Administration's review of regulations (such as the Clean Power Plan [CPP] ) by agencies result in rescissions or more permissive standards than those promulgated under the Obama Administration. One dozen states —along with hundreds of localities, businesses, universities, and other U.S. entities—have stated, nonetheless, their intentions to continue efforts to reduce their GHG emissions and, in many cases, to achieve a reduction proportionate to their shares of the U.S. NDC target. Through 2016, several analyses indicated that the United States could meet its NDC pledge to reduce GHG emissions to 26-28% below their 2005 levels by 2025, relying on optimistic assumptions and additional policies. Other analyses, or less optimistic assumptions, suggested that the United States would fall short of its NDC target. At the end of 2015, the United States submitted its second biennial report to the UNFCCC and itemized actions that the United States was implementing or intended to take that would assist in reducing GHG emissions. The State Department reported that, under then-current measures only, the United States could reduce GHG emissions (net of removals by sinks) by 12-16% below 2005 levels by 2025. This would be well short of the U.S. NDC target. Analyses by non-governmental sources produced similar results. New policies and actions of the Trump Administration could decrease the likelihood that the United States could meet the NDC GHG target. President Trump's Executive Order 13783, "Promoting Energy Independence and Economic Growth," directed the U.S. Environmental Protection Agency (EPA) Administrator to review and, if appropriate, suspend, revise, or rescind, "as appropriate and consistent with law," the CPP and other rules that "unduly burden the development or use of domestically produced energy resources beyond the degree necessary to protect the public interest or otherwise comply with the law." E.O. 13783 also withdrew President Obama's Climate Action Plan (CAP), among other policies. One measure in the CAP considered important to achieving the US NDC target was EPA's CPP, promulgated in 2015. It set standards limiting CO 2 emissions from existing fossil-fuel-fired electric generating facilities, which emitted 33% of U.S. net GHG emissions in 2015. Already, the Supreme Court had stayed the rule on February 10, 2016, under litigation challenging the rule. EPA published notice in April 2017 that it was reviewing the CPP and, if appropriate, would initiate proceedings, consistent with the law, to suspend, revise, or rescind the regulation. The court paused the CPP litigation for 60 days to allow EPA time for that review. Regarding GHG emissions from the transportation sector, the Trump Administration announced on March 15, 2017 a reconsideration of vehicle GHG standards for the Model Years 2017-2025 that could ease or delay the emissions limits. The evaluation is due by April 2018. Other new policies designed to encourage greater fossil energy production and consumption could increase associated GHG emissions. The outcomes on U.S. GHG emissions of the ordered regulatory reviews and other changes in policy remain to be seen. Many factors outside of federal policy could increase or decrease the likelihood of meeting the target, and it is not possible to predict future emissions precisely. Some analysts suggest that economic and technological factors may continue to reduce U.S. GHG emissions through 2025, with a few suggesting that the NDC targets could be met through continuing market forces along with state, local, and philanthropic programs. Plentiful natural gas supplies have continued to offer an attractive alternative to coal-fired electricity, and falling costs of electricity from wind and solar—along with federal tax incentives—have expanded investment in these more advanced technologies. Any projection of future emissions is contingent on assumptions about future economic conditions and consumer preference, the size and structure of the energy sector, the influence of existing and new policy measures, and the modeling methods. Strategies being undertaken by states and localities and many in the private sector could also limit GHG emissions. Rapid technological change in the energy sector may have an even greater influence. Many state and local policies already constrain GHG emissions, and they will continue to influence the U.S. emissions trajectory even under new federal policy. California proceeds with its Advanced Clean Car Program, which included an EPA waiver to use the MY2017-2025 vehicles standards; 12 additional states have adopted the California standards. California has also enacted laws to reduce its GHG emissions to 1990 levels by 2020 and has set a goal to reduce GHG emissions to 40% below 1990 levels by 2030. This will require GHG reductions beyond what was counted in earlier projections of California's Climate Action Plan. Ten northeastern states continue to implement the Regional Greenhouse Gas Initiative limiting CO 2 emissions, allowing emissions trading and reinvestment of associated revenues. Many states have renewable energy portfolio requirements, and many have stated that they will continue to pursue GHG reduction policies, as have a number of localities and major corporations. More than 130 U.S. cities have joined the Global Covenant of Mayors for Climate and Energy, pledging to abate GHG emissions locally. A number of electric utilities reliant on fossil fuels are hedging with investments in renewable energy generation or finding them economically competitive with the alternatives. Many experts expect expanding deployment of advanced technologies to continue to reduce costs and increase availability of less GHG-emitting energy systems. Some potentially countervailing factors include the relatively low prices of motor fuels and impacts on consumer choices and use of vehicles, relatively low operating costs of existing coal-fired plants, electricity grid constraints, and intermittency and storage challenges of renewable energy technologies. If natural gas prices rise significantly, or the CPP is remanded, rescinded, or weakened, the NDC targets could be especially challenging to achieve. Under most scenarios, fossil fuels remain strongly present in the U.S. energy economy through 2030 and beyond. More than 190 Parties to the UNFCCC submitted INDCs—now NDCs for Parties to the PA—that included pledges to address national GHG emissions. Nearly all announced specific GHG targets or actions to contribute to the evolving post-2020 regime. Some included pledges to prepare to adapt to forecasted climate change as well. The UNFCCC Secretariat synthesized and assessed the pledges of the 189 UNFCCC Parties—representing about 99% of 2010 global emissions—that had submitted INDCs as of April 4, 2016. The Secretariat estimated that implementation of the INDCs would result in aggregate global emissions of 55.0 (51.4 to 57.3) gigatons (Gt) CO 2 e in 2025 and 56.2 (52.0 to 59.3) Gt CO 2 e in 2030. These estimates would be higher than the 2010 global emissions by 7-19% in 2025 and 8-23% in 2030. While these estimates indicate that GHG emissions would continue to rise to 2030, the rate of growth would be 8-23% in the period 2010-2030, perhaps cutting by 4-67%, the 24% rate of growth in 1990-2010. (The ranges of uncertainty capture a number of questions, including how to characterize INDC pledges made conditional on, for example, financial assistance.) Below is a sampling of countries' NDC pledges, mostly from large emitting nations: China's NDC included myriad policies, existing and intended, and targets for 2030: Achieve peaking of CO 2 emissions around 2030 and make best efforts to peak earlier; Increase the share of non-fossil-fuel energy sources to around 20% of primary energy supply; Lower CO 2 emitted per unit of GDP by 60-65% compared with 2005 levels; Expand forest stock volume by around 4.5 billion cubic meters compared with 2005 levels; Gradually establish a nationwide carbon emission trading system; and "Proactively" adapt to climate change. The EU pledged to reduce its GHG emissions by at least 40% below 1990 levels by 2030. India stated its intention to reduce the GHG emissions intensity by 33-35% below 2005 levels by 2030, reach a 40% share of non-fossil installed electric capacity by 2030 with help and financing, increase carbon sinks by 2.5-3 billon tons CO 2 e by 2030, and set qualitative goals to mitigate GHG and adapt to climate change. Mexico pledged a NDC to "peak" its GHG emissions by 2026. Canada's NDC stated its intention to reduce its GHG emissions by 30% below 2005 levels by 2030. Russia offered an "indicator" of limiting GHG to 25-30% below 1990 levels by 2030, subject to "maximum possible account of absorbing capacity of forests." For more information, see CRS Report R44092, Greenhouse Gas Pledges by Parties to the United Nations Framework Convention on Climate Change , by [author name scrubbed]. The effect of the PA will depend both on the nonbinding pledges that Parties to it make and their achievement of those pledges. The PA relies on good faith, transparency, accountability, and peer and public pressure to motivate Parties' compliance with both binding and nonbinding provisions rather than enforcement mechanisms with mandatory sanctions. Also, Article 15 of the PA establishes a mechanism to facilitate implementation of and promote compliance with the provisions of the PA. The compliance mechanism "shall be expert-based and facilitative in nature and function in a manner that is transparent, non-adversarial and non-punitive." The mechanisms that best promote compliance can be difficult to predict. One treaty expert has argued that "transparency, accountability, and precision can also make a significant difference" in gaining compliance with a treaty. It is unclear whether formal sanctions promote greater compliance or result in less ambitious commitments. Even legally binding treaties or provisions—and provisions for non-compliance consequences—may not succeed in gaining compliance. Some analysts have looked at experience under the Kyoto Protocol as an example: It had provisions for enforcement, with possible punitive consequences for Parties that did not comply with their obligations; according to some, those provisions did not visibly encourage compliance from some Parties. However, reviews and compliance proceedings raised questions about reporting or other implementation actions of several Kyoto Protocol Parties, and those issues were corrected or resolved during the compliance procedures. These experiences of compliance procedures may be one indication that the process may promote compliance with procedural and technical matters. Many states comply with treaty obligations even when there are not enforcement mechanisms. Hence, it is difficult to conclude that the legal format of particular provisions, or inclusion of penalties for non-compliance, would be requisite for the effectiveness of the PA. As a senior State Department official stated, "At the end of the day, what applies in a country are the rules and the laws that it has to implement its obligations, its commitments." The Senate Environment and Public Works Committee majority staff, however, expressed doubts about future compliance with the PA: Just because a country signs a UNFCCC agreement does not mean the agreement has any legal effect in the country.… Countries that have signed and ratified an agreement have the freedom to act in their best interest and withdraw…. Kyoto was legally binding and countries still failed to comply. Non-binding targets in the Paris Agreement will not produce any greater confidence that countries will comply. Processes are taking shape to decide detailed rules to achieve the transparency and facilitative provisions of the PA under UNFCCC and PA bodies. Government officials and public stakeholders will likely be closely monitoring the effectiveness of those mechanisms by for the duration of the agreement. There are two aspects to understanding the effects of the PA on the climate system: (1) compliance with the long-term aspects of the agreement, and (2) compliance with the pledges made by countries only to 2025 or 2030; reporting of studies on effects of the PA often do not distinguish between the long-term PA and the near-term GHG pledges. According to scientific models of GHG-induced climate change, significant reductions of cumulative GHG emissions would reduce the induced temperature increase. There is wide scientific agreement that the more significant and earlier the GHG emission reductions, the greater the expected effect. If all countries were to comply fully with the vision and obligations of the PA, they would reduce their aggregate net GHG emissions nearly to net zero emissions in the second half of this century (Article 4.1), thereby stabilizing GHG concentrations in the atmosphere. Scientists expect that near-zero GHG emissions could curtail GHG-induced global warming and other climate changes on a multicentury timescale. Article 2 spelled out a goal of holding the increase in global average temperature to "well below" 2 o C above pre-industrial levels and to pursue efforts to limit the increase to 1.5 o C. In principle, Parties could achieve the PA's long-term temperature limits—but only if they ratchet their GHG reductions at a faster rate than was reflected on average in the INDCs. The UNFCCC Secretariat assessed that full compliance with the INDCs (mostly set to 2025 or 2030, including the conditional pledges) would show global GHG emission trajectories still rising in 2030, though the curve could be bending significantly toward a plateau. A few Parties submitted INDCs that envisioned continued downward GHG emission trajectories to 2050, but none pledged to achieve net zero emissions by mid-century. The UNFCCC Secretariat presented an analysis comparing the INDCs with externally developed GHG scenarios illustrating least-cost paths to a 2 o C temperature limit. (See Figure 2 .) The assessment concluded that the INDCs would reduce GHG emission below the pre-INDC paths (which included policies to which countries had previously committed) and that full compliance with INDCs would result in emission levels well above many identified least-cost paths to achieving the temperature target: [G]lobal GHG emissions resulting from the implementation of the communicated INDCs are generally expected to be lower than the emission levels according to pre-INDC trajectories, by 2.8 (0.0 to 6.0) Gt CO 2 eq in 2025 and 3.3 (0.3 to 8.2) Gt CO 2 eq in 2030.… If all conditional components of the INDCs are implemented, the resulting global total emissions are expected to be even lower, by 3.7 (1.2 to 6.0) Gt CO 2 eq in 2025 and 5.3 (0.9 to 8.2) Gt CO 2 eq in 2030 compared with emissions consistent with pre-INDC trajectories, while considering only the unconditional components of the INDCs reduces the emission difference from pre-INDC trajectories to 2.1 (–0.4 to 4.3) Gt CO 2 eq in 2025 and 2.8 (–0.4 to 5.9) Gt CO 2 eq in 2030. (paragraph 208 and footnote 65) The gap between INDCs and least-cost paths to temperature targets well below 2 o C or 1.5 o C would presumably be larger. The PA and the COP Decision to give it effect identified numerous tasks to bring the PA into force and help it function effectively according to Parties' intentions. Some tasks have already begun. The "Ad Hoc Working Group on the PA" (APA) met for the first time in May 2016 in Bonn, Germany. The first session of the COP, serving as the meeting of the Parties to the PA (CMA 1), was also held in Marrakech, Morocco, in November 2016, a few days after the agreement entered into force on November 4, 2016. (See question above, " How did the PA enter into force? ") Many Parties advocate for quick decisions by the CMA on numerous topics identified in the work program decided in November 2016. The main elements include: NDCs Adaptation communications Transparency framework for action and support The Global Stocktake The mechanism to facilitate implementation and compliance The Adaptation Fund The public registry/registries for NDCs and adaptation communications Periodic assessments of the Technology Mechanism Cooperative approaches under PA Article 6; and Accounting for financial resources provided and mobilized. (See Appendix , "Schedule for Some Key Tasks Under the PA.") Many of those activities will require sensitive negotiations over issues that were controversial in the lead-up to the PA. A complete list of tasks arising from the Decision to adopt the PA is available from the UNFCCC Secretariat. Some highlights of the tasks: The CMA is to develop guidance on the information to be submitted in NDCs so that they are clear, transparent, and comparable. The Secretariat established a public, interim NDC Registry containing NDCs communicated by Parties. The CMA is tasked with agreeing on guidance to ensure measurement of PA Parties' performance on their NDCs. Elements of this guidance may consider criteria in the PA that NDCs should promote environmental integrity, transparency, accuracy, completeness, comparability, and consistency and avoid double counting. Countries were invited to communicate, by 2020, their mid-century, long-term low GHG emission development strategies. The Executive Committee of the Warsaw Mechanism was charged with reviewing work in September 2016 to develop recommendations for integrated approaches to avert, minimize, and address displacement of people related to the adverse impacts of climate, and for a repository for information on insurance and risk transfer to help Parties develop and implement comprehensive risk management strategies. Associated with "cooperative approaches," the Subsidiary Body for Scientific and Technological Advice under the UNFCCC is tasked with developing guidance for market-based systems that the PA recognizes will be used by Parties to meet their NDCs. The bodies will also develop a work program for considering other cooperative approaches, including non-market-based approaches, to GHG emissions reductions. The Adaptation Committee under the COP must develop methods to recognize the adaptation efforts of developing countries and for communication of Parties' priorities, implementation, support needs, plans, and actions and for recording them in a registry maintained by the Secretariat. The CMA will, in the 2020s, negotiate to set a new collective, quantified goal for climate finance by 2025. In addition, there will be many requests for submissions of Parties' views, development of rules and guidance, and reviews of existing approaches and mechanisms in the period to 2020. The topics will include capacity building, technology cooperation, adaptation, and more. President Trump's announcement on June 1, 2017, of his intent to withdraw the United States from the PA raises several issues regarding next steps under the PA, including: What procedure might the United States follow to withdraw from the PA? Might the United States request that the PA Parties allow it an early exit from the agreement, following customary international law, rather than the four-year withdrawal process under PA Article 28? Will the United States continue to participate in meetings and decisions of the PA until withdrawal occurs, pursuant to the President's statement that "as of today, the United States will cease all implementation of the non-binding Paris Accord.... This includes ending the implementation of the nationally determined contribution and, very importantly, the Green Climate Fund"? When and how may the Administration follow up on the President's statement that the United States would begin negotiations to reenter either the PA or an entirely new transaction on terms that are fair to the United States"? May this occur within the procedures of the UNFCCC and/or the PA or in a different forum? How may other Parties alter their strategies and positions on implementing the PA in light of the U.S. announcement? Or, how may the balance of influence shift among Parties that have often shared or opposed U.S. views in negotiations? | The Paris Agreement (PA) to address climate change internationally entered into force on November 4, 2016. The United States is one of 149 Parties to the treaty; President Barack Obama accepted the agreement rather than ratifying it with the advice and consent of the Senate. On June 1, 2017, President Donald J. Trump announced his intent to withdraw the United States from the agreement and that his Administration would seek to reopen negotiations on the PA or on a new "transaction." Following the provisions of the PA, U.S. withdrawal could take effect as early as November 2020. Experts broadly agree that stabilizing greenhouse gas (GHG) concentrations in the atmosphere to avoid dangerous GHG-induced climate change would require concerted efforts by all large emitting nations. The United States is the second largest emitter of GHG globally after China. Toward this purpose, the PA outlines goals and a structure for international cooperation to slow climate change and mitigate its impacts over decades to come. The PA is subsidiary to the United Nations Framework Convention on Climate Change (UNFCCC), which the United States ratified in 1992 with the advice and consent of the Senate and which entered into force in 1994. The PA requires that nations submit pledges to abate their GHG emissions, set goals to adapt to climate change, and cooperate toward these ends, including mobilization of financial and other support. The negotiators intended the PA to be legally binding on its Parties, though not all provisions in it are mandatory. Some are recommendations or collective commitments to which it would be difficult to hold an individual Party accountable. Key aspects of the agreement include: Temperature goal. The PA defines a collective, long-term objective to hold the GHG-induced increase in temperature to well below 2o Celsius (C) and to pursue efforts to limit the temperature increase to 1.5o C above the pre-industrial level. A periodic "global stocktake" will assess progress toward the goals. Single GHG mitigation framework. The PA establishes a process, with a ratchet mechanism in five-year increments, for all countries to set and achieve GHG emission mitigation pledges until the long-term goal is met. For the first time under the UNFCCC, all Parties participate in a common framework with common guidance, though some Parties are allowed flexibility in line with their capacities. This largely supersedes the bifurcated mitigation obligations of developed and developing countries that held the negotiations in often-adversarial stasis for many years. Accountability framework. To promote compliance, the PA balances accountability to build and maintain trust (if not certainty) with the potential for public and international pressure ("name-and-shame"). Also, the PA establishes a compliance mechanism that will be expert-based and facilitative rather than punitive. Many Parties and observers will closely monitor the effectiveness of this strategy. Adaptation. The PA also requires "as appropriate" that Parties prepare and communicate their plans to adapt to climate change. Adaptation communications will be recorded in a public registry. Collective financial obligation. The PA reiterates the collective obligation in the UNFCCC for developed country Parties to provide financial resources—public and private—to assist developing country Parties with mitigation and adaptation efforts. It urges scaling up of financing. The Parties agreed to set, prior to their 2025 meeting, a new collective quantified goal for mobilizing financial resources of not less than $100 billion annually to assist developing country Parties. Obama Administration officials stated that the PA is not a treaty requiring Senate advice and consent to ratification. President Obama signed an instrument of acceptance on behalf of the United States on August 29, 2016, without submitting it to Congress. In 2015, Members of the 114th Congress introduced several resolutions (e.g., S.Res. 329, S.Res. 290, H.Res. 544, S.Con.Res. 25) to express the sense that the PA should be submitted for the advice and consent of the Senate. Additionally, resolutions were introduced in the House (H.Con.Res. 97, H.Con.Res. 105,H.Res. 218) to oppose the PA or set conditions on its signature or ratification by the United States. None received further action. In the 115th Congress, a number of resolutions have also been introduced to oppose or support U.S. participation in the PA (e.g., H.Con.Res. 55, H.Res. 85, H.Res. 390, S.Con.Res. 17). Beyond the Senate's role in giving advice and consent to a treaty, Congress continues to exercise its powers through authorizations and appropriations for related federal actions. Additionally, numerous issues may attract congressional oversight, such as: procedures for withdrawal; foreign policy, technological, and economic implications of withdrawal; possible objectives and provisions of renegotiation of the PA or of a new "transaction" for cooperation internationally; international rules and guidance to carry out the PA; financial contributions and uses of finances mobilized; and assessment of the effectiveness of other Parties' efforts. |
A long-standing challenge for aviation security is the need to reliably detect explosives and bomb-making components concealed under clothing. The Aviation and Transportation Security Act of 2001 (ATSA; P.L. 107-71 ) mandated 100% explosives detection screening of checked baggage. However, ATSA did not specifically address the threat posed by bombs carried in the aircraft cabin. Terrorist plots, including a December 2001 attempted shoe-bombing incident, the August 2004 downing of two Russian airliners, the August 2006 liquid explosives plot in the United Kingdom, the December 2009 attempted bombing of a Delta-Northwest flight from Amsterdam on approach to Detroit, and the May 2012 discovery of a similar plot orchestrated by terrorist operatives in Yemen, have served to focus policy attention on the threat to civil aviation posed by concealed improvised explosive devices. In 2004, the 9/11 Commission recommended that the Transportation Security Administration (TSA) and Congress give priority to improving the detection of explosives on passengers. The commission further recommended that, as a start, all individuals selected for secondary screening at airport checkpoints undergo explosives screening. Mirroring the 9/11 Commission recommendation, the Intelligence Reform and Terrorism Prevention Act of 2004 (IRTPA; P.L. 108-458 ) directed TSA to give high priority to developing, testing, improving, and deploying airport checkpoint screening technologies to detect nonmetallic, chemical, biological, and radiological weapons, as well as explosives on passengers and in carry-on items. In 2004, initial field trials of walk-through explosives trace detection portals, or "puffer" machines, revealed reliability problems, leading TSA to suspend further deployment of and investment in these systems. TSA instead moved forward with the evaluation and eventual system-wide deployment of whole body imaging (WBI) technologies, which TSA also refers to as Advanced Imaging Technology (AIT) systems. In contrast to the "puffer" machines, AIT systems do not search for traces of explosive materials. Instead, they generate images that can reveal anomalies underneath passenger clothing, allowing detection of concealed items, such as explosives, detonators, and both metallic and nonmetallic weapons. In response to the failed December 25, 2009, attempted bombing of a Detroit-bound international flight using an improvised explosive device, TSA accelerated its investment in AIT. Currently, TSA uses AIT systems for primary screening of both randomly selected and targeted passengers in conjunction with walk-through metal detector screening. Passengers selected for AIT screening may elect to either submit to the AIT scan or alternatively undergo a pat-down by a trained same-sex TSA screener. Since 2007, TSA has been procuring and deploying two competing AIT technologies for screening airline passengers: X-ray backscatter and millimeter wave imaging systems. X-ray backscatter systems use a low-intensity X-ray beam that moves at high speed to scan the entire surface of the body. The first body scanners using low-intensity X-ray backscatter technology were developed in the early 1990s. The X-ray backscatter systems currently used by TSA have evolved from these early commercial versions, having significantly improved resolution as well as special privacy algorithms that generate front and back images similar to chalk outlines (see Figure 1 ). TSA implemented "chalk outline" filtering, known as a privacy algorithm, to allay privacy concerns, as raw, unfiltered X-ray backscatter images resemble high-resolution photographic negatives. Trained TSA screeners review these filtered images. Millimeter wave imaging systems emit non-ionizing electromagnetic radio waves in the millimeter wave (30-300 gigahertz) spectrum to render images of what lies directly underneath clothing and near the skin. Deployed systems generate images that look like photographic negatives (see Figure 2 ). Privacy filters are applied to these images to selectively blur faces. Millimeter wave systems are capable of generating a 3-D view by scanning the full 360 degrees around an individual. This 3-D scan renders front and back images that are viewed by trained TSA screeners. However, TSA is currently field testing automated target recognition (ATR) algorithms that are intended to eventually replace human image analysis of millimeter wave images (see Figure 3 ). TSA is currently retrofitting deployed units, and all future millimeter wave systems procured by TSA will come with ATR. ATR is described in further detail in the discussion of " Privacy Concerns ." As of August 2012, TSA had deployed about 700 AIT units at more than 180 of the roughly 450 commercial passenger airports. TSA currently plans to acquire and deploy a total of 1,800 units throughout the country by the end of FY2014. Once all FY2012 funds are expended, TSA projects that it will have acquired 1,250 units, about 69% of the planned total. The acquisition cost per unit is about $175,000. In addition, TSA incurs costs associated with installing and maintaining AIT systems, training personnel, and operating the deployed units. TSA hired and trained an additional 8,000 screeners through FY2011 to meet the anticipated workload increases associated with operational deployment of the first 1,000 AIT units. These additional operational costs can add substantially to the overall cost of deploying and operating AIT. Inferring from TSA statements, the annualized cost for purchasing, installing, staffing, operating, supporting, upgrading, and maintaining checkpoint AIT systems currently sums to about $455 million and will increase to about $1.17 billion once the planned 1,800 units are fully deployed. This equates to roughly $655,000 annually per deployed AIT unit. TSA argues that, at about 1,000 deployed AIT units, the operating cost translates to roughly $1 per traveling passenger. However, this figure does not reflect the cost per scan because only a small percentage of passengers undergo a whole body scan. As TSA does not divulge the percentage of passengers screened using AIT, the cost per scan cannot be accurately estimated. TSA selects passengers for AIT screening using both random and targeted selection techniques. TSA considers the specific selection methods to be sensitive security information, and this information is not made public. Initially, TSA procurements of X-ray backscatter units were greater, but more recently TSA has acquired larger numbers of millimeter wave systems. As of February 2012, roughly 44% of total AIT deployments were X-ray backscatter units, but that percentage had dropped to about 35% by August 2012. Public perceptions of possible health risks associated with X-ray backscatter systems, coupled with technological advances in second-generation millimeter wave systems that will replace human observers with automated threat detection capabilities, may have influenced TSA toward favoring millimeter wave systems over X-ray backscatter systems. TSA cites several independent polls indicating widespread public support and understanding of the need for and use of AIT. The polling data indicate that about 75% to 80% of Americans support the use of AIT at airport checkpoints. Nonetheless, AIT remains controversial. Among respondents expressing concerns regarding the use of full-body scanners in a 2010 Travel Leaders study, roughly 48% raised privacy issues, 27% worried about potential known or unknown health risks, and about 20% expressed concerns over delays in getting through security. Concerns have also been raised over screening individuals with special needs, the effectiveness of the technology, screener staffing requirements, and TSA's deployment strategy. TSA use of AIT has met with objections from privacy advocates, such as the American Civil Liberties Union (ACLU), that have urged Congress to ban the use of whole body imaging technologies as a method for primary screening on the basis that "[p]assengers expect privacy underneath their clothing and should not be required to display highly personal details of their bodies." Privacy arguments have been raised against other airport screening procedures in the past, but have not been accepted by the courts. Courts characterize a routine search conducted at an airport security checkpoint as a warrantless search, generally not subject to the constitutional prohibition against "unreasonable searches and seizures" by the federal government. In a 1973 ruling, the 9 th Circuit Court of Appeals found such a warrantless search, also known as an administrative search, to be acceptable if it is "no more intrusive or intensive than necessary, in light of current technology, to detect weapons or explosives," if it is confined to that purpose, and if individuals may avoid the search by electing not to fly. In more recent case law, the 9 th Circuit Court of Appeals ruled in 2007 that airport searches of passengers are reasonable and do not require consent, as "… requiring that a potential passenger be allowed to revoke consent to an ongoing airport security search makes little sense in a post-9/11 world. Such a rule would afford terrorists multiple opportunities to attempt to penetrate airport security by 'electing not to fly' on the cusp of detection until a vulnerable portal is found." The Supreme Court, however, has not specifically considered whether airport screening searches are a constitutionally reasonable form of administrative search. Moreover, the courts have not specifically considered whether the use of AIT, as either a routine or a risk-based screening method, warrants any special consideration under the law because of its capabilities and surrounding privacy concerns. More specific policy and legal analysis in the current context may be needed to address whether AIT screening and alternative screening procedures, such as pat down searches of individuals, are no more intrusive or intensive than necessary. Since deploying AIT, TSA has sought to allay privacy concerns by implementing policies affecting both technology and operational procedures. Specifically, TSA policy requires that image storage capabilities be disabled on all fielded AIT units. TSA also has set up remote imaging locations, so that TSA screeners viewing an image are not able to see the person being scanned. TSA policy forbids TSA employees from taking any image recording devices into these remote viewing areas. Finally, TSA installed privacy filters that, depending on the technology, either blur facial features or render a less detailed image similar to a "chalk outline" of the entire body. Despite these safeguards, reports of alleged abuses have surfaced. In February 2012 it was reported that several female passengers have levied complaints against TSA, claiming that they were told to go through the scanners, sometimes multiple times, apparently because they were attractive. TSA responded that it is not policy to scan passengers multiple times. Concerns have been raised regarding the selection of children for AIT screening, including concerns over the viewing of their images, potential health effects, and safety when the child is separated from parents or guardians during the screening process. While TSA has modified screening procedures for children (12 years of age and younger), it does not exclude them from possible selection to undergo either AIT screening or a pat-down search. If selected, the child and/or her or his parent(s) or accompanying guardian(s) may choose the method of screening. In FY2011, TSA began installing Automated Target Recognition (ATR) software in its deployed millimeter wave machines, both to allay continuing concerns regarding privacy and to improve screening efficiency. With the introduction of ATR, TSA is working toward the eventual elimination of human image viewers. In the future, TSA plans to rely primarily or exclusively on ATR for threat detection, which automatically reviews and analyzes images for concealed threats. In 2011, TSA upgraded all deployed millimeter wave scanners with ATR software. The ATR algorithms are currently undergoing operational evaluations in which they are being tested side-by-side with existing image review procedures. The ATR displays show only a generic body outline identifying locations of potential concealed threats rather than a full body image. If no threats are detected, the ATR monitor displays no image and an "OK" appears on screen against a green background (see Figure 3 ). TSA plans to include ATR capabilities in all future millimeter wave AIT procurements. TSA has not announced whether a similar system will be developed or implemented for X-ray backscatter imagers. The ionizing radiation generated by X-ray backscatter systems has led to policy debate and some public concern over possible human health impacts. Ionizing radiation has been linked to various forms of cancer. TSA contends that the levels of ionizing radiation emitted by certified X-ray backscatter systems are well below those considered unsafe for human exposure. According to the vendor, X-ray backscatter systems in use by TSA deliver a radiation dose that is less than 15% of the Federal Drug Administration (FDA) allowable single dose limit of 25 microrem. DHS claims that the radiation exposure from a single X-ray backscatter image is equivalent to exposure from naturally occurring radiation received during two minutes flying at altitude aboard a commercial airliner and notes that passengers may opt out of the screening. The X-ray aperture in certified backscatter units is very small, measuring roughly 1/28 th of a square inch. While the device emits continuously through this aperture for the duration of the scan, it moves rapidly horizontally and vertically to image the entire human body over a span of about 10 to 20 seconds. Safety measures including redundant monitors and automatic shutdown circuits turn off the X-ray generation if any abnormal conditions are detected—for example, if the X-ray beam is not moving properly. TSA-approved backscatter systems comply with American National Standards Institute (ANSI) radiation safety standards and have been evaluated by FDA's Center for Devices and Radiological Health, the National Institute of Standards and Technology, and the Johns Hopkins University Applied Physics Laboratory. These independent evaluations concluded that TSA-certified X-ray backscatter units meet national health and safety standards. Nonetheless, controversy over exposure to X-ray backscatter persists. In April 2010, faculty members from the University of California, San Francisco, including prominent researchers in biochemistry, biophysics, X-ray imaging, and cancer research, expressed their concerns in a letter to President Obama's assistant for science and technology, John P. Holdren. They suggested that while the radiation dose received from X-ray backscatter imaging would be safe if it were distributed throughout the body, it is instead concentrated only on the skin and underlying tissue, such that "the dose to the skin may be dangerously high." The letter stated that older travelers and those with compromised immune systems may be at particular risk; that some females may be at higher risk of developing breast cancer; that the potential health effects on children, adolescents, pregnant women, and fetuses have not been fully assessed; that the proximity of the testicles to the skin raises concerns over possible sperm mutation; and that the effects on the cornea and the thymus gland have not been determined. It also cautioned that a system malfunction could potentially cause a very high radiation dose to be concentrated on a single spot. TSA and FDA provided a lengthy response to the letter, asserting that the potential health risks from full-body screening using approved systems are minuscule, and that extensive independent data confirm that the systems do not present significant risk to public health. More recently, an independent scientific review of certified X-ray backscatter units by the European Union's Scientific Committee on Emerging and Newly Identified Health Risks concluded that while "[t]he expected health detriment will probably be very close to zero for any scanned person, … at the population level the possible effect cannot be ignored." While the study could not meaningfully evaluate risk for special groups within the population, it raised concern over a higher risk related to exposure in childhood. The millimeter wave systems used by TSA do not emit ionizing radiation. Millimeter wave scanners therefore have not raised the same health concerns as X-ray backscatter systems. A recent statement by the International Commission on Non-Ionizing Radiation Protection found that, while it recommends limiting human exposure to non-ionizing radiation, human exposures from body scanners currently in use are about one-tenth of its recommended guidelines for the general public. TSA asserts that it makes accommodations for individuals with a variety of special needs, usually arising from medical conditions and the use of wearable or implanted medical devices. However, various incidents indicate that TSA does not always provide special accommodations and does not always follow these procedures for individuals with special needs. For example, in May 2012, a diabetic teenager reported that an AIT system damaged her insulin pump while she was being screened at the Salt Lake City International Airport, after a TSA screener reportedly told her that it would not be a problem to undergo AIT screening despite a doctor's note explaining that the sensitive medical device should not go through the body scanner. TSA informs passengers that individuals should ask for a pat down inspection if a medical doctor has advised them not to undergo AIT screening because it may affect the functioning or calibration of a wearable or implanted medical device. TSA has created an optional disability notification card that allows individuals to discreetly advise TSA screeners of a health condition, disability, or medical device that may affect screening. TSA has also established TSA Cares, a toll-free hotline (1-855-787-2227) for individuals with disabilities and medical conditions to discuss screening procedures and coordinate checkpoint support when necessary. Despite poll data indicating that roughly 20% of those concerned about AIT expressed specific concern over increased passenger delays, it does not appear that AIT screening has had any significant effect on delays. This is likely attributable in large part to the fact that TSA selects only a small percentage of passengers for AIT screening. In addition, TSA can choose to reduce the number of passengers selected for AIT screening when backlogs occur. Although passengers, if selected for additional screening, can opt for either an AIT scan or a pat down, the AIT is considerably faster, taking about 20 seconds to complete, compared to about 2 minutes for a physical pat down. TSA reports that more than 99% of passengers selected for additional screening choose to be screened by AIT technology over the alternative, suggesting that AIT is perceived as relatively quick and hassle-free. The effectiveness of screening technology can be measured in terms of its ability to accurately detect threats while minimizing false alarms. In operational settings there is a tradeoff between detection and false alarms. False alarm rates are easily measured in operational settings, but detection rates cannot be precisely known because of uncertainty over what may have gone undetected. AIT systems, like all other TSA-certified screening technologies, undergo certification testing performed by the Department of Homeland Security (DHS) Independent Test and Evaluation section of the Transportation Security Laboratory, a component of the DHS Science and Technology Directorate. TSA, in coordination with the Transportation Security Laboratory, sets certification criteria, which are not made public. Although the effectiveness criteria and parameters for AIT are not public information, outside experts are divided about the effectiveness of AIT systems. For example, it remains unclear whether a whole body scan would have detected the explosives used in the 2009 Christmas Day bombing attempt. Of particular concern is the possibility that terrorists could use concealment tactics to evade detection by AIT. Modeling by independent researchers, based on publicly available performance estimates, found that certain items—including types of explosives used in past terrorism attempts targeting aircraft—could be difficult, if not impossible, to detect using X-ray backscatter systems at current radiation exposure levels. The researchers concluded that "[e]ven if exposure were to be increased significantly, normal anatomy would make a dangerous amount of plastic explosives with tapered edges difficult if not impossible to detect." The researchers did not model the performance of millimeter wave systems, and CRS is not aware of similar evaluations of millimeter wave systems of the type deployed at airports. Additionally, the DHS Office of Inspector General has raised concerns over the adequacy of TSA's on-the-job training to operate AIT units and inconsistencies in the use of calibration procedures to ensure appropriate image quality. The adequacy of training and image quality can both have significant impacts on the overall effectiveness of AIT. TSA currently provides for eight hours of on-the-job training in addition to classroom instruction, and offers screeners additional time to achieve proficiency if needed. While TSA has issued standard procedures for the operation, testing, and maintenance of all AIT equipment, the DHS Office of Inspector General uncovered inconsistencies at various airports in the application and enforcement of these procedures. The DHS Office of Inspector General formally recommended that TSA conduct an assessment to determine appropriate on-the-job training requirements and develop controls to ensure that AIT systems calibrations, particularly for backscatter units, are conducted consistently and documented properly according to established standard operating procedures. Presently, TSA assigns three screeners per AIT unit for each shift. Through FY2011, TSA hired an additional 8,000 screeners to meet the anticipated workload demands associated with the deployment of the first 1,000 AIT units. TSA anticipates that the migration to ATR will relieve some screener staffing requirements. The anticipated use of ATR in place of human image viewers will eliminate the screener who views and analyzes images in a remotely located viewing room, in most cases. This could reduce system-wide operational staffing for AIT systems by as much as one-third. However, the effect of this on overall TSA staffing is uncertain, as TSA may need additional staff for secondary screening to resolve potential threat detections identified by the ATR software. The potential increased need for secondary screening to resolve ATR alarms will depend on both detection and false alarm rates for the ATR algorithms compared to those rates for human image viewers. This information is not publicly available. As noted previously, TSA seeks to acquire 1,800 AIT units by the end of FY2014. At present the U.S. aviation system includes about 2,300 screening lanes at roughly 450 commercial passenger airports. However, only about 180 of these airports currently have AIT machines. At some of these airports, AIT is not fully deployed to all terminals and all checkpoints. Even at full operating capacity, not all airports and not all screening lanes will be equipped with AIT under TSA's plan. TSA is deploying systems according to a risk-based prioritization strategy that gives highest priority to the largest airports, those that fall into security category X and category I. Even at full operating capacity, many smaller airports will not have AIT. This creates the possibility that terrorists could attempt to board planes at smaller airports to avoid body scanners they might expect to encounter at larger airports, just as some of the 9/11 terrorists originated their trips at the small airport in Portland, ME, and transferred to other flights in Boston without additional screening. Although TSA has put in place policies and procedures to address concerns regarding AIT scanning, these measures are not tied to specific statutory mandates and could be modified in the future without legislative action. A number of related bills have been introduced in the 112 th Congress. However, none of these bills has moved out of committee. The Aircraft Passenger Whole-Body Imaging Limitations Act of 2011 ( H.R. 1279 ) would require the National Academy of Sciences to determine that AIT does not pose a threat to public health, and would require the use of privacy filters or other privacy-protecting technology before AIT could be used for passenger screening. It would further restrict AIT or pat-down screening from being used as a primary screening method. The bill would also prohibit and establish penalties for storing, transferring, sharing, or copying AIT images. The Checkpoint Images Protection Act of 2011 ( H.R. 685 ) would establish penalties for the unauthorized recording or distribution of security screening images, while the Transportation Security Administration Authorization Act of 2011 ( H.R. 3011 ) would require TSA to certify that ATR software is installed on all deployed AIT machines, and that image retention capabilities on all such machines are disabled. Also, the Traveler Screening Act, or the "RIGHTS Act" ( S. 2207 ), would require the TSA Ombudsman's office to better track public complaints about screening, determine best practices to resolve frequent passenger complaints, resolve passenger complaints, and field advance notification calls from individuals with special needs to arrange for accommodation at screening checkpoints. This bill would also require the TSA Ombudsman to appoint TSA employees to serve as passenger advocates at all of the busiest (Category X) airports. Under the conditions specified in the bill, individuals selected as passenger advocates must not have been subject to disciplinary action by TSA and would be required to receive special training in conflict resolution as well as sufficient medical training to recognize legitimate complaints and concerns regarding medical conditions and disabilities. | Responding to the need to reliably detect explosives, bomb-making components, and other potential security threats concealed by airline passengers, the Transportation Security Administration (TSA) has focused on the deployment of whole body scanners as a core element of its strategy for airport checkpoint screening. TSA has deployed about 700 of these scanners, known as whole body imagers (WBI) or advanced imaging technology (AIT), at airports throughout the United States, and plans to have 1,800 in place by the end of FY2014. AIT systems include two technologies: millimeter wave systems and X-ray backscatter systems. AIT directly addresses specific recommendations and mandates to improve the detection of explosives on passengers. However, the deployment of these systems has generated a number of concerns. Although polling data indicate that the American public generally accepts the use of body scanners for passenger screening, various stakeholders have expressed concerns over privacy, potential health risks, and delays in getting through security. Concerns have also been raised regarding screening individuals with special needs, the overall effectiveness of current technology, screener staffing requirements, and TSA's deployment strategy. While TSA voluntarily applies a number of privacy measures (such as viewing AIT images remotely and providing alternative pat-down screenings on request), U.S. law does not specifically require these actions. Beyond these existing procedural measures to protect privacy, TSA is working toward the eventual elimination of human image viewers, replacing them with automated target recognition (ATR) technology to detect potential threats. If ATR eliminates the need for most image viewers, as expected, this could reduce TSA staffing requirements. However, this depends to an extent on the alarm rate for ATR, since TSA procedures require alarms to be resolved by labor-intensive pat-down searches. ATR is currently being deployed on all newly acquired millimeter wave systems and is being retrofitted into already deployed millimeter wave systems. It has not been announced whether a similar system will be implemented for X-ray backscatter imagers. The availability of ATR on millimeter wave units, coupled with continued public perceptions of potential health concerns associated with X-ray backscatter systems, appear to be key factors influencing TSA's approach to focus future acquisitions and deployments on millimeter wave systems. Bills under consideration in the 112th Congress, including the Aircraft Passenger Whole-Body Imaging Limitations Act of 2011 (H.R. 1279) and the Checkpoint Images Protection Act of 2011 (H.R. 685), address privacy and health safety concerns. Additionally, the Transportation Security Administration Authorization Act of 2011 (H.R. 3011) contains a provision that would require all deployed AIT systems to have ATR capabilities and any image retention capabilities to be disabled. Lastly, the Restoring Integrity and Good-Heartedness in Traveler Screening Act, or the "RIGHTS Act" (S. 2207), would address concerns over the processing of passenger complaints regarding TSA procedures and improve assistance to passengers needing special accommodations at screening checkpoints. |
Marijuana is the most commonly used illicit drug in the United States. It is a psychoactive drug that generally consists of leaves and flowers of the cannabis sativa plant. Its history dates back thousands of years, but in the United States, it became popular as a recreational drug in the early 20 th century. The THC content of marijuana is dependent on both the variety of the cannabis plant and the part used. Under federal law, cannabis and its derivatives are classified as Schedule I controlled substances—thus prohibiting their possession, cultivation, or distribution—under the Controlled Substances Act (CSA), regardless of its THC content, unless specifically exempted or listed in another schedule (see " Controlled Substances Act "). The percentage of the population 12 and older currently using (past month use of) marijuana has generally increased over the last several years—from 6.9% in 2010 to 8.3% in 2015. The rate of past-month marijuana use among youth (aged 12-17), however, has remained relatively unchanged over this period (7.0%). Youth also generally perceive that obtaining marijuana—if they desire it—is relatively easy. Indeed, marijuana is available throughout the United States; 34% of state and local law enforcement agencies that were surveyed by the Drug Enforcement Administration (DEA) reported an increase in availability over the last year, and 62% reported that availability had remained the same. This report provides a background on federal marijuana policy and an overview of state trends with respect to marijuana decriminalization and legalization—for both medical and recreational uses. It then analyzes relevant issues for federal law enforcement and the implications of state marijuana legalization. The report also outlines a number of related policy questions that Congress may confront, including legalization in the District of Columbia, financial services for marijuana businesses, the medical nature of marijuana, oversight of federal law enforcement, and evaluation of marijuana as a Schedule I drug. Marijuana is currently listed as a Schedule I controlled substance under the CSA. This indicates that the federal government has determined that (A) The drug or other substance has a high potential for abuse. (B) The drug or other substance has no currently accepted medical use in treatment in the United States. (C) There is a lack of accepted safety for use of the drug or other substance under medical supervision. U.S. federal drug control policies—specifically those positions relating to marijuana—continue to generate debates among policymakers, law enforcement officials, scholars, and the public. Even before the federal government's move in 1970 to criminalize the manufacture, distribution, dispensation, and possession of marijuana, there were significant discussions over marijuana's place in American society. Changes in state and local marijuana laws are coupled with a general shift in public attitudes toward the substance. In 1969, 12% of the surveyed population supported legalizing marijuana; today, 60% of surveyed adults feel that marijuana should be legalized. Support for legalization has more than doubled over the last 20 years. In addition, nearly 60% of respondents indicate that the federal government should not enforce federal marijuana prohibition laws in those states that allow for its use. As mentioned, marijuana's placement on Schedule I of the CSA means that it has no currently accepted medical use according to the federal government. Under federal law, marketing a drug as medicine requires approval from the Food and Drug Administration (FDA). While most states have laws allowing for medicinal use of marijuana, the FDA has not approved marijuana, any drug containing marijuana, or any drug containing a plant-derived chemical constituent of marijuana for medicinal use. The FDA has, however, approved two drugs containing synthetic THC. In addition, drugs containing plant-derived THC and/or cannabidiol (CBD, a nonpsychoactive chemical component of marijuana) are in the drug development and approval process. See Appendix A for further discussion of these drugs. Individuals use marijuana to treat medical issues such as lack of appetite, nausea, chronic pain, spasticity, anxiety, and other maladies; however, the efficacy of this treatment is unclear from available scientific evidence. While some individuals report (both anecdotally and in scientific studies) benefits and alleviation of symptoms from use of marijuana, reports are inconsistent. Some have argued that the scientific field has been unable to robustly determine the medicinal value and merits of marijuana due to regulatory restrictions on quality, quantity, and use of marijuana in scientific research. Recent evaluations conducted separately by the FDA and the National Academies of Sciences, Engineering, and Medicine (the National Academies) illustrate the challenge of meeting the required standard of evidence for demonstrating effective medical use. While taking different approaches to their evaluations, both the FDA and the National Academies have found that the current evidence base falls short. According to the FDA, "no published studies conducted with marijuana meet the criteria of an adequate and well-controlled efficacy study," and "the criteria for adequate safety studies [have] also not been met." According to the National Academies, "conclusive evidence regarding the short- and long-term health effects (harms and benefits) of cannabis use remains elusive." These studies are discussed in more detail in Appendix A . Individuals who seek to conduct research on any controlled substance must do so in accordance with the CSA and other federal laws. For all controlled substances, individuals must obtain a registration issued by the Attorney General, as delegated to the DEA in accordance with associated rules and regulations issued by the Attorney General. Also, DEA regulations require all registrants to comply with strict storage requirements for controlled substances. Some have argued that federal regulation of marijuana research unnecessarily impedes the clinical trials that are required for FDA approval, and the Obama Administration simplified some small steps within the larger process. In recent years, the federal government has attempted to make marijuana research easier. In June 2015, HHS eliminated one step in obtaining research-grade marijuana for research that is not funded by the National Institutes of Health. In December 2015, the DEA announced a waiver to make it easier for researchers conducting clinical trials with CBD to modify their research protocols and obtain more CBD than was initially approved. In August 2016, the DEA announced a new policy intended to increase the number of approved sources of research-grade marijuana. Prior to the August 2016 change, some contended that marijuana provided to researchers was "both qualitatively and quantitatively inadequate." The DEA's recent policy change may appease those researchers seeking better quality and quantity of marijuana. For broader discussion of this issue, see Appendix A . While the federal government maintains marijuana's current placement as a Schedule I controlled substance, states have established a range of laws and policies regarding its medical and recreational use. These developments have spurred a number of questions regarding potential implications for federal drug enforcement activities and for the nation's drug policies as a whole. In 1970, the CSA placed the control of marijuana under federal jurisdiction regardless of state regulations and laws, and its status has remained unchanged under federal law for nearly 50 years. For more background on federal marijuana policy and the history of how marijuana came to be illegal in the United States, see Appendix B . There has been mounting public pressure for the DEA to reevaluate marijuana as a Schedule I controlled substance. Over the years, several entities have submitted petitions to reschedule marijuana. In August 2016, after a five-year evaluation process done in conjunction with the Food and Drug Administration (FDA), the DEA rejected two petitions submitted by two state governors and a New Mexico health provider, respectively, to move marijuana to a less-restrictive schedule under the CSA. Consistent with past practice, the rejections were based on a conclusion by both the FDA and DEA that marijuana continues to meet the criteria for inclusion on Schedule I—namely that it has a high potential for abuse, has no currently accepted medical use, and lacks an accepted level of safety for use under medical supervision. It is important to note that both Congress and the Administration have the power to alter marijuana's status as a Schedule I substance. Congress could amend the CSA to move marijuana to a lower schedule or remove it entirely from control. The Administration could also make such changes on its own, though it is bound by the CSA to evaluate a substance prior to altering its scheduling status. Over the past few decades, most states have deviated from an across-the-board prohibition of marijuana, and as of March 2017, nearly 90% of the states, as well as Puerto Rico and the District of Columbia, allowed for the medical use of marijuana in some capacity. Also, eight states and the District of Columbia now allow for the recreational use of marijuana. It is now more so the rule than the exception that states have laws and policies allowing for some manufacturing, sale, distribution, and possession of marijuana—all of which are contrary to the CSA, except for the purposes of sanctioned research. Evolving state-level positions on marijuana include decriminalization initiatives, legal exceptions for medical use, and legalization of certain quantities for recreational use. See Figure 2 at the end of this section for the various marijuana policies of states. Decriminalization and legalization initiatives in the states reflect growing public support for the legalization of marijuana. As mentioned, just prior to passage of the CSA in 1970, 12% of surveyed individuals aged 18 and older felt that marijuana should be made legal. In 2016, more than half (60%) of surveyed U.S. adults expressed that marijuana should be legalized. Marijuana decriminalization differs markedly from legalization . A state decriminalizes conduct by removing the accompanying criminal penalties; however, civil penalties remain. If, for instance, a state decriminalizes the possession of marijuana in small amounts, possession of it still violates state law, but possession of quantities within the specified small amount is considered a civil offense and subject to a civil penalty, not criminal prosecution. By decriminalizing possession of marijuana in small amounts, states are not legalizing its possession. In addition, as these initiatives generally relate to the possession (rather than the manufacture or distribution) of small amounts of marijuana, decriminalization initiatives do not impede federal law enforcement's priority of targeting high-level drug offenders, or so-called "big fish," rather than individual users. Decriminalization initiatives by the states do not appear to be at odds with the CSA because both maintain that possessing marijuana is in violation of the law. For example, individuals in possession of small amounts of marijuana in Nebraska—a state that has decriminalized possession of small amounts—are in violation of both the CSA and Nebraska state law. The difference lies in the associated penalties for these federal and state violations. Under the CSA, a person convicted of simple possession (first offense) of marijuana may be punished with up to one year imprisonment and/or fined not more than $1,000. Under Nebraska state law, a person in possession (first offense) of an ounce or less of marijuana is subject to a civil penalty of not more than $300. In recent years, several states have decriminalized the possession of small amounts of marijuana; however, some of these states continue to treat possession of small amounts of marijuana as a criminal offense under specific circumstances. In New York, for example, the possession of small amounts of marijuana is still considered a crime when it is "open to public view." In 2015, just over 21,000 individuals in New York were arrested for criminal possession of marijuana in the fifth degree, a misdemeanor. Several cities have officially or unofficially decriminalized marijuana possession regardless of what has occurred at the state level. In November 2014, New York City (NYC) Mayor de Blasio and NYC Police Commissioner Bratton announced a change in marijuana enforcement policy; individuals found to be in possession of marijuana (25 grams or less) may be eligible to receive a summons instead of being arrested. The New York City Police Department (NYPD) issues so-called "pot tickets" for those in possession of 25 grams or less. In 2016, however, preliminary data indicated that marijuana possession arrests were increasing in NYC compared to 2015—this increase could be the result of changes in NYPD arrest policies; this remains unclear. Just as there are disparities in state and federal laws and policies, some cities' decriminalization initiatives run contrary to the laws and policies of the states. In Pennsylvania, the state government has not decriminalized marijuana possession, but Pittsburgh, Philadelphia, State College, and Harrisburg have all decriminalized possession in some form. In 2016, Harrisburg's city council unanimously voted to make possession of 30 grams or less of marijuana punishable by a $75 fine and public use punishable by a $150 fine. In 1996, California became the first state to amend its drug laws to allow for the medicinal use of marijuana. As of March 2017, over half of the states, the District of Columbia, Puerto Rico, and Guam have comprehensive policies allowing for the medicinal use of marijuana. Seventeen additional states allow for so-called "limited access medical marijuana," which refers to cannabis with low THC content or CBD oil. As noted, the CSA does not distinguish between the medical and recreational use of marijuana. Under the CSA, marijuana has "no currently accepted medical use in treatment in the United States," and states' allowance of its use for medical purposes is at odds with the federal position. Federal law enforcement has investigated, arrested, and prosecuted individuals for medical marijuana-related offenses regardless of whether they are in compliance with state law; however, federal law enforcement emphasizes the investigation and prosecution of growers and dispensers over individual users of medical marijuana. Federal enforcement priorities are discussed further in " Federal Response to State Divergence ." In contrast to marijuana decriminalization initiatives wherein civil penalties remain for violations involving marijuana possession, marijuana legalization measures remove all state-imposed penalties for specified activities involving marijuana. Until 2012, the recreational use of marijuana had not been legal in any U.S. state since prior to the passage of the CSA in 1970. In November 2012, citizens of Colorado and Washington voted to legalize, regulate, and tax small amounts of marijuana for recreational use. In November 2014, legalization initiatives also passed in Alaska, Oregon, and the District of Columbia (DC), further expanding the disparities between federal and state marijuana laws. Later, in November 2016, recreational legalization initiatives passed in Massachusetts, California, Maine, and Nevada. These recreational legalization initiatives all legalized the possession of specific quantities of marijuana by individuals aged 21 and over and (with the exception of DC) set up state-administered regulatory schemes for the sale of marijuana; however, there are variations among the initiatives. For example, Colorado, Alaska, Oregon, Massachusetts, Nevada, Maine, California, and DC allow for individuals to grow their own marijuana plants while Washington does not. These legalization initiatives also specify that many actions involving marijuana remain crimes. For example, in Washington, as well as other states, the operation of a motor vehicle while under the influence of marijuana remains a crime. In some states such as Colorado, individuals over the age of 21 may grow small amounts of marijuana for personal use, but marijuana may not be consumed "openly and publicly or in a manner that endangers others." In an example of city-level initiatives breaking from state-level policies, in November 2016, the city of Denver voted to allow designated areas where public consumption of marijuana would be allowed. Figure 2 highlights the status of marijuana laws by state. Rather than targeting individuals for drug use and possession, federal law enforcement has generally focused its counterdrug efforts on criminal networks involved in the drug trade. Notably, federal policing efforts on marijuana enforcement appear consistent with this position. Federal marijuana enforcement efforts have largely been focused on traffickers and distributors of illicit drugs, rather than the low-level users; rather, arrests for marijuana possession offenses are largely made by state and local police. President Obama once noted that "[it] would not make sense from a prioritization point of view for us to focus on recreational drug users in a state that has already said that under state law that's legal." While it is not yet clear how the Trump Administration will proceed with drug enforcement priorities, the White House press secretary indicated there may be increased enforcement against recreational marijuana, and stated that there is a "big difference" between medical and recreational marijuana. After some states began to legalize the medical use of marijuana, the Department of Justice (DOJ) reaffirmed that marijuana growth, possession, and trafficking remain crimes under federal law irrespective of how individual states may change their laws and positions on marijuana. DOJ has clarified federal marijuana policy through several memos providing direction for U.S. Attorneys in states that allow the medical use of marijuana. In the so-called "Ogden Memo" of 2009, former Deputy Attorney General David Ogden reiterated that combating major drug traffickers remains a central priority and stated: [t]he prosecution of significant traffickers of illegal drugs, including marijuana, and the disruption of illegal drug manufacturing and trafficking networks continues to be a core priority in the [Justice] Department's efforts against narcotics and dangerous drugs, and the Department's investigative and prosecutorial resources should be directed towards these objectives. As a general matter, pursuit of these priorities should not focus federal resources in your States on individuals whose actions are in clear and unambiguous compliance with existing state laws providing for the medical use of marijuana. In a follow-up memorandum to U.S. Attorneys, former Deputy Attorney General James Cole restated that enforcing the CSA remained a core priority of DOJ, even in states that had legalized medical marijuana. He clarified that "[t]he Ogden Memorandum was never intended to shield such activities from federal enforcement action and prosecution, even where those activities purport to comply with state law." In his memo, Deputy Attorney General Cole warned those who might assist medical marijuana dispensaries in any way. He stated that "[p]ersons who are in the business of cultivating, selling or distributing marijuana, and those who knowingly facilitate such activities [emphasis added], are in violation of the Controlled Substances Act, regardless of state law." This has been interpreted by some to mean, for example, that building owners and managers are in violation of the CSA by allowing medical marijuana dispensaries to operate in their buildings. Deputy Attorney General Cole further warned that "[t]hose who engage in transactions involving the proceeds of such activity [cultivating, selling, or distributing of marijuana] may be in violation of federal money laundering statutes and other federal financial laws." This warning may be one reason why medical marijuana dispensaries have had difficulty accessing bank services. In an August 2013 memorandum, Deputy Attorney General Cole stated that while marijuana remains an illegal substance under the CSA, DOJ would focus its resources on the "most significant threats in the most effective, consistent, and rational way." The memo outlined eight enforcement priorities for DOJ: Preventing the distribution of marijuana to minors; Preventing revenue from the sale of marijuana from going to criminal enterprises, gangs, and cartels; Preventing the diversion of marijuana from states where it is legal under state law in some form to other states; Preventing state-authorized marijuana activity from being used as a cover or pretext for the trafficking of other illegal drugs or other illegal activity; Preventing violence and the use of firearms in the cultivation and distribution of marijuana; Preventing drugged driving and the exacerbation of other adverse public health consequences associated with marijuana use; Preventing the growing of marijuana on public lands and the attendant public safety and environmental dangers posed by marijuana production on public lands; and Preventing marijuana possession or use on federal property. In a February 2014 memorandum, Deputy Attorney General Cole further reinforced these enforcement priorities, specifically as they relate to the prosecution of marijuana-related financial crimes. The memo directed the U.S. Attorneys that "in determining whether to charge individuals or institutions with ... [certain financial] offenses based on marijuana-related violations of the CSA, prosecutors should apply the eight enforcement priorities described in the August 29 guidance." In October 2014, DOJ released another memo to the U.S. Attorneys that reiterated the applicability of the eight enforcement priorities to their marijuana efforts in Indian country. It responded to the American Indian tribes' requests for guidance on CSA enforcement on tribal lands. DOJ reiterated that the August 2013 Cole memo does not prohibit the federal government from enforcing federal law in Indian Country, and adds the following: The eight priorities in the Cole Memorandum will guide United States Attorneys' marijuana enforcement efforts in Indian Country, including in the event that sovereign Indian Nations seek to legalize the cultivation or use of marijuana in Indian Country [emphasis added]. Unlike the Cole memo, DOJ did not specifically refer to distribution and regulation of marijuana. It was unclear whether distribution of marijuana would be tolerated on tribal lands should tribal governments seek to legalize and distribute marijuana. Despite the lack of clarity, some tribes moved forward with plans to grow and sell marijuana at tribe-owned stores on tribal lands. Since the memo was released, the DEA has led marijuana enforcement actions on tribal lands, but it remains unclear whether legal marijuana will be tolerated on tribal land as it has been tolerated in states. In a review of the DOJ memoranda, the Government Accountability Office (GAO) concluded that "DOJ has not historically devoted resources to prosecuting individuals whose conduct is limited to possession of small amounts of marijuana for personal use on private property. Rather, DOJ has left such lower-level or localized marijuana activity to state and local law enforcement authorities through enforcement of their own drug laws." GAO has recommended that DOJ monitor the effects of state-level marijuana legalization initiatives relative to the eight DOJ enforcement priorities. This evaluation noted that DOJ has used a number of tools to help assess these effects. For instance, DOJ indicated to GAO that U.S. Attorneys were in contact with officials in states such as Colorado and Washington that had legalized marijuana. In addition, DOJ reported that it relies upon information from sources such as "federal surveys on drug use; state and local research; and feedback from federal, state, and local law enforcement." Notably, DOJ has reportedly not been documenting its specific monitoring process, and GAO has recommended that DOJ develop a "clear plan" for how it will monitor and document the effects of state marijuana legalization on federal enforcement priorities. Over the past several years, Congress has included provisions in appropriations acts that prohibit DOJ from using appropriated funds to prevent certain states and the District of Columbia from "implementing their own State laws that authorize the use, distribution, possession, or cultivation of medical marijuana." The current appropriations provision is in effect until April 28, 2017. Courts have interpreted the appropriation provision to restrict DOJ from using appropriated funds (1) to take legal action directly against states and (2) to initiate criminal prosecutions of state officials for any action related to the implementation of a state medical marijuana law. Several federal courts also have interpreted the provision as prohibiting DOJ from prosecuting individuals who, while strictly complying with the laws of one of the states covered by the appropriations provisions, have allegedly distributed, possessed, or cultivated medical marijuana in violation of federal law. Although the appropriations provision restricts DOJ's ability to expend funds to enforce federal law, at least one court has made clear that the provision "does not provide immunity from prosecution for federal marijuana offenses." As explained below, so long as marijuana remains classified as a Schedule I controlled substance under federal law, financial institutions and their directors, officers, employees, and owners could be subject to severe criminal and administrative sanctions for providing financial services to marijuana businesses, even if those businesses are operating in compliance with state law. A consequence of these legal risks is that many financial institutions reportedly have been unwilling to provide financial services to state-authorized marijuana businesses. Federal law classifies marijuana as a Schedule I controlled substance. As a result, it is a federal crime to grow, sell, or merely possess the drug. In addition to facing the prospect of a federal criminal prosecution, imprisonment, and criminal fines, those who violate the federal CSA may suffer a number of additional adverse consequences under federal law. For example, federal authorities may confiscate any property used to grow marijuana or facilitate its sale or use, as well as all proceeds derived from the sale of marijuana. When financial institutions provide financial services to business customers, they generally are not directly involved in the sale, possession, or distribution of their customers' products. However, financial institutions commonly acquire the proceeds from the sale of their customers' products. To the extent that a bank acquires such proceeds with the knowledge that they are derived from the sale of marijuana in violation of federal law, the proceeds potentially could be confiscated by federal authorities, even when the underlying actions are permissible under state law. For example, if a bank originates a loan to a business openly operating as a state-authorized medical marijuana dispensary, then the principal and interest payments earned by the bank on that loan could be subject to forfeiture, if the bank knew that those payments derived from the sale of marijuana in violation of federal law. In addition to the risk of asset forfeiture, federal anti-money laundering laws (i.e., Sections 1956 and 1957 of the criminal code) criminalize the handling of proceeds that are known to be derived from certain unlawful activities, including the sale and distribution of marijuana. Violators of these anti-money laundering laws may be subject to fines and imprisonment, and any real or personal property involved in or traceable to prohibited transactions is subject to criminal or civil forfeiture. For example, a bank employee could be subject to a 20-year prison sentence and criminal money penalties under Section 1956 for knowingly engaging in a financial transaction involving marijuana-related proceeds that is conducted with the intent to promote a further offense (e.g., withdrawing marijuana-generated funds in order to pay the salaries of medical marijuana dispensary employees). Similarly, a bank officer could face a 10-year prison term and criminal money penalties under Section 1957 for knowingly depositing or withdrawing $10,000 or more in cash that is derived from the distribution and sale of marijuana. Furthermore, Congress has crafted laws that affirmatively enlist financial institutions to aid in the investigation and prosecution of those who violate federal laws, including the CSA. For example, financial institutions generally must file suspicious activity reports (SARs) with the Treasury Department's Financial Crimes Enforcement Network (FinCEN) regarding financial transactions suspected to be derived from specified illegal activities, including the sale of marijuana. Depository institutions and certain other financial institutions also must establish and maintain anti-money laundering programs, designed to ensure that the institutions' officers and employees will have sufficient knowledge of their customers and of the businesses of those customers to identify the circumstances under which filing SARs is appropriate. Even in the absence of suspicion, financial institutions must file currency transaction reports (CTRs) with FinCEN relating to transactions involving $10,000 or more in cash or other "currency." The failure to comply with these reporting requirements can result in fines and imprisonment. Additionally, financial institutions, their employees, and certain other affiliated parties could be subject to administrative enforcement actions by federal regulators for violating the Bank Secrecy Act or anti-money laundering laws. For example, the federal banking regulators may utilize administrative enforcement powers against depository institutions and their directors, officers, controlling shareholders, employees, agents, and affiliates that engage in unlawful, marijuana-related activities. The banking regulators have the legal authority, for instance, to issue cease and desist orders, impose civil money penalties, and issue removal and prohibition orders that temporarily or permanently ban individuals from working for any depository institution. The banking regulators also have the authority, under certain circumstances, to revoke an institution's federal deposit insurance coverage and to take control of and liquidate a depository institution. In fact, a criminal conviction for violating the Bank Secrecy Act or anti-money laundering laws is an explicit ground for the appointment of the Federal Deposit Insurance Corporation "as receiver [to] place the insured depository institution in liquidation." In response to state marijuana legalization efforts, FinCEN issued guidance with respect to marijuana-related financial crimes on February 14, 2014. This guidance appears to provide a roadmap for financial institutions seeking to comply with suspicious activity reporting requirements when providing financial services to state-authorized marijuana businesses, while also alerting FinCEN to transactions that might trigger federal enforcement priorities. The guidance notes that: [b]ecause federal law prohibits the distribution and sale of marijuana, financial transactions involving a marijuana-related business would generally involve funds derived from illegal activity. Therefore, a financial institution is required to file a SAR on activity involving a marijuana-related business (including those duly licensed under state law) in accordance with this guidance and [FinCEN regulations]. FinCEN advised financial institutions that, in providing services to a marijuana business, they must file one of three types of special SARs: 1. A marijuana limited SAR: The marijuana limited SAR is seen to be appropriate when the bank determines, after the exercise of due diligence, that a customer is not engaged in any activities that violate state law or implicate the investigation and prosecution priorities in the 2014 Cole Memorandum (see " Department of Justice Guidance Memos for U.S. Attorneys "); 2. A marijuana priority SAR: A marijuana priority SAR must be filed when the financial institution believes a customer is engaged in activities that implicate DOJ's investigation and prosecution priorities; and 3. A marijuana termination SAR: A financial institution is instructed to file a marijuana termination SAR when it finds it necessary to sever its relationship with a customer to maintain an effective anti-money laundering program. FinCEN also provides examples of "red flags" that may indicate that a marijuana priority SAR is appropriate. The FinCEN guidance does not impact financial institutions' obligations to file currency transaction reports. While the majority of the American public supports marijuana legalization, some have voiced concern over possible negative implications, particularly with respect to recreationa l legalization. Some concerns were outlined as enforcement priorities by DOJ in monitoring state legalization. These implications include, but are not limited to, the potential impact of legalization on (1) use of marijuana, particularly among youth; (2) traffic-related incidents involving marijuana-impaired drivers; (3) trafficking of marijuana from states that have legalized it into neighboring states that have not; and (4) U.S. compliance with international treaties. On the other hand, some have been encouraged by the potential outcomes from marijuana legalization, including new tax revenue for states and a potential decrease in marijuana-related arrests. Not all potential implications are discussed in this report, and some are yet to be fully measured. Of note, data on potential effects of marijuana legalization should be interpreted with caution, as they are fairly limited, and not all factors are presented when reporting changes in statistics since state legalization. Further, conclusions about the impact of marijuana legalization would be premature without broader inclusion of both historical data and additional years of post-legalization data, as well as consideration of other factors aside from legalization. As discussed, marijuana is the most commonly used illicit drug in the United States. In 2015, an estimated 22.2 million individuals aged 12 or older were current (past month) users of marijuana. The percentage of users has gradually increased over the last several years—from 6.9% in 2010 to 8.3% in 2015. The rate of past-month marijuana use among youth (aged 12 to 17), however, has remained fairly unchanged over this period (7.0%). In the states that legalized recreational marijuana in November 2012 (Washington and Colorado), the percentages of youth (aged 12-17) and adults (aged 18 and older) who are current users have changed in various ways over the 2010-2015 period according to survey data. For adults, the changes generally match national trends over the same time period (see Figure 3 ). Colorado and Washington have higher percentages of use for adults and youth compared to national estimates—both before and after recreational legalization began. Of note, the 2014/2015 percentages of marijuana use among youth are fairly similar to the percentages reported in 2010/2011, while adult percentages are higher than those reported in 2010/2011. Rates of drug use may be influenced by many possible factors including availability of the drug, family, peers, school, economic status, and community variables. Of note, some state government officials in states that have legalized marijuana have monitored changes in drug use patterns and emerging research on the health effects of marijuana. For example, the Colorado Department of Public Health and Environment (CDPHE) was given the responsibility to "monitor changes in drug use patterns, broken down by county and race and ethnicity, and the emerging science and medical information relevant to the health effects associated with marijuana use." The recent use of marijuana has been shown to impair driving ability. According to the National Highway Traffic Safety Administration (NHTSA), "[l]ow doses of THC moderately impair cognitive and psychomotor tasks associated with driving, while severe driving impairment is observed with high doses, chronic use and in combination with low doses of alcohol." Some may be concerned that recreational marijuana legalization could be associated with an increase in marijuana-related traffic incidents. In Colorado, despite limited traffic data, the Department of Public Safety reports the following: [T]he number of summons issued for Driving Under the Influence [DUI] in which marijuana or marijuana-in-combination[ ] with other drugs [was recorded] decreased 1% between 2014 and 2015 (674 to 665). The prevalence of marijuana or marijuana-in-combination identified by CSP [Colorado State Patrol] as the impairing substance increased from 12% of all DUIs in 2014 to 15% in 2015. The Denver Police Department found summons where marijuana or marijuana‐in-combination was recorded increased from 33 to 73 between 2013 and 2015. Citations for marijuana or marijuana‐in‐combination account for about 3% of all DUIs in Denver. Toxicology results from Chematox Laboratory showed an increase in positive cannabinoid screens for drivers, from 57% in 2012 to 65% in 2014. Of those that tested positive on the initial screen, the percent testing positive for delta‐9 Tetrahydrocannabinol (THC) at 2 nanograms/millileter rose from 52% in 2012 to 67% in 2014. Fatalities with THC‐only or THC‐in‐combination positive drivers increased 44%, from 55 in 2013 to 79 in 2014. Note that the detection of any THC in [the] blood is not an indicator of impairment but only indicates presence in the system. Detection of delta‐9 THC, one of the psychoactive properties of marijuana, may be an indicator of impairment. In monitoring the impacts of recreational marijuana legalization in Washington State, government researchers report that there was no trend identified in the percentage of drivers testing positive for marijuana (either marijuana only or marijuana in combination with other drugs/alcohol) for those involved in traffic fatalities and who were tested for drugs or alcohol. They also report that "marijuana incidents" on the highways and roads decreased from 2,462 in 2012 to 625 in 2014. Changes in these data may be influenced by many possible factors including changes in enforcement practices and priorities. It is possible that the sharp drop in marijuana incidents may be explained by the legalization of marijuana possession after 2012. For example, many traffic stops involving the smell of marijuana would no longer require further law enforcement investigation unless the individual in question is under the age of 21, there is suspicion of drug trafficking, or other reasons. After the legalization of the possession, sale, manufacturing, and distribution of certain quantities of marijuana for recreational purposes, one might expect the number of marijuana arrests to go down in jurisdictions that have done so. Indeed, Washington State reports that "all criminal activities involving marijuana decreased between 2012 and 2014." Possession was cited as the most common criminal activity, and the number of marijuana possession arrests decreased from 5,133 in 2012 to 2,091 in 2013, and then to 1,918 in 2014. Additionally, the number of marijuana incidents decreased from 6,336 in 2012 to 2,326 in 2014. In Colorado, the number of marijuana arrests decreased by nearly half from 12,894 in 2012 to 6,502 in 2013, and then increased to 7,004 in 2014. Of note, the number of marijuana arrests for youth (aged 10-17) increased by 6%, from 3,235 in 2012 to 3,400 in 2014, after a slight decline in 2013. Mexican transnational criminal organizations have historically been the primary foreign suppliers of marijuana to the United States, with small amounts also coming from Canada and the Caribbean. While anecdotal reports about the impact of domestic legalization initiatives on the domestic marijuana black market exist, officials have noted that there is an "intelligence gap" with respect to data on exactly how domestic legalization has impacted the amount of Mexican-produced marijuana entering the United States. For one, estimates on domestic marijuana consumption cannot speak to the source of this marijuana. In addition, drug seizure data from the various federal, state, and local law enforcement agencies do not give a sense of the origin of the marijuana. Further, there is no marijuana "signature program," like there is for cocaine and heroin, that can help determine the geographic origin of cannabis plants used to produce the seized marijuana. Marijuana cultivation in Mexico has decreased, though it is unclear precisely how this affects or is driven by U.S. demand for Mexican marijuana. One of the tradeoffs has been an increase in production of other drugs. Reportedly, the trafficking organizations have shifted production to more profitable drugs such as heroin and methamphetamine. Consistent with a decline in Mexican marijuana cultivation, there has been a general decline in marijuana seizures along the Southwest border between 2010 and 2015. However, the DEA's outlook on marijuana trafficking is that "Mexico-produced marijuana will continue to be trafficked into the United States in bulk quantities and will likely increase in quality to compete with domestically-produced marijuana." One notable statistic is that since the first states began legalizing marijuana for recreational use in 2012, there has been a "sharp decline" in the number of individuals prosecuted and sentenced for federal marijuana trafficking offenses. As experts have noted, however, this decline could be driven by a number, or combination, of factors such as federal efforts to prosecute marijuana-related drug offenders, efforts by drug traffickers to conceal their illegal contraband entering the United States, and the amount of illegal marijuana being shipped into the United States. Some states have alleged that there has been increased marijuana trafficking from nearby states that have legalized marijuana possession or sale for medical or recreational purposes. For instance, according to DEA testimony, there has been increased marijuana trafficking in states surrounding Colorado since the state legalized recreational use. The Rocky Mountain High Intensity Drug Trafficking Area (HIDTA) reported 394 instances of interdiction of Colorado marijuana destined for 36 other states in 2015. Additionally, the HIDTA's report indicates that interdiction experts estimate these seizures represent about 10% or less of the total amount that is moved across the border undetected. In December 2014, Nebraska and Oklahoma filed a lawsuit in the U.S. Supreme Court against Colorado claiming that their law enforcement and criminal justice systems had been adversely impacted by Colorado's laws legalizing marijuana. The complaint included claims that Colorado's "statutes and regulations are devoid of safeguards to ensure marijuana cultivated and sold in Colorado is not trafficked to other states." In March 2016, however, the Supreme Court declined to hear the case challenging Colorado's marijuana law. There have been reports of changes in the domestic black market for marijuana as states have moved to legalize it for medical and recreational purposes. For instance, the market in Denver, CO, has been described as smaller and less violent than it previously was. In addition, buyers there are said to be purchasing more from "mom-and-pop operations" rather than from entities affiliated with larger cartels. Most of the domestically produced marijuana (other than that which is produced in accordance with various state laws) is cultivated in California. This cultivation is carried out not only by U.S. persons, but also by foreign criminal networks. For instance, Mexican traffickers run large outdoor grow sites in California, which are sometimes established on public lands. The DEA has indicated that marijuana concentrates—such as hashish, hash oil, and keif—are a growing concern for federal law enforcement. These substances have "potency levels far exceeding those of leaf marijuana." The DEA has also stated that one effect of state marijuana legalization initiatives has been an increase in seizures of marijuana concentrates and an increase in the number of THC extraction laboratories in the United States. Broadly, there has been a shifting demand for higher-quality marijuana. The marijuana produced in the United States and Canada is generally thought to be of superior quality to the marijuana produced in Mexico. To be responsive to the U.S. demand for high-quality marijuana, Mexican drug traffickers have tried to improve their product. However, it is not just U.S. consumers who demand higher-quality marijuana. The demand exists in Mexico as well; there have even been anecdotal reports of traffickers moving high-quality marijuana produced in the United States across the Southwest border for sale and distribution in Mexico. U.S. officials have not yet reported data on the quantity or frequency of this southbound smuggling. In Colorado, state law allows the cultivation of up to 99 marijuana plants for patients and caregivers and up to 6 plants per individual for recreational purposes. In what has been dubbed "the gray market," marijuana is sometimes being grown legally but then sold illegally. In addition to federal and local enforcement actions against gray market actors, Colorado Governor Hickenlooper reportedly is seeking to establish new limits on residential plants and give law enforcement additional resources to combat unlicensed marijuana growers. A number of criminal networks rely on profits generated from the sale of illegal drugs—including marijuana—in the United States. Mexican drug trafficking organizations control more of the wholesale distribution of marijuana than other major drug trafficking organizations in the United States. One estimate has placed the proportion of U.S.-consumed marijuana that was imported from Mexico at somewhere between 40% and 67%. While the Mexican criminal networks control the wholesale distribution of illicit drugs in the United States, they "are not generally directly involved in retail distribution of illicit drugs." In order to facilitate the retail distribution and sale of drugs in the United States, Mexican drug traffickers have formed relationships with U.S. street, prison, and outlaw motorcycle gangs. Although these gangs have historically been involved with retail-level drug distribution, their ties to the Mexican criminal networks have allowed them to become increasingly involved at the wholesale level as well. Trafficking and distribution of illicit drugs is a primary source of revenue for these gangs. A number of organizations have assessed the potential profits generated from illicit drug sales, both worldwide and in the United States, but "[e]stimates of marijuana ... revenues suffer particularly high rates of uncertainty." The former National Drug Intelligence Center (NDIC), for instance, estimated that the sale of illicit drugs in the United States generates between $18 billion and $39 billion in U.S. wholesale drug proceeds for the Colombian and Mexican drug trafficking organizations annually. The proportion that is attributable to marijuana sales, however, is unknown. Without a clear understanding of (1) actual proceeds generated by the sale of illicit drugs in the United States, (2) the proportion of total proceeds attributable to the sale of marijuana, and (3) the proportion of marijuana sales controlled by criminal organizations and affiliated gangs, any estimates of how marijuana legalization might impact the drug trafficking organizations are purely speculative. Marijuana proceeds are generated at many points along the supply chain, including production, transportation, and distribution. Experts have debated which aspects of this chain—and the related proceeds—would be most heavily impacted by marijuana legalization. In addition, the potential impact of marijuana legalization in some subset of the states (complicated by varying legal frameworks and regulatory regimes) may be more difficult to model than the impact of federal marijuana legalization. For instance, in evaluating the potential fiscal impact from the 2012 Washington and Colorado legalization initiatives on the profits of Mexican drug trafficking organizations, the Organization of American States (OAS) hypothesized that "[a]t the extreme, Mexican drug trafficking organizations could lose some 20 to 25 percent of their drug export income, and a smaller, though difficult to estimate, percentage of their total revenues." Other scholars have based their estimates on a hypothetical federal legalization of marijuana when estimating the potential financial impact of marijuana legalization. Under this scenario, small-scale growers at the start of the marijuana production-to-consumption chain might be put out of business by professional farmers, a few dozen of which "could produce enough marijuana to meet U.S. consumption at prices small-scale producers couldn't possibly match." Large drug trafficking organizations generate a majority of their marijuana-related income (which some estimates place at between $1.1 billion to $2.0 billion) from exporting the drug to the United States and selling it to wholesalers on the U.S. side of the border. This revenue could be jeopardized if the United States were to legalize the production and consumption of recreational marijuana. Of note, the Tax Foundation has estimated that the annual U.S. marijuana market is $45 billion—0.28% of GDP. Under a legalization regime, some portion of the revenue that might have previously been generated by traffickers could be lost to authorized sellers (in the form of profits) and governments (in the form of taxes). Developments in state marijuana laws and policies, particularly those that relate to recreational marijuana activities, have raised some concerns about the United States' compliance with three United Nations (U.N.) drug control treaties that impose certain international obligations relating to marijuana. These treaties generally seek to curb the use of controlled substances while carving out exceptions for medicinal and scientific uses. The United States is a party to the following drug treaties: The Single Convention on Narcotic Drugs (Single Convention) requires parties to the convention to "take such legislative and administrative measures as may be necessary ... to limit exclusively to medical and scientific purposes" the manufacture, distribution, trade, use, and possession of "cannabis." The 1971 Convention on Psychotropic Substances requires that specific controls be placed upon THC. The 1988 U.N. Convention Against Illicit Traffic in Narcotic Drugs and Psychotropic Substances requires parties to establish criminal penalties for the possession, purchase, or cultivation of marijuana for nonmedicinal consumption, but only to the extent that such action is consistent with the "constitutional principles and basic concepts of [the country's] legal system." The International Narcotics Control Board (INCB or Board) and the Commission on Narcotic Drugs of the Economic and Social Council (Commission) are responsible for monitoring parties' compliance with these treaties, though they appear to have limited ability to enforce such compliance. For example, the Single Convention provides that the Commission may "call the attention of the Board to any matters which may be relevant to the functions of the Board," while the Board may take measures that are "most consistent with the intent to further the co-operation of Governments with the Board and to provide the mechanism for a continuing dialogue between Governments and the Board which will lend assistance to and facilitate effective national action to attain the aims of this Convention." It is unclear whether, or to what extent, the enactment of state laws authorizing the use of marijuana for recreational purposes affects the United States' compliance with the drug treaties. Some assert that state-level recreational marijuana legalization (and the federal government response to those state laws) does not conform with the international obligations regarding marijuana, while others disagree with this interpretation. For example, the then-President of the INCB stated in 2013 that recreational marijuana legalization in states is inconsistent with the Single Convention's requirement that parties limit lawful uses of cannabis to medical and scientific purposes. On the other hand, in 2014, the then-Assistant Secretary of State for International Narcotics and Law Enforcement Affairs appeared to express a contrary view when he urged the international community to "accept flexible interpretation of" the U.N. Drug Control Conventions. He appealed to countries "to tolerate different national drug policies, to accept the fact that some countries will have very strict drug approaches; other countries will legalize entire categories of drugs." A Stanford University professor has also opined that the United States is not in violation of the drug control conventions on account of state-level laws, although a Brookings Institution fellow has argued otherwise. Some observers have raised doubts about claims that the drug treaties contain the "flexibilities" that can accommodate state recreational marijuana laws; they have instead argued for reforms of the treaties to expressly permit them. Yet in September 2014, President Obama disagreed that the international drug control regime needs revision in light of marijuana policy developments. The Trump Administration's stance on this issue has not yet been articulated. All eight of the states that have legalized marijuana for recreational purposes levy some combination of taxes and business licensing fees at the level of marijuana cultivation or retail sales (in addition to general state sales taxes). Tax rates on the cultivation and retail sales are more commonly levied on an ad valorem basis, or as a percentage of price. The tax treatment of medical marijuana varies by state. In some states, medical marijuana is indirectly taxed further back the distribution chain at the cultivator level. In addition, states tax the retail sales of medical marijuana differently. In Colorado, for example, medical marijuana sales are exempt from a 10% special excise tax that applies to recreational marijuana sales, but they are still subject to the 2.9% general state sales tax. In Washington, medical marijuana sales are subject to the same 37% excise tax that applies to recreational sales, but they are exempt from the state's 6.5% general sales tax. While some states utilize marijuana-related revenue streams for general spending purposes, others have approved measures to dedicate a portion of this revenue for spending on education (Colorado and Oregon), criminal justice programs (Alaska), or public health and substance abuse programs (Washington). Overall, though, these tax and spending regimes have been subject to change, as government officials and voters respond to changes in revenue collections and budget priorities. Given the current federal marijuana policy gap with certain states, there are a number of issues that Congress may address. These include, but are not limited to, issues surrounding financial services for marijuana businesses, federal tax issues for these businesses, oversight of federal law enforcement, allowance of states to implement medical marijuana laws and involvement of federal health care workers, and consideration of marijuana's designation as a Schedule I drug. In spite of the guidance issued by FinCEN and DOJ, many financial institutions remain reluctant to openly enter relationships with state-authorized marijuana businesses. Some marijuana businesses and marijuana industry proponents have complained that even when marijuana businesses are able to open bank accounts or secure other financial services, those customer relationships are frequently terminated in relatively short order, especially when the existence of the relationship between the financial institution and the marijuana business becomes public. Over the years, several legislative proposals have been designed to jump-start financial relationships with state-authorized marijuana businesses. Some of these proposals would attempt to alleviate BSA reporting burdens beyond the measures detailed in the 2014 FinCEN guidance. These proposals also would amend banking laws to prevent banking regulators from "prohibit[ing], penaliz[ing], or otherwise discourag[ing] a depository institution from providing financial services to a marijuana-related legitimate business" (i.e., one that is in compliance with a state or local marijuana regulatory regime). While such measures, if enacted, might help around the edges, many financial institutions and their federal regulators may remain apprehensive about ties to the marijuana industry while marijuana is listed as a Schedule I controlled substance under the CSA. In the absence of legislative change to the CSA, financial institutions must proceed with the knowledge that the Administration could reverse or otherwise make significant changes to its enforcement priorities and policies. In other words, while these financial institutions may not be the subject of law enforcement investigations currently, the option remains. Other legislative proposals would reclassify marijuana as a Schedule II substance—this would legalize marijuana for medical purposes. This would likely do more to ease bank concerns with providing financial services to medical marijuana businesses but would not entirely eliminate a financial institution's legal risks, particularly if it associates with medical marijuana businesses that operate in states or localities lacking strong regulatory oversight and enforcement standards. Additionally, the reclassification of marijuana to Schedule II probably would have little impact on the provision of financial services to recreational marijuana businesses because they would still be operating in violation of the CSA. Marijuana producers and retailers may not deduct the costs of selling their product (e.g., payroll, rent, or advertising) for the purposes of the federal income tax filings. The Internal Revenue Code (IRC) Section 280E states that No deduction or credit shall be allowed for any amount paid or incurred during the taxable year in carrying on any trade or business if such trade or business (or the activities which comprise such trade or business) consists of trafficking in controlled substances (within the meaning of schedule I and II of the Controlled Substances Act) which is prohibited by Federal law or the law of any State in which such trade or business is conducted. Media reports indicate that the Internal Revenue Service (IRS) has enforced Section 280E in audits of marijuana-related businesses by refusing to accept these businesses' deductions. IRC Section 280E does not prohibit a marijuana business from deducting the costs of cultivating or acquiring marijuana as a "cost of goods sold," though. Effectively this constitutes an implicit tax on marijuana-related businesses equal to the value of the tax benefit of such deductions if these firms had engaged in an industry that was legal under federal law. One such public case involves the Sacramento-based Canna Care marijuana dispensary. The IRS disallowed $2.6 million in deductions for employee salaries, rent, and other costs over a three-year period, which resulted in the business owing $875,000 in additional taxes. Canna Care challenged the IRS in U.S. Tax Court, but ultimately the court upheld the IRS ruling. The discrepancies between federal, state, and local tax treatments of marijuana-related businesses may create economic incentives to engage in the underground economy. In addition to the uncertainty of federal tax enforcement procedures (and costs of any related legal assistance), the inability of marijuana businesses to deduct their business expenses is effectively an implicit tax up to 39.6% (if organized as sole-proprietor or partnership) or 35% (if organized as a C corporation) of the cost of these expenses. These implicit taxes are paid in addition to state and local sales and special excise taxes. The status quo administration of federal tax laws creates an economic advantage for illicit marijuana sellers, who are not subject to direct taxation of their sales. Past marijuana-related tax proposals have varied in scope. Some would have exempted a business (that conducts marijuana sales in compliance with state law) from the Section 280E prohibition against allowing business-related tax credits or deductions for expenditures in connection with trafficking in controlled substances. In contrast, one bill would have removed marijuana from all lists of controlled substances (and, indirectly, IRC §280E restrictions on marijuana), and another would have imposed a federal excise tax on domestic recreational marijuana retail sales that would begin at 10% of the price and phase in a tax rate of 25% over four years. In exercising its oversight authorities, Congress may choose to examine the extent to which (if at all) federal law enforcement missions—in particular the DEA's mission—are impacted by state legalization of marijuana. For instance, policymakers may elect to review the mission of each federal law enforcement agency involved in enforcing the CSA and examine how its drug-related investigations may be influenced by the varying state-level policies regarding marijuana. As noted, federal law enforcement has generally prioritized the investigation of drug traffickers and dealers over that of low-level drug users. Policymakers may question whether these policies and priorities are implemented consistently across states with different drug policies regarding marijuana. One issue policymakers may debate is whether or how to incentivize task forces, fusion centers, and other coordinating bodies charged with combating drug-related crimes. Before determining whether to increase, decrease, or maintain funding for coordinated efforts such as task forces, policymakers may consider whether state and local counterparts are able to effectively achieve task force goals if the respective state marijuana policy is not in agreement with federal marijuana policy. Policymakers may choose to evaluate whether certain drug task forces are sustainable in states that have established policies that are either inconsistent—such as in states that have decriminalized small amounts of marijuana possession—or are in direct conflict—including states that have legalized either medical or recreational marijuana—with federal drug policy. For instance, might there be any internal conflicts that prevent task force partners from collaborating effectively to carry out their investigations? Of note, the Arizona Court of Appeals ruled that patients who possess marijuana in compliance with the Arizona Medical Marijuana Act are entitled to the return of their marijuana that law enforcement may have seized during a traffic stop. In states such as Colorado, media reports indicate that some local law enforcement officers avoid seizing marijuana in certain cases because they do not want to have to return the marijuana to its owner—an act that is tantamount to distribution of a Schedule I controlled substance, a violation of federal law. As noted, in responding to states with recreational legalization initiatives, DOJ issued federal enforcement priorities for states with legal marijuana. According to DOJ, it monitors the effects of state legalization by collaborating with other DOJ components and other federal agencies in assessment of marijuana enforcement-related data; prosecuting cases that threaten federal enforcement priorities; and consulting with state officials about areas of federal concern. As of December 2015, however, DOJ has not documented its efforts to monitor the effects of state legalization and ensure that these priorities are being emphasized. It is unclear how the metrics to evaluate these priorities will be used to determine whether federal intervention is needed in states that have legalized. For example, one of the eight enforcement priorities listed by Deputy Attorney General Cole was to prevent the diversion of marijuana to other states. While it seems the DEA is aware of increased marijuana trafficking from Colorado to Kansas, it is unclear what level of increased trafficking might trigger action by the federal government against state marijuana laws. Congress may choose to exercise oversight over DOJ's enforcement priorities and metrics for tracking illicit activity in the states. Congress may also request research on or an investigation of this issue outside of actions by the Administration. The Administration may alter or reverse its enforcement priorities at any time. As mentioned, in a February 2017 White House press statement, the Trump Administration indicated there may be increased enforcement against recreational marijuana, and stated that there is a "big difference" between medical and recreational marijuana. State medical marijuana laws have raised questions for federal policymakers about enforcing federal law related to marijuana in situations where individuals or organizations are acting in compliance with state law. In previous Congresses, Members of both the House and the Senate have introduced legislation that would amend the CSA such that provisions relating to marijuana would not apply to a person who is acting in compliance with relevant state law. As discussed, in recent years, Congress has included policy riders in appropriations acts to prohibit DOJ from using funds to prevent states from implementing their medical marijuana laws. Congress may decide to alter, maintain, or reverse this provision. Notably, in a February 2017 White House press statement, the Trump Administration signaled some acceptance of the medicinal use of marijuana: "[t]he President understands the pain and suffering that many people go through who are facing especially terminal diseases and the comfort that some of these drugs, including medical marijuana, can bring to them." A topic of particular interest to federal policymakers has been how federal health care providers—especially those in the Department of Veterans Affairs (VA)—deal with state medical marijuana laws. VA policy does not deny health care services to veterans who participate in state marijuana programs; however, it does prohibit VA providers from completing the forms that effectively take the place of prescriptions in state medical marijuana programs. Members in both chambers have introduced legislation that would allow VA providers to complete such forms. Similar provisions passed the Senate as part of an FY2016 appropriations bill, and passed the Senate Committee on Appropriations as part of an FY2017 appropriations bill; however, neither were included in an enacted appropriations law. As the gap between federal and state policies on marijuana widens each year, policymakers might decide to reevaluate federal marijuana policy. It has only been a few years since states began to legalize recreational marijuana, but over 20 years since they began to legalize medical marijuana. A large majority of states now have marijuana policies that contradict the CSA. In addressing state-level legalization efforts, Congress could take one of several routes. It could elect to take no action, thereby upholding the federal government's current marijuana policy and enforcement priorities. It may also decide that the CSA must be enforced in states and direct federal law enforcement to strictly enforce the CSA, even when individuals may be in compliance with state laws. Alternatively, Congress could choose to reevaluate marijuana's placement as a Schedule I controlled substance. Given the history of its scheduling, Congress may consider establishing a committee of experts to evaluate the efficacy of marijuana laws in the United States and address other issues such as the medicinal value and harm of marijuana use. Upon reevaluation, should Congress determine that marijuana no longer meets the criteria to be a Schedule I substance, it could take legislative action to remove it from the list of substances on that schedule. In doing so, Congress may (1) place marijuana on one of the other schedules (II, III, IV, or V) of controlled substances or (2) remove marijuana as a controlled substance altogether. If Congress chooses to remove marijuana as a controlled substance, it could alternatively seek to regulate and tax commercial marijuana activities. If marijuana remains a controlled substance under the CSA under any schedule, this would not eliminate the existing conflict with states that have legalized recreational marijuana. If the conflict remains, Congress may choose to continue to allow states to carry on with implementation of recreational marijuana laws, or it may choose to press for increased enforcement action against or within the states to attempt to stop state-sanctioned, recreational marijuana. Appendix A. Medical Research on Marijuana Approved Drugs and Ongoing Research The Food and Drug Administration (FDA) has approved two drugs containing synthetic THC: nabilone and dronabinol. Nabilone is FDA-approved as an antiemetic (to reduce nausea or prevent vomiting) for patients receiving chemotherapy for cancer. Dronabinol is FDA-approved as both an antiemetic for patients on chemotherapy and an appetite stimulant for patients with AIDS-related weight loss. In addition, drugs containing plant-derived THC and/or cannabidiol (CBD, a nonpsychoactive chemical component of marijuana) are in the drug development and approval process. The UK-based GW Pharmaceuticals has plant-derived cannabinoid drug products in trials with the goal of FDA approval. Its drug Sativex®, which is composed primarily of plant-derived THC and CBD, has already gained approval in 30 other countries for the treatment of spasticity due to multiple sclerosis. In 2014, the company announced that the FDA had granted "Fast Track" designation to Sativex as a potential pain reliever for patients with advanced cancer; however, in 2015, three trials of Sativex failed to show superiority over a placebo. The company continues to seek approval of Sativex and other plant-derived cannabinoid products for treatment of various conditions (e.g., childhood epilepsy). Scientific Evaluations of Marijuana Recent evaluations conducted separately by the FDA and the National Academies of Sciences, Engineering, and Medicine (the National Academies) illustrate the challenge of meeting the required standard of evidence. While taking different approaches to their evaluations, both the FDA and the National Academies have found that the current evidence base falls short. FDA Evaluation. The FDA evaluated only marijuana, not drugs containing a plant-derived chemical constituent of marijuana or drugs containing synthetic THC. Its analysis of marijuana's potential therapeutic effects is limited to 11 published studies that met criteria for inclusion in the review (e.g., that the study must be a randomized controlled trial). The studies examined marijuana's use to treat neuropathic pain (five studies), stimulate appetite in patients with HIV (two studies), treat glaucoma (two studies), treat spasticity in multiple sclerosis (one study), and treat asthma (one study). The evaluation also assessed potential risks of marijuana use (see text box, "Risks Associated with Marijuana Use"). The evaluation, called an eight-factor analysis, was conducted by the FDA pursuant to a request by the DEA. The DEA requests such scientific and medical evaluations from the Secretary of Health and Human Services (HHS) in response to petitions asking the DEA to reschedule marijuana administratively. National Academies Evaluation. The National Academies evaluated cannabis, its constituents, and drugs containing synthetic THC. For each of 11 health topics, the report assessed "fair- and good-quality" research, relying on systematic reviews published since 2011 (where available) and primary research published after the systematic review (or since 1999, if no systematic review exists). The 11 health topics are (1) therapeutic effects; (2) cancer; (3) cardiometabolic risk; (4) respiratory disease; (5) immunity; (6) injury and death; (7) prenatal, perinatal, and postnatal exposure to cannabis; (8) psychosocial effects; (9) mental health; (10) problem cannabis use; and (11) cannabis use and abuse of other substances. The report presents nearly 100 conclusions, including some related to the challenges in conducting research with cannabis and cannabinoids. Federal Research Requirements for Marijuana Many federal research requirements are standard across all schedules of controlled substances; however, some requirements vary according to the assigned schedule of the particular substance. Federal regulations are more stringent for Schedule I substances—including marijuana. Examples of this include the following: For Schedule I substances, such as marijuana, even if practitioners have a DEA registration for a substance in Schedules II-V, they must obtain a separate DEA registration for Schedule I substances. Individuals who seek to register to manufacture a controlled substance in Schedule I or II are subject to production quota limitations as determined by the DEA, but registrants for substances in Schedules III-V are not subject to such quotas. Researchers are required to store Schedule I and II substances in electronically monitored safes, steel cabinets, or vaults that meet or exceed certain specifications. They are required to store Schedule III-V substances by secure standards but the requirements are less stringent than those required for Schedule I and II substances. When researchers apply for a DEA registration to conduct research involving Schedule I controlled substances, they must comply with federal regulations specifying the form and content of the research protocols. The DEA Administrator must forward a copy of the application and research protocol to HHS, which is responsible for determining "the qualifications and competency of the applicant, as well as the merits of the protocol." The HHS Secretary delegates that responsibility to the FDA. No equivalent process is required for Schedule II -V controlled substances. Marijuana Supply for Researchers Under the CSA, the Attorney General is required to register an applicant to manufacture Schedule I or II controlled substances "if he determines that such registration is consistent with the public interest and with United States obligations under international treaties, conventions, or protocols in effect on May 1, 1971." In the case of marijuana, the National Center for Natural Products Research at the University of Mississippi has been the only registered manufacturer, operating under a contract administered by the National Institute on Drug Abuse (NIDA) within HHS's National Institutes of Health. For nearly 50 years, it has been the only official source through which researchers may obtain marijuana for research purposes—and which some have referred to as a "federal research monopoly." Some have contended that marijuana provided by NIDA to researchers is "both qualitatively and quantitatively inadequate." Marijuana's status as a Schedule I drug has reportedly created difficulty for researchers who seek to study the substance but are potentially unable to meet the strict requirements of the CSA, or perhaps they seek to utilize a different quality of marijuana than what is available through NIDA. In August 2016, the DEA announced a policy change "designed to foster research by expanding the number of DEA-registered marijuana manufacturers." Under the new policy, the DEA is willing to license additional growers to "operate independently, provided the grower agrees (through a written memorandum of agreement with DEA) that it will only distribute marijuana with prior, written approval from DEA." In addition, under the new policy, these growers will only be permitted to supply marijuana to DEA-registered researchers whose "protocols have been determined by [HHS] to be scientifically meritorious." This new approach, DEA states, will allow individuals to obtain a DEA cultivation registration "not only to supply federally funded or other academic researchers, but also for strictly commercial endeavors funded by the private sector and aimed at drug product development." Given that both the FDA and the DEA identified the lack of research as a significant factor in denying the rescheduling petitions in 2016, and to the extent that this policy may increase the amount of marijuana research conducted, the change could contribute to future debate on rescheduling. Appendix B. Background on Federal Marijuana Policy Early 20 th Century Prior to 1937, the growth and use of marijuana was legal under federal law. During the course of promoting federal legislation to control marijuana, Henry Anslinger, the first commissioner of the Federal Bureau of Narcotics (FBN), and others submitted testimony to Congress regarding the evils of marijuana use, claiming that it incited violent and insane behavior. Of note, Commissioner Anslinger had informed Congress that "the major criminal in the United States is the drug addict; that of all the offenses committed against the laws of this country, the narcotic addict is the most frequent offender." The federal government unofficially banned marijuana under the Marihuana Tax Act of 1937 (MTA; P.L. 75-238). The MTA imposed a strict regulation requiring a high-cost transfer tax stamp on marijuana sales, and these stamps were rarely issued by the federal government. Shortly after passage of the MTA, all states made the possession of marijuana illegal. Mid-20 th Century In the decades after enactment of the MTA, Congress continued to pass drug control legislation and further criminalized drug abuse. For example, the Boggs Act (P.L. 82-255), passed in 1951, established mandatory prison sentences for some drug offenses, while the 1956 Narcotic Control Act (P.L. 84-728) further increased penalties for drug offenses. In conjunction with growing support for a medical approach to addressing drug abuse, there was a strong emphasis on law enforcement control of narcotics. Congress shifted the constitutional basis for drug control from its taxing authority to its power to regulate interstate commerce, and in 1968 the FBN merged with the Bureau of Drug Abuse Control and was transferred from Treasury to the Department of Justice. Several years later, President Nixon would declare a war on drugs. Congress and President Nixon enhanced federal control of drugs in the enactment of comprehensive federal drug laws—including the Controlled Substances Act (CSA), enacted as Title II of the Comprehensive Drug Abuse Prevention and Control Act of 1970 (P.L. 91-513). The CSA placed the control of marijuana and other plant, drug, and chemical substances under federal jurisdiction regardless of state regulations and laws. In designating marijuana as a Schedule I controlled substance, this legislation officially prohibited the manufacture, distribution, dispensation, and possession of marijuana. The Shafer Commission As part of the CSA, the National Commission on Marihuana and Drug Abuse, also known as the Shafer Commission, was established to study marijuana in the United States. Specifically, this commission was charged with examining issues such as (A) the extent of use of marihuana in the United States to include its various sources of users, number of arrests, number of convictions, amount of marihuana seized, type of user, nature of use; (B) an evaluation of the efficacy of existing marihuana laws; (C) a study of the pharmacology of marihuana and its immediate and long-term effects, both physiological and psychological; (D) the relationship of marihuana use to aggressive behavior and crime; (E) the relationship between marihuana and the use of other drugs; and (F) the international control of marihuana. The Shafer Commission, in concluding its review, produced two reports: (1) Marihuana: A Signal of Misunderstanding , and (2) Drug Use in America: Problem in Perspective . In its first report, the Shafer Commission discussed the perception of marijuana as a major social problem and how it came to be viewed as such. It made a number of recommendations, including the development of a "social control policy seeking to discourage marihuana use, while concentrating primarily on the prevention of heavy and very heavy use." In this first report, the commission also called the application of criminal law in cases of personal use of marijuana "constitutionally suspect" and declared that "total prohibition is functionally inappropriate." Of note, federal criminalization and prohibition of marijuana was never altered, either administratively or legislatively, to comply with the recommendations of the Shafer Commission. In its second report, the Shafer Commission reviewed the use of all drugs in the United States, not solely marijuana. It examined the origins of the country's drug problem, including the social costs of drug use, and once again made specific recommendations regarding social policy. Among other conclusions regarding marijuana, the commission indicated that aggressive behavior generally cannot be attributed to its use. The commission also reaffirmed its previous findings and recommendations regarding marijuana and added the following statement: The risk potential of marihuana is quite low compared to the potent psychoactive substances, and even its widespread consumption does not involve social cost now associated with most of the stimulants and depressants (Jones, 1973; Tinklenberg, 1971). Nonetheless, the Commission remains persuaded that availability of this drug should not be institutionalized at this time. At the conclusion of the second report, the Shafer Commission recommended that Congress launch a subsequent commission to reexamine the broad issues surrounding drug use and societal response. While a number of congressionally directed commissions regarding drugs have since been established, no such commission has been directed to review the comprehensive issues of drug use, abuse, and response in the United States. | Under federal law, the cultivation, possession, and distribution of marijuana are illegal, except for the purposes of sanctioned research. States, however, have established a range of laws and policies regarding marijuana's medical and recreational use. Most states have deviated from an across-the-board prohibition of marijuana, and it is now more so the rule than the exception that states have laws and policies allowing for some cultivation, sale, distribution, and possession of marijuana—all of which are contrary to the federal Controlled Substances Act (CSA). As of March 2017, nearly 90% of the states, as well as Puerto Rico and the District of Columbia, allow for the medical use of marijuana in some capacity. Also, eight states and the District of Columbia now allow for some recreational use of marijuana. These developments have spurred a number of questions regarding their potential implications for federal law enforcement activities and for the nation's drug policies as a whole. Thus far, the federal response to state actions to decriminalize or legalize marijuana largely has been to allow states to implement their own laws on marijuana. The Department of Justice (DOJ) has nonetheless reaffirmed that marijuana growth, possession, and trafficking remain crimes under federal law irrespective of states' positions on marijuana. Rather than targeting individuals for drug use and possession, federal law enforcement has generally focused its counterdrug efforts on criminal networks involved in the drug trade. While the majority of the American public supports marijuana legalization, some have voiced apprehension over possible negative implications. Opponents' concerns include, but are not limited to, the potential impact of legalization on (1) marijuana use, particularly among youth; (2) road incidents involving marijuana-impaired drivers; (3) marijuana trafficking from states that have legalized it into neighboring states that have not; and (4) U.S. compliance with international treaties. Proponents of legalization have been encouraged by potential outcomes that could result from marijuana legalization, including a new source of tax revenue for states and a decrease in marijuana-related arrests. Many of these potential implications are yet to be fully measured. Given the current marijuana policy gap between the federal government and many of the states, there are a number of issues that Congress may address. These include, but are not limited to, issues surrounding availability of financial services for marijuana businesses, federal tax treatment, oversight of federal law enforcement, allowance of states to implement medical marijuana laws and involvement of federal health care workers, and consideration of marijuana as a Schedule I drug under the CSA. The marijuana policy gap has widened each year for some time. It has only been a few years since states began to legalize recreational marijuana, but over 20 years since they began to legalize medical marijuana. In addressing state-level legalization efforts and considering marijuana's current placement on Schedule I, Congress could take one of several routes. It could elect to take no action, thereby upholding the federal government's current marijuana policy. It may also decide that the CSA must be enforced in states and not allow them to implement conflicting laws on marijuana. Alternatively, Congress could choose to reevaluate marijuana's placement as a Schedule I controlled substance. |
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 by the start of the fiscal year (October 1), continuing appropriations may be used to provide temporary funding until the annual appropriations process is concluded. Continuing appropriations acts are often referred to as "continuing resolutions" or "CRs." CRs may be enacted for a period of days, weeks, or months. If all 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 FY2016 regular appropriations bills was enacted by the start of the fiscal year (October 1, 2015). H.R. 719 , a CR for FY2016, was passed by the House and Senate and signed into law by the President on September 30, 2015 ( P.L. 114-53 ). This CR provides funds for covered projects and activities from the beginning of the fiscal year, October 1, 2015, through December 11, 2015. The purpose of this report is to provide an analysis of the continuing appropriations in H.R. 719 . 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 FY2015, see CRS Report R42647, Continuing Resolutions: Overview of Components and Recent Practices , by [author name scrubbed]. For information on the FY2016 appropriations process, see CRS Report R44062, Congressional Action on FY2016 Appropriations Measures , by [author name scrubbed]. 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 do not prescribe a specified 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 pro-rated based on the fraction of a year for which the CR is in effect. The CR for FY2016 covers all 12 regular appropriations bills by providing continuing budget authority for projects and activities funded in FY2015 by that fiscal year's regular appropriations acts—Divisions A-K of the FY2015 Consolidated and Further Continuing Appropriations Act, P.L. 113-235 , with some exceptions ; and Department of Homeland Security Appropriations Act, 2015, P.L. 114-4 . Statutory limits on discretionary spending are in effect for FY2016, as established by the Budget Control Act of 2011 (BCA; P.L. 112-25 ). The CR includes both budget authority that is subject to those limits and also budget authority that is effectively exempt from those limits. Budget authority that is effectively exempt includes that which is 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 FY2015 appropriations acts. Effectively, this requirement extends many of the provisions in the FY2015 acts that stipulated or limited agency authorities during FY2015. 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 FY2015. 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. Funding in the CR is effective October 1, 2015, through December 11, 2015—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 11. 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 11. The CR provides budget authority for projects and activities funded in the FY2015 appropriations acts covered by the CR, at a rate based on the amount of funding provided in those acts and the duration of the CR (through December 11). The rate is the net of any provisions reducing FY2015 budget authority that were included in those acts. For entitlement and other mandatory spending that is funded through appropriations acts, the CR 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 of less than 1% (0.2108%). 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. It does apply, however, to advance appropriations enacted in previous fiscal years that first became available in FY2016. Appropriations for FY2016 are subject to statutory discretionary spending limits on "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 non-exempt spending in the category of the limit that was breached (i.e., defense or nondefense). Once discretionary spending is enacted, OMB evaluates that spending relative to the spending limits and determines whether sequestration is necessary. For FY2016 discretionary spending, the first such evaluation (and any necessary enforcement) is to occur within 15 calendar days after the 2015 congressional session adjourns sine die. For any FY2016 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, the total amount of annualized budget authority for regular appropriations in the CR that is subject to the BCA limits (including projects and activities funded at the rate for operations and anomalies) is $1,016.582 billion. Although that total is equal to the combined amount of the statutory discretionary spending limits for FY2016, the CR is estimated to exceed one of those two limits. While CBO estimates defense spending in the CR to total $520.385 billion, which is about $2.7 billion below the defense limit, nondefense spending is estimated to total $496.197 billion, which is about $2.7 billion above the defense limit. As was previously mentioned, however, the earliest that the statutory discretionary spending limits could be enforced is 15 days after the end of the congressional session. This date is likely to occur after the expiration of the CR on December 11, 2015. When spending is included in the CBO estimate that is 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—the total amount of annualized budget authority in the CR is $1,099.962 billion. In addition to the general provisions that establish the coverage, duration, and rate, CRs usually 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 other anomalies and provisions changing law for inclusion 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. 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. It also addresses CR-specific issues for the activities funded by these appropriations acts related to advance appropriations for the Department of Veterans Affairs and foreign military financing aid to Israel. For additional information on specific provisions in the CR, 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 basing funding for the program on the FY2015 funding level ($212 million), this CR provision would use a base of approximately $221 million. This anomaly is typically included to maintain current caseload and participation while accounting for increased food costs. This provision has two parts. The first part was reportedly requested by the President for inclusion in the CR, and it would permit OMB to apportion funding to the Department of Agriculture's Rural Housing Service (RHS) for the Rural Rental Assistance program at a higher rate than would normally be permitted under the standard terms of the CR described earlier in this report. (See " Coverage, Duration, and Rate .") The President's request stated that this authority is needed because rental assistance contract renewal costs are expected to be significantly higher in FY2016 than in FY2015 and because the timing of renewals has shifted such that a large share occur in the first few months of the fiscal year, requiring a higher rate of spending in the first quarter. The second part of the provision does not appear to have been requested by the President for inclusion in the CR. It would authorize the Secretary to waive a provision of the FY2015 appropriations law that prohibits RHS from renewing rental assistance contracts before the expiration of a 12-month period. This "re-renewal" prohibition was included in the President's FY2015 budget request, and again in the FY2016 budget request, as part of a suite of cost-cutting measures. Rural housing advocates have lobbied for a repeal of the re-renewal prohibition, arguing it has caused funding shortages for some properties which, they contend, puts those properties at risk of loss to the affordable housing stock. The provision included in the CR would not repeal the prohibition but would instead provide the Secretary of Agriculture with the discretion to waive the prohibition for the duration of the CR. Section 118 would allow the National Oceanic and Atmospheric Administration (NOAA) to apportion the procurement, acquisition, and construction account up to the rate necessary to maintain the planned launch schedules for the Joint Polar Satellite System (JPSS). This would provide NOAA with flexibility that may be needed to maintain JPSS launch schedules. Previous CRs have included provisions similar to Section 118. Previous provisions provided flexibility to NOAA for maintaining launch schedules of JPSS and the Geostationary Operational Environmental Satellite System. Section 118 applies only to JPSS. Polar-orbiting satellites constantly circle the earth in a north-south orbit and provide the primary inputs for weather prediction models. JPSS has a history of development challenges, cost overruns, and delays. JPSS is scheduled to replace current coverage with the launch of JPSS-1 in 2017 and JPSS-2 in 2021. An ongoing concern is the potential gap in satellite coverage before JPSS becomes operational, as the current satellite is near the end of its design life. JPSS is designed to provide global environmental data such as cloud imagery, sea surface temperature, atmospheric profiles of temperature and moisture, atmospheric ozone concentrations, Arctic sea ice monitoring, and search and rescue. For FY2015, a total of $1.595 billion in appropriations was enacted for the USMS's Federal Prisoner Detention (FPD) account. However, $1.1 billion of the total provided for the account was derived from unobligated balances from the Department of Justice's (DOJ) Assets Forfeiture Fund (AFF). For the duration of the CR, Section 119 would end the required transfer of $1.1 billion of unobligated balances from the AFF to the FPD account, and it would also suspend a limitation on the transfer of unobligated balances from the AFF to the FPD account that are in excess of the required $1.1 billion transfer. In effect, this section would fund federal prisoner detention operations for the duration of the CR by allowing DOJ to transfer unobligated balances from the AFF to the FPD account. Reportedly, the Administration requested that Congress not supplement funding for the FPD account with unobligated balance transfers from the AFF. The Administration also requested an anomaly that would allow the USMS to obligate funds from the FPD account at a rate equal to $1.454 billion. The Administration reported that the AFF does not currently project excess unobligated balances, so the FPD account needs additional new resources from a source other than the AFF to cover operational expenses related to prisoner detention. In other words, the Administration stated that without the requested anomaly, the USMS will not be able to cover projected detention costs, and the AFF will be required to deplete its carry-over balances and reduce programmatic expenses. This provision would extend the availability of previously appropriated funds for closeout of NASA's space shuttle program. The last flight of a space shuttle was in July 2011. Closeout funds for the program have been appropriated and obligated but have not yet been fully expended. Without this extension, OMB estimates that approximately $68 million could not be expended after September 30, 2015, making it unavailable to cover remaining obligations for closeout costs. Section 121 would allow uncompleted Broadband Technology Opportunity Program (BTOP) projects to continue to expend obligated funds through FY2020. Under current law, funds obligated under the American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ) for this program are no longer available to be expended after September 30, 2015. The National Telecommunications and Information Administration administers the ARRA BTOP grants. Specific concerns have been raised in Congress over the completion of BTOP public safety grant projects, which are funding the construction of interoperable communications networks for first responders. The BTOP public safety grant projects were partially suspended after passage of the Middle Class Tax Relief and Job Creation Act of 2012 ( P.L. 112-96 ), which authorized and funded a national public safety broadband network (called FirstNet). They were suspended pending spectrum leasing agreements between each project and FirstNet. BTOP public safety projects that reached an agreement with FirstNet were eventually resumed, but some are not able to be completed before the deadline of September 30, 2015. Section 102, which is typically included in interim CRs, would prohibit the Department of Defense from accelerating the rate at which it is acquiring any major procurement item, which includes any type of ship, plane, missile, or ground vehicle. This would have the effect of barring production rate increases for several types of weapons that are incorporated into the Administration's FY2016 DOD budget request. Among the programs that would be affected are production of C-130J cargo planes (slated to increase from 14 aircraft in FY2015 to 29 in FY2016), remanufacture (with upgrades) of the Army's Apache attack helicopter (slated to increase from 35 helicopters rebuilt in FY2015 to 64 in FY2016), and the Navy's T-AO mid-ocean refueling tanker, the first of which is requested in the FY2016 budget. This section would extend authorizations for the duration of the CR that would otherwise expire at the end of FY2015 for two programs. These programs have been authorized routinely on a year-by-year basis through the National Defense Authorization Act: 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; and A program to pay cash rewards of up to $5 million to persons assisting U.S. forces in counterterrorism operations, originally established by Section 1065(a) of P.L. 107-314 , the FY2003 Bob Stump 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 11, 2015, 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 Section 122 of the Continuing Appropriations Resolution, 2015 ( P.L. 113-164 ). This section provides the authority for the District of Columbia to expend local funds (from local tax revenues and other non-federal sources) for programs and activities funded in FY2015 at the rate set forth in the DC FY2016 Budget Request Act of 2015. Section 125 provides that no funds are included in the CR for the Recovery Accountability and Transparency Board, which was established by ARRA to provide oversight and transparency in the expenditure of ARRA funds. The board was funded through the Financial Services and General Government appropriations bill for the first time in FY2012. Since then, the board was funded by now exhausted ARRA appropriations. The board received appropriations of $20 million for FY2014 and $18 million for FY2015 but is slated to sunset on September 30, 2015. Neither the House ( H.R. 2995 ) nor the Senate ( S. 1910 ) FY2016 FSGG appropriations bills contains funding for the board. This provision 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" exceeds the program's fiscal year authorization ceiling, which is currently $23.5 billion. 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 appears to be the first time that a CR anomaly has not specified a ceiling amount. Section 127 extends a moratorium preventing state and local governments from taxing Internet access or imposing multiple or discriminatory taxes on electronic commerce, originally enacted as the Internet Tax Freedom Act (ITFA; P.L. 105-277 , Title IX) in 1998. The act included a grandfather clause allowing state and local governments to continue taxing Internet access, provided the tax had been imposed and enforced before October 1, 1998. Under the moratorium, state and local governments cannot impose their sales taxes on the monthly payments that consumers make to their Internet service providers. The 113 th Congress enacted multiple extensions of ITFA. The Internet tax moratorium and grandfather clause were set to expire on November 1, 2014, but were extended through December 11, 2014, as part of the Continuing Appropriations Act, 2014 ( P.L. 113-46 ). The Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ) extended these provisions through September 30, 2015. The provisions in the CR that pertain to the activities of the Department of Homeland Security (DHS) extend specialized procurement authority and certain visa programs through the expiration date of the CR. These are solely extensions—no changes are made or policy direction provided. The Administration reportedly requested four of the five provisions and indicated it has no objection to the fifth. Section 129 of the CR extends special procurement authorities for leading edge research and development activities at DHS, known as "other transaction authority." This provision, requested by the Administration, has been carried in many CRs covering DHS, including most recently the FY2015 CR, P.L. 113-164 . The following provisions were all carried in the CR for FY2010 (Division B of P.L. 111-68 ) but in no CRs since FY2010 until FY2016: Section 130, which continues the authorization for the E-Verify employment eligibility verification program to operate, Section 131, which extends the EB-5 immigrant investor visa program, Section 132, which extends the nonminister religious worker visa program, and Section 133, which extends a program to provide visas for doctors who serve in rural areas of the United States. This provision extends, through September 30, 2017, 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—all in the Department of the Interior (DOI)—and the Forest Service in the Department of Agriculture. In FY2014, the agencies collected a total of $278.6 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. The current authority of the agencies, which would expire on September 30, 2016, was provided in P.L. 113-235 (Division F, Title IV, §422). Section 135 would provide the Forest Service with an additional $700 million for FY2016 for "urgent" wildland fire suppression activities. The agency would also be able to use the $700 million to repay amounts transferred from other accounts to pay for suppression activities. These monies would be available to the Forest Service only (1) if the funds previously provided for wildfire suppression would be "imminently" exhausted, and (2) upon notification to the Appropriations Committees. Section 135 would also designate the funding as an emergency requirement, effectively exempting it from certain budget rules, such as the statutory discretionary spending caps. This provision extends, through the duration of the CR, the authority of the Secretary of the Interior to establish higher minimum rates of pay for certain DOI employees working on onshore and offshore energy development, namely those in specified engineering, geophysicist, and geologist job series. The intent is to foster hiring and retention of these highly skilled employees at several DOI agencies. DOI's high turnover rates in oil and gas inspection and engineering positions have been found by the Government Accountability Office (GAO) to be high risks to the federal government, challenging DOI's ability to meet its oil and gas oversight responsibilities and "potentially placing both the environment and royalties at risk." GAO determined that the recruitment and retention problems are largely due to lower salaries and a slow hiring process compared with similar positions in industry. The current authority of the Secretary to raise the minimum pay rates, which would expire on September 30, 2015, was provided in P.L. 113-76 (§§117 and 123). Section 137 contains two provisions related to the Dwight D. Eisenhower Memorial Commission and the Dwight D. Eisenhower Memorial. First, Section 137 would extend, through December 11, 2015, 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 expire on September 30, 2015 (under P.L. 113-235 , Division F, Title IV, §423(a)). Second, Section 137 would continue, through December 11, 2015, to prohibit the Secretary of the Interior from issuing a construction permit to build the Eisenhower Memorial until 100% of the funds are raised. Without the extension, the prohibition would expire on September 30, 2015 (under P.L. 113-235 , Division F, Title IV, §423(b)). The prohibition was initially included in P.L. 113-46 (§138). Prior to this prohibition, the commission had been granted the ability to request a construction permit prior to collecting 100% of the funds necessary to complete the memorial. The PILT program compensates local governments for the presence of federally owned land. A provision of P.L. 113-291 (§3096) provided $70 million in mandatory spending for PILT. Of this amount, $33 million was made available in FY2015. The remaining $37 million will be made available after the start of FY2016 on October 1, 2015, leaving some doubt as to whether the amount should be considered a late payment for FY2015 or an early payment for FY2016. Section 138 clarifies that the $37 million is to be applied to the FY2015 payment cycle. In addition, P.L. 113-235 (§11) provided $372 million in discretionary spending for FY2015. The FY2015 total PILT appropriation of $442 million represents 97.8% of the full formula amount. Section 139 would allow CDC to use previously appropriated funds to continue construction of a replacement freezer building on its Fort Collins, Colorado, campus in order to meet construction deadlines. (This provision is also proposed as FY2016 appropriations language in the agency's budget justification. ) Section 140 would extend the HQT provision enacted in Section 163(b) of the Continuing Appropriations Act, 2011 ( P.L. 111-242 ), as amended by the Continuing Appropriations and Surface Transportation Extensions Act, 2011 ( P.L. 111-322 ), through the 2016-2017 school year. States that receive funds under Title I-A of the Elementary and Secondary Education Act, as amended by the No Child Left Behind Act ( P.L. 107-110 ), must ensure that all teachers of core academic subjects meet the definition of an HQT. The definition in law requires teachers to be fully certified. Regulations adopted in December 2002 expanded the HQT definition to include teachers participating in alternative certification programs who have not yet become fully certified. P.L. 111-322 referenced this definition and stipulated that it be in effect only until the end of the 2012-2013 school year; P.L. 112-175 provided an extension through 2013-2014, and P.L. 113-46 extended the provision through 2015-2016. Section 141 would rescind $1.7 billion from the State Children's Health Insurance Program (CHIP) Child Enrollment Contingency Fund. The rescinded funds include some funding from the initial deposit into the contingency fund ($2.1 billion in FY2009) and the interest accrued to the fund. In addition to the initial deposit, for FY2010 through FY2017, the fund can receive deposits of such sums as are necessary for making contingency payments to eligible states. Previously, multiple appropriations laws rescinded a total of $24.3 billion from the CHIP performance bonus payments fund from FY2011 through FY2015, which is a different account than CHIP Child Enrollment Contingency Fund. Section 142 would extend the duration of the National Advisory Committee on Institutional Quality and Integrity (NACIQI) through December 11, 2015. 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. Currently, Section 114(f) of the act provides that NACIQI shall terminate on September 30, 2015. Section 422 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—in the regular session that ends prior to the beginning of the terminal fiscal year of authorization or duration of an applicable program—does not pass legislation extending the program. However, GEPA Section 422 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 terminate on September 30, 2015, unless it is extended. Previously, NACIQI was set to terminate on September 1, 2014. However, on September 26, 2014, Congress extended its operation for an additional fiscal year through September 30, 2015, under P.L. 113-174 . Section 143 provides one gratuity payment to the widow of a deceased Member of the House. This language had previously been included in the House-passed and Senate committee-reported versions of H.R. 2250 , the FY2016 Legislative Branch Appropriations bill. 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. This section of the CR would authorize the Department of Veterans Affairs (VA) to transfer up to $625 million from unobligated balances in FY2015 and FY2016 advance appropriations discretionary accounts to the Construction Major Projects account to fund the Denver Replacement Medical Center construction project. The section contains conditions for this authority, such as the written approval of the House and Senate Appropriations Committees. Under Section 145, the VA is allowed to obligate funding in its general operating expenses account for VBA under the CR formula at a rate for operations of $2.7 billion to maintain necessary staffing levels, overtime pay, and information technology required to support disability claims processing and other veterans services provided by VBA. The Consolidated and Further Continuing Appropriations Act, 2015 ( P.L. 113-235 ) provided approximately $2.5 billion for the VBA General Operating Expenses account for FY2015. Section 146 would rescind certain amounts from FY2014 medical accounts (medical services, medical support and compliance, and medical facilities), which became available on October 1, 2013, and re-appropriates it to those same accounts to be available for two fiscal years. The VA is funded through a combination of budget year and advance appropriations. For FY2015, P.L. 113-235 provided approximately $159.1 billion for veterans' benefits and services. This included approximately $94.3 billion for veterans' benefits—such as disability compensation, pensions, and readjustment benefits—and $56.4 billion for the programs of the Veterans Health Administration, which includes medical care for veterans and medical and prosthetic research. Furthermore, P.L. 113-235 provided $58.6 billion in advance FY2016 appropriations for the medical services, medical support and compliance, and medical facilities accounts, which would be available on October 1, 2015. As previously mentioned, the CR's general rate for operations would fund most VA programs through a formula using the FY2015 level of appropriations minus an across-the-board rescission of 0.2108%. Section 115 of the CR would require that this same percentage reduction be applied to rescind funds from the FY2016 advanced appropriated accounts. Section 147 extends the termination date of the U.S. Commission on International Religious Freedom. It would otherwise expire on September 30, 2015. A similar provision in the FY2015 CR ( P.L. 113-164 ) extended the commission's termination date to September 30, 2014; P.L. 113-271 further extended the date to September 30, 2015. Section 148 provides that funds from specified international affairs accounts may be obligated at the rate necessary to sustain assistance to Ukraine, including international broadcasting, economic, and security assistance. Section 148 is limited to Ukraine, whereas a similar provision (Section 145) included in the FY2015 CR ( P.L. 113-164 ) also referenced "independent states of the Former Soviet Union and Central and Eastern Europe." Pursuant to current law, authority for the U.S. Commission on Public Diplomacy ends October 1, 2015, and the commission would cease to exist and operate on that date. Section 149 would extend the authorization through December 11, 2015. Congress has extended the commission's authorization in various types of legislation, including most recently in the National Defense Authorization Act for Fiscal Year 2013 ( P.L. 112-239 ). Section 109 of the CR states that for programs for which current law allows appropriations to be distributed at high rates early in the fiscal year, such high rates of distribution shall not apply under the CR. Instead, distributions are governed by Section 110 of the bill, which requires that "only the most limited funding action" be taken to continue projects and programs under the CR. In the international affairs context, this affects foreign military financing aid to Israel, which the FY2015 appropriation ( P.L. 113-235 ) requires to be disbursed in full within 30 days of enactment. These same general provisions have been included in CRs for a number of previous fiscal years. The President reportedly requested this provision, which would allow OMB to apportion certain Department of Housing and Urban Development (HUD) management and administration funding at a higher rate than would normally be permitted under the standard terms of the CR described earlier in this report. (See " Coverage, Duration, and Rate .") This is to allow HUD to continue on schedule with its "New Core" project, which is a transition of HUD's financial management systems to a federal shared services provider (SSP). OMB has directed federal agencies to consider converting to SSPs to improve their financial systems. At the completion of this transition, HUD will become the first Cabinet-level agency to use a federal SSP. This provision would require HUD to report to Congress before, during, and after the use of the enhanced apportionment authority provided under the bill. | The purpose of this report is to provide an analysis of the FY2016 continuing appropriations in H.R. 719. None of the FY2016 regular appropriations bills were enacted by the start of the fiscal year (October 1, 2015). On September 30, 2015, H.R. 719, a continuing resolution (CR) for FY2016, was signed into law by the President (P.L. 114-53). The CR for FY2016 covers all 12 regular appropriations bills by providing continuing budget authority for projects and activities funded in FY2015 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, 2015, through December 11, 2015—roughly the first 10 weeks of the fiscal year. The CR generally provides budget authority for FY2015 projects and activities at the rate they were funded during that fiscal year. Most projects and activities funded in the CR are subject to an across-the-board decrease of less than 1% (0.2108%). According to the Congressional Budget Office (CBO), the total amount of annualized budget authority for regular appropriations in the FY2016 CR that is subject to the statutory discretionary spending limits is $1,016.582 billion. When spending is included in the CBO estimate that is effectively not subject to those limits, the total amount of annualized budget authority in the CR is $1,099.962 billion. In addition to the general provisions that establish the coverage, duration, and rate, 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") and 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 FY2015, see CRS Report R42647, Continuing Resolutions: Overview of Components and Recent Practices, by [author name scrubbed]. For information on the FY2016 appropriations process, see CRS Report R44062, Congressional Action on FY2016 Appropriations Measures, by [author name scrubbed]. |
The Obama Administration and Congress continue to grapple with high rates of unemployment despite some tentative signs of economic recovery. On December 8, 2009, President Obama outlined a series of proposals intended to accelerate job growth, focusing on incentives to small businesses, spending on various infrastructure projects, and job creation through energy efficiency and clean energy initiatives. The President also signaled support for the extension of some of the direct assistance provisions included in the American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ), including Unemployment Compensation (UC) benefits and health insurance premium subsidies under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). On December 16, 2009, the House passed the Jobs for Main Street Act ( H.R. 2847 ), which would spend approximately $154 billion in three general areas: infrastructure investment, public service jobs, and emergency relief for families. Appropriations for infrastructure and jobs would total about $75 billion, to be offset by redirecting Troubled Asset Relief Program (TARP) funds. Emergency assistance (which are primarily entitlement or mandatory spending provisions) would total another $79 billion, as estimated by the Congressional Budget Office (CBO) on the date of House passage; however, this amount includes some spending for UC and COBRA provisions that were subsequently enacted into law under the FY2010 Defense Appropriations Act ( P.L. 111-118 ). Infrastructure investments would include such projects as highways, public transit, Amtrak, airports, clean water, energy innovation, school renovation, and housing. Spending for public service jobs would be intended to stabilize the jobs of teachers, law enforcement officers, firefighters, and parks and forestry workers, as well as to provide training for youth, help college students stay in school through work-study jobs, and provide training in high-growth industries. Emergency assistance would provide extended UC and COBRA subsidies. Among other provisions, the bill would also extend enhanced Medicaid matching provisions established under ARRA, temporarily expand the child tax credit, and freeze federal poverty guidelines at 2009 levels to prevent a reduction in eligibility for certain means-tested programs. As passed by the House in December, H.R. 2847 would also extend surface transportation authorizations through FY2010. On February 24, 2010, the Senate passed an amendment in the nature of a substitute to H.R. 2847 ( S.Amdt. 3310 ). This substitute would provide tax credits for hiring and retaining unemployed workers, extend a tax provision in ARRA related to expensing for small businesses, and reauthorize certain transportation authorities. The Senate version of H.R. 2847 contains none of the education, training, or direct assistance provisions of the House-passed bill that are discussed in this report, with the single exception of provisions for school construction bonds. Meanwhile, on February 25, 2010, the House passed the Temporary Extension Act of 2010 ( H.R. 4691 ), which would provide a shorter extension of some of the direct assistance provisions also included in the House-passed version of H.R. 2847 , including UC benefits and COBRA subsidies. This report focuses specifically on provisions in the House-passed bill that would support education and training or that would provide direct support to unemployed workers or low-income individuals. Unless noted otherwise, the Senate version of H.R. 2847 contains no comparable provisions. Certain overarching provisions included in the House bill are discussed at the end of the report. The House-passed Jobs for Main Street Act includes several provisions related to programs administered by the U.S. Department of Education (ED). First, it would create an Education Jobs Fund that would be based on the State Fiscal Stabilization Fund created under the American Recovery and Reinvestment Act (ARRA, P.L. 111-5 ). Second, H.R. 2847 would provide additional funding for Federal Work-Study (FWS) programs authorized under Title IV, Part C of the Higher Education Act (HEA). Finally, H.R. 2847 (and the Senate amendment to H.R. 2847 ) would modify provisions related to Qualified Zone Academy Bonds and Qualified School Construction Bonds. Each of these provisions is discussed below. H.R. 2847 would provide $23 billion for an Education Jobs Fund. These funds would be provided in an attempt to offset potential job loss that may occur as a result of state budget shortfalls in the current economic climate. The Education Jobs Fund would be based on the State Fiscal Stabilization Fund created by ARRA. The first part of this discussion provides an overview of the State Fiscal Stabilization Fund, followed by an analysis of the proposed Education Jobs Fund and how it differs from the State Fiscal Stabilization Fund. Some emphasis is placed on issues related to the ways federal funds may be used to supplant state funds, because such issues have arisen with regard to the State Fiscal Stabilization Fund under ARRA and are already arising with regard to the proposed Education Jobs Fund. The section concludes with a discussion of estimates of state grants that would be provided under the Education Jobs Fund. The State Fiscal Stabilization Fund provided general state fiscal stabilization grants to support education at the elementary, secondary, and postsecondary levels, as well as for "public safety and other government services." It was funded at $53.6 billion in supplemental FY2009 appropriations. After set asides and reservations, about $48.6 billion was available for grants to states. ED is required to allocate these funds to states according to a formula that incorporates two population measures: 61% of each state's grant is based on the state's relative share of the population of individuals ages 5 to 24, and 39% of each state's grant is based on the state's relative share of the total population. State Fiscal Stabilization Funds are being provided to states in two phases. Under the first phase, about two-thirds of the available funds were awarded to states beginning in April 2009. About $11.5 billion will be awarded to states in the second phase of state grants. States were required to apply for these funds by January 11, 2010. Once funds are received at the state level, the state's governor must use 81.8% of the state's allocation to support elementary, secondary, and postsecondary education, and, as applicable, early childhood education programs and services. With these funds, the governor must provide, through the state's principal elementary and secondary education funding formula, the amount needed to restore state funding for elementary and secondary education in FY2009, FY2010, and FY2011 to the greater of the FY2008 or FY2009 levels. The governor is required to use the remaining 18.2% of the state allocation for "public safety and other government services," which may include assistance for elementary and secondary education and public institutions of higher education (IHEs), and for modernization, renovation, and repair of public school facilities and IHEs' facilities. The State Fiscal Stabilization Fund includes specific provisions related to the use of funds by local educational agencies (LEAs) and IHEs. Funds for elementary and secondary education can be used for any activity authorized under the Elementary and Secondary Education Act (ESEA), Individuals with Disabilities Education Act (IDEA), the Adult and Family Literacy Act, or the Carl D. Perkins Career and Technical Education Act (Perkins Act), or for the modernization, renovation, and repair of school facilities, including modernization, renovation, and repairs that are consistent with a recognized green building system. Public IHEs that receive State Fiscal Stabilization Funds must use the funds for (1) education and general expenditures, and in such a way as "to mitigate the need to raise tuition and fees for in-State students," or (2) modernization, renovation, or repair of IHE facilities that are primarily used for instruction, research, or student housing, including modernization, renovation, or repairs that are consistent with a recognized green building rating system. In applying for funds for Phase 1 and Phase 2 of the State Fiscal Stabilization Fund grants, states were required to submit applications to the Secretary that provided information required by the Secretary and provided five assurances focused on maintenance of effort requirements, equity in teacher distribution, data collection, standards and assessments, and support for struggling schools. In addition, states were required to provide baseline data demonstrating states' current status with respect to each of the five assurances and a discussion of how the State Fiscal Stabilization Funds will be used, including whether the state will use funds to meet ESEA and IDEA maintenance of effort requirements. The application for the Phase 2 grants also required states to address the five assurances, but it required substantially more information, including detailed information about data collection and public reporting of data. States receiving funds under the State Fiscal Stabilization Fund are required to submit a report to the Secretary based on a timetable established by the Secretary that discusses how funds were used, how funds were distributed, the estimated number of jobs saved or created using the State Fiscal Stabilization Fund, tax increases that were averted, the state's progress in meeting the aforementioned assurances, increases in tuition and fees at public IHEs, changes in enrollment in public IHEs, and each modernization, renovation, and repair project funded. A longstanding principle of federal aid to elementary and secondary education is that federal funding should add to, and not substitute for, state and local education funding. That is, federal funds are awarded to provide a net increase in financial resources for specific types of educational services (such as the education of disadvantaged student or students with disabilities), rather than effectively providing general subsidies to state and local governments. All of the fiscal accountability requirements included in federal elementary and secondary education programs are intended to provide that all federal funds represent a net increase in the level of financial resources available to serve eligible students, and that they do not ultimately replace funds that states or LEAs would provide in the absence of federal aid. Two fiscal accountability requirements that apply to major federal K-12 education aid programs are also relevant to the State Fiscal Stabilization Fund. To meet the first requirement, maintenance of effort (MOE) recipient LEAs must have provided, from state and local sources, a level of funding (either aggregate or per student) in the preceding year that is at least a specified percentage of the amount in the second preceding year. A second fiscal accountability requirement provides that federal funds must be used to supplement, not supplant (SNS) , state and local funds that would otherwise be available for the education of students eligible to be served under the federal program in question. SNS provisions prohibit states and/or LEAs from using federal funds (1) to provide services that state and/or local funds have provided or purchased in the past, (2) to provide services that are required to be provided under federal, state, or local law, or (3) to provide services for some students (e.g., those eligible under specific federal programs) that are provided to other students with non-federal funds. For the State Fiscal Stabilization Fund, an FY2006 MOE based on state-source revenues for public K-12 education and higher education applies to states, but there is no SNS requirement at any level and no MOE requirement for LEAs with respect to funds provided under this program. The MOE requirement for the State Fiscal Stabilization Fund program can be waived or modified by the Secretary of Education for a state for any of FY2009-FY2011 if the Secretary determines that the percentage of the total state funds available for elementary and secondary education will not be lower than the percentage made available for the preceding fiscal year. In addition, under ARRA, states or LEAs may, with prior approval of the Secretary, treat State Fiscal Stabilization Fund grants used for education as "non-federal funds" for purposes of meeting MOE requirements under any ED program for FY2009, FY2010, or FY2011. In determining whether to provide approval to allow states and LEAs to use State Fiscal Stabilization Funds as non-federal funds to meet MOE requirements, ED has indicated that it would be "concerned" if a state has reduced the proportion of total state revenues that are spent on education. If this proportion has been reduced, the Secretary will consider whether the reductions were due to exceptional or uncontrollable circumstances, the extent to which available financial resources have declined, and whether there have been changes in the demand for services. Required levels of state and local funding in subsequent years, however, will not be reduced as a result of states using federal State Fiscal Stabilization Funds as "non-federal funds." Thus, for FY2009, FY2010, and FY2011, approved states may reduce their level of spending for K-12 education without jeopardizing their eligibility for funding for IDEA and ESEA programs. However, the potential impact of this authority is not fully clear, particularly since SNS requirements would continue to apply to ESEA Title I, Part A (Education for the Disadvantaged), IDEA, and other ED programs. As has been noted, the House-passed version of H.R. 2847 includes provisions to create an Education Jobs Fund. The fund would be created by modifying certain statutory provisions for the State Fiscal Stabilization Fund authorized and funded under ARRA. These modifications, however, would represent a substantial deviation from the currently authorized uses of funds under the State Fiscal Stabilization Fund and the requirements related to receiving funds. The following discussion of the Education Jobs Fund is divided into two parts to mirror the preceding discussion of the State Fiscal Stabilization Fund. The first part examines the formula used to distribute funds, the uses of funds, and related requirements. The second part focuses specifically on fiscal accountability issues. The Education Jobs Fund would receive an appropriation of $23 billion, about half the amount that was appropriated for the State Fiscal Stabilization Fund. Funds appropriated for the Education Jobs Fund would remain available for obligation through September 30, 2010. These funds could be allotted only to states and the outlying areas based on the terms established under the State Fiscal Stabilization Fund. No funds could be reserved by the Secretary for administration, oversight, or competitive grant programs (i.e., Race to the Top (RTTT) or the Investing in Innovation (i3) Fund). While many federal education programs administered by ED also include a set aside for the Bureau of Indian Education, the State Fiscal Stabilization Fund did not include a set aside for this purpose, nor does the proposed Education Jobs Fund. With respect to the use of state grants, the Education Jobs Fund is substantially different than the State Fiscal Stabilization Fund. As discussed above, state grants under the State Fiscal Stabilization Fund were provided to governors who had to use 81.8% of the funds to support elementary, secondary, and postsecondary education. The remaining 18.2% of the funds had to be used for "public safety and other government services," which could include education. Under the Education Jobs Fund, funds would be used for different purposes. States would be permitted to reserve up to 5% of their grants for administrative costs related to the program, and for retaining or creating positions in the state educational agency (SEA) or the state agency responsible for higher education, and other state agency positions related to administering or supporting early childhood, elementary, secondary, or postsecondary education. However, funds used for administration could not exceed 1% of the state's total allocation under the Education Jobs Fund. The Education Jobs Fund provisions specify that the states shall use the remaining funds only to make awards to LEAs and public IHEs to support elementary, secondary, and postsecondary education. The governor would be required to determine how much funding to provide to elementary and secondary education and higher education based on the proportional reductions in state funding for these areas. This would be similar to the requirements of the State Fiscal Stabilization Fund, which required that the amount of funding going to elementary and secondary education versus postsecondary education be determined based on the amount needed to restore state support to the greater of the FY2008 or FY2009 levels. As with the State Fiscal Stabilization Fund, funding made available for elementary and secondary education would be distributed through the state's primary funding formulas for elementary and secondary education. LEAs could use funds provided under the State Fiscal Stabilization Fund for any purpose authorized under several education acts or for modernization, renovation, or repair of public school facilities, and IHEs could use funds for education and general expenditures, mitigating the need to raise tuition and fees, and for modernization, renovation, or repair of facilities of higher education. Under the Education Jobs Fund, however, funds could only be used for the following purposes: compensation and benefits and other expenses, such as support services, necessary to retain existing employees; activities defined under Section 101(31) of the Workforce Investment Act (WIA), which provide wage subsidies to employers for individuals in on-the-job training programs; hiring of new employees to provide early childhood, elementary, secondary, or postsecondary educational and related services; or modernization, renovation, and repair of public school facilities and facilities of higher education. With respect to the first and third uses of funds, it appears that instructional staff and support staff would be eligible for support. However, H.R. 2847 does not define "support services" or "educational or related services," so it is unclear whether these funds could be used to retain or hire staff who have any association with early childhood, elementary, secondary, or postsecondary education (e.g., janitors, bus drivers, cafeteria workers) or whether the funds would be targeted for retaining and hiring any staff with a direct connection to the instructional process. Activities defined under Section 101(31) of WIA provide wage subsidies to employers for on-the-job training. These subsidies are limited to 50% of the individual's wage rate. In addition, these arrangements must be limited in duration. When these programs are initiated under WIA, generally the local Workforce Investment Board and the employer reach an agreement on the duration of the program. Under the Education Jobs Fund provisions, it is unclear how the decision to limit the duration of the use of funds would be made in an on-the-job training situation that is not coordinated through WIA. Under the Education Jobs Fund, LEAs and IHEs could use funds for the modernization, renovation, and repair of public school facilities and facilities of higher education. The prohibitions related to the use of these funds under the State Fiscal Stabilization Fund (Sections 14003 and 14004, respectively) would apply to use of funds for these purposes under the Education Jobs Fund. To receive funds under the Education Jobs Fund, a governor would still be required to submit an application to the Secretary containing information required by the Secretary based on a timeline established by the Secretary. The provisions governing the application process under the Education Jobs Fund would eliminate the assurances that states had to provide in their State Fiscal Stabilization Fund. The Education Jobs Fund also would eliminate the requirement that the state provide baseline data related to the assurances. A state would continue to be required to indicate how it intends to use available funds to meet MOE requirements under ESEA and IDEA and the amount of funds that would be used for these purposes. If a governor does not submit an application to the Secretary by the prescribed deadline, the Secretary would have the authority to distribute the state's share of funds to another entity or entities in the state under terms and conditions established by the Secretary. The same terms and conditions that would apply to other grant recipients under the Education Jobs Fund would also apply to any entity or entities that receive funding in the aforementioned situation. The State Fiscal Stabilization Fund did not include a similar provision. Under the Education Jobs Fund, states would be required to meet the same reporting requirements included under the State Fiscal Stabilization Fund. For example, states would be required to report on how the state used funding provided through the Education Jobs Fund and how many jobs were saved or created as a result of the receipt of funds. As with the State Fiscal Stabilization Fund, the Secretary would be required to submit a report to the House Committee on Education and Labor, the Senate Health, Education, Labor, and Pensions Committee, and the Appropriations Committees in both the House and Senate. The Secretary would be required to report on the information provided through the state reports as well as information provided by states in their application on the use of funds to meet MOE requirements under ESEA and IDEA. In addition, all grant recipients would be prohibited from using funds provided under the Education Jobs Fund to provide financial assistance to students to attend elementary or secondary schools. H.R. 2847 would also retain the definitions used under Section 14013 of the State Fiscal Stabilization Fund, although not all of the definitions would be relevant to the Education Jobs Fund. The Education Jobs Fund would include two new provisions related to fiscal accountability. The first provision would focus on supplement, not supplant (SNS) requirements regarding state rainy-day funds and the use of state grants for debt reduction. The second provision addresses fiscal assurances that LEAs must provide when participating in a program administered by ED. Rainy-Day Funds and Debt Reduction. States would be prohibited from using their funds to directly or indirectly establish, restore, or supplement a rainy-day fund. Further, states would be prohibited from using funds to reduce or retire state debt obligations. These prohibitions, however, would not apply to fund balances that are necessary to comply with state budget rules. The State Fiscal Stabilization Fund did not include these prohibitions. The term "rainy-day fund" is not defined in H.R. 2847 . While there may be a general understanding of what this term means, the bill lacks a definition, making it difficult to predict how the prohibition would be applied across states. In addition, it is unclear which state-specific rules, constitutional or statutory, would be affected by the exception allowing states to meet balanced budget requirements with fund balances. Balanced budget rules vary by state, which also makes it difficult to predict how the exception may be applied from state to state. Further, balanced budget rules generally apply to the operating budget, not the capital budget. Thus, the lack of specificity in the language creating the exception and the variety of budget rules across states would likely make it difficult to track how states use the authority granted to them through the exception. The inclusion of prohibitions on the use of Education Jobs Funds for rainy-day funds or debt reduction may be in response to issues that arose during the implementation of the State Fiscal Stabilization Fund. The fungibility of state revenue was one of the major issues that arose as states began to use their State Fiscal Stabilization Fund grants. Some states reduced their education funding to meet the MOE requirements for receiving funding and used the State Fiscal Stabilization Fund grants to backfill their education budgets. The funds the state would have spent on education were transferred to another purpose. Thus, in some states, the provision of State Fiscal Stabilization Fund grants may not have represented a net gain in education funding. In addition, at least one state governor (South Carolina) indicated that he wanted to use the State Fiscal Stabilization Fund to reduce state debt. While ED indicated that this would be illegal, the inclusion of language related to debt reduction in the Education Jobs Fund may be intended to clarify congressional intent on fund use. Fiscal Assurances. Under Section 442 of the General Education Provisions Act (GEPA), individual LEAs participating in a program to which GEPA applies are required to provide the state with an application containing assurances regarding the administration of the program, the control of funds, fiscal control and accounting procedures, reporting, participation in program planning and operation, making reports publicly available, requirements related to construction, procedures for disseminating relevant research to practitioners, and the acquisition of equipment. If an LEA provided such an application to the state for purposes of the State Fiscal Stabilization Fund, the LEA would not be required to submit a new application under the Education Jobs Fund. The assurances provided under the previous application would continue to apply to the Education Jobs Fund. Under the State Fiscal Stabilization Fund, states were required to provide assurances regarding state MOE. The Education Jobs Fund would not include the same MOE requirements but, rather, would require the governor of each state to provide an assurance that the state will meet one of two sets of MOE requirements for FY2010 and for FY2011. One notable difference between the MOE assurances required under the Education Jobs Fund and the State Fiscal Stabilization Fund is that the MOE assurances under the State Fiscal Stabilization Fund had to be established separately for elementary and secondary education and for public higher education. Under the Education Jobs Fund, the MOE would be based on aggregate support for elementary, secondary, and public higher education. More specifically, under the Education Jobs Fund, one option would require the state to maintain state support for elementary, secondary, and public higher education, in the aggregate in FY2010, at the level of such support for FY2009. Alternatively, the state could maintain state support for elementary, secondary, and public higher education for FY2010, in the aggregate, at a level no less than such support for FY2006. If the state chose to meet the latter criterion and enact a reduction to such aggregate level of FY2010 state support for elementary, secondary, and public higher education after December 12, 2009, the state must maintain state support for elementary, secondary, and public higher education for FY2010 at a percentage of the total revenues available to the state that is at least equal to the percentage provided for such purpose for FY2010 prior to December 12, 2009. For FY2011, the state must also meet one of two sets of MOE requirements. The first requirement is identical to the first requirement for FY2010. That is, the state would be required to maintain state support for elementary, secondary, and public higher education, in the aggregate, at the level of such support for FY2009. Alternatively, the state could maintain state support for elementary, secondary, and public higher education, in the aggregate, at a percentage of the total revenues available to the state that is at least equal to the percentage provided for such purposes in FY2010. The Education Jobs Fund would retain all of the provisions from the State Fiscal Stabilization Fund that were included for the purpose of providing fiscal relief for states and LEAs that have experienced a precipitous decline in their financial resources. The Secretary would be able to waive or modify any requirement under the Education Jobs Fund related to maintaining fiscal effort. As with the State Fiscal Stabilization Fund, these waivers could only be granted if the Secretary determines that the state or LEA requesting the waiver would maintain support for elementary and secondary education for the fiscal year under consideration at the same percentage of total revenues available to the state or LEA as was provided during the prior fiscal year. In addition, with prior approval from the Secretary, states and LEAs would be permitted to consider Education Jobs Fund grants that are used for elementary, secondary, or postsecondary education as non-federal funds for the purpose of meeting the requirement to maintain fiscal effort under any other program administered by the Secretary. Thus, states and LEAs could use the Education Jobs Fund money to meet MOE requirements for ESEA and IDEA programs, as they could under the State Fiscal Stabilization Fund. Table 1 presents estimates of state grant amounts that would be available under the Education Jobs Fund. Grants to states would be made on the same basis as they were made under the State Fiscal Stabilization Fund. That is, 61% of each state's grant would be based on the state's relative share of the population of individuals ages 5 to 24, and 39% of each state's grant would be based on the state's relative share of the total population. It is estimated that state grants would range from about $39 million (Wyoming) to $2.8 billion (California). The FWS program is a need-based federal student aid program that provides undergraduate, graduate, and professional students the opportunity for paid employment in a field related to their course of study or in community service. Students receive FWS aid as compensation for the hours they have worked. FWS aid may be provided to any student demonstrating financial need. Awards are typically based on factors such as each student's financial need, the availability of FWS funds, and whether a student requests FWS employment and is willing to work. Federal funding for the FWS program is provided to IHEs for the purpose of making available need-based federal student aid to students enrolled at those IHEs. Funds are awarded to IHEs according to a complex two-stage procedure, with a portion of funds allocated based on what the IHE received in prior years, and a portion based on an institutional need-based allocation formula. Under the FWS program, students are compensated with a combination of federal funding and a matching amount provided by the student's employer, which may be the IHE or another entity. In most instances, the maximum federal share of compensation is 75%. For FY2009, $980.5 million was provided for the FWS program. ARRA provided an additional $200 million in supplemental discretionary appropriations for the FWS program for FY2009. For FY2010, the program was level funded at the FY2009 amount provided through regular appropriations. The House-passed version of H.R. 2847 would provide an additional $300 million for FWS for FY2010. The funds would remain available through September 30, 2011. Under current law, state and local governments can issue Qualified Zone Academy Bonds (QZABs) and Qualified School Construction Bonds (QSCBs) to finance school renovation and construction. These bonds are called "tax credit bonds." In contrast to tax-exempt bonds, most tax credit bonds (TCBs) allow the investor to claim a federal tax credit equal to a percentage of the bond's par value (face value) for a limited number of years. This tax credit percentage is set at the yield on taxable bonds at the time of issuance. Issuers of tax credit bonds typically pay no interest to bondholders. Thus, TCBs can deliver a larger federal subsidy to the issuer than do traditional municipal bonds. The subsidy to the issuer is the full taxable interest rate instead of the difference between the taxable rate and the lower tax-exempt rate as with traditional tax-exempt bonds. The government entity issuing the bond is obligated to repay only the principal of the bond. The federal government effectively makes "payments" to the investor through the tax credits. The tax credits delivered through the bonds are unlike typical tax credits because the credit is included in taxable income as if it were interest income. The tax credit bond rate is set with the intent of compensating for this taxability. The House-passed version of H.R. 2847 includes a provision that would allow QZAB and QSCB issuers to receive a direct payment from the Treasury in lieu of the investor receiving a tax credit. This mechanism is most often used for the new Build America Bonds (BABs), which were created by ARRA ( P.L. 111-5 ). Critically, however, the BAB tax credit rate (or the direct payment, if the issuer chooses) is set at 35% of the interest cost, not 100% like QZABs and QSCBs. The higher tax credit rate for QZABs and QSCBs, coupled with the greater popularity of the direct payment mechanism with both investors and issuers, could generate a sizable tax loss for the federal government when compared to current law. H.R. 2847 would also remove the restriction that the bonds be issued before January 1, 2011. The Senate amendment to H.R. 2847 ( S.Amdt. 3310 ), which was passed on February 24, 2010, also would expand the direct payment option for QZABs and QSCBs, although at a reduced credit rate. For large jurisdictions, those that issue more than $30 million of bonds annually, the direct payment credit rate would be set at 45% (in contrast to the 100% credit rate for the investor credit option as under current law). For small issuers, the direct payment credit rate would be set at 65%. Thus, under the Senate version of H.R. 2847 , issuers that choose the direct payment option would incur a higher interest cost than under the House-passed legislation. Nevertheless, the direct payment option under the Senate bill would still provide a lower interest cost to issuers when compared to traditional tax-exempt bonds. States are currently authorized to issue $2.8 billion of QZABs and $22 billion of QSCBs. QZAB allocations will be made through 2010 and may be carried forward up to two years. QSCB allocations will also be made through 2010 but can be carried forward indefinitely. On January 14, 2010, the credit rate on QZABs and QSCBs was 6.11% and the term 17 years. The Congressional Budget Office (CBO) estimates that the proposal for QZABs and QSCBs in the House-passed version of H.R. 2847 would cost $9.028 billion over the FY2010-FY2019 budget window. CBO estimates that the proposal included in the Senate version of H.R. 2847 would cost $2.257 over the same timeframe. The Workforce Investment Act of 1998 (WIA; P.L. 105-220 ) provides job training and related services to unemployed and underemployed individuals. WIA programs are administered by the Department of Labor, primarily through its Employment and Training Administration (DOLETA). 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 funds have continued to be provided for WIA programs through annual appropriations acts. 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 the Native American Program, the Migrant and Seasonal Farmworker Program, the Veterans' Workforce Investment Program, Responsible Reintegration for Young Offenders, the Prisoner Reentry Program, Career Pathways Innovation Fund, and YouthBuild. In FY2010, the WIA programs and activities noted above are funded at $5.5 billion, including $3.0 billion for state formula grants for Adult, Youth, and Dislocated Worker Activities. As described below, WIA programs also received funding under the American Recovery and Reinvestment Act (ARRA). Under the House-passed Jobs for Main Street Act, $1.25 billion would be provided for existing workforce development and related programs administered by DOLETA. These funds would be in addition to amounts already appropriated for FY2010. Specifically, H.R. 2847 would provide: $500 million for Youth Activities under Title I-B of WIA, specifically summer employment programs; and $750 million for worker training in high growth and emerging industry sectors under Title I-D of WIA. The Youth Activities program provides training and related services to low-income youth ages 14-21. Under the program, formula grants are allocated to states, which, in turn, allocate funds to local entities. H.R. 2847 would provide a total of $500 million for grants for Youth Activities, which would be available for obligation on the date of enactment through September 30, 2010. H.R. 2847 specifies that funding would be solely for summer employment programs for youth; no portion of this additional funding would be available for Youth Opportunity Grants; the formula allocation for grants provided under this section would remain the same as if the total allocation were less than $1 billion ; the only performance measure to be used in assessing the effectiveness of summer jobs for youth would be attainment of basic skills and, as appropriate, work readiness or occupational skills; and an in-school youth would meet the low-income eligibility requirement if such youth has met the eligibility requirements for free meals under the National School Lunch Act (42 U.S.C. 1751 et seq. ) during the most recent school year. Under ARRA, Youth Activities had received an appropriation of $1.2 billion. Funding from ARRA was available for all activities authorized under grants for Youth Activities, including summer employment. ARRA also increased the age of "eligible youth" in these ARRA-funded programs from 21 to 24 years of age. Otherwise, the provisions in ARRA and in H.R. 2847 are the same. Funds for this program, which would be available for obligation on the date of enactment through September 30, 2010, would be distributed through a competitive grant process to provide worker training and placement in high-growth and emerging industry sectors. H.R. 2847 would provide a total of $750 million for these grants. Of the total proposed allotment, $275 million would be for job training projects that prepare workers for careers in the following energy efficiency and renewable energy industries: energy-efficient building, construction, and retrofits industries; renewable electric power industry; energy-efficient and advanced drive-train vehicle industry; biofuels industry; deconstruction and materials use industry; energy efficiency assessment industry serving the residential, commercial, or industrial sectors; and manufacturers that produce sustainable products using environmentally sustainable processes and materials. Of the $275 million for worker training in energy efficiency and renewable energy careers, $225 million would be reserved for Pathways Out of Poverty projects. Finally, H.R. 2847 would direct the Secretary of Labor to give priority to projects that prepare workers for careers in the health care sector when granting the remaining funds—$475 million. ARRA also provided $750 million for competitive grants for worker training in high-growth and emerging sectors. ARRA specified that $500 million of the total allotment was reserved for research, labor exchange, and job training projects that prepare workers for careers in energy efficiency and renewable energy industries (listed above) and that the Secretary of Labor should give priority to projects in the health care industry when granting the remaining $250 million. In addition, the ARRA allowed local workforce investment boards to award training contracts to an institution of higher education if such a choice would facilitate the training of multiple individuals in high-demand occupations. A variety of benefits are available to provide workers with income support during a spell of unemployment. A key component of this support is the joint federal-state Unemployment Compensation (UC) program, which may provide benefits to eligible workers for up to 26 weeks. Extended benefits may be available under permanent law in states with high unemployment rates; additionally, Congress may choose to enact temporary extensions of UC benefits in response to specific circumstances. Section 3301 of the House-passed Jobs for Main Street Act would extend several existing temporary unemployment insurance provisions through June 2010. These provisions are the Emergency Unemployment Compensation (EUC08) benefit, the $25 Federal Additional Compensation (FAC) benefit, and the temporary 100% federal financing structure of the Extended Benefit (EB) program. The Congressional Budget Office (CBO) estimates the UC provisions of H.R. 2847 would cost $41 billion over the FY2010-FY2019 budget window. However, this estimate was based on current law as of the date of House passage (December 16, 2009) and includes some spending that occurred under the FY2010 Defense Appropriations Act, which was enacted on December 19, 2009, and extended these same provisions for part of the period that would otherwise be covered under H.R. 2847 . The following sections describe the UC provisions included in the House-passed version of H.R. 2847 . The Senate-passed version of H.R. 2847 contains no comparable provisions. Readers should note that on February 25, 2010, the House also passed the Temporary Extension Act of 2010 ( H.R. 4691 ), which would extend these temporary UC provisions through April 5. On July 2008, a new temporary unemployment benefit, Emergency Unemployment Compensation (EUC08), began. The EUC08 program was created by P.L. 110-252 , and was amended by P.L. 110-449 , P.L. 111-5 , P.L. 111-92 , and P.L. 111-118 . The EUC08 program expires at the end of February 2010, although H.R. 2847 would extend the program through June 2010. The EUC08 program provides up to 53 weeks of additional unemployment benefits to certain workers through a series of four tiers of benefits. All tiers of EUC08 benefits are temporary and expire on February 28, 2010. Those beneficiaries receiving tier I, II, III, or IV EUC08 benefits before February 28, 2010, are "grandfathered" for their remaining weeks of eligibility for that particular tier only. There will be no new entrants into any tier of the EUC08 program after February 28, 2010. That is, if an individual exhausts his or her regular UC benefits after February 28, 2010, the individual would not be eligible for any EUC08 benefit. If an individual is eligible to continue to receive his or her remaining tier I benefit after February 28, 2010, that individual would not be entitled to tier II benefits once those tier I benefits were exhausted. No EUC08 benefits—regardless of tier—are payable for any week after July 31, 2010. As passed by the House, H.R. 2847 would extend the availability of EUC08 benefits for four additional months, through the end of June 2010 with the final "grandfathered" payments ending by November 30, 2010. The American Recovery and Reinvestment Act ( P.L. 111-5 ), as amended by P.L. 111-118 , created the federally funded $25 FAC weekly benefit for individuals currently receiving regular UC, Extended Benefits (EB), EUC08, Trade Adjustment Assistance (TAA), and Disaster Unemployment Assistance (DUA) benefits. The FAC is temporary and its authorization ends on February 28, 2010. The $25 per week supplemental benefit will be grandfathered for individuals who have not exhausted the right to unemployment insurance as of February 28, 2010. That is, individuals who were receiving unemployment insurance (UC, EB, EUC08, TAA, or EB) on February 28, 2010, will continue to receive the $25 supplemental benefit for the duration of that particular benefit. An individual who is grandfathered for payment of the supplemental weekly benefit for one form of unemployment benefit (such as regular UC) would not receive the $25 supplemental weekly benefit for subsequent unemployment benefits that begin after February 28, 2010 (such as EB). No supplemental compensation would be payable for any week beginning after August 31, 2010. H.R. 2847 would extend the availability of FAC benefits for four additional months, through the end of June 2010, with the final "grandfathered" payments ending by November 30, 2010. ARRA, as amended by P.L. 111-118 , provides for 100% federal financing of the EB program to end the week ending before February 28, 2010. For individuals who are receiving EB payments during that last week, the federal government will continue to pay 100% of EB benefits for the duration of these individuals' benefits (but not for new entrants to the EB program starting on or after March 1, 2010). Regardless, the 100% federal financing would end the first week ending before July 31, 2010. Under permanent law, states that do not require a one-week waiting period before unemployed individuals are eligible for UC benefits, or have an exception for any reason to the waiting period, pay 100% of the first week of EB. P.L. 110-252 , as amended by P.L. 110-449 and P.L. 111-8 , suspended the waiting-week requirement for federal funding for that first week of EB until July 31, 2010. H.R. 2847 would extend 100% federal financing of EB benefits through June 2010. Additionally, H.R. 2847 would continue to suspend the one-week waiting period provision through December 2010. When workers lose their jobs, they can also lose their health insurance. Under Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA, P.L. 99-272 ), a private sector employer with 20 or more employees who offers health insurance to its employees must also offer continued health insurance coverage at group rates to qualified employees and their families faced with a loss of coverage due to unemployment and other qualifying events. However, employers may charge unemployed workers 100% of the COBRA premium cost, plus an additional 2% administrative fee. Since most employers subsidize health insurance premiums for their workers, the 102% COBRA premium may be prohibitive for the unemployed, especially when compared to what they receive as unemployment compensation. In 2009, an average COBRA premium was about $410 per month for individual coverage ($4,920 annually) and $1,137 per month for family coverage ($13,644 annually). Average weekly unemployment benefits were $307 in 2009. When converted to a monthly basis of $1,330 a month, these premiums may consume a large share of one's monthly unemployment benefits, especially for those purchasing family coverage. Section 3302 of the Jobs for Main Street Act would extend an existing provision intended to help make these premiums more affordable. The first session of the 111 th Congress acted twice to temporarily address this issue. First, the American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ), enacted in February 2009, included a premium subsidy for COBRA continuation coverage. Under ARRA, individuals involuntarily terminated from September 1, 2008, through December 31, 2009, were eligible for a 65% subsidy against their COBRA premiums. The subsidy was available for nine months. By December 2009, many of the COBRA subsidy provisions under ARRA were set to expire. After December 31, 2009, those who became unemployed would not be eligible for the subsidy. Furthermore, some of those who were unemployed were experiencing durations of unemployment longer than the available subsidy of nine months. To address this issue, on December 19, 2009, Congress extended the COBRA subsidy for unemployed workers that was initially enacted under ARRA. As part of the FY2010 Defense Appropriations Act ( P.L. 111-118 ), the eligibility period for the COBRA premium reduction was extended for an additional two months (through February 28, 2010) and the maximum period for receiving the subsidy was extended for an additional six months (from nine to 15 months). In addition, these provisions were made retroactive for individuals whose COBRA subsidy expired October 31, 2009. Section 3302 of the House-passed Jobs for Main Street Act would extend the COBRA subsidy even further and would include those who are involuntarily terminated through June 30, 2010. The Congressional Budget Office estimates this proposal would cost $12.3 billion over the FY2010-FY2019 budget window. However, this estimate was based on current law as of the date of House passage (December 16, 2009) and includes some spending that occurred under P.L. 111-118 , which was enacted on December 19, 2009, and extended COBRA premium subsidies for part of the period that would otherwise be covered under H.R. 2847 . The Senate-passed version of H.R. 2847 contains no COBRA provisions comparable to those just described. Readers should note that on February 25, 2010, the House also passed the Temporary Extension Act of 2010 ( H.R. 4691 ), a short-term extension that would extend eligibility for the COBRA subsidy to include individuals who are involuntarily terminated between March 1, 2010, and March 31, 2010. The child tax credit was initially enacted in 1997 to address concerns that the tax structure did not adequately reflect a family's reduced ability to pay taxes as family size increased. Over time, the credit has been amended and recent provisions have expanded the credit's refundability. As passed by the House, Section 3304 of the Jobs for Main Street Act would, for tax year 2010 only, make the credit refundable for up to 15% of a taxpayer's earned income without an income threshold. The Congressional Budget Office estimates the cost of this provision would be $2.3 billion over the FY2010-FY2019 budget period. The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA, P.L. 107-16 ) made the child tax credit refundable for taxpayers with less than three children, and for up to 10% of a taxpayer's income above a $10,000 income threshold (indexed for inflation). The Working Families Tax Relief Act of 2004 (WFTRA, P.L. 108-311 ) increased the refund percentage for the credit from 10% to 15% beginning in tax year 2004. The American Recovery and Reinvestment Act of 2009 (ARRA, P.L. 111-5 ) lowered this income threshold to $3,000 for tax years 2009 and 2010. The EGTRRA changes to the child tax credit will expire for tax years beginning after December 31, 2010, at which time the tax credit will be refundable only to taxpayers with three or more children. The federal poverty guidelines, issued by the Secretary of Health and Human Services (HHS), or multiples of them, are used in determining individual, family, and household income eligibility and benefit levels under a number of means-tested federal and state programs. Under current law, the poverty guidelines are adjusted annually based on the percentage change in the Consumer Price Index for all Urban Consumers (CPI-U). Normally, the CPI-U adjustment results in an annual increase in poverty guidelines from one year to the next due to price inflation. However, in 2009, the economic recession resulted in price deflation from 2008 to 2009 , which under current law would result in lower poverty income guidelines for 2010 than for 2009. This could potentially cause some individuals, families, or households to lose eligibility, or have their benefits reduced, under programs that use the guidelines for these purposes. The FY2010 Defense Appropriations Act ( P.L. 111-118 ) contains a provision prohibiting the Secretary of HHS from publishing updated poverty guidelines for 2010 before March 1, 2010, and requiring that the 2009 guidelines, which were issued on January 23, 2009, must remain in effect until the new guidelines are published. On February 25, 2010, the House passed H.R. 4691 , which would extend this prohibition on publication of new poverty guidelines until March 31, 2010. Section 3305 of H.R. 2847 , as passed by the House, would further provide that the poverty guidelines issued for 2010 may not be lower than those issued on January 23, 2009. The Congressional Budget Office (CBO) estimates that this provision would have a cost of $305 million over the FY2010-FY2019 budget window. Applying the methodology used by HHS to update the poverty guidelines, CRS estimates that for 2010, poverty guidelines for a family of four for the 48 contiguous states and the District of Columbia would be $100 lower than in 2009; for Hawaii they would be $120 lower, and for Alaska, $140 lower under current law (see Table 2 ). As described above, Section 3305 of the Jobs for Main Street Act would maintain the 2010 guidelines at their 2009 level; however, the provision would have no effect on poverty guidelines issued for subsequent years. Certain means-tested programs treat income tax refunds, including advance payments of refundable tax credits, as income or resources for purposes of determining eligibility and benefit levels. Section 3306 of the House-passed Jobs for Main Street Act would provide that tax refunds or advance payments would be disregarded as income or resources under any federal program or state or local program receiving federal funds for the month in which the refund or advance payment is received, plus the subsequent 11 months. This provision would apply only to amounts received after December 31, 2009, and before January 1, 2011. As noted in the introduction to this report, the House-passed Jobs for Main Street Act would provide appropriations for infrastructure investments intended to save or create jobs. Some of these appropriations would be made to programs administered by the Departments of the Interior and Agriculture. These programs are not discussed in this report but include resource management activities of the Bureau of Land Management, U.S. Fish and Wildlife Service, National Park Service, and National Forest Service. Section 1402 of H.R. 2847 directs the Secretaries of the Interior and Agriculture, in administering these funds, to use—to the maximum extent practicable—the Public Land Corps, Youth Conservation Corps, Student Conservation Association, Job Corps, Corps Network members, and other partnerships with federal, state, local, tribal, or nonprofit organizations that serve young adults, underserved and minority populations, veterans, and special needs individuals. Certain overarching or general provisions included in the American Recovery and Reinvestment Act would also apply to the Jobs for Main Street Act, as passed by the House. For example, Section 1702 of H.R. 2847 would maintain ARRA's prohibition on the use of funds for casinos or other gambling establishments, aquariums, zoos, golf courses, or swimming pools. The bill would also provide that any funds made available under the act would be subject to the same reporting, transparency, and oversight requirements established by Title XV of Division A of ARRA. Likewise, funds provided under ARRA to agency Inspectors General or the Recovery Accountability and Transparency Board would be available to oversee activities under the Jobs for Main Street Act as well (Section 1703(a) and (b)). Finally, Section 4002 of H.R. 2847 would require that any funds provided under the act be subject to the "Buy American" provisions included in ARRA. | The Obama Administration and Congress continue to grapple with high rates of unemployment despite some tentative signs of economic recovery. On December 8, 2009, President Obama outlined a series of proposals intended to accelerate job growth, focusing on incentives to small businesses, spending on infrastructure projects, and job creation through energy initiatives. The President also signaled support for the extension of some of the direct assistance provisions included in the American Recovery and Reinvestment Act (ARRA, P.L. 111-5), including Unemployment Compensation (UC) benefits and health insurance premium subsidies under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). On December 16, 2009, the House passed the Jobs for Main Street Act (H.R. 2847), which would spend approximately $154 billion over 10 years in three general areas: infrastructure investment, public service jobs, and emergency relief for families. Appropriations for infrastructure and jobs would total about $75 billion, to be offset by redirecting Troubled Asset Relief Program (TARP) funds. Emergency assistance (which are primarily entitlement or mandatory spending provisions) would total another $79 billion, as estimated by the Congressional Budget Office (CBO) on the date of House passage; however, this amount includes some spending for UC and COBRA provisions that were subsequently enacted into law through the FY2010 Defense Appropriations Act (P.L. 111-118). On February 24, 2010, the Senate passed an amendment in the nature of a substitute to H.R. 2847 (S.Amdt. 3310). This substitute would provide tax credits for hiring and retaining unemployed workers, extend a tax provision in ARRA related to expensing for small businesses, and reauthorize certain transportation authorities. The Senate version of H.R. 2847 contains none of the education, training, or direct assistance provisions of the House-passed bill that are discussed in this report, with the single exception of provisions for school construction bonds. Meanwhile, on February 25, 2010, the House passed the Temporary Extension Act of 2010 (H.R. 4691), which would provide a shorter extension of some of the direct assistance provisions also included in the House-passed version of H.R. 2847, including UC benefits and COBRA subsidies. This report focuses specifically on provisions in the House-passed bill that would support education and training or that would provide direct support to unemployed workers or low-income individuals. Education provisions include an Education Jobs Fund, which is similar in some respects to the State Fiscal Stabilization Fund created under ARRA; additional funding for the Federal Work-Study Program; and provisions for school construction bonds. Training provisions include additional funding for youth employment and training activities, particularly summer employment, and grants to support worker training and job placement in high-growth industries. Direct assistance includes a further extension of certain temporary UC benefits and COBRA health insurance premium subsidies; a temporary expansion of the child tax credit; a provision that would freeze federal poverty guidelines at 2009 levels to prevent a reduction in eligibility for certain means-tested programs; and a provision that would disregard income tax refunds as income or resources for determining eligibility or benefit levels under means-tested programs. |
Recent years have witnessed a growing interest, in Congress, in the executive branch, and in the broader policy community, in re-examining how well the U.S. government conducts the business of national security—from decision-making, to strategy-making, to budgeting, to planning and execution, to accountability and oversight. That interest reflects concerns with effectiveness—how well the U.S. government accomplishes the mission—and with efficiency—how well the U.S. government stewards scarce resources—in the national security arena. Within the context of these debates, a number of practitioners and observers have called for the adoption of "unified"—or "consolidated" or "integrated"—approaches to national security budgeting. The primary concern of this unified national security budgeting school, loosely defined, is not to improve U.S. budgeting practices per se , but rather to use budgetary mechanisms to drive changes in the priorities and practice of national security. Members of the school broadly share the view that some U.S. national security concerns, such as counter-terrorism, or stabilization and reconstruction, are inherently cross-cutting: that is, they require the participation of multiple agencies, and their associated responsibilities could conceivably be divided up any number of ways among various agencies. In turn, members of the school argue that the current system allows little space for holistic consideration of such cross-cutting national security issues, and they propose an array of budgetary tools designed to promote cross-fertilization. They suggest that for such cross-cutting issues, more "unified" budgeting approaches could facilitate the identification of overlaps and gaps among agencies' efforts; enable more deliberate assignment of roles and responsibilities; catalyze closer collaboration; and provide greater transparency to help support congressional oversight. Such changes, they add, could improve effectiveness and save money. The school itself is far from unified—there is no single model for "unified national security budgeting." Various proponents have put forward quite different proposed remedies and are—apparently—aiming to solve quite different underlying problems. The fact that the debate itself is not cohesive has no logical bearing on the value of the various associated proposals, but it suggests a need to define terms, as a starting point. For Congress, constitutionally mandated to control the power of the purse, fundamental issues at stake include both oversight of the effectiveness and efficiency of U.S. government national security activities, and the integrity of the overall federal system of budgeting. Of particular interest may be the extent to which, if any, efforts to optimize the overall system, and efforts to optimize its national security "sub-system," constitute competing imperatives. This report describes and characterizes the unified national security budgeting school's broadly shared critique of the current system; describes and analyzes various proposed unified national security budgeting approaches; and offers a succinct list of considerations for Members and staff of Congress who may be interested in this issue. The U.S. government system of budgeting for national security activities is part of a much larger, highly complex system of federal budget development—based on the constitutional distribution of roles and responsibilities between Congress and the President, on statute, and on a wide array of established practices by key stakeholders. The system necessarily covers the full panoply of U.S. government responsibilities and activities, and therefore by definition—de facto if not explicitly—adjudicates among all competing concerns. In a sense, the federal budget system not only reflects the distribution of power among branches, but also refines and institutionalizes that power balance. So the stakes associated with any possible revision of the federal budget system are quite high. The current, extremely complex federal budgeting system includes at least three major processes directly germane to the consideration of national security. In the executive branch, the Office of Management and Budget (OMB), part of the Executive Office of the President (EOP), is responsible for administering budget development and execution. OMB typically assigns each federal Department and agency an informal topline—a total funding limit—early in the process. OMB may also provide additional funding level guidance for some specific activities. Agencies then typically work within their respective toplines, which can be negotiable, to craft their budget requests. The appropriate Resource Management Offices (RMO) within OMB consider the draft requests and work with agencies to refine them. OMB leadership considers the findings—a process in which National Security Staff (NSS) members, for national security-related matters, may participate. OMB "passes back" its decisions to agencies, revisions are made, any agency appeals are adjudicated, final EOP decisions are taken, and the results are put forward to Congress as the President's budget request. In Congress, appropriations committees allocate shares of the discretionary budget to their subcommittees, each of which has specified oversight responsibilities. Each subcommittee's remit corresponds to some broad mission area—such as "defense" or "homeland security." But those remits do not fully align with Departments and agencies—subcommittees may be responsible for some activities at multiple agencies, and agencies may answer to more than one subcommittee. Meanwhile, as an organizing construct, the entire federal government uses a hierarchy of categories—budget "functions" and "sub-functions," based on the purpose the funding is intended to serve—to organize compilation and consideration of budget requests. These functions do not fully align with Departments and agencies, nor do they correspond directly to appropriations subcommittees—for example, there is no single budget function for "homeland security," which is both an agency and a subcommittee title. According to a number of practitioners, budget function categories do not fully reflect the way that budget requests are developed or considered in either participating branch of government. The current system does not budget for national security in an explicit and bounded way. There is no legal definition stating how "national security" maps onto any of the sets of boundaries used in the current budget process—including executive branch agencies, appropriations subcommittees, or budget functions. It is worth noting that bounding "national security" for the purposes of budgeting would require more than organizational or administrative fixes; it would also require significant conceptual efforts to define the boundaries of the category. The broader policy community has no single, shared understanding of the arenas and activities that contribute to national security. In practice, the debates about boundaries tend to be shaped by real-world developments. For example, in the wake of the terrorist acts of September 11, 2001, many practitioners and observers urged closer integration between homeland security and traditional national security efforts. The Obama Administration, at the start of its first term, declared the two "indistinguishable" and institutionalized the concept organizationally with a merger of the previously separate National and Homeland Security Councils. Yet on one hand, it is not obvious that all national and homeland security concerns should be combined, for all purposes. And on the other hand, contributions to U.S. national security might be defined more broadly still—to include energy, the environment, and the economy, for example. In principle, incorporation of some activities that are not traditionally included under a national security umbrella might give them additional prominence and might even boost their chances of getting funded. Even more ambitiously, broadening the scope of "national security" in the budgeting process might encourage practitioners to think more creatively about how various instruments of national power contribute to U.S. national security, and to use resourcing decisions to re-balance the weight of those contributions. Yet inclusion of broader activities in the national security mix could conceivably have the opposite effect by sharpening the zero-sum contest for resources between traditional and less-traditional national security tools. Unified national security budget advocates typically characterize the current system in at least two important ways. First, they rightly point out that the current system does not treat "national security" in a distinct, bounded way. Second, they tend to argue that the various national security-related components of the budget are developed in striking isolation from one another. They suggest that the executive branch process would do well to undertake more ambitious cross-cutting consideration of national security issues; and they add that in practice it is better at ensuring the internal consistency of each agency's budget request than at reconciling the requests of various agencies. They suggest that appropriations committees would do well to adjudicate more actively how cross-cutting national security priorities are met by adjusting the mix of activities undertaken, or the division of labor among agencies, or both. But they argue that in practice, subcommittees tend to guard against perceived incursions into their respective jurisdictions, and full committee-level adjudication is relatively rare. Skeptics might raise concerns about any of several broadly shared facets of UNSB community thought. First, they might point to the relatively limited attention UNSB advocates tend to give to the integrity of the federal government budgeting system—to the damage that might be done to the overall system including, not least, congressional oversight, by changes to any of its basic modalities. Second, some might suggest that the UNSB community typically fails to consider what additional room there might be for holistic consideration of cross-cutting issues within the formal bounds of the current system through fuller utilization of existing tools. Third, skeptics might observe that "national security" is but one subset of overall U.S. concerns, and that optimizing for national security might well mean sub-optimizing in other arenas and at the level of U.S. government responsibilities. Finally, some suggest that unified budgeting advocates may be particularly eager to label national security activities as "cross-cutting," viewing holistic consideration as an additive good without associating any opportunity costs with the forfeiture of single-agency responsibility. In principle, single agency-based approaches may sometimes offer greater efficiency and greater effectiveness. Further, unified budgeting advocates may tend to believe that an activity either is cross-cutting or it is not. Yet in practice, activities may have some single-agency facets and some cross-cutting facets, so the art would be to weigh the benefits and opportunity costs of treating such activities either holistically or within single agencies. While a number of practitioners and outside experts have called for adopting more "unified" approaches toward budgeting for national security, those calls themselves have hardly been unified in the prescriptions they have put forward. They vary greatly in content and—more fundamentally—in intent. Perhaps the most ambitious approach to unified budgeting for national security would feature a single, shared pool of funding for all national security activities, with systemic-level decision-making and accountability from the White House, and with holistic congressional oversight of the entire pool. A key variant of such an approach would limit the scope of the shared pool and other associated modalities to those national security activities that are inherently "cross-cutting"—those, for example, that by definition require the participation of more than one agency such that integration of effort is required, or those that could conceivably be carried out by any of several different agencies such that decisions about roles and responsibilities are required. Other activities that contribute to national security, deemed to be self-contained within given agencies, might be excluded from such a cross-cutting pool. Either variant would require discrete choices regarding scope—of national security activities writ large, or of some cross-cutting subset. Potential benefits of such an approach, given its shared funding pool and its systemic-level adjudication, might include enabling trade-offs to be made—among activities, agencies, or both—across the full span of U.S. government national security efforts. Such an approach might not only make tradeoffs theoretically possible, but also catalyze deeper strategic thinking about the best balance of tools of national power for delivering "security." A list of potential costs of this approach might start with the possibility that such fundamental adjustments to the mechanisms of budgeting for national security could trigger shifts in the balance of power between the Legislative and executive branches—particularly if the new modalities entail a more proactive de facto exercise of authority over the budget process by the President. In addition, the scope of this approach—particularly in its maximal, comprehensive, version—could prove unwieldy and make it hard to manage a disciplined process. Further, a single comprehensive pool of such scope would likely require a more robust mechanism for systemic-level adjudication, and might also require a greater number of systemic-level adjudicators at the NSS and OMB, with the appropriate expertise, to carry it out. In turn, the use of a genuinely shared funding pool, with no a priori decisions about the division of responsibilities and resources among agencies, might also require new modalities for congressional oversight. Finally, while the process of determining the best use for a large, shared pool might conceivably help foster a strong, shared sense of purpose, it might also intensify zero-sum competitions among agencies for both resources and relevance. An alternative to comprehensive unified budgeting for national security is "mission-based budgeting," which typically refers to some form of unified budgeting across multiple agencies in a specific mission area. This approach is sometimes regarded as a "pilot" for a broader unified budgeting effort, and sometimes as an end in itself. Mission-based approaches might, in theory, take any of a wide variety of forms, with a correspondingly wide variety of potential costs and benefits. The Global Security Contingency Fund (GSCF) might be considered a leading example of mission-based budgeting. Regardless of how accurately it reflects that approach, however, its prominence in official rhetoric, congressional interest, and policy community attention make it an important touchstone for consideration. GSCF is a budgeting mechanism that allows State and DOD to transfer funds to a discrete Treasury account, to be used to provide assistance to foreign security forces to help them conduct counterterrorism or stability operations. GSCF is sometimes characterized as a bold step forward toward unified national security budgeting, away from past approaches designed merely to "work around" existing limitations. Yet in practice, GSCF's specific mechanisms and narrow scope raise questions about the kind of change it is intended to drive. GSCF's total funding stream is relatively limited. More importantly, not all U.S. government activities—or even all State and DOD activities—within the specified mission areas, are covered by GSCF, so the mechanism is limited in its ability to highlight the full range of gaps, unnecessary overlaps and potential tradeoffs in these areas. Further, GSCF is horizontally adjudicated—as a rule, State and DOD conduct programmatic decision-making between themselves, which may limit the Fund's ability to directly link national strategy and resourcing. In turn, the adjustments required in order for Congress to provide oversight are in this case relatively simple, compared to hypothetical, comprehensive unified budgeting approaches, because the Fund involves only two agencies. DOD's use of joint capability areas (JCAs) in its internal budgeting process may be a helpful agency-level analogue for the concept of mission-based budgeting. It is also a good counterpoint to GSCF, because the two approaches differ markedly in their business rules. In general, DOD budgeting might be viewed as a microcosm of broader executive branch budgeting, given the need to coordinate and reconcile budget requests among Military Services and agencies, each with its own mandate but all broadly supporting of a single defense strategy. JCAs are an organizing construct designed to give DOD leadership a single consolidated view of key mission areas—such as "Battlefield Awareness"—and to support analysis and decision-making over portfolios of related matters. Unlike GSCF, they are not based on shared funding pools. But also unlike GSCF, they are designed, in theory, to be comprehensive within a given mission area, and thus able to provide a full picture and enabling identification of gaps, overlaps, and potential tradeoffs. And unlike GSCF, JCA adjudication and decision-making are conducted at the systemic level—at the level of the Office of the Secretary of Defense and the Joint Staff—rather than horizontally among Services and agencies. The process typically generates displays that could be used to inform both internal decision-making and external review by the White House and/or Congress. The potential benefit, and also costs, of mission-based budgeting are likely to vary greatly based on the design of any specific initiative. One potential virtue of a focus on mission area, rather than on the entire field of national security, is its relative manageability, given both the narrower substantive scope and the smaller quantitative scale. In turn, if the mission area is defined inclusively—as JCAs are—it can provide focused analysis and tee up decision-making regarding gaps, overlaps and tradeoffs within that arena. While it cannot shed light on the appropriate balance among mission areas, it might help make decision-making—and execution—within single arenas more effective. Further, if the mission area is defined inclusively, the adjudication process could easily generate comprehensive displays of all the associated budgetary choices, which might facilitate oversight by illuminating the Administration's approaches and choices. Different levels of adjudication for mission-based budgets suggest different potential pay-offs. Systemic-level adjudication might help ensure that top national priorities, rather than agency equities, drive choices within that arena. Horizontal adjudication might, as some practical experience suggests, present greater difficulties in arriving at solutions. But if participants of horizontal processes persevere, their enforced collaboration on budgeting might conceivably open doors to broader collaboration in that mission area—for example in planning and execution. Costs, like benefits, would be likely to vary greatly depending on design. One consideration—a limitation more than a cost—concerns scope. Mission-based budgets may be less well-placed than a more comprehensive unified national security budget to consider genuinely alternative approaches, or to catalyze fundamental re-thinking about the provision of national security—for example, tradeoffs in the balance of prevention and preparedness efforts. In turn, different levels of adjudication might introduce different kinds of potential costs. Systemic-level adjudication of a mission area would require—as it would for a comprehensive unified budget—the time and attention of systemic-level adjudicators, as well as their ability to grasp the full spectrum of issues, activities, and agency equities at stake. That suggests the need for sufficient numbers of personnel with the appropriate expertise at the NSS and OMB, and for effective NSS/OMB collaboration mechanisms. Horizontal adjudication might hold more potential pitfalls; practical experience and organizational theory suggest that the instruction to "sort it out amongst yourselves" can be fraught with peril. Arguably, this variant might require sufficient strategic guidance from the systemic level to allow—or force—major stakeholders to work toward the same ends, and with a shared understanding of the basic division of labor. In addition—or instead—this approach might require interlocutors who are steeped in their own agencies' capabilities and equities, but who also fully appreciate other agencies' roles and contributions. To that end, many have argued that the best means for making sure that agencies can collaborate fluidly on national security matters—on planning and execution as well as on budgeting—is by building, across the federal government, a cadre of national security professionals, through shared education, training, and inter-agency exchange service. In theory, such cadre-building might foster a stronger sense of shared purpose and priorities, and the participants—fully cognizant of the roles and capabilities of other agencies as well as their own—might come to approach budgeting for cross-cutting national security issues more collaboratively—for example, more readily identifying, and agreeing to, tradeoffs. Finally, mission-based budgeting might require, or make desirable, some form of coordinated congressional oversight. For example, some activities designed to be carried out by multiple agencies might only be executable if each agency receives the necessary authorization and appropriations from its respective committees of jurisdiction. That is, it might make sense to decide "yes" or "no" across the board. And some requests by individual agencies for resources and authorities might only make logical sense in the context of the Administration's request for the entire mission area. Many proposals regarding national security budgeting focus not on the use of a shared funding pool, but rather on a variety of other measures, often in combination with each other. Of those, "crosscut displays" may be the most common. In general, a crosscut budget display refers to a comprehensive visual depiction of all activities by two or more agencies within a given policy arena. Crosscuts are not a new idea—they have long been used in a variety of fields, sometimes but not always congressionally mandated. The homeland security arena provides one of the most prominent crosscut display examples of recent years. In the wake of the terrorist attacks of September 11, 2001, Congress required that the President submit, with the annual budget request, a display of funding—by budget function, by agency, and by initiative area—contributing to homeland security. The requirement consolidated and expanded previous requirements for crosscut displays concerning counterterrorism, and domestic emergency preparedness. Today the results of that mandate are captured in an appendix to the Analytical Perspectives component of the President's budget submission, which is entitled "Homeland Security Funding by Agency and Budget Account." This display, which covers recently enacted budgets as well as the current budget request, highlights the remarkably broad spectrum of agencies considered to contribute to homeland security. Crosscut budget displays have many potential benefits. Their most obvious virtue might be transparency, providing both the executive branch and Congress a picture of overall U.S. effort in a given field, including all the facets of that effort and the respective contributions of all participating agencies. That picture might highlight gaps and unnecessary redundancies, and might help facilitate adjudication of the roles and missions of various actors. For Congress, even without any adjustments to current modalities for oversight, crosscuts might provide broader context for the activities within a given committee's jurisdiction, and might also facilitate cross-talk among committees as needed. One cost associated with the use of crosscuts is the discipline required in order for the results to be meaningful. In particular, all contributors have to share the same vocabulary and understanding of concepts. Enforcing such discipline might require additional systemic-level supervision. Under the heading of "costs" broadly defined, the use of crosscuts also carries certain limitations. Crosscuts do not, on their own, tee up decision-making—they merely reflect decisions made—so additional steps would be required in order for crosscuts to serve as tools for change of any kind. Crosscuts also do not inherently indicate accountability for the cross-cutting mission areas they depict. Instead, effective execution may require the additional step of assigning responsibility, whether to the systemic level, to a lead agency, or to a combination of agencies, for ensuring that all facets of a mission area are integrated and accomplished. And unlike pooled funding, crosscuts, even when they indicate gaps or unnecessary overlaps in effort, include no mechanism for the re-allocation of resources and/or authorities. Any such changes might require additional actions by Congress as well as the executive branch. In addition to costs and limitations, the use of crosscuts merit particular caution in several ways. First, regardless of how the scope of inclusion is defined, crosscuts might give the impression of being comprehensive and might therefore focus disproportionate attention on aggregate funding levels over time. That is, they might encourage particular scrutiny of whether the U.S. government is spending "too much" or "too little"—a consideration that would only be as meaningful as the defined scope of the crosscut, and the consistency of that definition over time. Second, crosscuts displays might tacitly encourage straight cost comparisons among activities that might not make sense: how, after all, should a timely, effective diplomatic intervention be weighed against the acquisition of a major weapons system as contributions to national security? Also commonly encountered in the unified national security budgeting debates—and in the national security reform debates more broadly—are calls for the White House to issue more specific strategic guidance that sets the terms for budgetary decisions. Some view such a step as a necessary precursor for any effective pooled funding approach. Others suggest that a very rigorous process designed to develop such strategic guidance might provide some of the same benefits that pooled funding mechanisms are designed to deliver. Currently the most prominent delivery system for national security guidance is the National Security Strategy. The law requires that Administrations deliver such a strategy annually, and Administrations have varied in their compliance with that timeline. Typically, the final products provide elegant descriptions of fundamental U.S. interests, U.S. security concerns around the world, and an array of U.S. objectives. But they typically do not articulate priorities, assign roles and responsibilities to specific Departments and agencies, or provide resource parameters. Responding to these perceived shortcomings, many practitioners and observers have recommended a more rigorous approach: the conduct of a systemic-level national security review, every four years, led by the NSS with strong support from OMB and full participation by all relevant agencies. Such a review would be designed to clarify core U.S. national security interests; identify and prioritize U.S. objectives; identify and prioritize the activities—the "ways and means"—to be used to achieve those objectives; assign roles and responsibilities to Departments and agencies; establish resource constraints; and elaborate a shared understanding of associated risks and opportunities to mitigate them. The review process would generate internal, classified guidance—national security planning guidance (NSPG)—that would serve as the basis for agencies to build their budget requests. In turn, the broad themes of the review would be released as a public document, the national security strategy, that is, as a by-product rather than as the primary goal of the review effort. For its part, Congress has shown some interest in the potential utility of such an approach, mandating that the President issue NSPG in one major mission area—countering al Qaeda and its affiliates. The potential benefits of the use of more explicit strategic guidance would likely depend on how rigorously and iteratively the associated reviews are conducted. In principle, a rigorous review process that links strategy and resourcing and delivers clear guidance has great potential to ensure that national priorities are met both effectively and efficiently. In particular, the approach includes the potential to make cross-cutting comparisons—for example, which approach should be chosen, when it would be possible to use any of several different instruments of national power to achieve an objective? And who should exercise those instruments? Also importantly, the hands-on direction by the Executive Office of the President gives this approach, unlike the use of crosscut displays alone, a built-in mechanism for decision-making as an integral part of the process. Strategically driven budgeting carries a number of potential costs in the sense of additional requirements. The approach relies on rigorous adjudication at the systemic level by both strategy and resource experts, working closely with each other and managing a complex dialogue with all contributing agencies. That implies a requirement for sufficient numbers of personnel with sufficient expertise, at the NSS and OMB, and for adequate collaboration mechanisms. While a key distinguishing quality of this approach is the strong role played by the EOP, it might also require sufficiently rigorous strategic, planning, and budgetary processes within participating agencies, so that they can contribute meaningfully to the interagency reviews. Crosscut displays might be considered an additional requirement of this approach, although their use might more appropriately be considered a likely inherent facet of the strategic review process itself. Finally, because this approach does not alter the basic modalities for submitting budget requests to Congress, it would not necessarily require changes in congressional oversight. However, to the extent that an Administration makes significant tradeoffs across mission areas, and/or across agencies in order to provide national security, Members of Congress might be interested in using cross-cutting modalities of their own—such as holding joint hearings among several committees, or considering the Administration's crosscut displays together—to better evaluate Administration decision-making. In evaluating proposals and options for possible refinements to budgeting for national security activities, Congress may wish to consider the following issues. The debates about unified budgeting for national security lack a shared sense of the basic problem that needs to be solved. Accordingly, they also lack a shared sense of the basic goal that needs to be achieved. For any given unified budgeting proposal, what problem is it designed to solve—for example, are current U.S. national security efforts perceived to be too expensive, too ineffective, or imbalanced in the distribution of labor across the executive branch? In reality, how if at all does the current system of budgeting for national security fall short? What advantages if any might it have over proposed alternative systems? To what extent might cross-cutting consideration of national security issues be expanded within the formal constraints of the current system? How do various proposals balance the magnitude of the perceived problem and the anticipated benefits of proposed changes, against the anticipated costs of change in terms of time, energy and resources, together with the risks of unanticipated damage to the rest of the system? In theory, many different choices could be made regarding the appropriate boundaries of national security writ large, or of explicitly "cross-cutting" issues within the field of national security, for use in unified budgeting approaches. In budgeting for national security activities, regardless of the mechanisms for doing so, what purchase might be gained by considering national security as a whole? What advantages might examination, instead, of explicitly cross-cutting national security activities, offer? If either cross-cutting national security issues, or national security issues writ large, deserve explicit attention in the budgeting process, what should those categories include? What are the broader stakes—for both agencies and issues—of exclusion from or inclusion under a national security umbrella? Regardless of the specific goals that any changes to national security budgeting might be designed to achieve, any number of different approaches, or combinations of approaches, might theoretically be selected to help achieve those goals. Which of the various possible "ways and means" put forward in different proposals would in principle be compatible with each other? For any given desired end, which ways and means would best achieve the desired results? For any proposed set of ends/ways/means, which of the ways and means are essential to making the approach work, and which are merely helpful additions? Almost any changes to current ways of doing business would be likely to carry some near-term financial costs as a reflection of adjustments to new practices. But some changes might introduce longer-term savings, either because the process itself becomes more efficient, or because new processes yield a more effective practice of national security writ large. For any given proposal, what would be the likely near-term associated resource requirements? What longer-term savings, if any, might it generate? How might the likelihood that refined budget processes would reduce future U.S. requirements through the more effective execution of national security activities—for example, through better-integrated or better-balanced instruments of national power—best be calculated? How might the likelihood that refined budget processes would increase future U.S. requirements—either through initial investments as changes are institutionalized, or through unanticipated consequences—best be calculated? Any analysis of unified budgeting proposals would sensibly include a consideration of risk. In taking apart various facets of the current system (together with the myriad behavior patterns that inevitably develop in any bureaucratic order to compensate for the inefficiencies of the formal system), what unanticipated ripple effects might be created? What steps if any do proposals offer for mitigating such risks? A particularly vexing problem for both national security practice and organizational theory concerns assessments—knowing in what ways, to what extent, and why introduced changes are generating desired results. One unsatisfying approach would be to consider immediate "outputs"—for example, does the system produce decisions? A much more sophisticated approach would consider effects—for example, what additional contributions, if any, does a modified system of budgeting for national security make to the protection of U.S. national security interests? What quickly becomes apparent is the great difficulty of distinguishing among the impacts of many different variables—budgeting, but also decision-making, strategy-making, planning, execution. For any unified budgeting proposal, how would the impact of its use on both effectiveness and efficiency be determined? How would its impact be distinguished from that of other facets of the national security process? How much time would it take for any results to manifest themselves? To what extent if any might the tools provided by the GPRA Modernization Act of 2010, P.L. 111-352 , be helpful for ascertaining the impact of any changes to modalities for budgeting for national security on the effectiveness and/or efficiency of results in that field? Some unified budgeting approaches suggest—while others would seem to require—changes in the modalities of congressional oversight. To what extent if any could Congress, in theory, without any formal changes, engage in more holistic consideration of national security matters? What benefits if any might that have? To what extent, if any, would any given unified national security budgeting proposal necessitate changes in the modalities of congressional oversight, of authorizations as well as appropriations? What impact if any might proposed changes in congressional oversight—for example, holding more frequent joint hearings concerning cross-cutting national security issues, or increasing the size of appropriations committee staffs—have on the effectiveness and/or efficiency of U.S. national security efforts, even without changes in the structure or organization of executive branch national security budgeting? | In recent years a number of observers and practitioners have identified various facets of U.S. government national security practice—decision-making, strategy-making, budgeting, planning and execution, and congressional oversight—as inherently "cross-cutting." They have in mind arenas—such as counterterrorism, and stabilization and reconstruction—that by definition involve multiple agencies, or for which responsibilities could be divided up in any number of ways among various agencies. For such facets of national security, they argue, the U.S. government is seldom able to conduct genuinely holistic consideration. The cost, they add, is a loss of effectiveness, or efficiency, or both. In order to encourage holistic consideration of national security issues, some members of this inchoate school have called for the use of "unified national security budgeting" (UNSB). To be clear, their goal is not to refine the U.S. federal system of budgeting, but rather to use budgetary mechanisms to drive changes in U.S. national security practices. Within this broad school of thought, various proponents call for the adoption of a number of different approaches, from a single shared funding pool for all national security activities, to mission-specific funding pools, to crosscut displays, to more strategically driven budgeting. In turn, various proponents apparently aim to achieve quite different kinds of change with their proposed remedies—from rebalancing the distribution of roles and responsibilities among executive branch agencies, to saving money, to revisiting fundamental understandings about how U.S. national security is best protected. For Congress, constitutionally mandated to control the power of the purse, the most fundamental issue at stake may be ensuring the integrity of the overall federal budgeting system—there may be no single best answer regarding how it should function, but that it function would seem to be of paramount importance. At the same time, while the current system does not adjudicate "national security" in an explicit, bounded way, and while no single, generally agreed definition of the boundaries of "national security" exists, Congress has oversight responsibility for any number of activities and executive branch agencies that could reasonably be considered to contribute to national security, and thus vested interests in both the effectiveness and the efficiency of U.S. national security practices. A basic challenge for Congress may be fundamental tensions between optimizing the overall federal budgeting system, and optimizing for its national security sub-system. For any set of "unified budgeting" proposals, it may be helpful to Congress to consider what problems the proposals are designed to address; the potential costs and benefits that implementing the proposals might introduce; the risks the proposals might pose to the functioning of the current overall U.S. federal budgeting system; and how the impact of the implementation of the proposals would best be gauged. |
In response to the ongoing economic recession in the United States, Congress enacted P.L. 111-5 , the American Recovery and Reinvestment Act of 2009, on February 17, 2005. Title V of P.L. 111-5 included funding for a number of agencies within DHS, including $20 million for the Office of the Undersecretary for Management; $5 million for the Office of the Inspector General; $680 million for CBP; $20 million for ICE; $1,000 million for TSA; $250 million for the Coast Guard; and $610 million for FEMA. On September 23, 2008, the House Rules Committee reported H.Res. 1488 for consideration of the Senate amendment to H.R. 2638 , the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009. H.R. 2638 was originally introduced as the FY2008 DHS Appropriations Act, but has been amended to serve as the legislative vehicle for the proposed Continuing Resolution, a Disaster Relief Emergency Supplemental, the Department of Defense FY2009 Appropriations Act, the FY2009 Department of Homeland Security Appropriations Act, and the FY2009 Military Construction and Veterans Assistance Act. On September 24, 2008, the House passed H.R. 2638 . On September 27, 2008 the Senate passed H.R. 2638 . H.R. 2638 was enacted as P.L. 110-329 on September 30, 2008. Division D of P.L. 110-329 provided a net appropriation of $41,225 million for DHS for FY2009. This amounts to nearly $2,376 million more than the President's request for FY2009, $88 million more than was reported by the House in H.R. 6947 , and $89 million less than was reported by the Senate in S. 3181 . Net appropriations for major agencies within DHS were as follows: Customs and Border Protection, $9,821 million; Immigration and Customs Enforcement, 4,989 million; Transportation Security Administration, $4,367 million; Coast Guard, $9,361 million; Secret Service, $1,413 million; National Protection & Programs Directorate, $1,158 million; Federal Emergency Management Administration (FEMA), $6,963 million; Science and Technology, $933 million; and the Domestic Nuclear Detection Office, $514 million. Additionally, Division B of the Act also contained the following amounts for DHS agencies in emergency supplemental FY2008 funding: $300 for the Coast Guard, $7.96 billion for FEMA's Disaster Relief Account, and $100 million for FEMA to reimburse the American Red Cross. The House Appropriations Committee reported its version of the FY2009 DHS Appropriations bill on June 24, 2008. The bill was filed on September 18, 2008, as H.R. 6947 , and the accompanying report has been numbered H.Rept. 110-862 . House-reported H.R. 6947 would provide a net appropriation of $41,137 million in budget authority for DHS for FY2009. This would have amounted to an increase of $2,288 million or nearly 6% increase over the President's request. H.R. 6947 contained net appropriations for major components of the department as follows: $9,694 million for CBP; $4,813 million for ICE; $4,354 million for the TSA; $9,206 million for the U.S. Coast Guard; $1,371 million for the Secret Service; $1,287 for the NPP; $7,407 million for the FEMA; $102 million for USCIS; $887 million for the S&T; and $544 million for the DNDO. The Senate-reported its version of the bill on June 19, 2008. S. 3181 would have provided $41,314 million in net budget authority for DHS for FY2009, a $2,465 million or 6% increase over the President's request. S. 3181 contained net appropriations for major components of the department included as follows: $9,740 million for CBP; $4,989 million for ICE; $4,277 million for the TSA; $9,216 million for the U.S. Coast Guard; $1,418 million for the Secret Service; $1,041 for the NPP; $7,407 million for the FEMA; $151 million for USCIS; $919 million for the S&T; and $541 million for the DNDO. The President's budget request for the Department of Homeland Security (DHS) for FY2009 was submitted to Congress on February 4, 2008. The Administration requested $50,502 million in gross budget authority for FY2009 (including mandatories, fees, and funds). The Administration's request included gross appropriations of $46,786 million, and a net appropriation of $38,849 million in budget authority for FY2009, of which $37,664 million was discretionary budget authority, and $1,185 million was mandatory budget authority. The FY2008 enacted net appropriated budget authority for DHS was $38,747 million ($49,907 million including supplemental appropriations). Data used in this report include data from the President's Budget Documents, the FY2009 DHS Congressional Budget Justifications , the FY2009 DHS Budget in Brief , S. 3181 and the accompanying report S.Rept. 110-396 , House-reported H.R. 6947 and the accompanying report ( H.Rept. 110-862 ), and the DHS Joint Explanatory Statement as submitted in the Congressional Record on September 24, 2008, and in the House- and Senate- enrolled version of H.R. 2638 . Data used in Table 21 are taken from the Analytical Perspectives volume of the FY2009 President's Budget. These amounts do not correspond to amounts presented in Tables 4-20 , which were derived from the FY2009 DHS Congressional Budget Justifications . Except when discussing total amounts for the bill as a whole, all amounts contained in this report are rounded to the nearest million. This report describes the President's FY2009 request for funding for DHS programs and activities, as submitted to Congress on February 4, 2008. It compares the enacted FY2008 amounts to the request for FY2009, and tracks legislative action and congressional issues related to the FY2009 DHS appropriations bills with particular attention paid to discretionary funding amounts. The report does not follow specific funding issues related to mandatory funding—such as retirement pay—nor does the report systematically follow any legislation related to the authorization or amendment of DHS programs. The 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 been organized into five titles: Title I Departmental Management and Operations; Title II Security, Enforcement, and Investigations; Title III Preparedness and Recovery; Title IV Research and Development, Training, Assessments, and Services; and Title V general provisions. Title I contains appropriations for the Office of Management, the Office of the Secretary, the Office of the Chief Financial Officer, Analysis and Operations (A&O), the Office of the Chief Information Office (CIO), the Office of the Inspector General (OIG), and the Office of the Federal Coordinator for Gulf Coast Rebuilding. 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. The U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT) program was appropriated within Title II through the FY2007 appropriation. The FY2008 appropriation transferred US-VISIT, as proposed by the Administration, to the newly created National Protection & Programs Directorate (NPPD) in Title III. Division E of P.L. 110-161 , the DHS Appropriations Act, 2008, enacted this reorganization, which is reflected by the FY2009 request. Through the FY2007 appropriation, Title III contained appropriations for the Preparedness Directorate, Infrastructure Protection and Information Security (IPIS) and the Federal Emergency Management Administration (FEMA). The President's FY2008 request included a proposal to shift a number of programs and offices to eliminate the Preparedness Directorate, create the NPPD, and move several programs to FEMA. These changes were largely agreed to by Congress in the FY2008 appropriation, reflected by Title III in Division E of P.L. 110-161 . The FY2009 request also reflects this reorganization. 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). 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. 302(b) allocations may be adjusted during the year as the various appropriations bills progress towards final enactment. The annual concurrent resolution on the budget sets forth the congressional budget. There is as yet no budget resolution for FY2009. Table 2 shows DHS' 302(b) allocations for FY2008 and the current appropriations cycle. 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 be indefinite, however, when Congress enacts language providing "such sums as may be necessary" to complete a project or purpose. Budget authority may be available on a one-year, multi-year, or no-year basis. One-year budget authority is only available for obligation during a specific fiscal year; any unobligated funds at the end of that year are no longer available for spending. Multi-year budget authority specifies a range of time during which funds can be obligated for spending; no-year budget authority is available for obligation for an indefinite period of time. Obligations are incurred when federal agencies employ personnel, enter into contracts, receive services, and engage in similar transactions in a given fiscal year. Outlays are the funds that are actually spent during the fiscal year. Because multi-year and no-year budget authorities may be obligated over a number of years, outlays do not always match the budget authority enacted in a given year. Additionally, budget authority may be obligated in one fiscal year but spent in a future fiscal year, especially with certain contracts. In sum, budget authority allows federal agencies to incur obligations and authorizes payments, or outlays, to be made from the Treasury. Discretionary agencies and programs, and appropriated entitlement programs, are funded each year in appropriations acts. Gross budget authority, or the total funds available for spending by a federal agency, may be composed of discretionary and mandatory spending. Of the $46.4 billion gross budget authority requested for DHS in FY2009, 82% is composed of discretionary spending and 18% is composed of mandatory spending. Discretionary spending is not mandated by existing law and is thus appropriated yearly by Congress through appropriations acts. The Budget Enforcement Act of 1990 defines discretionary appropriations as budget authority provided in annual appropriation acts and the outlays derived from that authority, but it excludes appropriations for entitlements. Mandatory spending, also known as direct spending, consists of budget authority and resulting outlays provided in laws other than appropriation acts and is typically not appropriated each year. However, some mandatory entitlement programs must be appropriated each year and are included in the appropriations acts. Within DHS, the Coast Guard retirement pay is an example of appropriated mandatory spending. Offsetting funds are collected by the federal government, either from government accounts or the public, as part of a business-type transaction such as offsets to outlays or collection of a fee. These funds are not counted as revenue. Instead, they are counted as negative outlays. DHS net discretionary budget authority, or the total funds that are appropriated by Congress each year, is composed of discretionary spending minus any fee or fund collections that offset discretionary spending. Some collections offset a portion of an agency's discretionary budget authority. Other collections offset an agency's mandatory spending. They are typically entitlement programs under which individuals, businesses, or units of government that meet the requirements or qualifications established by law are entitled to receive certain payments if they establish eligibility. The DHS budget features two mandatory entitlement programs: the Secret Service and 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. Table 3 tabulates all of the offsets within the DHS budget as enacted for FY2008 and in the FY2009 request. Table 4 presents DHS Appropriations, as enacted, for FY2003 through the FY2009 request. The appropriation amounts are presented in current dollars and are not adjusted. The amounts shown in Table 4 represent enacted amounts at the time of the start of the next fiscal year's appropriation cycle (with the exception of FY2009). Thus, the amount shown for FY2003 is the enacted amount shown in the House Committee report attached to the FY2004 DHS Appropriations bill. FY2008 is from the Joint Explanatory Statement for Division E of P.L. 110-161 , and FY2009 is from the FY2009 DHS Budget Justifications. Table 5 is a summary table comparing the enacted appropriations for FY2008 and the requested, recommended by the House and Senate, and enacted appropriations for FY2009. Title I covers the general administrative expenses of DHS. It includes the Office of the Secretary and Executive Management (OS&EM), which is comprised of the immediate Office of the Secretary and 12 entities that report directly to the Secretary; the Undersecretary for Management (USM) and its components, such as the offices of the Chief Administrative Services Officer, Chief Human Capital Officer, and Chief Procurement Officer; the Office of the Chief Financial Officer (OCFO); the Office of the Chief Information Officer (OCIO); Analysis and Operations Office (AOO); Office of the Federal Coordinator for Gulf Coast Rebuilding (OFCGCR); and Office of the Inspector General (OIG). Table 6 shows Title I appropriations for FY2008 and congressional action on the request for FY2009. FY2009 requests relative to comparable FY2008 enacted appropriations were as follow: OS&EM, $127 million, an increase of $30 million (+31%); USM, $321 million, an increase of $176 million (+121%); OCFO, $56 million, an increase of $25 million (+81%); OCIO, $247 million, a decrease of $48 million (-16%); AOO, $334 million, an increase of $28 million (+9%); OFCGCR, $.25 million, a decrease of approximately $3 million (-90%); and OIG, $101 million, a decrease of $8 million (-7%). The total FY2009 request for Title I was $1,187 million. This represents an increase of $201 million (+20%) over the FY2008 enacted level. Of the amounts requested, the largest increase would occur in the USM, which is seeking $120 million for the planned consolidation of DHS executive program leadership on the West Campus of the Saint Elizabeth's Hospital grounds in accordance with the DHS National Capital Region Housing Master Plan signed by the Secretary on October 25, 2006. The consolidation includes up to 4.5 million gross square feet of office space at the Saint Elizabeth's site. Other areas of increased USM funding include department-wide program management teams ($4 million), the department-wide acquisition intern program ($3 million), and increased counterintelligence and security needs ($1 million). A small increase in USM funding is being sought to provide added support for the Deputy Under Secretary for Management for the transition process. Formed in 2002, DHS has not previously been through a presidential transition. Many of its principal components, however, have done so, some several times over. For example, the United States Secret Service began as a Treasury Department bureau in 1865; the Bureau of Immigration, which grew into the Bureau of Immigration and Naturalization and the Immigration and Naturalization Service, was established in the Treasury Department in 1891; the United States Coast Guard was statutorily chartered in 1915; the Bureau of Customs was created in the Treasury Department in 1927; and the Federal Emergency Management Agency was mandated by E.O. 12127 of March 31, 1979. At DHS, the Under Secretary for Management has responsibility for, "before December 1 of any year in which a Presidential election is held, the development of a transition and succession plan, to be made available to the incoming Secretary and Under Secretary for Management, to guide the transition of management functions to a new Administration." On January 10, 2008, in response to a request of the Secretary of Homeland Security, the Homeland Security Advisory Council issued a report by its Administration Transition Task Force. The panel's recommendations regarding transition preparation addressed seven broad areas: threat awareness, leadership, congressional oversight/action, policy, operations, succession, and training. Details about the implementation of the panel's recommendations are not available for security reasons, according to DHS. House-reported H.R. 6947 recommended $1,049 million for DHS management and operations entities funded in Title I, $136 less (-12%) than the amount requested. The allocations for entities within the title, as approved by the House, were as follow: OS&EM, $123 million, a decrease of $4 million (-3%); USM, -$190 million, a decrease of $130 million (-41%); OCFO, $55 million, a decrease of $1 million (-2%); OCIO, $247 million, the same level as requested (0%); AOO, $324 million, a decrease of $9 million (-3%); OFCGCR, less than $1 million, the same level as requested (0%); and OIG, $101 million, the same level as requested (0%), but increased by a $15 million proposed transfer of funds from FEMA's Disaster Relief account, resulting in a recommended total appropriation of $116 million, an increase of $15(+15%). A subsequent amendment adopted in committee moved $6 million (-5%) from the Title I OS&EM account to the Title II ICE salaries and expenses account. Senate appropriators recommended $1,197 million for Title I accounts, slightly more (+1%) than the President's $1,185 million request. The suggested allocations for the title were as follow: OS&EM, $123 million, a decrease of $4 million (-3%); USM, $310 million, a decrease of about $9 million (-3%); OCFO, $56 million, the same level as requested (0%); OCIO, $274 million, an increase of $27 million (+11%); AOO, $318 million, a decrease of $16 million (-5%); OFCGCR, $3 million, an increase of $2 million (+50%); and OIG, $96 million, a decrease of $5 million (-5%), but increased by a $16 million proposed transfer of funds from FEMA's Disaster Relief account, resulting in a recommended total appropriation of $112 million, an increase of $11 million (+11%). As approved by both houses of Congress and signed by the President, the final bill allocated $1,086 million for Title I provided $99 million less (-8%) than the President's $1,185 million request. The allocations for the title were as follow: OS&EM, $123 million, a decrease of $4 million (-3%); USM, $191 million, a decrease of $130 million (-40%); OCFO, $55 million, a decrease of $1 million (-2%); OCIO, $272 million, an increase of $25 million (+10%); AOO, $327, an decrease of $7 million (-2%); OFCGCR, almost $2 million, an increase of almost $1.75 million (+70%); and OIG, 114 million, an increase of $13 million (+13%). The American Recovery and Reinvestment Act of 2009 ( H.R. 1 ), enacted on February 17, 2009, provides $200 million for planning, design, construction costs, site security, information technology infrastructure, fixtures, and related costs to consolidate the DHS headquarters (in the OUM account). The Secretary of Homeland Security, in consultation with the Administrator of General Services, must submit a plan for the expenditure of these funds to the Senate and House Committees on Appropriations no later than 60 days after the act's enactment. The law also provides $5 million to the Office of Inspector General for the oversight and audit of programs, grants, and projects funded under Title VI. The money will remain available until September 30, 2012. The Office of the Chief Human Capital Officer (OCHCO) manages and administers human resources at DHS and includes the Office of Human Capital (OHC). The OCHCO reports to the Under Secretary for Management, and its appropriation is included in that of the Under Secretary. The office "establishes policy and procedures" and "provides oversight, guidance, and leadership for human resources functions, including learning and development." The OHC designs and implements human resources programs, including their strategy and technology components, and the response to the issues identified in the Federal Human Capital Survey (FHCS). According to the DHS Justifications, the FY2009 budget requested $47 million and 86 full-time equivalent (FTE) employees for the OCHCO and the OHC. The requested funding is $29 million above the $18 million provided for FY2008. The number of FTEs would increase by 33 over the 53 authorized for FY2008. An appropriation is not requested for the new human resources management system (MAX-HR) that was authorized in P.L. 107-296 . The FY2009 request was $47 million; these figures are included in Table 7 . Table 7 below shows the funding and staff for the OCHCO and the OHC as enacted in FY2008, as requested for FY2009, and as recommended by the House- reported H.R. 6947 and the Senate-reported S. 3181 , and as provided in P.L. 110-329 . The justification that accompanied the DHS budget request for FY2009 stated that the increased funding would be used for continued support of the learning and development strategy to train the department's workforce through the Preparedness Center, the Leadership Institute, the Homeland Security Academy, and the Center for Academic and Interagency Outreach. The requested appropriation also would be used to fund the continued modernization of the human resources systems, including eRecruitment and ePerformance, "to implement a prototype pay for performance plan for a limited number of DHS employees," and to invest in diversity and recruitment and retention programs. Under the leadership of the OHC, the department will "monitor and evaluate the implementation of the performance management system." Initiatives related to the diversity of the DHS workforce will include finalizing and implementing the diversity strategy; outreach to colleges, universities, organizations, and professional associations; training on diversity; increased diversity among the department's executives; and improved outreach to veterans. The OHC will conduct an internal survey of DHS employees, analyze the results, and develop a plan to address any concerns. It will determine current and future staffing needs for mission critical occupations, analyze employee turnover and attrition using methods such as exit interviews and surveys, and link the results of that analysis to training and strategies for recruitment and retention. With regard to fostering better results on the FHCS, the office will focus on developing and monitoring policies and programs that will improve the work environment and perceptions of employees. According to its Annual Performance Report for Fiscal Years 2007-2009, DHS has established a target of achieving a 50% favorable response rate on the FHCS. In FY2009, the OHC will convert 23 contractor positions to federal positions to provide the office with a workforce that is stable and cost effective and "to perform ongoing initiatives and provide depth" in issue areas. Furthermore, according to DHS, the conversions will enable the OHC "to broaden and sustain its diversity, veteran outreach, recruiting and retention, employee morale, service delivery," and management of human resources lines of business. A challenge that will face the department in FY2009 is the transition to a new Administration. In a February 7, 2008, letter to DHS Secretary Michael Chertoff, Representative Bennie G. Thompson, chairman of the House Committee on Homeland Security, requested that the Secretary "issue a policy directive to prohibit the 'burrowing in' of political appointees into non-political career positions within the Department" within 60 days. Representative Thompson stated that he was "sure that [the Secretary] would agree that it would be inappropriate to fill career non-political executive level positions with political appointees absent an open and fully competitive process." CRS research has not located a publicly available record of any such directive issued by the Secretary. The OHC will use the savings that accrue from conversion of the contractor positions to fund services such as responding to the FHCS, conducting a survey of employee morale, and responding to its findings. Its contracts will focus "on short term projects to meet surge requirements, one-time infrastructure costs, and areas where expertise is not easily obtained ... or would be more cost effective if provided by contractors." The House report ( H.Rept. 110-862 ) stated that the funding recommended by the House Committee on Appropriations is $8 million below the President's request and $20 million above the FY2008 appropriation. The $10 million recommended for human resource activities is to be used "to enhance employee morale and create a more satisfying work environment." The committee recommended that the request to transfer the law enforcement accreditation board from the Federal Law Enforcement Training Center (FLETC) to the OCHCO be denied, that $2.5 million be provided for new learning initiatives, and that the human resource information technologies be funded at $17.1 million. With regard to the latter appropriation, the report stated that the committee "is troubled that the request to fund this" account under the CHCO instead of under the Chief Information Officer (CIO) "was not clearly detailed in the budget request," and, for the future directs that all proposals to move programs and funding from one office to another be clearly outlined in congressional budget justifications and include: the preceding year funding level; a detailed description of the work; a rationale for the movement; and a detailed breakdown of the budget request. Expressing concern about delays in the department's hiring process, administered by the OCHCO, the report directed the OCHCO to report to the House and Senate Committees on Appropriations, on a monthly basis on vacancies requested, by [the] office, that have not been processed; vacancies announced, by [the] office; and the amount of time after a vacancy has closed before a selection list is sent back to the requesting entity. According to the Senate report ( S.Rept. 110-396 ), the funding recommended by the Senate Committee on Appropriations was $6.3 million below the President's request and $21.7 million above the FY2008 appropriation. Within the OCHCO's salaries and expenses account, funding of $18.8 million was recommended to maintain current services, including a transfer of $17.1 million from the CIO to the OCHCO for human resources information technology. An additional appropriation of $5.5 million, and three FTEs, were recommended for implementation of the learning and development strategy. The $10 million recommended for human resources is to "be spent on programs that directly address the shortcomings identified in [the 2006 Federal Human Capital Survey and the 2007 internal DHS employee survey] or in subsequent surveys." The programs could include "gap analysis of mission critical occupations, hiring and retention strategies, robust diversity programs, and Department-wide learning and development programs." Like the House committee, the Senate committee denied the President's request that $1.3 million and seven FTEs be transferred from the FLETC to the OCHCO for the law enforcement accreditation board. The law provided funding at the level recommended in the House-reported bill. The Congressional Record version of the DHS explanatory statement noted that the "Funding has been reduced due to high unobligated balances" in the OCHCO. The statement also directed the OCHCO to "provide monthly reports on the amount of time it takes to fill vacancies within DHS," as the House report specified. The law included the following general provisions related to DHS personnel: Section 519 requires the Chief Financial Officer at DHS to submit a monthly budget and staffing report to the House and Senate Committees on Appropriations. The report must be submitted within 45 days after the close of each month and include information on total obligations, on-board versus funded full-time equivalent staffing levels, and the number of contract employees by office. Section 522 prohibits the obligation of funds "for the development, testing, deployment, or operation of any portion of a human resources management system authorized by 5 U.S.C. 9701(a), or by regulations prescribed pursuant to such section." Collaboration is required between the DHS Secretary and employee representatives in the manner prescribed in 5 U.S.C. 9701(e), on "planning, testing, and development of any portion of a human resources management system ... for persons excluded from the definition of 'employee.'" Section 534 prohibits the use of funds appropriated to the Office of the Secretary and Executive Management for any new hires by DHS that are not verified through the basic pilot program to confirm employment eligibility that is codified at 8 U.S.C. §1324a note. In the wake of the Section 522 provision, the OCHCO at DHS reportedly issued a memorandum to department employees on October 1, 2008, announcing that development of the human resources management system authorized at Title VIII, Subtitle E of P.L. 107-296 would be halted. The OCHCO reportedly wrote to employees "that no current salary adjustments or bonus decisions will be affected." The DHS intelligence mission is outlined in Title II of the Homeland Security Act of 2002 (codified at 6 U.S.C. 121). Organizationally, and from a budget perspective, there have been a number of changes to the information, intelligence analysis, and infrastructure protection functions at DHS. Pursuant to the Homeland Security Act of 2002, the Information Analysis and Infrastructure Protection (IAIP) Directorate was established. The act created an Undersecretary for IAIP to whom two Assistant Secretaries, one each for Information Analysis (IA) and Infrastructure Protection (IP), reported. The act outlined 19 functions for the IAIP Directorate, including the following, among others: To assess, receive, and analyze law enforcement information, intelligence information, and other information from federal, state, and local government agencies, and the private sector to (1) identify and assess the nature and scope of the terrorist threats to the homeland, (2) detect and identify threats of terrorism against the United States, and (3) understand such threats in light of actual and potential vulnerabilities of the homeland; To develop a comprehensive national plan for securing the key resources and critical infrastructure of the United States; To review, analyze, and make recommendations for improvements in the policies and procedures governing the sharing of law enforcement information, intelligence information, and intelligence-related information within the federal government and between the federal government and state and local government agencies and authorities. Secretary Chertoff's Second Stage Review of the Department made numerous changes in the DHS intelligence structure. For example, the erstwhile IAIP disbanded, and the Office of Information Analysis was renamed the Office of Intelligence and Analysis and became a stand alone entity. The Office of Infrastructure Protection was placed within the Directorate for Preparedness. The Assistant Secretary for Intelligence Analysis was also provided the title of the Department's Chief Intelligence Officer. Pursuant to the Implementing Recommendations of the 9/11 Commission Act of 2007 ( P.L. 110-53 , signed August 3, 2007), a number of amendments to the Homeland Security Act of 2002 (codified at 6 U.S.C. 201) related to homeland security intelligence were made. Among these changes, the law provided statutory standing to the Office of Intelligence and Analysis and the Office of Infrastructure Protection. The Office of Intelligence and Analysis is to be headed by an Under Secretary for Intelligence and Analysis, who will also serve as the Department's Chief Intelligence Officer. The FY2009 request for the Analysis and Operations (AOO) account was $334 million, an increase of $28 million (+9%) over the enacted FY2008 amount. It should be noted that funds included in this account support both the Office of Intelligence and Analysis (OIA) and the Office of Operations Coordination. The Office of Intelligence and Analysis, the successor to the "IA" element of the erstwhile IAIP, has as its primary responsibility the integration and analysis of information from DHS, state and local stakeholders, and the intelligence community into finished intelligence products such as threat assessments and other indications and warning documents. As a member of the Intelligence Community, the Office of Intelligence and Analysis's budget is classified. The Office of Operations Coordination formally houses the National Operations Center which, among other functions, disseminates OIA assessed threat information, provides domestic situational awareness, and performs incident management on behalf of the Department. House-reported H.R. 6947 included $324 million for AOO, amounting to a nearly $10 million decrease compared to the amount requested for FY2009, and $18 million more than the FY2008 enacted level of $306 million. The House report included language reflecting the Committee's continued concern over the National Applications Office and the National Immigration Information Sharing Office (NIISO). The FY2008 DHS Appropriations Act (Division E, P.L. 110-161 ) required the Secretary to submit and the Government Accountability Office (GAO) to review a certification that the National Applications Office (NAO) and the NIISO comply with all existing laws, including applicable privacy and civil liberties standards. The Department was prohibited from using any related funds from the FY2008 Act until GAO completed its review. The House Committee notes in its report that the Department's NAO submission was incomplete, and that no information was submitted regarding the NIISO. The Committee therefore includes in the FY2009 bill statutory prohibitions on the operations of the NAO and the NIISO until the certification has been reviewed by GAO. Senate-reported S. 3181 included $318 million, a decrease of $16 million (-5%) for the AOO account as compared with the President's request. The Committee, in S.Rept. 110-396 , directed the Secretary to submit a detailed expenditure plan for FY2009 within 60 days after enactment of the FY2009 DHS Appropriations Act. Reflecting the Committee's concern with the I&A's reliance on contract staff versus federal full-time equivalents, the reporting requirements were geared to provide the Committee with staffing and expenditure data regarding all of I&A's programs. S.Rept. 110-396 also included language requiring the DHS Chief Intelligence Officer to continue to provide the Appropriations Committees quarterly updates on the Department's progress towards placing DHS intelligence professionals in state and local fusion centers. P.L. 110-329 included $327 million for AOO for FY2009, a decrease of $7 million (-2%) for the AOO account as compared with the President's request, and increase of $30 million or 10% as compared to the FY2008 enacted amount. The Congressional Record version of the DHS Explanatory Statement, required the Secretary to submit a FY2009 expenditure plan for the Office of Intelligence and Analysis that includes balances carried forward from prior years. In addition, the DHS Explanatory Statement required the Department's Chief Intelligence Officer to continue to provide quarterly updates to the Committees detailing the progress in placing DHS intelligence professionals in state and local fusion centers. Title II contains the appropriations for the Bureau of Customs and Border Protection (CBP), the Bureau of Immigration and Customs Enforcement (ICE), the Transportation Security Administration (TSA), the US Coast Guard, and the US Secret Service. Table 8 shows the FY2008 enacted and FY2009 appropriation action for Title II. CBP is responsible for security at and between ports-of-entry along the border. Since September 11, 2001, CBP's primary mission is to prevent the entry of terrorists and the instruments of terrorism. CBP's ongoing responsibilities include inspecting people and goods to determine if they are authorized to enter the United States; interdicting terrorists and instruments of terrorism; intercepting illegal narcotics, firearms, and other types of contraband; interdicting unauthorized travelers and immigrants; and enforcing more than 400 laws and regulations at the border on behalf of more than 60 government agencies. CBP is comprised of the inspection functions of the legacy Customs Service, Immigration and Naturalization Service (INS), and the Animal and Plant Health Inspection Service (APHIS); the Office of Air and Marine Interdiction, now known as CBP Air and Marine (CBPAM); and the U.S. Border Patrol (USBP). See Table 8 for account-level detail for all of the agencies in Title II, and Table 9 for sub-account-level detail for CBP Salaries and Expenses (S&E) for FY2008 and FY2009. The Administration requested an appropriation of $10,935 million in gross budget authority for CBP for FY2009, amounting to a $127 million (or 1%) increase over the enacted FY2008 level of $10,808 million. The Administration requested $9,487 million in net budget authority for CBP in FY2009, which amounts to a $64 million increase over the net FY2008 appropriation of $9,423 million. House-reported H.R. 6947 would have provided $11,142 million in gross budget authority for CBP for FY2009, amounting to $207 million (or 2%) more than was requested by the Administration, and a $334 million or 3% increase over the enacted FY2008 level of $10,808 million. House-reported H.R. 6947 included $9,694 million in net budget authority for CBP for FY2009, amounting to a $207 million increase over the Administration's request, and a $271 million increase over the FY2008 enacted level of $9,423 million. Senate-reported S. 3181 would have provided $11,189 million in gross budget authority for CBP for FY2009, amounting to $254 million (or 2%) more than was requested by the Administration, and a $381 million or 4% increase over the enacted FY2008 level of $10,808 million. Senate-reported S. 3181 included $9,741 million in net budget authority for CBP for FY2009, amounting to a $254 million increase over the Administration's request, and a $318 million increase over the FY2008 enacted level of $9,423 million. The Act provided $11,268 million in gross budget authority for CBP for FY2009, $333 million (or 3%) increase over the Administration's request, and a $460 million (or 4%) increase over the enacted FY2008 level of $10,808 million. The enacted net appropriation for CBP was $9,821 million, $334 million above the Administration's request and $398 million over the FY2008 enacted level. The American Recovery and Reinvestment Act of 2009 provided an emergency supplemental appropriation of $680 million for CBP during FY2009. The funding for CBP included $160 million for salaries and expenses, of which $100 million was designated for the procurement and deployment of non-intrusive inspection technology and $60 million was designated for the procurement and deployment of tactical communications equipment and radios. The Act included $100 million for the deployment of SBInet technology to the border, and $420 million for the construction and modification of ports of entry. Issues that Congress considered during the FY2009 appropriations cycle included funding for and deployment of the border fence and the Secure Border Initiative (SBI); Border Patrol hiring and staffing levels; the Western Hemisphere Travel Initiative (WHTI); the designation of CBP Officers as law enforcement officers for retirement purposes; and the declining request for appropriations for some cargo security initiatives. The Administration requested $775 million for the deployment of SBInet related technologies and infrastructures in FY2009, a decrease of $450 million over the FY2008 enacted level of $1,225 million (this total included an emergency appropriation of $1,053 million, however this may be somewhat misleading because the FY2008 request for the account was $1,000 million). Within the FY2009 request, the Administration is proposing to allocate $275 million for developing and deploying additional technology and infrastructure solutions to the southwest border. An additional $410 million is requested for operations and maintenance of the cameras, sensors, and fencing that will have been constructed by the end of calendar year 2008 with prior-year funding. The Administration notes that this will fund the costs associated with operating and maintaining the technologies that have been deployed to the border as part of the SBInet program as well as 370 miles of fencing and 300 miles of vehicle barriers, which are scheduled to be completed by the end of calendar year 2008 with funding appropriated in FY2007 and FY2008. Recent GAO testimony noted that CBP's goal for fencing and vehicle barrier deployment in 2008 "will be challenging because of factors that include difficulties acquiring rights to border land and an inability to estimate costs for installation." GAO also noted that the Border Patrol was not consulted early enough in the process of developing the technology solutions that would be used by SBInet, and that this fact combined with some challenges relating to the integration of the technologies deployed by Boeing led to an eight month delay in the initial pilot program's deployment in Tucson Sector. Oversight of the SBInet program's continuing deployment of technology, fencing, and infrastructure at the border, including whether DHS is on track to meet its goals for fencing and vehicle barriers at the border, will likely be an issue of concern to Congress as it considers the FY2009 request. The Senate Committee recommended fully funding the President's request, and noted that close oversight of the program was required due to its importance. The House Committee recommended fully funding the President's request, but noted its concern that the rapid growth in border technology "may lead to systems and structures that are expensive, fail to perform as promised, and do not result in a more secure border." The House Committee noted that only 1.7% of funding for fencing, infrastructure, and technology had been expended on the northern border and included $40 million in its FY2009 appropriation for this purpose. The House Committee also directed that $30 million be spent on a border interoperability demonstration project to better integrate border security efforts between federal, state, local, and tribal authorities, and that $50 million be spent on regulatory and environmental assessments to mitigate the environmental damage associated with infrastructure construction. Lastly, the House Committee noted that it was disappointed with the FY2008 expenditure plan for this account, and directs CBP to fully comply with its requirements for the FY2009 expenditure plan. P.L. 110-329 fully funded the President's request, but withheld $400 million from obligation until an expenditure plan is submitted and approved by the House and Senate Committees on Appropriations. This spending plan should include 12 specific components, among them: a detailed accounting of the program's implementation to date; a description of how the expenditure plan allocates funding to the highest priority border security needs, addresses northern border security needs, and works towards obtaining operational control of the entire border; certifications by the Chief Procurement Officer and the Chief Information Officer at DHS; an analysis, for each 15 miles of fencing or tactical infrastructure, of how the selected approach compares to other alternative means of achieving operational control; and a review by the Government Accountability Office. P.L. 111-5 provided an emergency supplemental appropriation of $100 million to expedite the development and deployment of SBInet technologies at the border and required DHS to submit an expenditure plan for this funding to Congress within 45 days of enactment. The Administration requested an increase of $363 million to hire 2,200 new USBP agents in order to bring the total number of agents to 20,019 by the end of FY2009. CBP is also proposing to transfer "up to" 440 veteran agents to the northern border in FY2009; this is the first time that DHS' budget request has complied with the P.L. 108-458 mandate requiring DHS to augment the northern border staffing by 20% of any annual increases each year between FY2006 and FY2010. An issue for Congress may involve whether incentives should be offered to help DHS recruit additional agents or keep existing agents from leaving the agency; in FY2007 the USBP experienced a 10% attrition rate. The Senate Appropriations Committee recommended fully funding the President's request. Additionally, the Senate Committee reiterated its desire that 20% of the overall increase in Border Patrol agents be assigned to the northern border and required a report on the challenges CBP faces in transferring agents to the northern border within 60 days of the bill's enactment. Lastly, the Senate Committee noted that the National Guard was withdrawing its troops from their supporting role at the border in FY2008 and directed CBP, "in the strongest terms possible," to hire the previously funded USBP support personnel in order to allow agents to focus on their border enforcement responsibilities. The House Committee recommended fully funding the President's request and reiterated its support for transferring additional agents to the northern border in order to comply with the statutory requirements. P.L. 110-329 fully funded the President's request for additional Border Patrol agents and provided funding for up to 75 agents to be transferred to the northern border. The Administration requested an increase of $107 million for WHTI. WHTI will require U.S. citizens, and Canadian, Mexican, and some island nation nationals to present a passport, or some other document or combination of documents deemed sufficient to denote identity and citizenship status by the Secretary of Homeland Security, as per P.L. 108-458 §7209. DHS has already required all U.S. citizens entering the country at air and sea POE to present passports as of January 18, 2007. P.L. 110-161 , the Consolidated Appropriations Act, 2008, prohibited DHS from implementing WHTI, which requires U.S. citizens to provide proof of identity and citizenship at the land border, before the later of the following two dates: June 1, 2009, or three months after the Secretaries of State and Homeland Security certify that a series of implementation requirements have been me. Despite this legislation, as of January 31, 2008 DHS has ended the practice of accepting oral declarations of citizenship at the land border and is requirng U.S, citizens to present a passport, some other accepted biometric document, or the combination of a driver's license and a birth certificate, in order to re-enter the country. The FY2009 request for WHTI included funding to hire 89 CBP officers and to deploy radio frequency technologies to the 39 busiest land POE which cover 95% of the incoming traffic at the land border, including "facility modifications and the build out of primary lanes as operationally necessary." Issues for Congress include whether DHS's disregard of the extension enacted by P.L. 110-161 was appropriate, whether the proposed staffing increases and infrastructure modifications are adequate to meet the needs associated with the WHTI program, and whether the program to develop enhanced state driver's licenses that may be used to cross the land-border adequately addresses security concerns. The Senate Committee fully funded the President's request and directed CBP to provide quarterly briefings on the status of WHTI implementation in FY2009. The House Committee also fully funded the President's request and noted that it remains concerned that the program "may not be fully integrated and ready for enforcement of the WHTI document requirements." The House Committee also directed CBP to provide quarterly briefings on the program's implementation. The House Committee voiced its support for the new International Registered Traveler program enacted by the FY2008 Consolidated Appropriations Act, and which has been renamed Global Entry by the Administration. The program will give pre-approved, low-risk travelers (U.S. Citizens and Legal Permanent Residents) expedited clearance into the United States at three airports. The Committee also included $10 million to expand this program to the 20 busiest international airports. Additionally, the House Committee noted that it provided $36 million in FY2008 for the Electronic System for Travel Authorization (ESTA), which will be used to screen and process travelers from visa-waiver countries, and directed CBP to submit a report on ESTA's implementation with the FY2010 budget request. Congress addressed concerns that CBP was losing valuable officers to other agencies due to disparities in retirement pay in FY2008 by extending federal law enforcement officer status to CBP officers for retirement purposes in P.L. 110-161 . The FY2009 President's request would have retracted the law enforcement officer status for CBP officers that was enacted in FY2008. During the FY2009 appropriations cycle, the Senate Committee reiterated its strong support for CBP officers' new retirement status and included $200 million to fully fund the new law enforcement officer retirement program for CBP officers. The House Committee recommended $217 million for CBP officers' new retirement status, also rejecting the Administration's proposal to repeal the new status. P.L. 110-329 provided CBP with an additional $200 million above the President's request to cover the costs associated with the new retirement status for CBP officers. The Secure Freight Initiative (SFI) is the next stage in the Department's effort to secure cargo containers in-bound to the U.S. from foreign countries. According to DHS, SFI is now being characterized as a "three-pronged approach to enhance supply chain security." The three prongs of this approach are: the International Container Security project (ICS), the Security Filing (SF); and the Global Trade Exchange (GTX). The ICS is the component of the strategy whereby all U.S.-bound maritime containers are subject to an integrated scan (image and radiation detection) at the participating overseas port before being loaded on the U.S.-bound vessel. ICS is currently in operation at ports in the United Kingdom, Pakistan, and Honduras. According to DHS, operating the ICS at these ports fulfills the requirements set out in P.L. 109-347 , the Safe Port Act of 2006. The SF initiative, also referred to as "10+2" by CBP, is the latest effort to collect additional data pertaining to U.S.-bound maritime shipments. The SF initiative will allow CBP to collect additional data earlier in the supply chain to enhance risk assessment capabilities before cargo is loaded onto U.S.-bound vessels. CBP issued a Notice of Proposed Rulemaking (NPRM) on the SF initiative and is in the process of developing the final rule. The Global Trade Exchange (GTX) was being proposed as a "private sector owned and operated ... new business model for collecting and fusing disparate international cargo data, providing governments and other parties with greater visibility into that data." On April 4, 2008, CBP Commissioner Basham announced in remarks given before the National Customs Brokers & Forwarders Association of America that CBP has decided not to go forward with a contract award for the GTX. The Commissioner did not rule out exploring similar concepts in the future. Language in the House Appropriations committee report indicated that CBP has decided not to go ahead with GTX while in the midst of implementing the 10+2 Security Filing initiative. The House Report also noted that Committee remains concerned about the remaining gaps in CBP's information about in-bound cargo containers and their supply chains, and directs CBP to report to the Committee no later than January 8, 2009 on the information and intelligence CBP collects on these containers. CBP Congressional Budget Justification materials indicated that the $149 million request for ICS in FY2009 includes an $11 million reduction for Secure Freight. It is unclear from the budget materials what this reduction represented, since one of the goals for the fiscal year was to expand the program to at least one additional port and to add more capacity at other designated ports. Both House-reported H.R. 6947 and Senate-reported S. 3181 would have funded ICS/CSI at the requested level for FY2009. P.L. 110-329 fully funded the Administration's request for ICS/CSI. It is important to note that CBP is currently describing the Secure Freight Initiative (SFI) as the next phase/iteration or future of the Container Security Initiative (CSI). CSI may also be referred to as a component of the International Container Security (ICS) project. The ICS, as noted above, is the new umbrella name for CBP's international cargo security initiatives, which also includes CSI and SFI. CSI is a program by which CBP stations CBP officers in foreign ports to target high-risk containers for inspection before they are loaded on U.S.-bound ships. CSI is operational in 58 ports as of September, 2007. As noted above, the CBP Budget Justifications indicate a requested decrease of nearly $7 million for the CSI/ICS program for FY2009. This year, the requested $149 million for FY2009 includes funding for CSI/ICS, SFI, the Security Filing (SF), and the proposed Global Trade Exchange(GTX). Given that the request includes less funding for several programs, than has been appropriated for CSI alone in the past couple of years, this indicates a decline in requested funding for CSI. An issue for Congress concerns the reasoning behind the Administration's proposal to apparently decrease funding for CSI given that DHS anticipated expanding CSI/ICS in FY2009 by deploying ICS at one additional site and expanding capacity at other designated ports. Language in the House Appropriations committee report indicated that the Committee was concerned about CBP staffing levels at CSI and SFI port locations. Among other items of concern, the staffing of senior leadership positions and staff with appropriate language skills were of particular interest to the Committee. The House Report required CBP to report to the Committee no later than January 8, 2009, on the steps that CBP will have taken to improve staffing and host country relations. 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. Furthermore, this bureau oversees the building security activities of the Federal Protective Service, formerly of the General Services Administration. The Federal Air Marshals Service (FAMS) was returned from ICE to TSA pursuant to the reorganization proposal of July 13, 2005. The Office of Air and Marine Interdiction was transferred from ICE to CBP in FY2005, and therefore the totals for ICE do not include Air and Marine Interdiction funding, which is included under CBP. See Table 8 for account-level detail for all of the agencies in Title II, and Table 10 for sub-account-level detail for ICE Salaries and Expenses (S&E) for FY2008 and FY2009. The Administration requested $5,663 million in gross budget authority for ICE in FY2009. This represented a 1% increase over the enacted FY2008 level of $5,581 million. The Administration requested an appropriation of $4,748 million in net budget authority for ICE in FY2009, representing a small increase over the FY2008 enacted level (including Division E of P.L. 110-161 ) of $4,735 million. Notably, Division E of P.L. 110-161 included an appropriation of $200 million for the comprehensive identification and removal of criminal aliens, which is not included in the FY2009 budget request. Table 10 provides activity-level detail for the Salaries and Expenses account. The request included the following program increases: $46 million (39 FTE) for 725 additional detention beds and support personnel; $12 million (36 FTE) for investigations related to national security and critical infrastructure; $12 million for 287(g) agreements; $12 million to co-locate ICE facilities (i.e., consolidating ICE offices in cities where ICE occupies more than one location); $7 million (19 FTE) for the Office of Professional Responsibility to investigate allegations of criminal and serious misconduct involving ICE employees; $6 million (20 FTE) for the Office of Cyber Crimes Center to increase investigations of cyber crimes related to document fraud, child exploitation, and money laundering; $5 million (14 FTE) for additional positions in the Commercial Fraud, Intellectual Property Rights, and Trade Transparency Units to combat crimes such as trafficking in counterfeit merchandise and pharmaceuticals; $3 million for new Visa Security Units in Istanbul, Turkey and Beirut, Lebanon; $2 million (14 FTE) to consolidate and coordinate ICE training and oversight activities; and $1 million to increase outbound enforcement to prevent arms and strategic technologies from leaving the United States. House-reported H.R. 6947 would have appropriated $5,728 million in gross budget authority, $65 million more than the President's request. House-reported H.R. 6947 would have appropriated $4,813 in net budget authority for ICE, which would have represented an increase of $65 million, 1% over the Administration's requested amount. Of the appropriated amount, nearly $8 million would have been for special operations under §3131 of the Customs Enforcement Act of 1986; $1 million would have provided compensation awards to informants; $305,000 would have been used to promote public awareness of the child pornography tipline and anti-child exploitation activities; $11 million would have been designated to fund or reimburse other federal agencies for the cost of care, and repatriation of smuggled aliens; $16 million would have been targeted for enforcement of laws against forced child labor; and $800 million would have been designated to identify aliens convicted of a crime and remove them from the United States. According to the House report, the appropriated monies would have included the President's budget requested increases of $46 million to fund the for detention bed space and support personnel, and $12 million for investigations related to national security and critical infrastructure. The House report noted that House-reported H.R. 6947 would have appropriated an additional $2 million for Office of Professional Responsibility to oversee the comprehensive review of the medical care provided to ICE detainees. In addition, according to the House report, House-reported H.R. 6947 would have appropriated over the President's requested budget: $12 million for criminal gang investigations; approximately $1 for Office of the Principle Legal Advisor; and $7 million for the Alternatives to Detention Program. In addition, an amendment was adopted during the full Committee mark-up that would have transferred an additional $6 million from Title I OE&SM account to the ICE salaries and expenses account. Senate-reported S. 3181 would have appropriated $5,928 million in gross budget authority for ICE, $265 million more than the President's request. Senate-reported S. 3181 would have appropriated $4,989 in net budget authority for ICE, which would have represented an increase of $241 million, 5% over the Administration's requested amount. Of the appropriated amount, $2,478 million would have been designated for detention and removal operations; $160 million would have been allocated to identify and remove criminal aliens; nearly $8 million would have been for special operations under §3131 of the Customs Enforcement Act of 1986; $1 million would have provided compensation awards to informants; $305,000 would have been used to promote public awareness of the child pornography tipline and anti-child exploitation activities; $5 million would have been used to facilitate agreements under §287(g) of the INA; $11 million would have been designated to fund or reimburse other federal agencies for the cost of care, and repatriation of smuggled aliens; $16 million would have been targeted for enforcement of laws against forced child labor; and nearly $7 million would have been used to fund the Visa Security Program. According to S.Rept. 110-396 , Senate-reported S. 3181 would have fully funded the President's budget request for increases over the FY2008 appropriate amounts for: the ICE Office of Human Capital ($1 million); the co-location of ICE facilities ($12 million); national security and critical infrastructure investigations ($12 million); commercial fraud and intellectual property investigations ($5 million); outbound enforcement investigations ($1 million); 287(g) agreements ($12 million); fugitive operations ($1 million); and the Criminal Alien Program ($2 million). In addition, S.Rept. 110-396 recommended an increase over the President's budget requested of: $26 million for 400 additional detention beds and support personnel to support increased worksite enforcement (total increase of $74 million); $34 million (108 FTE) for worksite enforcement investigations; $2 million for the Office of Professional Responsibility to investigate allegations of criminal and serious misconduct involving ICE employees (total increase of $9 million and 39 FTE from FY2008); $5 million (3 FTE) for investigations of cyber crimes (total increase of $11 million (23 FTE) over FY2008); $3 million (3 FTE) for the Visa Security Program (total increase of $7 million and 6 FTE from FY2008); $5 million (7 FTE) for Security Advisory Opinion Units; $5 million for textile transshipment enforcement; $3 million (19 FTE) for Field Intelligence Groups;6 $4 million for Alternatives to Detention; and $160 million for Secure Communities. P.L. 110-329 appropriated $5,928 million in gross budget authority for ICE, which was $265 million (5%) more than the President's request. P.L. 110-329 appropriated $4,989 million in net budget authority, 5% or $241 million more than the President's request. The Act specified that the appropriated amounts are to be used as follows: $1,000 million to identify and removal criminal aliens; $22 million to expand a variety of investigative programs; $100 million for state and local programs; $127 million for worksite enforcement investigations; $11 million for the Forensics Document Laboratory; $34 for the Law Enforcement Support Center (LESC); $5 million for textile transshipment enforcement; $63 million for alternatives to detention; $57 million for Automatization Modernization; and $16 million for TECS modernization. P.L. 110-329 provided increases in appropriations over the President's request for the following programs: $150 million for the identification and removal of criminal aliens; $6 million for transnational gang enforcement; $8 million for the visa security program; $3 million for cyber crime investigations; $34 million for worksite enforcement investigations; $3 million for ICE field intelligence groups; $2 for the Law Enforcement Support Center (LESC) to fund the conversion of LESC employees from job category 1802 to job category 1801; $7 million for alternatives to detention; $1 million for ICE training consolidation and integration; $7 million to co-locate ICE field facilities; $0.5 million got the Office of the Principle Legal Advisor; and $5 million for construction, which funds basic and emergency maintenance at ICE-owned detention facilities. The American Recovery and Reinvestment Act of 2009 appropriated $20 million for the procurement and deployment of tactical communications equipment and radios. According to the conference report, ICE estimates this will create more than 120 new jobs related to the planning, manufacture, programming, and installation of this equipment. In addition, the Act requires that by April 3, 2009, the Secretary submit to the House and Senate Committees on Appropriations a plan for expenditure of these funds. ICE is responsible for many divergent activities due to the breadth of the civil and criminal violations of law that fall under ICE's jurisdiction. As a result, how ICE resources are allocated in order to best achieve its mission is a continuous issue. In addition, 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. Additionally, in recent years there has been debate concerning the extent to which state and local law enforcement should aid ICE with the identification, detention, and removal of deportable aliens. The Office of Investigations (OI) in ICE focuses on a broad array of criminal and civil violations affecting national security such as illegal arms exports, financial crimes, commercial fraud, human trafficking, narcotics smuggling, child pornography/exploitation, worksite enforcement, and immigration fraud. ICE special agents also conduct investigations aimed at protecting critical infrastructure industries that are vulnerable to sabotage, attack, or exploitation. The Homeland Security Act of 2002 ( P.L. 107-296 ) abolished the INS and the United States Customs Service, and transferred most of their investigative functions to ICE effective March 1, 2003. There are investigative advantages to combining the INS and Customs Services, as those who violate immigration laws may be engaged in other criminal enterprises (e.g., alien smuggling rings often launder money). Nonetheless, concerns have been raised that not enough resources have been focused on investigating civil violations of immigration law and that ICE resources have been focused on terrorism and the types of investigations performed by the former Customs Service. The House report noted that the Committee has developed a new investigatory budget structure for ICE in 2009 to provide transparency into the agency's various law enforcement missions. P.L. 110-329 appropriated 1,653 total for OI for FY2009, $154 million less than the President's budget request of $1,807 million. Senate-reported S. 3181 would have appropriated $1,648 million for OI, while the House report would have appropriated $1,317 million. Detention and Removal Operations (DRO) in ICE provide custody management of the aliens who are in removal proceedings or who have been ordered removed from the United States. DRO is also responsible for ensuring that aliens ordered removed actually depart from the United States. Many contend that DRO does not have enough detention space to house all those who should be detained. A study done by DOJ's Inspector General found that almost 94% of those detained with final orders of removal were deported, whereas only 11% of those not detained, who were issued final orders of removal, left the country. 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 the amount of space may vary by area of the country leading to inequities and disparate policies in different geographic areas. The Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 , §5204) authorized, subject to appropriations, an increase in DRO bed space of 8,000 beds for each year, FY2006-FY2010. P.L. 110-329 appropriated $2,481 million for DRO, including funding 1,400 more detention beds and support personnel than in FY2008, bring the total number of FY2009 detention beds to 33,400. Although P.L. 110-329 appropriated less money than the President's request of $2,579 for DRO, P.L. 110-329 appropriated an additional $150 million to identify and removal criminal aliens much of which will be used by DRO. The House-reported bill would have fully funded the President's request of $2,579 million for DRO including an additional $46 million for 725 detention beds and support personnel. Senate-reported S. 3181 would have appropriated $2,478 for DRO, including funding for 400 more detention beds and support personnel, and $160 million for Secure Communities (a program that identifies and removes incarcerated criminal aliens) than the President's budget request. Furthermore, there have been concerns raised about the adequacy of medical care received by aliens in detention. House-reported H.R. 6947 would have specified that no funds could be used to continue any contract for detention services with a facility that receives two consecutive less than adequate performance ratings, while S.Rept. 110-396 urged ICE to establish and improve the system for responding to detainee complaints. As in the House report, P.L. 110-329 appropriated an additional $2 million for the Office of Professional Responsibility to undertake an immediate comprehensive review of the medical care provided to ICE detainees. The Act also directed ICE to immediately implement the Government Accountability Office's recommendation to improve medical services. Currently, the INA provides limited avenues for state enforcement of both its civil and criminal provisions. One of the broadest grants of authority for state and local immigration enforcement activity stems from INA §287(g), which authorizes the Attorney General to enter into a written agreement with a state, or any political subdivision, to allow state and local law enforcement officers to perform the functions of an immigration officer in relation to the investigation, apprehension, or detention of aliens in the United States. The enforcement of immigration by state and local officials has sparked debate among many who question what the proper role of state and local law enforcement officials should be in enforcing federal immigration laws. Many have expressed concern over proper training, finite resources at the local level, possible civil rights violations, and the overall impact on communities. Nonetheless, some observers contend that the federal government has scarce resources to enforce immigration law and that state and local law enforcement entities should be utilized. House-reported H.R. 6947 would have specified that no funds may be used to continue a 287(g) agreement if the DHS Inspector General determined that the 287(g) agreement had been violated; or to enter into an agreement with law enforcement (other than at a jail or prison) of a state or subdivision of the state unless the Assistant Secretary of ICE reviewed all requests for 287(g) agreements in that state and prioritizes the agreements that will maximize the identification of criminal aliens convicted of dangerous crimes. In addition, the President's budget request included an increase of $12 million for these agreements that Senate-reported S. 3181 would have fully funded. P.L. 110-329 appropriated $100 million for state and local programs including $54 million for the 287(g) program and $5 million for compliance reviews of the 287(g) agreements. P.L. 110-329 directed ICE to prioritize 287(g) agreements that will maximize the identification and removal of deportable criminal aliens. The Federal Protective Service (FPS), within ICE, is responsible for the protection and security of federally owned and leased buildings, property, and personnel. It has two primary missions—basic security and building specific security. Basic security functions include daily monitoring of federal building entry and exit points; building specific security includes investigating specific threats to a federal facility or building. In general, FPS focuses on law enforcement and protection of federal facilities from criminal and terrorist threats. The FY2009 President's request for FPS was $616 million. House-reported H.R. 6947 would have fully funded the President's request. Senate-reported S. 3181 would have appropriated $640 million for FPS. P.L. 110-329 appropriated $640 million for FPS in FY2009. In FY2007, the Administration realigned its workforce and reduced the number of FPS law enforcement officers and investigators. Following this realignment and reduction, the Government Accountability Office (GAO) found that FPS's staff decreased by approximately 20%, from about 1,400 employees at the end of FY2004 to approximately 1,100 employees at the end of FY2007.7 According to GAO, this reduction in FPS's staff resulted in the reduction of security at federal facilities and increased the risk of crime or terrorist attacks. Finally, GAO stated that the decision by FPS to eliminate proactive security patrols at federal facilities resulted in FPS law enforcement personnel not being able to conduct security operations. Such operations involve inspecting suspicious vehicles, monitoring suspicious individuals, or detecting and deterring criminal activity in and around federal buildings. Since the Administration's FY2007 decisions on FPS activities received congressional attention, it may be important to note the Administration's actions and intentions for FY2008 and FY2009. In FY2008, the Administration expected to: improve methods used to identify and reduce real and perceived threats to federal facilities; continue intelligence and information sharing; provide law enforcement and security services at National Special Security Events (NSSE); and strengthen federal facility security standards. Finally, in FY2009, the Administration intends for the FPS to: provide law enforcement and security services at National Special Security Events (NSSE); complete risk-based security standards aligned with intelligence; continue federal facility security assessments; continue to monitor federal agency compliance with security standards; improve contract security guard management; and continue to strengthen business processes and the Service. As a result of GAO's findings and congressional interest, P.L. 110-329 required OMB and DHS to fully fund FPS operations through revenue and collections of security fees paid by federal departments and agencies. This security fee collection is intended to ensure that the FPS maintains not fewer than 1,200 full-time equivalent staff and 900 full-time equivalent police officers, inspectors, area commanders, and special agents. The TSA was created by the Aviation and Transportation Security Act (ATSA, P.L. 107-71 ), and it was charged with protecting air, land, and rail transportation systems within the United States to ensure the freedom of movement for people and commerce. In 2002, the TSA was transferred to DHS with the passage of the Homeland Security Act ( P.L. 107-296 ). The 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. The 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. See Table 8 for account-level detail for all of the agencies in Title II, and Table 11 for sub-account-level detail for TSA for FY2008 enacted levels and supplemental appropriations and FY2009 amounts specified in the President's request, the House and Senate-reported bills, and enacted levels specified in P.L. 110-329 . The President's requested funding level for the TSA in FY2009, totaling $7,102 million, comprises about 14% of the DHS gross budget authority. The President's FY2009 request estimates receipts totaling $2,360 million in offsetting collections, mostly through the collection of passenger security fees and security fees paid by the airlines. These estimated offsetting collections for FY2009 are $67 million over FY2008 projected levels, yielding a net total requested amount for TSA of $4,065 million, to be paid for out of the Treasury General Fund. New funding initiatives include an additional $426 million to the Aviation Security Capital Fund (ASCF) for explosives detection equipment purchase and installation. Proposed discretionary funding for the purchase and installation of Explosive Detection Systems (EDS) and Explosive Trace Detection (ETD) equipment would be reduced by $140 million compared to FY2008 levels, however this reduction would be more than offset by the proposed increase to the ASCF. A proposed increase of $47 million for Screening Technology (Maintenance and Utilities) reflects increasing costs of checked baggage and checkpoint screening equipment maintenance as these systems age and approach their useful service life. Also, a funding increase of $32 million is proposed for the Secure Flight program. The Checkpoint Screening Security Fund—a one-time mandatory funding vehicle that provided $250 million in FY2008 for checkpoint screening technologies—would be replaced by a requested appropriation of $128 million for Checkpoint Support. The President's FY2009 request provides for 800 additional full-time equivalent (FTE) Transportation Security Officers (TSOs) and other aviation security job functions. These additional slots would mainly be filled by more Behavioral Detection Officers (BDOs, 330 additional FTEs) and additional screeners to conduct random screening of airport workers. The President's FY2009 request includes a proposal to realign several TSA programs. Most notably, the request proposes to place the Federal Air Marshal Service (FAMS) under the Aviation Security account, rather than maintaining it as a separate entity. The budget also seeks to realign several regulatory functions, including air cargo security, under the Aviation Regulation program, and several law enforcement programs, including airport law enforcement support; canine teams; Visible Intermodal Protective Response (VIPR) teams; and Federal Flight Deck Officers (FFDOs), under the Law Enforcement program. The proposal also seeks to establish a single Human Resource Services within the Aviation Security account, to support both field and headquarters staff. Also, the request proposes that information technology and support for Aviation Security be realigned with the Information Technology function housed within the Transportation Security Support account. The House committee recommended $6,964 million for the TSA, $138 million less than the President's request, but $77 million more than the Senate-reported bill. Like the Senate-reported bill, the House-reported bill has not adopted many of the realignment proposals offered in the President's request. Specifically, the committee rejected the idea of consolidating air cargo with other aviation regulation activities, and it rejected the concept of placing FAMS under the aviation security program area. However, like the Senate-reported bill, H.R. 6947 concurred with the Administration proposals to consolidate human resources and information technology activities throughout the TSA. Thus, while funding levels for budget activities contained in H.R. 6947 are directly comparable to the Senate-reported amounts, these amounts are not directly comparable to the President's request for affected budget activities. House-reported H.R. 6947 requested $250 million for Checkpoint Support, the same amount provided under the Checkpoint Security Screening Fund in FY2008, and $122 million above the President's request for FY2009. The committee believed that this additional funding was necessary to expedite testing and deployment of checkpoint explosives screening technologies. The House report expressed concern that only half of large airports have optimized their baggage screening systems to date, and recommended $294 million for EDS/ETD purchase and installation, in line with the Senate-reported amount. The committee also recommended $110 million for air cargo security, $39 million above the FY2008 appropriated level, but $13 million below the Senate-reported amount. The House committee recommended $109 million for Threat Assessment and Credentialing functions, $24 million below the requested level. The committee recommended $75 million of this for the Secure Flight program, $7 million below the request, citing schedule slips in the regulatory process and GAO reviews of the program. With regard to surface transportation security, the House-reported measure specified $50 million, $13 million above the President's request, and $14 million below the Senate-reported amount. The additional funding specified in the House report was intended for the deployment of additional security inspectors. The Senate-reported bill would have set total funding for the TSA at $6,887 million, $215 million less than the President's request. The reported bill supported only some of the Administration-proposed functional realignments. Therefore, funding for several of the budget activities in Table 11 cannot be directly compared. Specifically, the committee agreed with the Administration plan to consolidate human resources and information technology programs throughout the TSA. However, the committee did not go along with the Administration proposals to consolidate law enforcement activities under the aviation security program area, to place the FAMS under aviation security, and to consolidate regulatory enforcement functions, including air cargo security activities. The committee recommended $2,692 million for passenger and baggage screening personnel compensation and benefits (PC&B), $24 million below the requested levels based on FY2008 "payroll underburn" reported to the committee. The committee also recommended a recision of $7.3 million of FY2008 funds set aside for pilot programs to screen airport employees that were determined to be in excess of the amount needed to carry out these pilots. The committee recommended $200 million for checkpoint support, $72 million above the President's request, but $50 million less than the amount provided in FY2008 under the Checkpoint Security Screening Fund. The committee noted that the Administration's proposed passenger security fee increase has not been acted on by congressional authorizing committees, and therefore reported mandatory funding for the Aviation Security Capital Fund at the currently authorized level of $250 million. The committee, instead, proposed a funding level of $294 million for EDS/ETD purchase and installation, $140 million above the President's request. The committee recommended $123 million for air cargo security, $18 million above the amount proposed in the President's request within the aviation regulation and law enforcement program area, under the proposed restructuring scheme. The committee also sought to expand the TSA air cargo screening technology pilots to address the mandate for 100% screening of cargo placed on passenger aircraft, and called for the TSA to issue an expenditure plan detailing efforts to develop covert testing protocols, augment cargo strike teams, and provide details of deployed canine teams and screening technologies. In addition to increased air cargo security funding to meet the 100% screening mandate of the Implementing Recommendations of the 9/11 Commission Act of 2007 ( P.L. 110-53 ), the committee recommendation included $20 million across various budget activities to implement regulations and fulfill other mandates of the 9/11 Act. The committee also recommended $4 million for airport perimeter security pilot projects, which was not included in the President's request but is equal to FY2008 funding for this activity. The committee proposed $799 million for FAMS, $13 million above the President's request, and recommends keeping FAMS separate from aviation security, rather than placing it under the aviation security program area as requested. With regard to surface transportation security, the bill sought $64 million, $27 million more than the President's request, and seeks additional inspectors and operations staff. The Act provided a total of $6,978 to the TSA, $91 million above the Senate-reported level and $14 million above the House-reported level, but $124 million less than the President's request. Funding for aviation security totaled $4,735 million, roughly matching the House-reported levels. As recommended in the House and Senate reports, the Act consolidated Information Technology functions and Human Capital Services across the TSA. Like the House and Senate-reported measures, the Act did not support other realignment and consolidation proposals from the President's request. The Act included a total of $544 million for the procurement and installation of checked baggage explosives detection systems, including $294 million for EDS/ETD purchase and installation and the mandatory $250 million for the ASCF. This comprises slightly less than half of the spending that has been designated as going towards efforts to implement requirements of the 9/11 Act ( P.L. 110-53 ). These funding initiatives, totaling $1,119 million, also included $123 million for Air Cargo Security; $391 million for specialized screening programs, including travel document checkers, behavior detection officers, bomb appraisal officers, and random screening of airport workers; $30 million to expand the VIPR teams; almost $12 million for surface transportation security inspectors; and $20 million specifically designated for Implementing P.L. 110-53 , intended for conducting vulnerability assessments and security training exercises for high-risk surface transportation systems. Of the $123 million appropriated for Air Cargo Security, $18 million was allocated for expanding test programs evaluating air cargo screening technologies, and for auditing freight forwarders, shippers, and distributors participating in the TSA's certified shipper program. The Act also directed the TSA to submit an expenditure plan for air cargo security funds including details of new covert testing protocols, efforts to expand regulatory inspection strike teams, and data on canine team and air cargo screening technology deployment. The Act also provided $250 million for Checkpoint Support to deploy emerging passenger and carry-on screening technologies, with a focus on deploying whole body imaging (WBI) technologies to passenger checkpoints. This amount equals the funding provided in FY2008 under the Checkpoint Screening Security Fund. The Act also provided $306 million for Screening Technology Maintenance and Utilities for the upkeep of deployed passenger checkpoint and checked baggage screening technologies, including slightly more that $4 million for the disposal of equipment no longer in service. The Act provided $116 million for Transportation Threat Assessment and Credentialing functions, including $82 million for Secure Flight. The Act, however, prohibited the operational deployment of Secure Flight beyond testing until the DHS certifies and the GAO reports that all statutory conditions pertaining to privacy, data security, data retention, and redress procedures for passengers have been satisfactorily met. The American Recovery and Reinvestment Act of 2009 includes $1,000 million for aviation security. This funding is designated for the procurement and installation of checked baggage explosives detection systems and checkpoint explosives detection equipment. The act requires the DHS to submit an expenditure plan for these funds within 45 days of enactment, and the conference report ( H.Rept. 111-16 ) includes language specifying that projects should be prioritized based on security risks and funds be used to accelerate equipment installation at airports with completed design plans. Conference report language also specifies that contracts for expending these funds must be competitively awarded. The conference report cites TSA estimates that this funding will create slightly more than 3,500 manufacturing and construction jobs in the private sector as well as a small, unspecified number of federal positions. A previous report by the GAO, however, indicated that investment in integrating and streamlining checked baggage explosives detection equipment would likely reduce TSA workforce requirements in the long term by reducing manually intensive tasks related to baggage screening. This may have the additional benefit of reducing future year screener staffing levels and may result in significant federal savings in future years. For example, in 2005 the GAO reported that the TSA estimated that integrating EDS systems in-line with baggage conveyors at nine airports that completed such projects under letter-of-intent (LOI) agreements with the TSA would yield a savings to the federal government of $1.3 billion over a seven-year period, compared with stand-alone systems. The GAO also reported that the TSA expected to recover its initial investment in in-line EDS projects in a little over one year. Savings would largely be attained through increased baggage throughput and reduced TSA screener staffing needs. Issues considered during in the FY2009 appropriations process included the passenger security fee surcharge proposal, the adequacy of checkpoint technology investment, and the appropriateness of proposed program realignments included in the President's request. The Administration requested a four-year temporary passenger surcharge beginning in FY2009 of $0.50 per flight, not to exceed $1.00 per one-way trip, in addition to the current passenger security fees of $2.50 per flight with a cap of $5.00 per one-way trip. Under the proposal, these additional fees would be deposited in the Aviation Security Capital Fund (ASCF). The surcharge is intended to offset the $426 million in new budget authority for the Aviation Security Capital Fund that the Administration is seeking. These funds would be used to finance the acquisition and installation of checked baggage explosives detection equipment. The Administration regards this new budget authority it is seeking as being subject to PAYGO rules, and it has recommended the collection of the passenger security fee surcharge as an offsetting collection. If the increased budget authority for the ASCF is subject to PAYGO rules, as the Administration maintains, then questions regarding the need for, and possibly the adequacy of, the proposed $0.50 surcharge may be raised during congressional appropriations debate. The Administration projects an increase of $216 million in offsetting security fee collections in FY2009 compared to FY2008, and it is requesting additional budget authority totaling $426 million for the ASCF. Current authorization for the ASCF consists of a mandatory appropriation of $250 million derived solely from passenger security fee collections. In addition, the Implementing Recommendations of the 9/11 Commission Act of 2007 ( P.L. 110-53 ) authorizes an additional $450 million annually through FY2011 for these same purposes, but as a discretionary appropriation and not through the ASCF. Congress may debate whether the direct appropriation is a preferable alternative to supplementing the ASCF as the Administration proposes. Congress may also debate whether the $0.50 surcharge is adequate to offset the proposed ASCF funding increase, particularly if economic conditions were to worsen and lead to a slowdown in passenger volume and lower-than-expected security fee revenue. Authorizing committees in the House and the Senate have not considered legislation to raise the passenger security fees as proposed in the President's request. Therefore, in both the Senate-reported and the House-reported legislation, it was assumed that the ASCF will be funded in FY2009 at the mandatory level currently authorized in law of $250 million. Both the Senate-reported and House-reported measures, therefore, proposed increased discretionary appropriations levels for EDS/ETD purchase and installation. P.L. 110-329 provided a total of $544 million for baggage screening explosives detection system purchase, installation, and integration, including $294 million for EDS/ETD purchase and installation in addition to the $250 million mandatory ASCF funding, matching the amount specified in both the House and Senate bills. At the President's requested funding level, the TSA anticipates deploying advanced technology (AT) x-ray systems at 60% of checkpoints at Category X and Category I airports, whole-body imaging (WBI) systems at 15% of checkpoints at such airports, bottle liquids scanners at 65% of checkpoints at such airports, and cast and prosthesis screening systems at 25% of checkpoints at such airports. Additionally, the TSA intends to fund the deployment of additional video cameras and electronic surveillance monitoring systems at checkpoints, and devote $13.5 million to mitigating various safety hazards at passenger and baggage screening areas. Congress considered whether the $128 million requested for Checkpoint Support will be adequate to address advanced screening technology initiatives throughout the aviation system along with these other competing efforts. This may be an area of particular interest given that in FY2008 Congress provided $250 million for advanced checkpoint technologies through the creation of the Checkpoint Screening Security Fund. As many of these advanced checkpoint screening technologies are now moving beyond the pilot testing phase to full-scale operational deployment, Congress may seek to more closely examine and reevaluate the TSA's existing checkpoint screening technology plan in light of what is now known about the capabilities and limitations of these various technologies as well as the current risk environment. Congress may debate whether the deployment strategy should be modified to either accelerate, or perhaps even scale back, the fielding of various advanced checkpoint screening technologies. The House-reported measure specifies $250 million for Checkpoint Support, which would maintain this activity at the level provided for under the one-year authorization of the Checkpoint Screening Security Fund in FY2008. The Senate report specified $200 million for Checkpoint Support, $50 million below the amount specified in the House report, but $72 million above the requested level. P.L. 110-329 provided $250 million for Checkpoint Support, matching the FY2008 funding level of the Checkpoint Screening Security Fund and the amount reported in the House. The Act emphasized the use of these funds to acquire mulitple whole body imaging (WBI) technologies including x-ray backscatter and millimeter wave systems, as directed in the Senate report. Congress also considered the realignment of functions as proposed in the President's budget request. Most notably, placing air cargo security—which has been a priority issue for legislation and appropriations over the past five year—within the Aviation Regulation function may be of particular concern. Critics may argue that air cargo security should remain a separate function because of its unique characteristics and in recognition of statutory requirements to screen 50% of all cargo placed on passenger aircraft by February 2009 and 100% of such cargo by August of 2010 (see P.L. 110-53 , Sec. 1602). While the TSA's budget justification contended that aligning air cargo security under Aviation Regulation would emphasize the regulatory aspects of the program and provide greater flexibility in assigning regulatory inspectors to air cargo details, these air cargo screening mandates arguably suggest a broader scope to the overall air cargo program. The TSA has maintained that its roles and responsibilities in meeting these statutory requirements will largely be met through promulgating regulations and conducting stepped-up regulatory oversight to ensure air carrier, freight forwarder, and shipper compliance with screening requirements and other security regulations. However, some in Congress view the TSA's role as being much larger, including testing and evaluating screening technologies, the acquisition and deployment of such equipment, and the training and deployment of canine teams to assist in cargo screening operations. The TSA has indicated that it intends to significantly expand canine team involvement in air cargo screening, making these teams available for air cargo screening 42.5% of the time by FY2009 compared to the current availability level of 25%. Since a formal plan for meeting statutory cargo screening requirements has not yet been presented by the TSA, viewing the TSA role in air cargo security and screening as a regulatory function may arguably be taking an overly narrow perspective (see CRS Report RL34390, Aviation Security: Background and Policy Options for Screening and Securing Air Cargo , by [author name scrubbed]). Other proposed realignment options may not be as seemingly controversial, but may nonetheless raise questions during congressional debate. The proposed alignment of the Federal Air Marshal Service (FAMS) into the Aviation Security function may allow better integration of FAMS operations with screening operations and may provide more streamlined career advancement opportunities for screeners to enter FAMS, as the TSA budget justification argues. However, some may question why FAMS, the largest law enforcement unit within the TSA, is not instead aligned with the Law Enforcement program, which could potentially provide better integration with other law enforcement functions, including airport law enforcement presence and the FFDO program. As noted above, neither the Senate-reported nor the House-reported legislation supported the integration of FAMS into the Aviation Security. The measures also did not support the realignment of air cargo security operations, opting instead to keep Air Cargo Security as a separate program. The committees also did not endorse the Administration proposals to realign other law enforcement and regulatory functions. The committees did, however, agree to realign human resources and information technology functions across the TSA. Realignment of these two functional areas was reflected in the FY2009 appropriations act ( P.L. 110-329 ), but the act did not restructure or realign any other TSA functional areas as proposed in the President's request. The President's request proposed a funding increase of $32 million for the Secure Flight program in order to achieve initial operational deployment in the second quarter of FY2009, with a goal of fully implementing Secure Flight in early FY2010. This long-delayed and highly controversial initiative to develop a system for government prescreening of airline passengers against terrorist watchlists remains an issue. Prior appropriations acts, including the FY2008 Consolidated Appropriations Act ( P.L. 110-161 ), have imposed restrictions on deploying Secure Flight or any other follow-on prescreening system until the DHS certifies, and the GAO reports to Congress, that specific issues regarding privacy protection, data security and integrity, and redress procedures have been adequately addressed. The Administration has long maintained that this requirement for GAO review and certification of the Secure Flight system constitutes a "legislative veto" of Administration decisions and actions and therefore, in the Administration's view, violates the constitutional framework of separation of powers. Nonetheless, both the Senate-reported and House-reported legislation would keep in place these requirements as well as a general prohibition against the use of commercial information to assess the risk of passengers whose names do not appear on government terrorist watchlists. P.L. 110-329 also included language (See Sec. 512) prohibiting operational deployment of Secure Flight, in other than a test basis, until the DHS certifies and the GAO reports that statutory conditions described in section 522 of P.L. 108-334 pertaining to privacy, data security, data retention, and redress procedures for passengers have been satisfactorily met. The Act further specified that, during Secure Flight testing, the TSA may not delay or deny boarding to passengers on the basis of any system-provided information other than the results of matching names against a government watch list. The Act also prohibited the TSA from expending any appropriations, including prior year appropriations, to develop or test algorithms assigning risk to passengers whose names are not on government watch lists and prohibited the TSA from utilizing information from non-federal databases in the Secure Flight system, except for passenger name record (PNR) data provided by the airlines. 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 aids to navigation. The Coast Guard was transferred from the Department of Transportation to the DHS on March 1, 2003. For FY2009, the President requested a total of $9,071 million for the Coast Guard, which accounts for about 19% of DHS's requested budget. The President requested $6,213 million for operating expenses (an increase of 4% over FY2008), $1,205 million for acquisition, construction, and improvements (an increase of 21% over FY2008), $131 million for reserve training (an increase of 3% over FY2008), $16 million for research, development, tests, and evaluation (a decrease of 36% from FY2008), $12 million for environmental compliance and restoration (a decrease of 8% from FY2008), and zero funding for the bridge alteration program. Table 12 provides more detail regarding the Coast Guard's Operating Expenses (OE) account and its Acquisition, Construction, and Improvements (ACI) account. The House Appropriations Committee recommended a total of $9,206 million for the Coast Guard, $135 million more than requested by the President (see Table 8 for totals by major accounts). The major differences between the President's request and House committee recommendations include rejecting the request for funding for a fourth National Security Cutter, rejecting the requested transfer of $82 million in personnel funding from the ACI account to the OE account (both are discussed further below) and $98 million provided for the Coast Guard's new headquarters versus no funding requested by the President. The Senate Appropriations Committee recommended a total of $9,216 million for the Coast Guard, $145 million more than requested by the President (see Table 8 for totals by major accounts). The largest differences in dollar terms between the President's request and the Senate committee's recommendations concern the acquisition of the response-boat medium and the missionization of C-130J aircraft (both are discussed further below). P.L. 110-329 provided $9,361 million for the Coast Guard which includes $6,195 million for OE and $1,495 million for ACI (see Table 8 for totals by major accounts). The Act provided $64 million more than the President requested for response boats - medium, $44 million more for the Deepwater program, $18 million more for shore facilities and aids to navigation, $30 million for refurbishment of a polar icebreaker vessel, and $98 million for Coast Guard headquarters relocation (these differences are discussed further below). The American Recovery and Reinvestment Act of 2009 provided a total of 240 million in emergency funding for the Coast Guard. The Act provided $142 million for the Alteration of Bridges program (see below) and directed the Coast Guard to allocate funds to those bridges that are ready to proceed to construction. Congress also provided $98 million under the Acquisitions, Construction, and Improvements account for shore facilities, aids to navigation facilities, priority procurements due to materials and labor cost increases, and to repair, renovate, assess, or improve vessels. The conference report prohibited the use of these funds for acquiring an additional polar icebreaker. The Act required the Coast Guard to submit an expenditure plan for these funds within 45 days of enactment. Increased duties in the maritime realm related to homeland security have added to the Coast Guard's obligations and increased the complexity of the issues it faces. Members of Congress have expressed concern with how the agency is operationally responding to these demands, including Coast Guard plans to replace many of its aging vessels and aircraft. The Deepwater program is a $24 billion, 25-year acquisition program to replace or modernize 91 cutters, 124 small surface craft, and 244 aircraft. The Coast Guard's management and execution of the program has been strongly criticized and several hearings were held on the program in 2007. The GAO and DHS IG have been very active in reviewing Deepwater and in 2007 the Coast Guard decided to phase out an outside system integrator (a team led by Lockheed Martin and Northrup Grumman) to execute the program. For FY2009, the President requested $990 million for the program (to be made available through the end of FY2013) which includes $541 million for vessels and $231 million for aircraft. The FY2009 request includes $9 million to add 65 new positions for the new Acquisition Directorate that will be responsible for major acquisition projects; most notably the Deepwater program. For FY2008 ( P.L. 110-161 ), Congress appropriated $651 million for Deepwater which included rescissions for unmanned aerial vehicles and offshore patrol cutters and was $137 million less than the President requested. Last fiscal year, Congress called for a detailed program expenditure plan from the Coast Guard, and requested that the GAO review the plan. Senate-reported S. 3181 largely concurs with the President's budget request for Deepwater except that the Senate committee recommended $24 million for the missionization of three C-130J aircraft while the President's request did not include these funds. The House report denied the President's request of $3 million for Unmanned Aerial Vehicles (UAVs) under the Deepwater program and instead funded these under the Coast Guard's Research, Test, and Evaluation account. The House committee also reduced the President's request for National Security Cutters by $54 million because it believes the construction of the fourth cutter will be delayed and because a GAO review raises concerns about the transparency of the contractor's cost and performance schedules. P.L. 110-329 provided $1,034 million for Deepwater and designates $245 million for aircraft and $571 million for surface ships. The Act withheld $350 million of this amount until the appropriations committees receives and approves an expenditure plan. The Act provided $13 million for missionization of three C-130J aircraft, $3 million for UAVs, and $354 million for National Security Cutters as the President requested. The President requested and the Senate-reported bill concurs that $82 million and 652 FTEs be transferred from the ACI appropriation to the OE appropriation in order to increase oversight and management of major acquisition projects, such as Deepwater. House-reported H.R. 6947 denied this transfer, at least until the GAO completes its review of the potential benefits of this proposal. P.L. 110-329 allowed the Coast Guard to transfer up to 5% of its OE appropriation to the ACI appropriation for personnel compensation and benefits if the agency gives notice to the appropriations committees. Issues for Congress include the Coast Guard's management of the program, which is the largest and most complex acquisition effort in Coast Guard history, the overall cost of the program, and the program's time-line for acquisition. These issues are discussed in CRS Report RL33753, Coast Guard Deepwater Acquisition Programs: Background, Oversight Issues, and Options for Congress , by [author name scrubbed]. The President requested and House-reported H.R. 6947 concurred to provide $64 million to order fourteen 45-foot response boats to replace existing 41-foot utility boats. The Senate committee, however, recommended an additional $44 million so that an additional 22 response boats can be ordered. The Congressional Record version of the DHS explanatory statement concurred with the Senate committee's recommendation, providing a total of $108 million to purchase a total of 36 boats. Some Members of Congress have expressed strong concerns that the Coast Guard does not have enough resources to carry out its homeland security mission. A GAO audit raised this concern with respect to the security of energy tankers, and at a Senate hearing the GAO testified that Coast Guard resources were being challenged by a number of security requirements. About 28% of the Coast Guard's FY2009 budget request was for its "port, waterways, and coastal security" (PWCS) mission. For monitoring harbor traffic, the President's FY2009 request included $26 million to continue deployment of a nationwide system to detect, identify, track, and communicate with ships in U.S. harbors, called the Automatic Identification System (AIS). This system is currently able to track ships, but not to communicate with them, in 55 ports and nine coastal waterways. Tracking receivers are installed on land as well as on sea buoys, aircraft, and satellites. The FY2009 funding request is for extending tracking capability out to 50 nautical miles from shore and being able to communicate with ships out to 24 nautical miles from shore for Coast Guard sectors Hampton Roads, Delaware Bay, and Mobile. By FY2014, the Coast Guard expects to extend this capability to all remaining Coast Guard sectors. The House report agreed with the President's request regarding AIS deployment but the Senate report reduced the President's request by $6 million, noting that the agency has carryover funds available from prior years and that it is unlikely that the Coast Guard will achieve its acquisition schedule in FY2009 based on recent history. The final bill agreed with the Senate report. The Senate report requested quarterly briefings by the Coast Guard on the status and development of interagency operations centers (IOCs). IOCs are fusion centers to be located in each Coast Guard sector that are intended to facilitate intelligence sharing and coordinated responses among federal and state or local law enforcement to harbor security-related incidents. AIS is a key technology for the functioning of the IOCs. The Senate report ( S.Rept. 110-396 ) stated that the President's budget requests a $15 million reduction in Coast Guard port presence and coastal security. The committee report recommended that this reduction be denied and instead used to add 170 billets for marine inspectors, armed boat crew escorts, security boardings, and dangerous cargo terminal inspections. An unresolved issue is the usefulness of tracking smaller vessels, such as recreational boats, to counter the threat posed by suicide bombers or smugglers. There are too many smaller boats for the Coast Guard to track and recreational boaters oppose tracking because of cost and privacy concerns. Based on a recent DHS strategy report, it appears the Coast Guard has no immediate plans to require smaller vessels be outfitted with AIS transponders but will continue to pursue methods to identify small craft. Some Members of Congress have expressed concern that with the Coast Guard's emphasis on its maritime security mission, the agency may have difficulty sustaining its traditional, non-homeland security missions such as fisheries enforcement or marine environmental protection. In the wake of an oil spill by a container ship (the Cosco Busan ) in San Francisco Bay on November 7, 2007, the Coast Guard was criticized for delays in its rulemaking requiring oil spill response plans for non-tank vessels. A congressional hearing was held on August 2, 2007 to examine the performance of the Coast Guard's Marine Safety Program. Witnesses from the maritime industry complained about Coast Guard delays in documenting mariners and vessels and a lack of technical expertise and experience by Coast Guard marine inspectors. In response to these criticisms, the Commandant announced a plan to increase civilian positions in the marine safety program and strengthen their career paths to foster professional continuity in this area. The FY2009 budget request noted that "the Coast Guard is encountering serious stakeholder concern about our capacity to conduct marine inspections, investigations, and rulemaking." The budget requested an additional $20 million in operating expenses in order to: add 276 marine inspector positions; respond to an increase in LNG vessel calls; conduct examinations of 5,200 towing vessels mandated in the FY2004 Coast Guard Authorization Act; review non-tank vessel oil spill response plans; and conduct oversight of ballast water management. The FY2009 budget also requested $2.6 million to fund 25 rulemaking projects involving safety, security, and environmental protection. Senate-reported S. 3181 recommended an additional $4 million to fund 67 more watchstanders than the President requested, citing a Coast Guard report on the Cosco Busan oil spill as justification for the increase. Watchstanders monitor harbor ship traffic and provide relevant navigation-related information to ship captains and pilots transiting harbors. The House report recommended an additional $29 million above the President's request for watchstanders, boats, marine inspection staff, and for additional oil spill and environmental response exercises and requests a report from the Coast Guard detailing how it intends to allocate these funds. During the FY2007 appropriations process, Congress expressed strong concern with the Coast Guard's management of the Rescue 21 program, the Coast Guard's new coastal zone communications network that is key to its search and rescue mission and which replaces its National Distress and Response System. A 2006 GAO audit of the program found a tripling of project cost from the original estimate and likely further delays in project completion, which was already five years behind schedule. The GAO's FY2008 Coast Guard budget review noted that while Rescue-21 was originally intended to limit gaps to 2% of coverage area, that target has now expanded to a less than 10% coverage gap. In the FY2008 Appropriations Act ( P.L. 110-161 ), Congress expressed concern for the number of outages that have been recorded with the system, and requested that the Coast Guard provide quarterly briefings on its plans to address the outages. The President's FY2009 budget requested $88 million for Rescue 21 for further deployment of the system's infrastructure at seven Coast Guard sectors and additional watchstanders at 15 sectors receiving the most rescue traffic. The Senate and House committees agreed with this request as does the final bill. The Senate report stated that the overall acquisition cost is now estimated to be $1,066 million, an increase of $366 million, and the completion date has been extended six years to 2017. The LORAN (Long-Range Aids to Navigation) -C system helps boaters (including commercial fishermen) and airplane pilots determine their location using radio signals from 24 tower stations in the United States. The Coast Guard has argued that this system in no longer needed in light of GPS (Global Positioning System) technology which is more precise than LORAN, and in recent budget submissions requested that the LORAN-C system be terminated. In FY2007, Congress funded continuation of the LORAN-C system and required the Coast Guard, among other things, to first notify the public before terminating the system. On January 8, 2007, DHS and the Department of Transportation issued a Federal Register notice seeking public comment on whether to decommission LORAN, maintain it, or upgrade it. Proponents of maintaining the ground-based LORAN system argue that it is valuable as a backup to the satellite-based GPS system. They argue that terrain can sometimes block the line of sight needed for GPS. For FY2008, Congress denied the Administration's request to terminate LORAN-C and noted that an Administration policy decision on the future of LORAN-C was expected to be completed by March 1, 2008. On February 7, 2008, the DHS announced that an enhanced LORAN system (eLoran) will be used as a backup system to GPS. The President's FY2009 budget requested that the administration of the eLoran system be transferred to the National Preparedness and Programs Directorate (NPPD) of DHS (a transfer equating to $35 million) while the Coast Guard continues to operate the system on a reimbursable basis. Both the Senate and House Appropriations Committees denied the President's request to transfer these funds to NPPD. The bridge alteration program is a program to alter or remove road or railroad bridges that are obstructing navigation. Consistent with prior requests, the President requested no new funding for this program. In FY2008, Congress appropriated $16 million. For FY2009, Senate-reported S. 3181 recommended $16 million while House-reported H.R. 6947 recommended $12 million for this program. P.L. 110-329 provided $16 million, and P.L. 111-5 included $142 million in emergency supplemental funding for this program. With the melting of arctic sea ice, it is predicted that a Trans-Arctic commercial shipping lane could soon develop in addition to other increased commercial activity in the region. The Coast Guard is currently testing how its vessels, aircraft, and personnel operate in the arctic. Three polar icebreaker ships are operated by the Coast Guard (one of them, the Polar Star, is in caretaker status) but funded from the National Science Foundation's (NSF) budget. In light of additional polar activities that may extend beyond scientific research, the House committee directed the Coast Guard to negotiate with the NSF to return the budget of the polar icebreakers to the Coast Guard. The Congressional Record version of the DHS explanatory statement provided $30 million to reactivate the Polar Star for 7 to 10 years of service life and directs the Coast Guard to follow the House committee's direction regarding the budget for icebreakers. 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 the 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 Secret Service is responsible for security activities at National Special Security Events (NSSEs), 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 Secret Service 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. Table 13 displays sub-account detail for Secret Service funding. For FY2009, the President's budget submission requested an appropriation of $1,414 million for the protection and criminal investigation missions of the Secret Service. This reflected an increase of $29 million, or nearly 2%, over the FY2008 total of $1,385 million for the Service. For FY2009, the House-reported version of H.R. 6947 proposed a total appropriation of $1,371 million for the Secret Service. This reflected a decrease of $14 million or nearly 1% less than the FY2008 total of $1,385 million for the Service. One area the House proposed to reduce funding for is White House mail screening. According to the House report, "No funding is provided for the processing of mail at the White House, since this activity is an administrative duty that should be requested and financed through the routine expenses of the Executive Office of the President." For FY2009, Senate-reported S. 3181 proposed a total appropriation of $1,418 million for the Secret Service. This reflected an increase of $33 million, or nearly 2%, more than the FY2008 total of $1,385 million for the Service. The Senate committee, unlike the House committee, included funds for White House mail screening. For FY2009, Congress appropriated a total appropriation of $1,413 million for the Secret Service. This reflects an increase of $27 million, or nearly 2%, more than the FY2008 total of $1,385 million for the Service. This appropriation also included $34 million for White House mail screening. Secret Service Issues for Congress. Federal funding for National Special Security Events (NSSE) costs incurred by federal, state, and local entities is one issue Congress may wish to address. In FY2009, Congress appropriated $1 million for NSSE costs within the Secret Service. This appropriation is used to fund the Secret Service's development and implementation of security operations at NSSEs, however, it can not be used to reimburse state and local law enforcement's NSSE costs—specifically the overtime costs incurred by state and local governments. Congress appropriated a total of $100 million for the 2008 presidential nominating conventions' security through the Department of Justice's (DOJ) Office of Justice Programs. The DOJ appropriation was used for security and related costs incurred by state and local governments, including overtime, associated with these two NSSEs. One issue that Congress may address concerns whether this amount is sufficient to cover multiple or unexpected NSSE costs, although the Secret Service has never requested supplemental funding to support NSSE operations. In addition to the NSSE funding through the Secret Service and DOJ, state and local jurisdictions can use DHS grants, such as the State Homeland Security Grant Program (SHSGP) and the Urban Area Security Initiative (UASI), for NSSE-related security activities. However, the grant approval process for these programs is not flexible, so the programs have limited application to NSSEs in that states and localities would need to include SHSGP and UASI funding for NSSE security in their grant applications. For unexpected NSSEs, states and localities are unable to plan ahead and therefore cannot use SHSGP or UASI funds to cover these unexpected security costs. DHS does authorize states and localities to reprogram SHSGP and UASI funding with the DHS Secretary's approval; however, that may result in states and localities not funding other planned homeland security activities. An issue that Congress may wish to consider could include whether more coordination of NSSE funding is needed at the federal level; currently the Secret Service, DOJ, and the Office of Grant Programs each have separate funding streams that can be used to fund different components of NSSEs but there is no overarching coordinating mechanism in place to oversee this funding. Title III includes appropriations for the Federal Emergency Management Agency (FEMA), the National Protection and Programs Directorate (NPPD), and the Office of Health Affairs (OHA). Congress expanded FEMA's authorities and responsibilities in the Post-Katrina Emergency Reform Act ( P.L. 109-295 ) and explicitly kept certain DHS functions out of the "new FEMA." In response to these statutory exclusions, DHS officials created the NPPD to house functions not transferred to FEMA, and the OHA was established for the Office of the Chief Medical Officer. Table 14 provides account-level appropriations detail for Title III. In the aftermath of Hurricane Katrina, Congress passed the Post-Katrina Emergency Management Reform Act (Title VI of P.L. 109-295 , the FY2007 DHS appropriations legislation) to address shortcomings identified in the reports published by congressional committees and the White House. Based on those reports and oversight hearings on many aspects of FEMA's performance during the hurricane season of 2005, the Post-Katrina Act expanded FEMA's responsibilities within the Department of Homeland Security and the agency's program authorities relevant to preparing for and responding to major disaster events. While Congress has shown interest in FEMA's plans to implement a strategic approach to disaster housing and other disaster response, recovery, and mitigation capabilities reflected in the provisions of the Post-Katrina Reform Act, the FY2009 request placed its greatest emphasis on expanding the FEMA workforce as shown in the increase for Management and Administration. How closely FEMA's expanded capacity addresses areas of congressional interest formed part of the discussion during the 2009 budget season for the Agency. Table 14 provides account-level funding details for FY2008 and FY2009. FEMA's budget request of $5,573 million for FY2009 was $4,153 million below the FY2008 level. Most of this difference is in the Disaster Relief Fund account which, during FY2008, received two emergency supplemental appropriations of $2,900 million and $2,400 million respectively. The other substantial reductions were in the Office of Grant Programs which would have received a cut of $1,598 million under the request. There were also program areas within FEMA's request that were below the FY2008 level for programs, such as the Flood Map Modernization fund and the Emergency Food and Shelter Program (EFSP). FEMA's FY2009 budget request contained an increase of $233 million to the Management and Administration account. Parts of this increase were dedicated to a series of improvements in information technology and logistical support. However, most of the increase ($184 million) would have gone to adding 118 new positions in FEMA as well as transitioning 149 CORE (Cadre On-call Response Employees) positions into permanent slots. The CORE's are the multi-year temporary positions at FEMA dedicated to disaster-related work. H.R. 6947 recommended $7,407 million for FEMA in FY2009, surpassing the Administration's requested level by 32% ($1,834 million). As in the previous year, the majority of increases over the Administration request would have come from consistently higher funding levels for nearly all of the state and local grant programs. The FY2009 mark of $7,407 million was also greater than the actual FY2008 ($6,806 million). The Senate FEMA mark for FY2009 was $7,328 million which represented an increase of $1,755 million over the President's request. The Senate bill also increased grants to states above the proposed Administration levels. The Senate mark also exceeded the enacted level for the previous fiscal year by 31%. P.L. 110-329 funded FEMA at $6,963 million. This represented an increase of nearly $1,400 million above the President's request for FEMA's budget and 25% ($157 million) over the FY2008 enacted level. The American Recovery and Reinvestment Act of 2009 provided $100 million in emergency supplemental funding for the Emergency Food and Shelter program within FEMA. FY20007 and the early stages of FY2008 were relatively quiet hurricane seasons; that changed dramatically in the late summer of 2008. During the quiescent period earlier in the year, Congress looked to FEMA for an assessment of priority areas, matched with suggested resource levels, that would improve FEMA's preparedness for, response to, and recovery from major disaster events. Most prominent among the issues that have drawn the interest of Congress is the quality and safety of FEMA's temporary housing that has been provided to disaster victims. With regard to a more effective immediate response to a major disaster, Congress has sought to improve FEMA's logistics chain that supports that response. An overarching theme of all these issues is the quality and depth of the FEMA work force and whether it is commensurate, in size and skill, with its missions. Additionally, for FY2009, Congress expressed support for two programs slated for cuts in the request, Emergency Food and Shelter and Flood Map Modernization. Congress instead recommended increased funding levels far over the Administration request . There were areas of agreement between the House and Senate measures and the Administration request. The Disaster Relief Fund (DRF) funds disaster response, recovery, and mitigation work following Presidentially declared disasters; the House and Senate concurred with the $1,900 million amount requested by the administration. While this represented a reduction of $2,400 million from last year's level, it also reflected an unobligated balance in the DRF as well as an earlier supplemental bill which contained $897 million for the DRF account. Neither the House nor the Senate committees endorsed the concept of a separate Disaster Readiness and Support Account in the FEMA budget. The Senate agreed to fund up to $250 million out of the DRF for those purposes without establishing a new account. The House also declined to create a separate account, but directed that this spending remain within the Disaster Relief Fund account since it supports future disaster activity. There were two transfers recommended from the DRF by both the House and Senate. First, the House and Senate recommended a transfer of $106 million to FEMA's Management and Administration account. Second, the committees also recommended the transfer of DRF funds to the Office of Inspector General for audits and investigations related to disasters. The House bill would have transferred $15 million while the Senate bill set the amount to be transferred at $16 million. P.L. 110-329 provided $1,400 million (approximately $1,278 after accounting for transfers from the Fund as noted in Table 14 ) for DRF in FY2009. This amount for the DRF was a reduction from the Administration request and the House and Senate recommendations. However, Division B of P.L. 110-329 , The Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009, contained an additional $7,960 million for the DRF in FY2008 emergency supplemental funding. Taken together, these amounts were intended to assure adequate funding for the busy disaster season of 2008 that included the Midwest floods and Hurricanes Gustav and Ike. The FY2009 appropriation transferred $106 million from the Fund to FEMA's Management and Administration account. In addition, $16 million will be transferred from the DRF to the Department of Homeland Security Office of Inspector General for audits and investigations related to disasters. Also, with regard to disasters, Section 539 of the bill instructed FEMA to submit to the appropriate committees of Congress and to publish on the FEMA website a report on the damage assessment information used to make determinations regarding disaster declarations. The Administration request for the EFS program, which provides funding to homeless assistance providers across the nation on a formula basis, sought a $53 million reduction to $100 million. Instead, the House chose to increase the program to $200 million, double the requested level. As a statement by the Chairman of the Homeland Security appropriations subcommittee explained: Additional resources for this program are especially critical now, as more and more people turn to food banks and other community support organizations to meet their basic needs. This is the largest single appropriation for this program in its 25 year history. The Senate also disagreed with the President's request to decrease the EFS account to $100 million, recommending instead the account be returned to the 2008 number. P.L. 110-329 provided $200 million for the EFS program, which represents the largest amount the program has ever received. P.L. 111-5 further supplemented the EFS program. The original House bill proposed a $200 million increase for FY2009, while the Senate version suggested a $100 million increase. The Act added $100 million to the EFS program in FY2009, raising the funds available through this program for homeless services providers to $300 million—or nearly double the FY2008 funding level. The President's FY2009 budget level for Flood Map Modernization was $150 million. The Senate approved an amount—$185 million, that was $35 million above the Administration's request. The House also chose to increase the amount of funds available for this program to $220 million, the FY2008 funding level, which represents an increase of 46% above the Administration's request. P.L. 110-329 provided $220 million to fund Flood Map Modernization for FY2009. Consistent with the Post-Katrina Act, the most substantial increase in the Administration's FEMA budget request for FY2009 is in the expansion of the work force. FEMA requested an increase of $184 million to support an additional 118 new permanent positions for the Agency and to transition 149 temporary positions (known as CORE appointments) into permanent slots. The CORE positions have traditionally been used by FEMA to accomplish ongoing disaster tasks at the regional and headquarters levels (such as closing out old disasters or working in the telephone and online registration centers). CORE personnel appointments can serve for a maximum of up to four years and receive benefits similar to a career employee (e.g., health benefits). The CORE position's status stands in contrast to the Disaster Assistance Employees (DAEs). The DAEs are the temporary employees, usually working on renewable 30 to 90 day appointments (without benefits), who are recruited, trained, and hired in large numbers to provide the staff support across a disaster. DAEs are often aligned into cadres of expertise. For example, there is a Public Assistance (PA) Cadre that employs engineers and other program experts to help manage the PA program in the field. Similarly there are DAEs trained to work in Individual Assistance, Mitigation, Congressional Affairs, Community Relations, and other functional areas during a disaster response and recovery operation. The DAEs work on an as needed basis, often with interruptions in service based on the level of disaster activity. COREs are also separate and distinct from private contractor employees and consultants who may also work in a supporting role within different FEMA program areas. Since CORE appointments have been multi-year rather than measured in months, the CORE employees have acquired organizational experience and programmatic skills that the Agency wants to retain. The retention of quality employees has been a recurring challenge for FEMA since the lack of continuity is disruptive to FEMA's state and local partners in the consistent interpretation of program policy and overall customer service. FEMA described the additional employees requested in the FY2009 budget as "enhancements" in several areas of the agency and mentions the improvement of plans for many programs. In the past, Congress has been supportive of FEMA expanding its base of employees and their skill levels, particularly at the regional level to "help state and local governments prepare for and respond to disasters." Congress may also wish to see greater specificity on how these new positions will be apportioned throughout the agency and whether those choices correspond to congressional direction and interest. The funding for more permanent staff reflects an attempt to address some general concerns that both chambers have raised. The House Appropriations Committee recommended that $90.6 million be transferred from the DRF account to support the conversion of temporary disaster employees to full time, permanent positions. While supporting the effort to supplement the permanent work force, the House committee noted that the funds will not be available until the Agency submits an implementation plan. The Committee also noted that the transfer is not at the full level requested by DHS/FEMA because "previous funding provided for this effort has been reprogrammed by FEMA." The Senate Appropriations Committee recommended that $43.5 million be transferred for position conversion. The Senate Committee wanted FEMA to improve customer service and is concerned about employee turnover, stating that the agency is overly reliant on temporary employees for projects related to public assistance. According to the Senate report, this reliance has created a lack of consistent decision making and has compromised the accuracy of information provided to state and local governments. To address these concerns, the Senate proposed an increase in the number of permanent personnel devoted to Public Assistance in particular. P.L. 110-329 transferred $106 million from the Disaster Relief Fund to the Management and Administration account. While the legislative language did not specify what purpose this funding would be used for, this increased the account up to $943 million, well above the House and Senate levels and only $14 million below the original Administration request. The appropriations statute also noted that the funds will "not be available for transfer" until the Agency submits an implementation plan to the Appropriations Committees. Pre-Disaster Mitigation is a competitive grant program that provides awards on an annual basis and is not directly linked to disaster declarations. The House Committee agreed with the reduced level of funding for the Pre-Disaster Mitigation (PDM) program suggested in the FY2009 budget. In FY2008 the Congress chose to increase funding in this account, but this year the House Committee acceded to the $39 million reduction in the President's budget. The Senate Committee disagreed with the Administration and House Committee position for the PDM fund and recommended an increase from the $75 million requested to $100 million to provide grants to states and localities for hazard mitigation planning and implementation mitigation projects. In explaining its reduced mark for the PDM program the House noted its support for similar mitigation programs, including $90 million for programs targeting flood loss properties, funded through the National Flood Insurance Program (NFIP). The House also pointed to its support of the Hazard Mitigation Grant Program (HMGP). This program is triggered under disaster declarations, is funded by the DRF account, and supports similar projects and activities. The House Committee has requested that FEMA report to the Committee within six months with a mitigation strategy showing how each mitigation program contributes to achieving mitigation goals. The House bill also earmarks the PDM program for the second time. The listed earmarks (51 projects) in the bill total just under $25 million, or close to a third of the funds available for the PDM competitive grant program. In that vein, the Senate report language directs FEMA to "operate this program competitively." The FY2009 bill appropriated $90 million for the PDM program. In addition to an appropriation for PDM, Section 553 of the law extended authorization for the program through September 30, 2009. Thousands of disaster victims from the Gulf Coast hurricane season of 2005 remain in temporary housing—some in rental units, and some in manufactured housing in the Gulf region. At the hearing of the House Appropriations Subcommittee on the FY2009 budget, Members expressed interest in FEMA's implementation, or lack thereof, of new housing authorities provided to the agency in the Post-Katrina Emergency Management Reform Act ( P.L. 109-295 ). Congress has been particularly interested in the problem of the levels of formaldehyde found in travel trailers and some mobile homes used for housing following the Gulf Coast disasters of 2005. One House Committee Chairman concluded that "no one was looking out for the interests of the displaced families living in the FEMA trailers." Congress directed in P.L. 109-295 that FEMA prepare a disaster housing strategy to inform the overall approach to housing following a catastrophic disaster. In a Senate hearing on the topic, the need for this report to serve as both a guide and an indication of Administration intent was underlined. Though the report on a housing strategy was due in July of 2007, an outline of the strategy was not presented to Congress until July of 2009. The full National Disaster Housing Strategy is expected to be delivered to Congress before the end of 2009. The Administration's budget request for FY2009 noted that it would improve and expand the agency work force devoted to disaster assistance in general (both the programs addressing eligible assistance to households and those dedicated to infrastructure repair) but did not specifically address temporary housing nor the related health and safety issues. The absence of information in the budget request may have reflected statements by the FEMA Administrator indicating a desire for an increased role for the Department of Housing and Urban Development in disaster housing. As evidence of this direction, FEMA entered into another agreement with HUD to provide housing assistance to the victims of Hurricane Ike. The ongoing housing problems following Hurricane Katrina prompted House comments that directly addressed an ongoing area of contention regarding the rebuilding of public housing in the wake of the 2005 hurricanes. Recent House hearings have concentrated on the perceived conflicting views of responsibility between HUD and FEMA regarding the repairs for public housing. In response to these concerns the House Committee provided an additional $50,000 to "the Office of the Federal Coordinator for Gulf Coast Rebuilding to convene a panel of experts to develop solutions for restoring the affordable rental housing stock of communities affected the 2005 hurricanes." In a related issue regarding mitigation, the House Committee noted it was "encouraged" by the progress being made to implement the Hazard Mitigation Grant Program (HMGP). Funding has moved slowly but it now appears that HMGP funds will supplement mitigation measures for recipients of the "Road Home" program in Louisiana. While noting the administrative progress, the House report observed that the program deadline for applications was September 1, 2008. Based on all of these considerations, the House report urged FEMA to consider extending that deadline. P.L. 110-329 included two provisions directed at Gulf Coast rebuilding. Section 546 of the law called on FEMA to provide "a single payment for any eligible costs" under the infrastructure repair program for any "police station, fire station, or criminal justice facility that was damaged by Hurricane Katrina of 2005 or Hurricane Rita of 225." Section 548 of the law called on FEMA to reimburse Jones County and Harrison County in the State of Mississippi for unreimbursed debris removal costs relating to debris as a result of Hurricane Katrina in 2005. An area of concern voiced by the Senate Appropriations Committee is FEMA's process of handling state and local grant programs. According to the Committee, grant award distribution is flawed because there is a lack of effective implementation. Accordingly, the Senate recommendation included a provision to withhold $10 million from FEMA Management and Administration until the Secretary, in coordination with the Administrator of FEMA, certified and reported to the Senate Appropriations Committee that the processes to incorporate stakeholder input for grant guidance development and award distribution have improved transparency and increased information about security needs on all hazards. The House also voiced this concern, albeit without the stipulations set forth by the Senate (see Office of Grants Programs section in this report). Other areas of concern were also noted. First, the House Appropriations Committee cited a recent GAO report which stated that FEMA needs to develop policies and procedures to ensure states and localities are involved collaboratively in all future updates to the National Response Framework (NRF). Second, both chambers directed FEMA to submit its FY2010 budget request, including justification materials, by office. In 2008 FEMA was directed to submit its 2009 budget in this fashion, but failed to do so. The House Committee used their report as an opportunity to express their displeasure with FEMA on this matter. Third, the Senate Committee agreed with the Office of Inspector General that FEMA has financial weaknesses as a result of the agency's financial reporting and accounting practices. While the Committee acknowledged the challenges of operating an agency which has been reorganized and supports multifaceted operations, the Members insisted that FEMA take steps to correct these areas of weakness. P.L. 110-329 reflected the above concerns and required that Agency officials report to the Committees on Appropriations of the Senate and the House on how FEMA processes incorporate input from stakeholders for grant guidance development and award distribution. FEMA was required to demonstrate that the process will be sufficiently strengthened to ensure greater transparency and to include an increased capacity to provide information and consultation about security needs for all-hazards. Finally, the process FEMA employs to meet these objectives must be formalized and made clear to stakeholders. Both Committees disagreed with the President's request to reduce funding for the Urban Search and Rescue (USAR) Response System from the 2008 amount of $32.5 million to $25 million. Rather, both recommended returning the account to its original amount of $32 million. The House report directed FEMA to report back to the Committee within six months on the feasibility of adding another team to the USAR program. The USAR system currently has 28 teams. The FY2009 appropriations bill funded USAR at $32 million. The House Committee stated $5 million should be designated for North Carolina to perform a risk assessment, and devise a mitigation strategy, to address the impact of sea level rise in that state. The information gained from this study will then be disseminated to other states to assist them with their climate change mitigation efforts. The information obtained from the study is expected to be used to assess the long-term, potential fiscal impact of climate change as it "affects the frequency and impacts of natural disasters." P.L. 110-329 included the $5 million for the state of North Carolina in the bill. The Grant Programs Directorate within the Federal Emergency Management Agency (FEMA) is responsible for facilitating and coordinating DHS state and local assistance programs. The office administers formula and discretionary grant programs to further state and local homeland security capabilities. As a result of the reorganization mandated by the Post-Katrina Emergency Management Reform Act of 2006 ( P.L. 109-295 ), the work of the Grant Programs Directorate was separated from FEMA training activities. FEMA's National Integration Center within the agency's National Preparedness Directorate administers training, exercises, and technical assistance for states and localities. Presently, DHS's assistance programs for states and localities include: State Homeland Security Grant Program (SHSGP); Urban Area Security Initiative (UASI); Port Security Program; Transit Security Program; Bus Security Program; Trucking Security Program; Buffer Zone Protection Program (BZPP); Assistance to Firefighters (FIRE); Emergency Management Performance Grants (EMPG); Citizen Corps Program (CCP); Metropolitan Medical Response System (MMRS); Training, technical assistance, exercises, and evaluations; Commercial Equipment Direct Assistance Program (CEDAP); Public Safety Interoperable Communications Grant Program (PSIC); Center for Counterterrorism and Cyber Crime; Emergency Operations Centers (EOC); and Regional Catastrophic Preparedness Grants. The Administration requested $2,200 million for FY2009 DHS assistance programs for states and localities. Additionally, the Administration proposed to reduce funding for most of the programs except the Urban Area Security Initiative (UASI), the Citizen Corps Program, and its program for bus security. Because of this, the Administration requested $2,028 million less than the $4,228 million Congress appropriated in FY2008. The House-reported version of H.R. 6947 proposed $4,171 million for FY2009 DHS assistance programs for states and localities. This proposed appropriation was $57 million, or 1%, less than the $4,228 million Congress appropriated in FY2008. Some of the assistance programs that the bill proposed not to fund in FY2009 were the Buffer Zone Protection Program, Commercial Equipment Direct Assistance Grants, and Regional Catastrophic Preparedness Grants. Additionally, the bill did not propose to fund the Administration's new initiative, the National Security and Terrorism Prevention Program, which would have consolidated funding for such programs as Real ID and the Buffer Zone Protection Program. The Senate-reported version of S. 3181 proposed $4,079 million for FY2009 DHS assistance programs for states and localities. This proposed appropriation was $149 million, or nearly 4%, less than the $4,228 million Congress appropriated in FY2008. Some of the assistance programs that the bill proposed to reduce funding for were the State Homeland Security Grant Program, Trucking Industry Security Program, Emergency Operations Centers, Metropolitan Medical Response System, and the Commercial Equipment Direct Assistance Grants. The Senate-reported bill, like House-reported legislation, did not propose to fund the National Security and Terrorism Prevention Program. Congress appropriated, in P.L. 110-329 , $4,138 million for FY2009 DHS assistance programs for states and localities. This appropriation is $90 million, or approximately 2%, less than the $4,228 million Congress appropriated in FY2008. This reduction was primarily due to Congress not funding the Real ID program ($50 million) in FY2008. Additionally, Congress did not appropriate funding for the Administration's proposed National Security and Terrorism Prevention Program. Table 15 shows the appropriations for State and Local Homeland Security Programs. The American Recovery and Reinvestment Act of 2009 appropriated $510 million for selected DHS assistance programs for states and localities. This appropriation is in addition to the FY2009 appropriations for these programs provided by P.L. 110-329 . Specifically, Congress appropriated $150 million for the Transit Security Grant Program, $150 million for the Port Security Grant Program, and $210 million for the Assistance to Firefighters Program. In FY2009, Congress could elect to address three issues when considering appropriating funds for DHS's state and local assistance programs. The first issue is the reduction in state and local assistance funding, the second issue is the allocation method DHS uses to determine state and locality grant awards, and the third issue is the reduction in appropriations for the Assistance to Firefighters Program. The issue that appears to continue to dominate DHS's assistance programs for states and localities is the overall reduction in funding. Congress reduced funding to the State Homeland Security Grant Program by $60 million, the Trucking Industry Security Program by $8 million, the Commercial Equipment Direct Assistance Grants by $17 million, and did not fund the Real ID program. Conversely, Congress did increase funding for Urban Area Security Initiative by $18 million, Emergency Operations Centers by $20 million, Assistance to Firefighters by $25 million, Emergency Management Performance Grants by $15 million, and appropriated $2 million for a new grant program, the Center for Counterterrorism and Cyber Crime. This combination of reduced and increased funding for these different programs resulted in the overall funding for states and localities to be $90 million less than appropriated in FY2008. Still, Congress continued to appropriate over $4 billion for states and localities, similar to the amount appropriated in FY2008. Since FY2003, Congress has debated the allocation methodology DHS uses to determine some state and locality grant awards. Some degree of resolution was reached in P.L. 110-53 . P.L. 110-329 requires GAO to report to Congress on the data, assumptions, and methodology that DHS uses to assess risk in determining SHSGP and UASI allocations. Specifically, this report is to include information on the reliability and validity of the data used, the basis for the assumptions used, how the methodology is applied to determine the risk scores for individual locations, an analysis of the usefulness of placing states and cities into tier groups, and the allocation of grants to eligible recipients. Additionally, the Congressional Record version of the DHS explanatory statement states that FEMA is "expected to continue to fully engage agencies with subject matter expertise within the Department, when appropriate, in the development of grant guidance and the determination of awards." In previous years, the Administration's budget proposals have typically recommended significant cuts for fire grants, used to fund training and equipment, as well as zero funding for Staffing for Adequate Fire and Emergency Response (SAFER) grants, used for hiring, recruitment, and retention. Opponents of the cuts have argued that the reduced levels are inadequate to meet the needs of fire departments, while the Administration has argued that reduced levels are sufficient to enhance critical capabilities in the event of a terrorist attack or major disaster. For FY2009, the Administration proposed $300 million for fire grants, a 46% cut from the FY2008 level. No funding was proposed for SAFER grants, and the total request for Assistance to Firefighters Grants (AFG) was 60% below the FY2008 level for fire and SAFER grants combined. The FY2009 budget proposal eliminated grants for wellness/fitness activities and modifications to facilities for firefighter safety. The budget justification requested funding for "applications that enhance the most critical capabilities of local response to fire-related hazards in the event of a terrorist attack or major disaster." The budget justification also stated that the requested level of funding is "an appropriate level of funding given the availability of significant amounts of funding for first responder preparedness missions from other DHS grant programs which are coordinated with state and local homeland security strategies and, unlike AFG, are allocated on the basis of risk." The Senate-reported version of S. 3181 proposed $750 million for firefighter assistance, including $560 million for fire grants and $190 million for SAFER grants, the same funding level approved for FY2008. The Senate report directed DHS to continue the present practice of funding applications according to local priorities and those established by the U.S. Fire Administration (USFA), and further directed DHS to continue direct funding to fire departments and the peer review process. The House version of H.R. 6947 , as reported, provided $800 million for firefighter assistance, consisting of $570 million for fire grants and $230 million for SAFER grants, and directed FEMA to continue granting funds directly to local fire departments and to include the U.S. Fire Administration during the grant administration process, while also maintaining an all-hazards focus and not limiting the list of eligible activities. P.L. 110-329 provided $775 million for firefighter assistance, including $565 million for fire grants and $210 million for SAFER. The Congressional Record version of the DHS explanatory statement directed FEMA to continue the present practice of funding applications according to local priorities and those established by the USFA. The American Recovery and Reinvestment Act of 2009 provides an additional $210 million in firefighter assistance grants for modifying, upgrading, or constructing state and local non-federal fire stations, provided that 5% be set aside for program administration and provided that no grant shall exceed $15 million. The conference report cites DHS estimates that this spending will create 2000 jobs. The Act also includes a provision (section 603) that waives the matching requirement for SAFER grants funded by appropriations in fiscal years 2009 and 2010. The Office of Health Affairs (OHA) coordinates public health and medical programs throughout DHS, and administers several of them, including the BioWatch program, the National Biosurveillance Integration System (NBIS), certain functions of Project BioShield, and the department's occupational health and safety programs. Dr. Jeffrey Runge, who was confirmed by the Senate as the first DHS Assistant Secretary for Health Affairs in 2007, stepped down in August, 2008. The position is now filled by the Acting Assistant Secretary for Health Affairs, Dr. Jon R. Krohmer. The Administration requested $161 million for OHA for FY2009, including $112 million for BioWatch, $8 million for NBIS, $3 million for the Rapidly Deployable Chemical Detection System (RDCDS), $10 million for planning and coordination, and $29 million for salaries and expenses. The bill would have provided $134 million for OHA, which is $27 million (-17%) below the FY2009 request, but $18 million (+15%) above the FY2008 level. This amount includes $89 million for the BioWatch program, $8 million for NBIS, $3 million for RDCDS, $6 million for planning and coordination, and $29 million for salaries and expenses. The bill would have provided $171 million for OHA, which is $10 million (+6%) above the FY2009 request, and $55 million (+47%) above the FY2008 level. This amount includes the amounts requested for BioWatch, NBIS, RDCDS, and planning and coordination, plus an additional $10 million above the requested amount for salaries and expenses. The law and the accompanying explanatory statement provided $157 million for OHA, which is $4 million (-3%) below the FY2009 request, and $41 million (+35%) above the FY2008 level. This amount includes $112 million for BioWatch, and $29 million for salaries and expenses, both amounts as requested. The upcoming presidential transition may prove challenging for OHA, which was established three years ago and has since experienced rapid growth in its budget and mission. OHA began as the Office of the Chief Medical Officer (CMO) in 2005, and was funded at $2 million in FY2006. As OHA, it was funded at $117 million in FY2008. Most of that amount was for existing programs transferred from elsewhere in the department, principally BioWatch, which was transferred from the Science and Technology Directorate. In addition to a $34 million increase for BioWatch for FY2009, OHA requested additional funding for planning and coordination, and salaries and expenses, partly to strengthen its administrative functions such as contracting, budget formulation, budget execution, and internal controls. In prior appropriations, Congress has been interested in the effectiveness of OHA programs. In FY2008, Congress provided funding for the National Academy of Sciences (NAS) to study the effectiveness of BioWatch. In P.L. 110-53 , the Implementing Recommendations of the 9/11 Commission Act of 2007, Congress called on the Comptroller General to evaluate implementation of NBIS. These reviews are pending. In its FY2009 recommendation, the House Committee provided BioWatch funding substantially below the request, and expressed concern about OHA's plans to deploy two different versions of BioWatch sensing systems concurrently, before the NAS review is completed. The Senate Committee recommended the requested amount for BioWatch, and did not discuss the program in its report. In P.L. 110-329 and the accompanying explanatory statement, Congress provided the amount requested for BioWatch, but laid out a number of explicit spending and reporting requirements for new system deployments. Additional matters mentioned by the House Committee include, among others, a directive that DHS's pandemic influenza planing activities be based in OHA rather than elsewhere in the department, and encouragement of OHA's activities to monitor environmental exposures among disaster victims. The Senate Committee expressed concern about the level of national preparedness for a nuclear incident, and recommended that $10 million—the amount that the Committee recommended above the request—be used to expand OHA's efforts to plan for this threat. Both the House and Senate Committees expressed concerns about problems with medical care in ICE detention facilities, and the House Committee directed ICE to initiate a comprehensive third-party review of detainee medical care, in consultation with OHA. Both committees also directed OHA and FEMA to coordinate their efforts in managing the Metropolitan Medical Response System (MMRS) grants to cities. The National Protection and Programs Directorate (NPPD) was formed by the Secretary for Homeland Security in response to the Post-Katrina Emergency Management Reform Act of 2006. The Directorate includes the Office of Infrastructure Protection, the Office of Cybersecurity and Communications, the Office of Intergovernmental Programs, the Office of Risk Management and Analysis, and the U.S. Visitor and Immigrant Status Indicator Technology Program (US-VISIT). The programs and activities of the Office of the Undersecretary for National Protection and Programs, along with the activities of the Office of Intergovernmental Programs and the Office of Risk Management and Analysis, are supported within the Directorate's Management and Administration Program. The programs and activities of the Office of Infrastructure Protection and the Office of Cybersecurity and Communications are supported through the Infrastructure Protection and Information Security Program. The programs and activities of the Office of the Undersecretary are aggregated in Directorate Administration and support the other offices and programs within the Directorate. This support includes budget formulation and financial management, contract and program management, information technology, business culture (i.e. employee relations), and communications, among other things. The Office of Intergovernmental Programs (IPG) was established by the Homeland Security Act of 2002 to act as both an advocate for State, local, tribal, and territorial officials within the department and as the primary liaison between these officials, the Secretary of Homeland Security, and other senior level officials within the department. In this role, the IPG manages communications and helps coordinate activities among these stakeholders. The Office of Risk Management and Analysis (RMA) was established as part of the Post-Katrina Emergency Reform Act of 2006. It had formerly been a division within the Office of Infrastructure Protection. The RMA now reports directly to the Undersecretary. The responsibility of this office is to help develop and implement a common risk management framework and to leverage risk management expertise throughout the entire department. The President requested a total of $54 million for the NPPD Management and Administration appropriation. This included $43 million for Directorate Administration, $2 million for Intergovernmental Programs, and $10 million for Risk Management and Analysis. The budget request included a programmatic increase for additional personnel (including increases in recruitment and retention bonuses and training) for both the Office of the Undersecretary (24 positions, 12 FTEs) and the Office of Intergovernmental Programs (17 positions, 17 FTEs). The primary reason for the increase was to reduce dependence on outside contractors. The IPG received no NPPD funds in FY2008. The request for the Office of Risk Management and Analysis supports current services. The House Committee recommended no funding for the Office of Intergovernmental Programs in the National Protection and Programs budget, noting that the Post-Katrina Emergency Reform Act moved this Office into FEMA and, that funding for the Office is provided within the FEMA budget. The House Committee would also cut in half the amount of funding requested for hiring and retaining staff (a reduction of $2 million in the Directorate Administration line item). The Committee stated the slow pace at which the Directorate is hiring new staff made it unlikely that the Directorate would need the full amount requested. The Senate Committee also chose not to fund the Office of Intergovernmental Programs through the NPPD. It did provide the requested funds for hiring and retaining staff within the Directorate Administration line item. Congress approved $42 million for Directorate Administration, a little over $1 million less than requested. Congress did not fully support the requested increase for hiring and retaining staff, nor did it transfer funding for the Office of Intergovernmental Affairs from FEMA to NPPD. Congress did fully support the RMA request. One potential issue in this appropriation cycle is whether the FY2009 budget justification documents sufficiently address Congress's concerns about the quality of the NPPD's budget requests. In the FY2008 appropriations, both the House and the Senate criticized the level of detail and clarity of the NPPD budget justification documents and the apparent transfer of funds without the Committees' knowledge. The Omnibus Appropriations Act ordered $5 million of the NPPD Management and Administration account to be put on hold until the Committees' receive and approve an expenditure plan that has been reviewed by the Government Accountability Office. Another possible issue is the location of the Office of Risk Management and Analysis (RMA) and the Office of Intergovernmental Programs. Both of these offices oversee activities that cut across the entire department. Some observers have expressed concern that the RMA, in particular, may be located too low in the organization to accomplish its goals. Lastly, where to budget the activities of the Office of Intergovernmental Programs continues to be a contentious issue between Congress and the Adminstration. The Administration has sought to fund the office through the NPPD budget in its last two budget submissions; both times Congress has chosen to keep the funding in FEMA's budget. Until FY2006, US-VISIT was coordinated out of the Directorate of Border and Transportation Security (BTS). DHS Secretary Chertoff's second stage review, among other things, eliminated BTS and proposed placing US-VISIT within a new Screening Coordination Office (SCO) that would have combined a number of screening programs within DHS and that would have reported directly to the Secretary. The appropriators did not provide funding for the SCO, 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 a new entity, the National Protection Programs Directorate (NPPD). In its Section 872 letter, DHS stated that it was relocating US-VISIT to the NPPD "to support coordination for the program's protection mission and to strengthen DHS management oversight." The Administration requested $390 million for US-VISIT in FY2009, a decrease of $85 million from the FY2009 enacted level of $475 million. Included in the Administration's request is an increase of $43 million to conduct testing of potential exit solutions at the land POE, and an increase of $4 million to help US-VISIT deal with increased demand for services from other government entities as the system expands to 10-fingerprints. The House Committee recommended fully funding the President's request for US-VISIT, but withheld $90 million pending the submission and approval of an expenditure plan for the program. Additionally, the House Committee included $40 million for operations and management of the program within the CBP Salaries and Expenses account, $22 million less than the President's request, because "the budget explanation did not justify full funding." The Senate Committee recommended $180 million for US-VISIT, $210 million less than the President's request. The Senate Committee noted that it did not receive US-VISIT's FY2008 expenditure plan until June 12, 2008 (or almost 3/4 of the way through the fiscal year) and that $125 million in FY2008 funding will remain unavailable for obligation until this plan is reviewed by GAO and accepted by the Committee—something that will likely not occur until September. As a result of the delay in submitting the plan, the Senate Committee noted that DHS was effectively turning US-VISIT into a forward funded account. As such, the Senate Committee reduced the FY2009 appropriation by $210 million from the FY2009 request, to $180 million. However, the Senate Committee noted that it fully funded the President's request for an additional $62 million for "operations and management" of the program within the CBP Salaries and Expenses Account. Congress provided $300 million for US-VISIT in the Act, $90 million below the President's request. The reduction in funding was in response "to the delay in submitting the expenditure plans and the resulting unobligated balances." Congress admonished DHS for continuing to run high unobligated balances in the US-VISIT program and directed DHS to ensure that US-VISIT becomes a current-year progam moving forward. In order to encourage this, Congress withheld $70 million from obligation until an expenditure plan for the program is submitted to and approved by the House and Senate Committees on Appropriations. Of the $300 million appropriation, Congress designated $20,000,000 for identity management and screening services; $66,368,000 for the Unique Identity program, and $25,327,000 for moving US—VISIT operations to a DHS data and establishing a second disaster recovery site. The remaining $188 million was made available for operations and maintenance, program management, and the development and implementation of biometric exit solutions. There are a number of issues that Congress may face relating to the implementation of the US-VISIT system. These issues may include whether the Administration's proposed pilot project for deploying the exit component at land POE is appropriate, whether the current plan to deploy the exit component at air POEs is adequate, and whether the current POE infrastructure can support the added communication load that a 10 fingerprint system would likely require. In FY2008, US-VISIT has been operating a pilot program of the 10 fingerprint enrollment system to assess the impact of the program's expansion on the infrastructure at POE and wait times for travelers entering the United States. During FY2009, US-VISIT plans to deploy 3,000 new 10 fingerprint scanners to the 292 POE where the US-VISIT system is currently operational. Issues for Congress could include wether the current information technology infrastructure at POEs can support the enhanced bandwidth that a 10 fingerprint system will require, whether the 10 fingerprint technology that gets implemented can produce fast and effective results, and what kind of an impact the deployment of the system to airports will have on the travel times for individuals entering the country as well as the potential economic impacts that delays may have on airlines due to missed connections. The Senate Committee noted its approval of the plans to transition to a 10 fingerprint entry system, and included full funding for that portion of the request. The House Committee also recommended fully funding the President's request for this component of the US-VISIT system, and directed DHS to provide quarterly briefings on the implementation of the 10 fingerprint entry solution. Deployment of a biometric exit system has been of concern to Congress for a number of years. Without verifying the identity of travelers who leave the United States, DHS has no easy way of identifying individuals who overstay their visas and remain in the country illegally. After being heavily criticized during FY2008 for appearing to move away from the deployment of an exit system, US-VISIT is requesting $56 million for the exit component of the system in FY2009. According the DHS, US-VISIT will "finalize a biometric exit strategy and complete implementation of a biometric air and sea exit system by the end of calendar year 2008." The exact nature of this strategy will likely be an issue that Congress will closely examine, given the intense congressional interest on this topic in the past. The House Committee noted that the exit component remains behind schedule, and expressed its concern that "no pilot tests have been carried out or are planned for the proposed assignment of biometric collection responsibilities to private industry." In order to address this concern, the House Committee withheld from its recommendation funding for the implementation of an exit solution at airports until US-VISIT conducts pilot programs testing private industry collection and transmission of biometric data and CBP collection of this data at airline gates and submits a report to the committee on their outcomes. US-VISIT would be required to complete these pilots by October 31, 2008. The House Committee also noted its concern that DHS has yet to provide a detailed and comprehensive strategy for implementation of an exit solution across all ports of entry, as required by the Consolidated Appropriations Act of 2008, and included language reiterating this requirement. P.L. 110-329 directed DHS to execute the pilot programs outlined in the House Report, but extended the deadline for completion of these pilots to January 31, 2009. The Infrastructure Protection and Information Security Program (IPIS) supports the activities of the Office of Infrastructure Protection (OIP), which manages the Infrastructure Protection Program (IP), and the Office of Cybersecurity and Communications, which includes the National Cyber Security Division (NCSD), the National Communication System (NCS), and the Office of Emergency Communications (OEC). OIP coordinates the national effort to reduce the risks associated with the loss or damage to the nation's critical infrastructure due to terrorist attack or natural events. This effort is a cooperative one between the federal government, state, local and tribal governments, and the private sector to identify critical elements of the nation's infrastructure, their vulnerabilities, the potential consequences of their loss or damage, and ways to mitigate those losses. The NCSD performs a similar function, but specifically focuses on the nation's information networks. The NCS also performs similar function, but specifically focuses on the nation's communication systems, in particular the communications systems and programs that ensure the President can communicate with selected federal agencies, state, local, and tribal governments, and certain private sector entities during times of national emergencies. The OEC is responsible for promoting the ability of state, local and federal emergency response providers to communicate with each other during an emergency through the development and distribution of interoperable communication equipment. The President requested a total of $841 million for IPIS in FY2009. This is an increase of approximately $186 million above the amount enacted for FY2008. Each of the four Program/Project Activities (PPAs) requested increased funding (see Table 16 ). Of the total increase, $44 million is the result of changes to baseline funding, including pay increases (plus one large baseline increase associated with the transfer of a program from the Coast Guard to the NCS). The balance, $142 million, is the net result of expanded or reduced programmatic activity, including the hiring of additional personnel. The National Communication System request is $101 million above last year's enacted amount. The request included an increase of nearly $35 million for the Next Generation Network. This program aims to migrate the Telecommunications Priority Services program from legacy circuit-switched technology to industry's new IP-based packet technology. In FY2008, Congress chose not to fully fund the President's request for this program, stating that DHS had not justified the need for the level of funding requested at that time. Another large programmatic increase in the NCS request, $57 million, would support the National Command and Coordination Capability (NCCC). NCCC is an effort to integrate existing and future networks that share classified as well as sensitive-but-unclassified information (voice, video, and data) between the President, Vice-President, federal agencies, state Emergency Operation Centers, and selected local fusion centers. The Secretary of DHS is the Executive Agent of the NCCC, and he has delegated this authority to the NCS. The $57 million increase goes toward standing up the NCCC Management Coordination Office and to extend and integrate the necessary interoperable hardware and software. The NCS also requested a $35 million increase to its baseline funding to take over the Coast Guard's Long Range Navigation (LORAN) system. The NCSD requested an increase of $83 million above the FY2008 enacted amount. Expansion of the Division's Einstein program, and its role in the Office of Management and Budget's (OMB's) Trusted Internet Connections initiative, accounts for nearly $70 million of this increase. The Einstein program monitors network traffic on federal information networks and acts as an intrusion detection system. OMB's Trusted Internet Connections initiative seeks to deploy the Einstein system to all federal departments and agencies (current involvement had been voluntary). The increased funding would be spent on the acquisition and deployment of additional and upgraded hardware and software, the expansion of facilities, and the hiring of additional personnel and contractor services. Some of the increases are to handle the additional incident handling and data analysis the expansion will generate. The net budget increase requested for IP is less than a million dollars. Increases would include $11 million to increase staff and support for chemical facility security compliance. It also would include $1 million for additional Protective Security Advisors. Proposed decreases included -$14 million for NIPP management, -$4 million for the National Infrastructure Simulation and Analysis Center, and -$1 million for the Bomb Prevention Program. Congress had appropriated funds above what the President requested for these programs in FY2008. The House Committee recommended $847 million for the IPIS program, but voted to withhold from obligation $149 million from three programs (National Cyber Security Initiative, Next Generation Networks, and the National Command and Coordination Capability) until the Committee receives expenditure plans and documentation on how these programs relate to achieving homeland security goals. The Committee recommended $39 million more for Infrastructure Protection and $6 million more for the National Cyber Security Division PPAs than requested. The House Committee supported the Administration's request for the Office of Emergency Communications, but recommended less (-$90 million) than what was requested for the National Communications System program. In addition, the House Committee recommended the $50 million REAL ID Hub program be transferred to NPPD. The Administration requested funds for this program in the U.S. Citizenship and Immigration Services (USCIS) budget. The Committee recommended the development program be run out of NPPD to allow the USCIS to focus on its large backlog of applications. Within the Infrastructure Protection PPA, the Committee included an additional $16 million to the request for National Infrastructure Protection Plan implementation and $2 million to the Bombing Prevention Program, more than reversing the Administration's proposed reductions in those programs. The Committee also recommended an additional $12 million for chemical plant security compliance support, also citing the need to support upcoming regulations on ammonium nitrate. In addition, the Committee recommended $2 million to fund continued deployment of video surveillance cameras in Philadelphia and $3 million to study the efficacy of manhole cover locking systems to ensure security of underground utilities. The Committee fully supported the National Cyber Security Division's U.S.-CERT budget, but, withheld from obligation half of the amount ($121 million) until the Committee receives an expenditure plan for the U.S.-CERT's contribution to the National Cyber Security Initiative. Also within the NCSD PPA, the Committee recommended $4 million more than the request for testing at Idaho National Laboratory the security of control systems. Within the National Communications System PPA, the Committee recommended $14 million for the National Command and Coordination Capability budget, about $47 million less than the request, and withheld all of this amount from obligation until it receives an expenditure plan for this program. The Committee also recommended $8 million less for the Next Generation Networks program, and withheld half of this amount from obligation until it receives an expenditure plan for the program. The House Committee did not support the transfer of the LORAN program to NPPD. The Senate Committee recommended a total of $809 million for the IPIS program. This included funding, above requested levels, for Infrastructure Protection (+$25 million), the National Cyber Security Division (+$26 million), and the Office of Emergency Communications (+$10 million) PPAs. The Committee, however, recommended less than requested funding for the National Communications System PPA (-$94 million). Within the Infrastructure Protection PPA, the Committee recommended additional funds for the National Infrastructure Simulation and Analysis Center (+$4 million) and the Bombing Prevention Program ($1 million), reversing the Administration's proposed reductions in these two programs. In addition, the Committee increased the funding for chemical plant security compliance an additional $12 million above the Administration's request, citing the need to enforce upcoming regulations on ammonium nitrate. The Committee also recommended an additional $8 million above the Administration's request to help accelerate the pace of vulnerability assessments at Tier 1 and Tier 2 critical infrastructure sites. The additional $10 million recommended for the Office of Emergency Communications PPA is to support 6 international interoperability border demonstration projects. The Committee did not expand upon its recommendation to increase the National Cyber Security Division's budget request by $26 million. Within the National Communications System PPA, the Committee recommended $6 million for the National Command and Coordination Capability (NCCC), $55 million less than what was requested. Although the Committee recommendation increased funding over last year's budget for the NCCC, the Committee expressed concern that the program lacked an overall strategic plan, input from prospective end users, a defined fully operational capability, and a total program cost estimate. The funds provided by the Committee are to conduct such planning. The Committee also directed the Government Accountability Office to review the program, including the business case for proceeding with the NCCC. Also within the National Communications System PPA, the Committee did not support the transfer of the LORAN program to the NPPD. The Committee noted that the requested funding was provided in the Coast Guard budget. Congress approved $807 million for the IPIS program. This included $314 million for IP, $314 million for NCSD, $38 million for OEC, and $141 million for NCS. However, a total of $152 million would be withheld from obligation until Congress received and approved expenditure plans for the following projects: the National Cyber Security Initiative in the NCSD program ($127 million withheld); and, the Next Generation Network in the NCS program ($25 million withheld). Within the IP program, Congress appropriated a total of $73 million for implementing chemical plant security regulations ($10 million above the request) and $5 million to initiate efforts to regulate ammonium nitrate. It provided $11 million for the Office of Bombing Prevention, roughly $2 million above the request. It also provided $31 million for NIPP management ($10 million above the request), $20 million for NISAC ($4 million above the request), and $6 million more than requested to conduct vulnerability assessments. In addition, the $2 million sought for the city of Philadelphia and the $3 million to study the efficacy of protecting underground infrastructures by securing manhole covers was approved. Notwithstanding the withholding of obligations noted above, Congress appropriated $255 million for DHS's activities associated with the National Cyber Security Initiative and $50 million for the Next Generation Network. Congress appropriated $6 million for the National Command and Control Capability. Congress provided $22 million for NCSD's activities to secure control systems of critical infrastructures ($4 million more than requested). Congress did not support the transfer of LORAN to NPPD. The bill did not mention transferring the Real ID Hub from U.S. Citizenship and Immigration Services to NPPD as sought in the House. Congress and the Administration continue to disagree on the direction or pace certain programs within the IPIS should take. The Administration favors reducing funding in the National Infrastructure Simulation and Analysis Center, the National Infrastructure Protection Plan implementation support, and the Bombing Prevention Program. Congress did not support these reductions in FY2008 and have not in the FY2009 budget. Meanwhile, Congress has not been willing to completely support relatively large increases the Administration has been seeking for programs in the National Communications Systems PPA. Both the House and the Senate appear to be in basic agreement. A primary difference between the House and Senate bills is that the House Appropriations Committee recommended the transfer of the REAL ID Hub program to NPPD, while the Senate Committee did not make a similar recommendation. Title IV includes 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 (DNDO). Table 18 provides account-level details of Title IV appropriations. There are three major activities that dominate the work of the U.S. Citizenship and Immigration Services (USCIS): the adjudication of immigration petitions (including nonimmigrant change of status petitions, relative petitions, employment-based petitions, work authorizations, and travel documents); the adjudication of naturalization petitions for legal permanent residents to become citizens; and the consideration of refugee and asylum claims, and related humanitarian and international concerns. USCIS funds the processing and adjudication of immigrant, nonimmigrant, refugee, asylum, and citizenship benefits largely through funds generated by the Examinations Fee Account. Table 19 shows FY2008 appropriations and the FY2009 request. USCIS is a fee supported agency. As part of the former Immigration and Naturalization Service (INS), USCIS was directed to transform its revenue structure with the creation of the Examinations Fee Account. Although the agency has received direct appropriations in the last decade, these appropriations have been largely directed towards specific projects such as backlog reduction initiatives. The vast majority of the agency's revenues, however, comes from the adjudication fees of immigration benefit applications and petitions. In the President's FY2009 budget request, the agency requested $151 million in direct appropriations. The remaining $2,539 million in gross budget authority requested would be funded by revenues from collected fees. As Table 19 below shows, the requested USCIS budget for FY2009 is approximately $2,690 million. This requested amount constitutes an increase of $70 million, or almost 3%, over the gross budget authority provided in FY2008. The requested direct appropriation of $151 million would include $100 million for the Employer Eligibility Verification Program (EEV, or E-Verify), $50 million for REAL ID Act implementation, and roughly $1 million for asylum and refugee program operating expenses. All other programs and operations would be fee funded. Of the requested funds for FY2009, $1,979 million, or roughly 73.6%, would fund the USCIS adjudication services. A plurality of these adjudication funds would go towards pay and benefits with an allocation of $780 million, while district operating expenses would receive $535 million and service center operating expenses would be allocated $346 million. Business transformation initiatives for modernizing systems and improving agency information sharing and efficiency would receive $139 million. The President's budget request also includes requested funding levels of $168 million for information and customer services, $374 million for administration, and $19 million for the Systematic Alien Verification for Entitlements (SAVE) Program. House-reported H.R. 6947 would have provided USCIS with total appropriations $2,641 million, of which $2,539 million would have been mandatory appropriations collected from fees and $102 million would have been direct appropriations. For the mandatory fees, the House report stated that at least $54 million must be used for supporting Customer Service Center operations. Additionally, the report would have directed all USCIS' premium processing revenues to be used for business and information technology transformation purposes, including the digital conversion of records. Discretionary funding included $100 million for E-Verify, $1 million for asylum/refugee operating expenses, and $1 million for citizenship education grants. Section 522 of the bill would have prohibited USCIS from using funds made available from House-reported H.R. 6947 for granting any immigration benefits unless any legally required background checks were completed and the results did not preclude benefits to be granted. Although the mandatory appropriations in the House-reported bill were identical to those in the President's budget request (as well as those in Senate-reported S. 3181 ), the discretionary funds would not have included the $50 million requested for REAL ID implementation. H.Rept. 110-862 noted that this funding would instead be provided through the National Protections and Program Directorate (NPPD), which has similar identity verification systems and experience in data integration. The Citizenship and education grants—proposed competitively awarded grants to community organizations in areas of the country with the highest concentrations of immigrants—were an exclusive item to House-reported H.R. 6947 . H.Rept. 110-862 made several additional notes regarding Congressional concerns. First, it noted concerns over the high error rates in the E-Verify system and required USCIS to submit a report on its plan to address this issue. Moreover, noting the projected cost of a nationwide mandatory E-Verify program, H.Rept. 110-862 encouraged USCIS to develop a detailed plan of E-Verify use, along with projected costs and an implementation timeline. Second, the report noted concern over the 2007 USCIS immigration benefit fee increase and the reduced possibility for fee waivers. Specific concerns were raised in the report regarding applicants under the Violence Against Women Act. Third, concerns were raised over refugee processing and cases where material support to extremist groups has been provided under threat or duress. USCIS, in conjunction with the Department of State, were asked to clarify United States policy on this matter. Finally, H.Rept. 110-862 expressed concerns over fraudulently or erroneously identified orphans from Vietnam, as well as the levels of funding used for naturalization and oath of allegiance ceremonies. Unlike House-reported H.R. 6947 , Senate-reported S. 3181 would have provided USCIS with its full funding request of $2,690 million. This funding would have provided $2,539 million in mandatory appropriations from fee collections and $151 million in direct appropriations. The accompanying report, S.Rept. 110-396 , noted that USCIS planned to use over $24 million in anticipated carry-over funds from FY2008 for E-Verify. It also noted the expectation that all DHS privacy rules and regulations will be adhered to in the development of the REAL ID program. The main concern expressed in S.Rept. 110-396 was the ongoing issue of FBI background check backlogs. Noting that having approximately 327,000 individuals in the country awaiting adjudication represented an unnecessary security rick, the report reiterated that a total of $28 million had been appropriated in previous fiscal years to address this issue. The report stated that USCIS has assured Congress that previously appropriated funding should be sufficient. Additionally, the report urged USCIS to place personnel at the FBI name check facility to expedite additional information requests. This request reflected a recent recommendation of the Department of Justice Inspector General. The provision of P.L. 110-329 regarding USCIS were virtually identical to those of the of House-reported H.R. 6947 . Like its predecessor in the House, the public law provided $102 million in direct appropriations, of which $100 million was specified for the E-Verify program. According to report language in the Congressional Record, $1 million of the direct appropriations was for citizenship education grants as spelled out in House-reported H.R. 6947 . The REAL ID funding that was requested and included in Senate-reported S. 3181 was included under Title V of the public law. In addition to the direct appropriations, USCIS was directed to collect an estimated $2,539 million in fee collections from adjudication services for mandatory appropriations. For the mandatory fees, the report language stated that at least $54 million must be used for supporting Customer Service Center operations. Additionally, $28 million of the mandatory fees was directed to be used for converting immigration records to digital format. Finally, the report language stated that USCIS is directed to advise Congress of any resource requirements necessary to avoid the buildup of new backlogs with the FBI Name Check Program. USCIS issues for Congress included the surge in immigration benefit applications that occurred in FY2007 and which resulted in an increase in the agency's backlog, and the use of the Federal Bureau of Investigation's (FBI's) National Name Check program to vet immigration benefit applications. According to the testimony of USCIS Director Emilo T. Gonzalez, USCIS experienced an increase in its backlog of naturalization applications in the second half of FY2007. From May through July of 2007 USCIS received three and a half times more applications than during the same three months in the previous year. Consequently, published accounts indicate that processing time for applications filed during the FY2007 "surge" would be between 16-18 months, as compared to 6-7 months for applications filed in the same period during FY2006. For all immigration benefits, the USCIS director testified that the agency received over 1.2 million more applications during the FY2007 surge than in the same period during FY2006, for a total of over 3 million applications. According to media reports, in February USCIS officials believed that the backlog created by the application surge could take close to three years to clear. As of April 2008, USCIS believed it would take 13-15 months to process an application for naturalization. Although citizenship campaigns and a contentious national immigration debate have been cited as contributing factors, many observers believe most of the surge in applications may be attributed to the USCIS fee increase of July 30, 2007. These fee adjustments followed an internal cost review and they increased application fees by a weighted average of 96% for each benefit. The cost of naturalization, for example, increased from $330 to $595. Critics of this new naturalization backlog have mainly raised concerns that applicants would not naturalize in time to participate in the 2008 election. USCIS did not include a request for direct appropriations to hire additional temporary personnel to adjudicate the backlog. An additional issue for Congress concerned USCIS' use of the Federal Bureau of Investigation's (FBI) National Name Check Program. In February, USCIS officials estimated that roughly 44% of 320,000 pending name checks for immigration benefit applications have taken more than six months to process, including applications for legal permanent residence (LPR) and naturalization. As a result, the White House authorized USCIS to grant approximately 47,000 LPR applicants their immigration benefits without requiring completed FBI name checks. Critics of this decision believe it could expose the United States to more security threats. The USCIS ombudsman, however, has argued that USCIS employment of the FBI name check process is of limited value to public safety or national security because in most cases the applicants are living and working in the United States without restriction. According to the USCIS Ombudsman's 2008 Annual Report , on May 6, 2008 there were 269,943 pending name checks, of which 219,615 (81%) had been pending for more than 90 days and 74,260 (28%) had been pending for more than one year. The Federal Law Enforcement Training Center provides training on all phases of law enforcement instruction, from firearms and high speed vehicle pursuit to legal case instruction and defendant interview techniques for 81 federal entities with law enforcement responsibilities, state and local law enforcement agencies, and international law enforcement agencies. Training policies, programs, and standards are developed by an interagency Board of Directors, and focus on providing training that develops the skills and knowledge needed to perform law enforcement functions safely, effectively, and professionally. FLETC maintains four training sites throughout the United States and has a workforce of more than 1,000 employees. The overall request for FLETC in FY2009 was $274 million, a decrease of $14 million from the FY2008 appropriation. The Administration requested an increase of 55 positions to assist in the training of the additional USBP agents, CBP officers, ICE detention personnel, and ICE investigators requested by DHS in its FY2009 budget submission. DHS also proposed transfering the office of Federal Law Enforcement Training Accreditation to the Chief Human Capital Office in Title I. The House Committee recommended $286 million for FLETC in FY2009, an increase of $12 million over the President's request. This increase would have been used to fund improvements in FLETC's simulated training capabilities, to add instructors for United States Capitol Police training needs, and to train 734 additional CBP officers. The House Committee did not support the Administration's requests to transfer FLETA and to close down its Washington D.C. office. The Senate Committee recommended $324 million for FLETC in FY2009, an increase of $50 million over the President's request. Of the increase: $40 million was included for the construction of a new dormitory in FLETC's Charleston, South Carolina facility to compensate for the expiration of a lease on dormitory currently being used there; $3 million was included to complete construction of training-related facilities at the Artesia, New Mexico facility; and $7 million was included for law enforcement accreditation and annualized increases in pay. The Senate Committee prohibited DHS from transferring the Law Enforcement Training Accreditation Board (FLETA) from FLETC and from closing down or transferring its Washington D.C. office. Lastly, the Committee recommended $5 million for the creation of a Rural Policing Institute to export training programs to rural first-responders throughout the country. Congress provided $339 million for FLETC in the Continuing Resolution, $65 million more than the President's request. Within this total, $40 million is allocated for construction of a replacement dormitary in the Charleston, South Carolina campus and $3 million for construction in the Artesia, New Mexico facility. Congress also denied FLETC's request to close its Washington D.C. office, provided $4 million for the creation of a Rural Policing Institute, and allocated $6 million above the President's request for the training needs of the additional CBP and ICE personnel provided in Title II of the appropriation. The Directorate of Science and Technology (S&T) is the primary DHS organization for research and development (R&D). Headed by the Under Secretary for Science and Technology, it performs R&D in several laboratories of its own and funds R&D performed by the national laboratories, industry, universities, and other government agencies. See Table 20 for details of the directorate's appropriation. The Administration requested a total of $869 million for the S&T Directorate for FY2009. This was 5% more than the FY2008 appropriation of $830 million. A proposed increase of $18 million for the Explosives program would fund R&D on countering improvised explosive devices (IEDs), with an emphasis on basic research to complement shorter-term R&D being conducted by other agencies. A proposed increase of $43 million for the Laboratory Facilities program included $29 million for startup costs at the National Biodefense Analysis and Countermeasures Center (NBACC) as well as $14 million for laboratory employee salaries previously budgeted in another account. A proposed $27 million reduction in the Infrastructure and Geophysical program was largely the result of reducing funding for local and regional initiatives previously established or funded at congressional direction. The House committee recommended a total of $887 million. Increases relative to the request included $11 million for the Infrastructure and Geophysical program to support the National Institute for Hometown Security; $5 million for the ongoing construction at PNNL; $4 million to help develop an operational test and evaluation program for first responder technologies; $2 million for a pilot program to improve the productivity and efficiency of the homeland security industrial base; and $7 million for University Programs to support university centers of excellence and maintain the fellowship program at the FY2008 level. Decreases included $5 million for new maritime technologies "more appropriately handled by the Coast Guard" and $6 million for the Innovation program "due to a lack of budgetary details." The committee directed DHS to provide a report on issues related to the S&T Directorate's unobligated balances. The Senate committee recommended a total of $919 million. Increases relative to the request included $25 million for cyber security research in the Command, Control, and Interoperability program; $27 million for the Infrastructure and Geophysical program to continue the Southeast Region Research Initiative; and $15 million for Laboratory Facilities to accelerate ongoing construction activities at the Pacific Northwest National Laboratory (PNNL). Decreases included $12 million for Innovation (because of the need for "sound business plans" based on "operational requirements") and $4 million for Human Factors. The committee recommended that $5 million for the Homeland Security Institute be provided as a separate item, as it was in FY2008, rather than as part of the Transition program as the Administration requested. The final appropriation for S&T was $933 million. Relative to the request, this total included increases of $10 million for cyber security research, $11 million for the National Institute for Hometown Security, $27 million for the Southeast Region Research Initiative, $15 million for the ongoing construction at PNNL, and $6 million for University Programs. Decreases included $12 million from Innovation, because the DHS Inspector General "raised concerns about how projects were selected and managed" and because S&T took nine months to inform the committee how FY2008 funding would be spent. Funding for the Homeland Security Institute was provided as a separate line item. The explanatory statement included the House requirement for a report on unobligated balances. Among the issues facing Congress are the S&T Directorate's priorities and how they are set, its relationships with other federal R&D organizations both inside and outside DHS, its budgeting and financial management, and the allocation of its R&D resources to national laboratories, industry, and universities. The directorate announced five new university centers of excellence in February 2008. Some existing centers are expected to be terminated or merged over the next few years to align with the directorate's division structure. For more information, see CRS Report RL34356, The DHS Directorate of Science and Technology: Key Issues for Congress , by [author name scrubbed] and [author name scrubbed] (pdf). The Domestic Nuclear Detection Office (DNDO) is the primary DHS organization for combating the threat of nuclear attack. It is responsible for all DHS nuclear detection research, development, testing, evaluation, acquisition, and operational support. See Table 21 for details of the appropriation for DNDO. The Administration requested a total of $564 million for DNDO for FY2009. This was a 16% increase from the FY2008 appropriation of $485 million. Most of the growth was in the Systems Acquisition account, where an increase of $68 million for procurement of Advanced Spectroscopic Portals (ASPs) was partly offset by a decrease of $10 million for the Securing the Cities initiative in the New York City area. The House committee recommended a total of $544 million. Changes relative to the request included reductions of $3 million for new headquarters employees, $1 million for a proposed fellowship program at the National Technical Nuclear Forensics Center, and $15 million for the Radiation Portal Monitoring Program. The House continued the prohibition on full-scale procurement of ASPs until the Secretary certifies their performance and added a prohibition from engaging in high-risk concurrent development and production of mutually dependent software and hardware. Report language directed DNDO to conduct a risk assessment for radiological dispersal devices. The Senate committee recommended a total of $541 million. The only change relative to the Administration request was a reduction of $23 million in the Radiation Portal Monitoring Program because of delays in the required certification of ASP performance. Like the House, the Senate continued the prohibition on full-scale procurement of ASPs until secretarial certification and prohibited high-risk concurrent development and production of mutually dependent software and hardware components of detection systems. The committee report urged DNDO to prioritize its programs based on risk and directed it to contract with the National Academy of Sciences (or another independent organization) to develop a conceptual framework for prioritizing defensive efforts relative to mitigation measures. The final appropriation for DNDO was $514 million. Reductions relative to the request included $10 million from new initiatives in Transformational R&D and $38 million from the Radiation Portal Monitoring Program due to development delays. Like the House and Senate bills, the final bill continued the prohibition on full-scale procurement of ASPs and prohibited high-risk concurrent development and production. Congressional attention has focused on the testing and analysis DNDO conducted to support its decision to purchase and deploy ASPs, a type of next-generation radiation portal monitor. The requirement for secretarial certification before full-scale ASP procurement has been included in each appropriations act since FY2007. The expected date for certification has been postponed several times; the current target is reportedly November 2008. The global nuclear detection architecture overseen by DNDO and the relative roles of DNDO and the S&T Directorate in research, development, testing, and evaluation also remain issues of congressional interest. For more information on the global nuclear detection architecture, see CRS Report RL34574, The Global Nuclear Detection Architecture: Issues for Congress , by [author name scrubbed]. The President's FY2009 budget request included nearly $992 billion in discretionary, non-emergency, budget authority. On March 6, 2008, the House and Senate Budget Committees each reported budget resolutions. The House budget resolution ( H.Con.Res. 312 ) was passed in the House on March 13, 2008. While the budget resolution does not identify specific amounts for DHS, it does note that: this resolution assumes funding above the President's requested level for 2009, and additional amounts in subsequent years, in the four budget functions—Function 400 (Transportation), Function 450 (Community and Regional Development), Function 550 (Health), and Function 750 (Administration of Justice)—that fund most nondefense homeland security activities. The Senate budget resolution ( S.Con.Res. 70 ) was passed in the Senate on March 14, 2008. On June 5, 2008, the House and Senate reached agreement on S.Con.Res. 70 . The final agreement contained language similar to the House language excerpted above, and also noted that: the homeland security funding provided in this resolution will help to strengthen the security of our Nation's transportation system, particularly our ports where significant security shortfalls still exist and foreign ports, by expanding efforts to identify and scan all high-risk United States-bound cargo, equip, train and support first responders (including enhancing interoperable communications and emergency management), strengthen border patrol, and increase the preparedness of the public health system. Appendix A. DHS Funding in P.L. 111-5 Title VI of P.L. 111-5 , the American Recovery and Reinvestment Act of 2009, included a number of provisions providing emergency funding to DHS components; these provisions were also included in the accompanying conference language in Title VI of H.Rept. 111-16 . The following funding provisions are included for the Department of Homeland Security: $200 million for the Office of the Under Secretary of Management. These funds are for the planning, design, and construction costs necessary to consolidate the DHS headquarters. $5 million for the Office of Inspector General. Funds are to be used for oversight and auditing of programs, grants and projects funded under the DHS Title of the stimulus bill. $160 million for the CBP Salaries and Expenses account. This includes $100 million for the procurement and deployment of new or replacement non-intrusive inspection (NII) systems, and $60 million for tactical communications. $100 million for the CBP Border Security Fencing, Infrastructure, and Technology account for the expedited development and deployment of border security technology on the Southwest border. A DHS expenditure plan is required within 45 days of enactment of P.L. 111-5 . $420 million for the CBP Construction account. These funds are designated for the planning, design, management, alteration, and construction of land ports-of-entry. A DHS expenditure plan is required within 45 days of enactment of P.L. 111-2 . $20 million for ICE's Automation Modernization account for the procurement and deployment of tactical communications equipment and radios. A DHS expenditure plan is required within 45 days of enactment of P.L. 111-5 . $1,000 million for TSA's Aviation Security account to procure and install checked baggage explosives detection systems and checkpoint explosives detection equipment. A DHS expenditure plan is required within 45 days of enactment of P.L. 111-5 . $98 million for the Coast Guard Acquisition, Construction, and Improvements account for shore facilities and aids to navigation facilities, priority procurements due to material and labor cost increases, and for costs to repair, renovate assess, or improve vessels. The funding cannot be used for pre-acquisition survey, design, or construction of a new polar icebreaker. A DHS expenditure plan is required within 45 days of enactment of P.L. 111-5 . $142 million for the Coast Guard Alteration of Bridges account to be used for the alteration or removal of obstructive bridges. A DHS expenditure plan is required within 45 days of enactment of P.L. 111-5 . $300 million to FEMA's State and Local Program account, of which $150 million is for Public Transportation Security Assistance and Railroad Security Assistance, including Amtrak security, and $150 million is for Port Security Grants. $210 million for FEMA's Firefighter Assistance Grants account to be used for the modification, upgrade or construction of non-Federal fire stations. $100 million for FEMA's Emergency Food and Shelter account. In addition to the broad funding distribution listed above, the general provisions of the Title VI of H.Rept. 111-16 includes so-called "buy American" requirements. With certain exceptions, this provision states that funds appropriated or otherwise made available to DHS in the Act may not be used for the procurement of fabric or fiber-related items if the item is not grown, reprocessed, reused, or produced in the United States. Generally, DHS can procure items with 10% or less of total value of non-compliant fibers. Exceptions to this requirement are made for vessels in foreign waters, emergency procurements, small purchases, and circumstances wherein the Secretary of DHS determines that qualifying items of satisfactory quality or quantity cannot be procured. Appendix B. FY2008 Supplemental Funding provided by Division B of P.L. 110-329 Division B of P.L. 110-329 provided supplemental funding related to disaster relief efforts in 2008. DHS received a total of $8,260 million in FY2008 emergency supplemental funding. The Act provided $300 million to the Coast Guard for the Acquisition, Construction, and Improvements account for the reconstruction and restoration of facilities damaged by disasters during 2008 and required that a plan listing these facilities be submitted to the House and Senate Committees on Appropriations. The Act also provided $7,960 million to FEMA for the Disaster Relief account and designated that up to $100 million be provided to the American Red Cross for reimbursement of their activities during major disasters, as designated by the President, during 2008. Appendix C. Emergency Funding for Border Security in The Consolidated Appropriations Act, 2008 ( P.L. 110-161 ) This appendix describes the distribution of $3,000 million ($3.0 billion) in emergency funds for border security throughout the Consolidated Appropriations Act, 2008 ( P.L. 110-161 ). Division E of P.L. 110-161 includes $2,710 million ($2.7 billion) in emergency funding for border security purposes. This funding is disbursed throughout several DHS funding accounts including Customs and Border Protection (CBP), Immigration and Customs Enforcement (ICE), U.S. Visitor and Immigrant Status Indicator Technology (US-VISIT); State and Local Programs (S&L); the U.S. Coast Guard, US Citizenship and Immigration Services (USCIS), and the Federal Law Enforcement Training Center (FLETC). P.L. 110-161 also includes another $40 million in Division B—Commerce, Justice, Science; the remaining $250 million is included in Division D—Financial Services. Distribution of FY2008 Emergency Border Security Funding in Division E—DHS of P.L. 110-161 As noted above, $2,710 million ($2.7 billion) in emergency funding was distributed among several accounts in Division E of P.L. 110-161 . The funds are distributed as follows: $1,531 million ($1.5 billion) for CBP; $527 million for ICE; $166 million for the U.S. Coast Guard; $275 million for USVISIT; $110 million for S&L programs; $80 million for USCIS; and $21 million for FLETC. CBP FY2008 Emergency Border Security Appropriations The $1,531 million ($1.5 billion) in FY2008 emergency funding for CBP is disbursed as follows, by account and amount: Salaries and Expenses—$323 million $40 million for the Model Ports of Entry program and includes funding to hire at least 200 additional CBP officers at the 20 U.S. international airports with the highest number of foreign visitors arriving annually; $45 million for terrorist prevention system enhancements for passenger screening - to develop system infrastructure needed to support a real-time capability to process advanced passenger information for passengers intending to fly to the U.S.; $36 million to implement the electronic travel authorization program for visa waiver countries; $150 million for the Western Hemisphere Travel Initiative (WHTI); $25 million for a ground transportation vehicle contract (Border Patrol); $13 million for Border Patrol vehicles; $14 million for Air and Marine Personnel Compensation and Benefits for 82 positions to support the establishment of 11 new marine enforcement units. Border Security Fencing, Infrastructure, and Technology (BSFIT)—$1,053 million: $1,053 million ($1.1 billion) for development and deployment of systems and technology. Air and Marine Interdiction, Operations, Maintenance, and Procurement: $94 million for procurement. Construction—$61 million: $61 million for Border Patrol Construction. ICE FY2008 Emergency Border Security Appropriations The $527 million in FY2008 emergency funding for ICE is disbursed as follows, by account and amount: Salaries and Expenses—$516 million $4 million for ICE vehicle replacements; $50 million for domestic investigations; $186 million for custody operations; $33 million for fugitive operations; $10 million for alternatives to detention; $33 million for transportation and removal; $200 million for the comprehensive identification and removal of criminal aliens. Construction—$11 million $11 million for construction. U.S. Coast Guard FY2008 Emergency Border Security Appropriations The $166 million in FY2008 emergency funding for the U.S. Coast Guard is disbursed as follows, by account and amount: Operating Expenses—$70 million $70 million for port and maritime security enhancements. Acquisition, Construction, and Improvements—$96 million $36 million for medium response boat replacement; $60 million for interagency operational centers for port security. U.S. Visitor and Immigrant Status Indicator Technology (USVISIT) FY2008 Emergency Border Security Appropriations The $275 million in FY2008 emergency funding for US-VISIT is provided in the main US-VISIT account. State and Local Programs FY2008 Emergency Border Security Appropriations The $110 million in FY2008 emergency funding for State and Local Programs is disbursed as follows: $60 million for Law Enforcement Terrorism Prevention Grants—Operation Stonegarden; $50 million for REAL ID grants. USCIS FY2008 Emergency Border Security Appropriations The $80 million in FY2008 emergency funding for USCIS is disbursed as follows: $60 million for the E-Verify program; $20 million for the FBI background check backlog. FLETC FY2008 Emergency Border Security Appropriations The $21 million in FY2008 emergency funding for FLETC is disbursed as follows, by amount and account: Salaries and Expenses—$17 million $17 million for law enforcement training Acquisition, Construction, Improvements, and Related Expenses—$4 million $4 million for construction. Distribution of FY2008 Emergency Border Security Funding in Division B—Commerce, Justice, Science of P.L. 110-161 Division B—the Commerce, Justice, Science portion of P.L. 110-161 contains border security-related emergency funding to provide additional resources that will be required as a result of an anticipated increase in immigration enforcement actions. Department of Justice (DOJ) FY2008 Emergency Border Security Appropriations The $40 million in FY2008 emergency funding for DOJ is disbursed as follows, by amount and account: General Administration - Salaries and Expenses—$8 million $8 million for the Executive Office for Immigration Review (EOIR) to provide additional attorneys and judges for the Board of Immigration Appeals Legal Activities—Salaries and Expenses, General Legal Activities - $10 million $10 million for the Civil Division Office of Immigration Litigation to provide 86 additional attorneys to address appeals resulting from increased immigration enforcement actions Legal Activities—Salaries and Expenses, United States Attorneys—$7 million $7 million for United States Attorneys for criminal and civil litigation resulting from increased immigration enforcement actions. US Marshals Service—Salaries and Expenses—$15 million. $15 million for prisoner transportation, defendant productions and courthouse security resulting from increased immigration-related Federal court proceedings. Distribution of FY2008 Emergency Border Security Funding in Division D—Financial Services Division D—the Financial Services portion of P.L. 110-161 contains border security-related emergency funding to provide additional resources that will be required as a result of an anticipated increase in immigration enforcement actions. This funding is found within the General Services Administration (GSA), and within the Judiciary, Courts of Appeals, District Courts and Other Judicial Services. General Services Administration (GSA) FY2008 Emergency Border Security Appropriations There is $225 million in emergency border security funding included in the Construction and Acquisition account of the Federal Buildings Fund under the GSA: Federal Buildings Fund—Construction and Acquisition—$225 million $225 million to expedite construction at select land ports of entry, including one of the nation's most congested sites. Courts of Appeals, District Courts and Other Judicial Services, FY2008 Emergency Border Security Appropriations P.L. 110-161 provides $25 million in emergency funding for border security initiatives within Courts of Appeals, District Courts and Other Judicial Services: Salaries and Expenses—$15 million $15 million to address the understaffed workload associated with increased immigration enforcement along the Southwest border Defender Services—$11 million $11 million to address the expected increased workload of attorneys appointed to represent persons under the Criminal Justice Act of 1964 as a result of increased immigration enforcement along the Southwest border. Appendix D. DHS Appropriations in Context Federal-Wide Homeland Security Funding Since the terrorist attacks of September 11, 2001, there has been an increasing interest in the levels of funding available for homeland security efforts. The Office of Management and Budget, as originally directed by the FY1998 National Defense Authorization Act, has published an annual report to Congress on combating terrorism. Beginning with the June 24, 2002 edition of this report, homeland security was included as a part of the analysis. In subsequent years, this homeland security funding analysis has become more refined, as distinctions (and account lines) between homeland and non-homeland security activities have become more precise. This means that while Table D -1 is presented in such a way as to allow year to year comparisons, they may in fact not be strictly comparable due to the increasing specificity of the analysis, as outlined above. With regard to DHS funding, it is important to note that DHS funding does not comprise all federal spending on homeland security efforts. In fact, while the largest component of federal spending on homeland security is contained within DHS, the DHS homeland security request for FY2009 accounts for approximately 49.5% of total federal funding for homeland security. The Department of Defense comprises the next highest proportion at 26.6% of all federal spending on homeland security. The Department of Health and Human Services at 6.7%, the Department of Justice at 5.7% and the Department of State at 3.7% round out the top five agencies in spending on homeland security. These five agencies collectively account for nearly 92.2% 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 FY2009 request included total homeland security budget authority of $32.8 billion for DHS, the requested total gross budget authority was $46.8 billion. The same is true of the other agencies listed in the table. | This report describes the FY2009 appropriations for the Department of Homeland Security (DHS). The Administration requested a net appropriation of $38,849 million in budget authority for FY2009. The House Appropriations Committee reported its version of the FY2009 DHS Appropriations bill on June 24, 2008. The bill was filed on September 18, 2008, as H.R. 6947, and the accompanying report has been numbered H.Rept. 110-862. House-reported H.R. 6947 would have provided a net appropriation of $41,137 million in budget authority for DHS for FY2009. This amounted to an increase of $2,288 million, or nearly 6% increase over the President's request. The Senate-reported its version of the bill on June 19, 2008. S. 3181 would have provided $41,314 million in net budget authority for DHS for FY2009, a $2,465 million or 6% increase over the President's request. On September 23, 2008, the House Rules Committee reported H.Res. 1488 for consideration of the Senate amendment to H.R. 2638, the Consolidated Security, Disaster Assistance, and Continuing Appropriations Act, 2009. H.R. 2638 was originally introduced as the FY2008 DHS Appropriations Act but was amended to serve as the legislative vehicle for the proposed Continuing Resolution, a Disaster Relief Emergency Supplemental, the Department of Defense FY2009 Appropriations Act, the FY2009 Department of Homeland Security Appropriations Act, and the FY2009 Military Construction and Veterans Assistance Act (see the CRS Appropriations Status table for more information: http://www.crs.gov/Pages/fy2009-status-table.aspx). H.R. 2638 was enacted as P.L. 110-329 on September 30, 2008. Division D of P.L. 110-329 provided a net appropriation of $41,225 million for DHS for FY2009. This amounted to nearly $2,376 million more than the President's request for FY2009, $88 million more than was reported by the House in H.R. 6947, and $89 million less than was reported by the Senate in S. 3181. Net appropriations for major agencies within DHS were as follows: Customs and Border Protection (CBP), $9,821 million; Immigration and Customs Enforcement (ICE), 4,989 million; Transportation Security Administration (TSA), $4,367 million; Coast Guard, $9,361 million; Secret Service, $1,413 million; National Protection & Programs Directorate, $1,158 million; Federal Emergency Management Administration (FEMA), $6,963 million; Science and Technology, $933 million; and the Domestic Nuclear Detection Office, $514 million. Additionally, Division B of the Act also contained the following amounts for DHS agencies in emergency supplemental FY2008 funding: $300 for the Coast Guard, $7.96 billion for FEMA's Disaster Relief Account, and $100 million for FEMA to reimburse the American Red Cross. P.L. 111-5, the American Recovery and Reinvestment Act of 2009, provided $2,765 million in emergency supplemental funding for DHS in FY2009. Funding was broken out as follows: $205 million for Departmental Operations; $680 million for CBP; $20 million for ICE; $1,000 million for TSA; $250 million for the Coast Guard; and $610 million for FEMA. This report will not be updated. |
This report presents figures showing trends in discretionary budget authority as a percentage of gross domestic product (GDP) by subfunction within each of 17 budget function categories, using data from President Trump's FY2018 budget submission. This report provides a graphical overview of historical trends in discretionary budget authority from FY1977 through FY2016, estimates for FY2017 spending, and the levels consistent with the President's proposals for FY2018 through FY2022. Spending in this report is shown as a percentage of GDP to control for the effects of inflation, population growth, and growth in per capita income. Past spending trends may prove useful in framing policy discussions as the 115 th Congress prepares to confront a new set of challenges as it considers a federal budget for FY2018. Discretionary spending is provided and controlled through appropriations acts. These acts fund many of the activities commonly associated with federal government functions, such as running executive branch agencies, congressional offices and agencies, and international operations of the government. Thus, the figures showing trends in discretionary budget authority (BA) presented below do not reflect the much larger expenditures on program benefits supported by mandatory spending. For some program areas, such as surface transportation, the division of expenditures into discretionary and mandatory categories can be complex. Discretionary spending in this report is measured in terms of BA. Budget authority for an agency has been compared to having funds in a checking account. Funds are available, subject to congressional restrictions, and can be used to enter into obligations such as contracts or hiring personnel. Outlays occur when the U.S. Treasury disburses funds to honor those obligations. Thus, outlays follow BA with a lag. For personnel costs, lags are generally short and outlays mostly occur in the same year that BA is provided. For large and complex projects, outlays may be spread over several years. Nearly all budget authority eventually results in outlays, although some major federal initiatives were later curtailed or cancelled, resulting in the rescission of BA. For instance, most funding for the Carter Administration's synthetic fuels program and the Obama Administration's plans for high-speed rail did not result in outlays. In some cases, changes in funding levels recorded in historical budget data reflect changes in budgetary concepts or the budgetary treatment of some types of spending. For example, the Federal Credit Reform Act of 1990 ( P.L. 101-508 ) changed the budgetary treatment of federal loan and other credit programs starting in FY1992. Discussions about the appropriate levels of spending for various policy objectives of the federal government have played an important role in congressional deliberations over funding measures in the last several years. For example, rapid growth in national defense and other security spending in the past decade has played an important role in fiscal discussions. In particular, concerns about the trajectory of fiscal policy led to the reestablishment of statutory caps on discretionary funding in the 2011 Budget Control Act ( P.L. 112-25 ). Funding for FY2017 was first provided by a continuing resolution ( P.L. 114-223 ) enacted on September 29, 2016, which provided discretionary funding through December 9, 2016, and included a 0.496% across-the-board reduction relative to the previous fiscal year's levels for most federal programs. A second continuing resolution ( P.L. 114-254 ) was enacted on December 10, 2016, that extended funding through April 28, 2017. A one-week stopgap funding measure (P.L. 115-30) was enacted on April 28, 2017. An omnibus appropriations measure (P.L. 115-31) enacted on May 5, 2017, provided funding for the remainder of FY2017. Spending caps and associated budget enforcement mechanisms, along with modifications of BCA provisions, framed policy discussions during recent budget cycles. Fiscal policy became a central concern of Congress in the wake of the 2007-2009 Great Recession. Government deficits and debt typically rise after serious financial crises and economic downturns for two main reasons. First, tax revenues typically drop during economic downturns. Second, as recession reduces incomes for many households, spending increases due to the effect of "automatic stabilizers"—that is, programs that provide benefits linked to income levels or unemployment. In addition, Congress passed the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5 ), which combined a package of increased federal funding on education, energy, and other areas; greater support for state and local governments; and tax reductions. The Budget Control Act of 2011 ( P.L. 112-25 ; BCA) was enacted in August 2011 in part due to concerns over rising deficits and debt levels. The BCA reinstated statutory caps on discretionary spending, similar to those that had lapsed in 2002, and set up budget enforcement mechanisms designed to achieve $2.1 trillion in savings over the period FY2012-FY2021. Imposition of an initial set of discretionary caps was estimated to save about $900 billion over 10 years. A bipartisan Joint Select Committee on Deficit Reduction, popularly known as the "Super Committee," was charged with developing a plan to reduce deficits by $1.2 trillion or more. When that committee did not report a plan by a November 2011 deadline, backup budget enforcement measures were triggered, including a January 2013 sequester (cancellation of budgetary resources), and a revised set of discretionary caps on funding for defense (defined as the national defense budget function 050) and non-defense programs (all other) for FY2013-FY2021. Those revised caps were to be lowered in each year by an amount calculated by the Office of Management and Budget (OMB) according to a formula designed to achieve a pro-rated share of the $1.2 trillion that a Joint Select Committee plan did not achieve. An annual sequester of non-exempt mandatory spending accounts also contributes to those savings. The spending trajectory implied by those backup enforcement measures implied discretionary base defense spending would revert to a level slightly above its FY2007 level in real dollar terms (i.e., adjusting for inflation but not for growth in population or the economy), while non-defense discretionary spending would revert to a level near its 2003 level. Discretionary spending as a share of GDP, if BCA caps remain in place, would decline to levels well below those seen in recent decades. Congressional Budget Office (CBO) current-law baseline projections suggest that discretionary spending would account for 5.3% of GDP in FY2026, two percentage points below its level in FY2007 (7.3%), just before the start of the Great Recession. The stringency of BCA discretionary spending caps and backup enforcement measures prompted Congress and the President to adjust those limits to avoid dislocations of federal operations. The Bipartisan Budget Act (BBA; H.J.Res. 59 ; P.L. 113-67 ), enacted in December 2013, modified BCA limits for FY2014 and FY2015. The Bipartisan Budget Act of 2015 (BBA2015; P.L. 114-74 ) raised FY2016 and FY2017 cap levels on both categories by $25 billion and FY2017 cap levels by $15 billion. BCA caps for FY2018 through FY2021, however, have not been changed. Absent new legislative modifications, those caps will constrain budgetary decisions for FY2018. BCA caps are adjusted to accommodate certain types of spending, such as war spending, emergency appropriations, disaster relief, and program integrity initiatives. In particular, war-designated funding has been seen as a "relief valve" that has taken budgetary pressure off priority military and international programs. Some Members of Congress have argued that war spending cap adjustments have weakened fiscal discipline. In its budget submission for FY2017, the Obama Administration had proposed raising BCA caps to allow more spending for non-defense and defense priorities. For FY2018, the Trump Administration proposed raising the BCA cap on defense (budget function 050) spending by $54 billion and lowering the BCA cap on non-defense by an equal amount. The Administration also proposed slightly smaller increases in the BCA cap on defense and increasingly large reductions in the non-defense cap for future years. Figures in this report are based on the Office of Management and Budget (OMB) Public Budget Database accompanying the FY2018 budget release. Table 5.1 in the Historical Tables volume of the FY2018 budget reports budget authority by function and subfunction, but does not provide a breakdown by discretionary and mandatory subcomponents. OMB's public budget data generally do not reflect budgetary categories used in the congressional budget process such as emergency-designated funding, the appropriations subcommittee responsible for an account, or distinctions between war and base funding. OMB maintains more detailed budget data for its internal work. Budget data in OMB documents may differ from other budget data for various reasons, although differences in historical data are typically small. For example, appropriations budget documents often reflect scorekeeping adjustments. Budget data issued at a later date may include revisions. In some cases, detailed appropriations data may differ from OMB data, which sometimes do not reflect certain relatively small zero-balance transfers among funds. Differences may also reflect technical differences or different interpretations of federal budget concepts. Within the federal budget concepts, certain inflows, such as offsetting receipts, offsetting collections, some user fees, and "profits" from federal loan programs, are treated as negative budget authority. Provisions in appropriations acts that affect mandatory spending programs, known as CHIMPs (changes in mandatory programs) can be counted as negative discretionary spending according to federal budgetary scorekeeping guidelines. For example, a sharp downward spike in proposed spending for subfunction 754 (criminal justice assistance), shown in Figure 17 , reflects a CHIMP affecting the Crime Victims Fund. That CHIMP, however, has had little effect on programmatic spending levels. Similarly, a CHIMP affecting the State Children's Health Insurance Program (CHIP) explains a dip in subfunction 551 (health care services) shown in Figure 6 . Scorekeeping adjustments, such as CHIMPs, lead to differences between actual discretionary budget authority totals and BCA discretionary caps. Scored totals of budget authority—that is, totals that include scorekeeping adjustments and which are used to check conformity to BCA spending limits and other budget enforcement measures—typically diverge from totals that do not include those adjustments. Disbursements for federal loan and loan guarantee programs do not appear directly in federal spending data. The federal government has used a form of accrual accounting for loan and loan guarantee programs since passage of the Federal Credit Reform Act (FCRA; Title V of the Omnibus Budget Reconciliation Act of 1990; P.L. 101-508 ) as well as for certain federal retirement programs. OMB calculates net subsidy rates according to FCRA rules for loan and loan guarantee programs. The net subsidy cost is then reflected in federal spending data. In general, FCRA adjustments affect mandatory spending more than discretionary spending because the largest sources of federal credit are mandatory programs. Comparisons of estimates of federal credit program costs before and after FY1991 should be treated with caution because FCRA changed the budgetary treatment of federal credit programs. For instance, the budgetary costs of loan guarantee programs before FCRA rules came into effect were typically understated because they required no upfront federal disbursements, unlike loan programs. Conversely, the budgetary costs of federal loan programs, which required upfront federal disbursements, did not reflect future repayments. FCRA changes in budgetary treatment of credit programs made loan and loan guarantee programs more comparable. Loan or loan guarantee program cost estimates calculated before FCRA implementation are unlikely to be comparable to estimates calculated afterward. FCRA calculations sometimes yield negative net subsidy levels, implying that the federal government appears to make a profit on those loans. FCRA subsidy calculations, however, omit risk adjustments. The true economic cost of federal credit guarantees can be substantially underestimated when risk adjustments are omitted. Functional categories provide a means to compare federal funding for activities within broad policy areas that often cut across several federal agencies. Various federal agencies may have closely related or overlapping responsibilities and many agencies have responsibilities in diverse policy areas. Budget data divided along functional categories therefore provide a useful view of federal activities supporting specific national purposes. Superfunction categories, which provide a higher level division of federal activities, are National Defense, Human Resources, Physical Resources, and Other Functions. Budget function categories, grouped by superfunctions, are shown in Table 1 . Net Interest, Allowances, and Undistributed Offsetting Receipts could also be considered as separate categories. Superfunction categories for National Defense, Net Interest, Allowances, and Undistributed Offsetting Receipts coincide with function categories. Trends in net interest are excluded, as federal interest expenditures have been automatically appropriated since 1847. Allowances, which contain items reflecting technical budget adjustments, and undistributed offsetting receipts are also excluded. Allowances in FY2018 include adjustments to BCA caps, and reflect proposals for spectrum relocation, disability insurance reform, a reduction in improper payments, infrastructure incentives, and war funding (Overseas Contingency Operations/OCO; Global War on Terror/GWOT) for years after FY2018. In this report, the International Affairs function, which OMB includes in the Other Functions superfunction, is listed after National Defense because similar influences affect both. Subfunction categories provide a finer division of funding levels within narrower policy areas. Budget functions do not play a role in budget enforcement, although budget legislation mandates that budget resolutions list preferred spending levels by budget function, thus highlighting broad fiscal priorities. Federal spending trends in functional areas are affected by changing assessments of national priorities, evolving international challenges, and economic conditions, as well as changing social characteristics and demographics of the U.S. population. Some of the trends and events that have had dramatic effects on federal spending are outlined below. Other CRS products provide background on more specific policy areas. The discussion of budgetary trends is broken up into three broad categories: defense and international affairs, domestic social programs, and other federal programs. Spending in the following figures, as noted above, is shown as a percentage of GDP, which controls for the effects of inflation, population growth, and real income growth. A flat line on such graphs indicates that spending in that category is increasing at the same rate as overall economic growth. The National Defense (050) and International Affairs (150) budget functions have been the categories most affected by larger changes in the geopolitical role of the United States. The allocation of discretionary spending between defense and non-defense programs is one reflection of changing federal priorities over time. Figure 1 shows defense and non-defense discretionary funding as a percentage of GDP. Relations between the United States and its allies on one hand, and the Union of Soviet Socialist Republics (USSR) and its allies on the other were the dominant security concern in the half century following the Second World War. In the early 1970s, U.S. involvement in the Vietnam War wound down, while the United States and the USSR moved toward detente, permitting a thaw in Cold War relations between the two superpowers and a reduction in defense spending relative to the size of the economy. Following intervention by the USSR in Afghanistan in 1979, military spending increased sharply. Defense spending continued to increase until 1986, as concern shifted to domestic priorities and the desire to reduce large budget deficits. The collapse in 1989 of most of the Warsaw Pact governments in Central and Eastern Europe and the 1990-1991 disintegration of the Soviet Union was followed by a reduction in federal defense spending, allowing a "peace dividend" that relaxed fiscal pressures. The attacks of September 11, 2001, were followed by sharp increases in homeland security spending. Defense spending also increased significantly with the start of the Afghanistan war in October 2001 and the Iraq war in March 2003. U.S. combat troops were withdrawn from Iraq in December 2011, and President Obama had announced that most U.S. troops would be withdrawn from Afghanistan by the end of 2014. In November 2014, however, President Obama announced an extension of operations in Afghanistan. The Obama Administration also noted challenges posed by Russia, which annexed the Crimean peninsula and sponsored military operations in eastern Ukraine; by the so-called Islamic State (IS; also known as ISIL, ISIS, or Da'esh); and by cyberattacks—hostile incursions of computer networks. President Trump, in his FY2018 budget submission, called for a $54 billion increase in defense programs to be offset by reductions in non-defense discretionary spending. Figure 2 shows subfunctions within the National Defense (050) budget function. The Department of Defense (DOD)-Military (051) subfunction accounts for over 95% of that funding. Almost all of the atomic energy defense activities (053) subfunction supports operations within the U.S. Department of Energy (DOE). About two-thirds of that funding supports the National Nuclear Security Administration (NNSA) and the remainder funds environmental clean-up of weapons production and research sites, along with other related activities. Much smaller amounts support the Defense Nuclear Facilities Safety Board and site remediation activities of the U.S. Army Corps of Engineers. The defense-related activities (54) subfunction comprises a variety of activities outside of DOD. In recent years, funding for counterterrorism activities within the Federal Bureau of Investigation (FBI) has accounted for almost two-thirds of all funding within this subfunction and about half of the FBI's total discretionary funding. Figure 3 shows levels of budget authority allocated to international affairs (budget function 150) as a share of GDP. Spending for activities within the international affairs budget function has fluctuated in response to changes in foreign relations and federal priorities. International security assistance rose sharply in the late 1970s and early 1980s, in large part due to foreign military financing support provided to Israel and Egypt following the 1979 Camp David Accords. The Economic Support Fund (ESF), which provides financial support to promote political and socioeconomic stability within a range of countries of strategic importance to the United States, also grew rapidly in the same time period. Funding for security assistance fell after the collapse of the Warsaw Pact governments in 1989 and the dissolution of the Soviet Union in 1991. The level of funding for international development and humanitarian assistance fell from about 0.2% of GDP in the late 1970s to less than 0.1% of GDP in the 1990s. The George W. Bush Administration increased funding for international development and humanitarian assistance in the early 2000s through initiatives such as the President's Emergency Plan for AIDS Relief (PEPFAR), which has supported programs to stem the spread of AIDS and HIV in sub-Saharan Africa and south Asia, and the Millennium Challenge Corporation (MCC), which sought to use financial incentives to spur economic development and reform. While funding for the MCC was curtailed during the Barack Obama Administration, funding for international development and humanitarian assistance hovered around 0.15% of GDP, about midway between levels seen in the 1970s and in the 1990s. Fluctuations in the level of funding for international financial programs have been dominated by occasional quota payments by the United States in the International Monetary Fund (IMF). The U.S. government receives special drawing rights (SDRs), which contribute to the capital base of the IMF, in exchange for those quota payments. The budgetary treatment of IMF quota payments has not been consistent. Since 2009, the budgetary costs of IMF quota payments have been calculated by an evaluation of the risks that non-payment of loans made by the IMF could reduce the value of U.S. investments in the IMF. Thus, the spikes in funding for international financial programs seen in Figure 3 reflect changes in budgetary concepts rather than changes in policy or funding levels. Costs of conducting foreign affairs, relative to GDP, rose during the first decade of the wars in Afghanistan and Iraq, but have been declining since FY2012. Heightened concerns over security of diplomatic facilities and personnel have also contributed to higher funding levels since 2001. This section discusses budgetary trends among domestic social programs. In the past two decades, federal responses to the attacks of September 11, 2001, and the Great Recession have had the most prominent effects of spending trends for most categories of federal domestic spending. Domestic spending (i.e., non-defense spending excluding international affairs) increased after the attacks of September 11, 2001, after having fallen for much of the 1990s. Most of that increase in domestic spending occurred in areas related to non-defense security spending, as the federal government overhauled airport security procedures, and then established the Department of Homeland Security. Since 2001, several definitions of "security spending" have been used, most recently in the 2011 Budget Control Act (BCA). Figure 4 shows funding trends divided by BCA security and non-security categories. After the financial crisis of 2007-2008 plunged the United States into the deepest economic recession in decades, Congress passed the American Recovery and Reinvestment Act of 2009 ( P.L. 111-5 ; ARRA), often known as the Recovery Act. ARRA includes support for state and local governments, as well as tax cuts and rebates among other provisions. According to initial CBO estimates, ARRA provisions were expected to total $787.2 billion in increased spending and reduced taxes over the FY2009-FY2019 period or just over 5% of GDP in 2008, while a more recent CBO estimate put the total at $814 billion. The effects of Recovery Act spending can be seen in most of the figures shown below. Since 2010, however, total non-defense discretionary spending has declined in real (i.e., inflation-adjusted) terms. Non-defense discretionary spending as a share of the economy been has declining more rapidly. Although economic growth has been relatively sluggish, most components of federal spending have grown even more slowly. Funding trends for most budget categories since FY2010 have been less volatile than in past decades. Figure 5 shows spending trends for subfunctions within the Education, Training, Employment, and Social Services budget function. Federal training and employment programs designed to address unemployment following the first oil shock of 1973, such as the Comprehensive Employment and Training Act (CETA, P.L. 93-203 ), accounted for the largest share of spending within that budget function. The successor program, the Job Training Partnership Act of 1982 (JTPA; P.L. 97-300 ), was enacted during the 1981-1982 recession. Later jobs and training programs, such as the Workforce Investment Act of 1998 (WIA; P.L. 105-220 ), operated on lower funding levels. Federal support for elementary and secondary education increased sharply following the reauthorization of the Elementary and Secondary Education Act (ESSA) by the No Child Left Behind Act of 2001 (NCLB; P.L. 107-110 ). Funding for most subfunctions within the budget function rose sharply with enactment of ARRA and other legislative responses to the Great Recession of 2007-2009. Since 2010, however, funding levels—measured as a percentage of GDP—have tapered off. Costs of federal health programs continue to play a central role in budgetary discussions. Total federal costs of the largest federal health care programs such as Medicare and Medicaid, however, are nearly all supported by mandatory spending and are thus not discussed here. Administrative costs for those programs, which account for a small portion of those costs, are generally funded by discretionary spending. Many other federal health programs, such as federal support for health research, public health programs, and veterans' health care, are mostly funded through discretionary spending. Figure 6 shows trends in discretionary funding within the Health (550) and Medicare (570) budget functions since FY1977. The trajectory of funding for the hospital and medical care for veterans subfunction, which falls under another budget function and is also shown in Figure 9 , is included for the sake of comparison. While discretionary funding for federal health programs has decreased as a share of GDP since FY2009, funding for veterans' health care has continued to increase in recent years. Discretionary funding within the health care services (551) subfunction supports activities and programs administered by the Centers for Disease Control and Prevention (CDC), the Health Resources and Services Administration, the Substance Abuse and Mental Health Services Administration (SAMSA), and the Indian Health Service (IHS), among other health-related agencies. From the mid-1980s through FY2001, funding within the health care services subfunction doubled. Since then, funding trends have been more volatile. The spike in funding for the health care services subfunction in FY2009, evident in Figure 6 , reflects funding for responses to an anticipated influenza pandemic, as well as funding in ARRA for health information technology investments and bioterrorism countermeasures. The downward spike in FY2017 and FY2018 reflects a CHIMP (Change in Mandatory Spending Program) affecting the State Children's Health Insurance Program (CHIP). The National Institutes of Health (NIH) accounts for most of the health research and training (552) subfunction. Discretionary funding within the health research and training subfunction has consistently exceeded discretionary funding for the health care services subfunction. After funding in the health research and training subfunction failed to keep up with the rate of GDP growth in the late 1970s and early 1980s, funding grew steadily as a percentage of GDP for the next 20 years. In the late 1990s, policymakers decided to double the NIH budget within a five-year period, from FY1999 to FY2003. After FY2003, however, funding as a percentage of GDP has generally fallen, with the exception of increased funding provided through ARRA in FY2009. Discretionary funding for Medicare (subfunction 571), which as noted above, mostly funds administrative costs, and the consumer and occupational health and safety (554) subfunction, has been relatively stable over time. Each has remained at about 0.03% to 0.04% of GDP over the period. The bulk of federal funding for income security programs is provided through mandatory spending. In general, discretionary spending—outside of housing assistance—funds administrative costs of those programs. Housing assistance programs, unlike most other income security programs, are largely supported by discretionary funding. Figure 7 shows trends in the Income Security (600) budget function. The largest changes within the Income Security budget function reflect shifts in the structure and funding levels for programs within the housing assistance (604) subfunction in the 1970s and early 1980s. Federal support for affordable housing shifted from supporting up-front long-term funding for construction of publicly subsidized units toward annual funding for rent subsidies for low-income households to use in existing housing and block grants to local governments over the time period in question. Since the late 1970s, the share of funding for housing assistance has fluctuated, driven by the creation of new programs and activities, as well as rescissions of recaptured unobligated balances. Housing assistance's share of GDP, however, has remained at less than a quarter of what it was at its peak. Legislative responses to the Great Recession led to increased funding for various housing programs in FY2009. Discretionary funding for other income security subfunctions has generally remained below 0.1% of GDP throughout the period. Discretionary funding for Social Security, depicted in Figure 8 , supports program administration. Social Security benefits are generally funded by mandatory spending. Program administration costs supported by discretionary funding are a small fraction of mandatory benefit amounts. Those costs, which increased in nominal dollar terms in most years, grew more slowly than the rate of economic growth. Over time, the composition of those costs evolved. In the 1970s, costs of administrating Old-Age and Survivors Insurance (OASI) benefits were nearly three times as large as those for Disability Insurance (DI) benefits. Since FY2012, costs of administering DI benefits, however, have exceeded costs of administering OASI benefits. Health care provided through the Veterans Health Administration (VHA) within the Department of Veterans Affairs (VA) accounts for the bulk of discretionary funding within the Veterans' Benefits and Services (700) budget function. Departmental administration, information technology, and smaller discretionary benefit programs account for the remainder. Veterans' income security programs, such as disability compensation, pensions, and readjustment benefits, are generally supported by mandatory spending. Essentially all discretionary spending within the veterans' benefits and services subfunction supports operations within the VA. Figure 9 shows trends in discretionary funding for the veterans' benefits and services budget function since FY1977. The Hospital and Medical Care for Veterans (703) subfunction accounts for the bulk of funding with the veterans' benefits and services budget function. Since 2001, veterans' health care costs have been one of the fastest growing components of discretionary spending. The Veterans' Health Care Eligibility Reform Act of 1996 ( P.L. 104-262 ) required the establishment of a national enrollment system to manage the delivery of inpatient and outpatient medical care. In FY1999, the VHA began enrolling veterans and classifying them into priority groups. Prior to the VHA enrollment system's setup, provision of care to veterans was based on available resources. By FY2000, just over 4.9 million eligible veterans—19% of all veterans—were enrolled in the VHA. By FY2016 that number increased by an estimated 90% to 9.4 million enrollees. During the same period, the total number of veterans decreased by 14%. Those trends reflect enrollment in newer veterans from wars and occupations in Afghanistan (Operation Enduring Freedom/OEF) and Iraq (Operation Iraqi Freedom/OIF and Operation New Dawn/OED), growth in female veterans, and economic conditions, among other factors. The number of veterans receiving VA health care services, according to VA projections, will level off over the next 10 years. Funding within the Other Veterans Benefits and Services (705) subfunction, which has accounted for roughly one-tenth of funding within the Veterans' Benefits and Services budget function, has doubled since FY2005 as a percentage of GDP. Most funding within the Energy budget function supports operations of the Department of Energy (DOE). The remainder supports rural electrification programs within the U.S. Department of Agriculture, tax credits administered by the U.S. Treasury, certain activities of the Nuclear Regulatory Commission, the Tennessee Valley Authority, and a few other agencies. About half of DOE's budget funds nuclear weapons programs or efforts to clean up sites used by those programs, which fall within the atomic energy defense activities (053) subfunction. The largest spike in funding within the energy supply (271) subfunction visible in Figure 10 reflects responses to the second oil shock of 1978-1979. Following a revolution in 1978, Iran cut its oil exports, which caused widespread disruptions through world energy markets in 1979. In June 1980, President Jimmy Carter signed the Energy Security Act ( P.L. 96-294 ), which established various renewable energy initiatives and provided $88 billion for synthetic fuels production. The Synthetic Fuels Corporation, which the act had created, was abolished in 1985 after struggling to develop viable projects. A smaller downtick in the emergency energy preparedness (274) subfunction in FY1980 also reflects world oil supply disruptions that followed the Iranian revolution. The United States, in consultation with G7 partner countries, agreed to suspend oil purchases for the Strategic Petroleum Reserve in early 1979. In June 1980, the Energy Security Act mandated resumed oil reserve purchases, although $2 billion was rescinded from the Strategic Petroleum Reserve the following month, which is reflected in the negative value for FY1980. Congress required additional oil reserve purchases in December 1980. The smaller spike visible in Figure 10 resulted from funding in ARRA, which provided $90 billion in funding or tax credits for clean energy projects, not all of which was within the energy budget function. DOE received about $35 billion in funding, with most of the remainder supporting energy-related tax credits as well as mass transportation and high-speed rail initiatives. Funding within the Natural Resources and Environment budget function supports activities of a wide range of federal agencies. Much of the discretionary funding for the U.S. Department of the Interior (DOI) and all of the discretionary funding for the Environmental Protection Agency (EPA) falls within this function, as does most of the funding for the Forest Service within the U.S. Department of Agriculture (USDA). Funding within this budget function also supports operations of the U.S. Department of Commerce's National Oceanic and Atmospheric Administration (NOAA), water projects of the U.S. Army's Corps of Engineers, and the U.S. Coast Guard's pollution control activities related to spills of oil and hazardous substances in the coastal zone. The largest spike visible in Figure 11 reflects an increase in the 1970s in federal support for construction of local wastewater treatment plants and other water quality initiatives, which fall within the pollution control and abatement (304) subfunction. That funding was reduced in the early 1980s due to budgetary pressures and because policymakers judged that the aim of modernizing municipal wastewater treatment facilities had largely been met. Federal aid for local water infrastructure projects, especially EPA assistance, has evolved over time from programs that provided grants directly to local governments to programs under which the federal government provides grants to states to capitalize state loan programs. Congress established a similar loan program for drinking water infrastructure projects in 1996 ( P.L. 93-523 ). In addition to federal funding for these water infrastructure programs, subfunction 304 also includes a wide range of environmental protection activities of EPA and other federal agencies under authority of statutes such as the Clean Air Act, Clean Water Act, and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA, or Superfund). The water resources subfunction (301) principally represents water infrastructure (e.g., dams, locks, levees) built, owned, and operated by the federal government. Discretionary funding for water resources projects has, by and large, declined as a percentage of GDP since the mid-1970s, as Figure 11 indicates. That decline has been attributed to a number of reasons. Presidents Carter and Reagan both targeted perceived excesses in federal spending on water resources projects during their terms in office and were reluctant to agree to new project authorizations and spending without corresponding alterations to federal cost-sharing policies. The Water Resources Development Act of 1986 (WRDA; P.L. 99-662 ) made changes requiring greater contributions from local governments that benefit from federal water infrastructure. Those changes included reductions in the federal share of project costs, and combined with the aforementioned reduced emphasis on new water resources infrastructure in general, led to a decrease in water resources spending. Overall spending on these projects has also declined as agency focus has shifted away from construction of new projects. In 1987, the Bureau of Reclamation, which built large federal dams and water projects throughout the West during the 20 th century, acknowledged a shift in its focus from development and construction of water projects to management of water resources. Forest Service funding, including costs of responding to forest fires, along with funding for the DOI Bureau of Land Management, are the largest items within the conservation and land management (302) budget subfunction. In FY2009, ARRA supported large supplemental increases in funding for multiple federal agencies, including EPA and the Army Corps of Engineers, for water projects within the pollution control and abatement subfunction. ARRA also supported Forest Service capital improvements, along with smaller increases in many other programs. The commerce and housing credit budget function supports a variety of programs within the U.S. Department of Commerce and the Department of Housing (HUD), along with several other federal agencies. Many of these programs provide credit for housing, business loans, and other purposes, and their costs are therefore calculated using methods prescribed by the Federal Credit Reform Act (FCRA; described above). Changes in estimates of the subsidy costs of those loans are sensitive to anticipated economic conditions, which can cause large fluctuations in budgetary costs, even if current cash flows are more stable. When the present value of fees or other receipts collected through a program exceeds disbursements and default costs, estimated using FCRA methods, a negative credit subsidy results which appears as negative BA. For example, the large negative amounts shown in Figure 12 for the mortgage credit (371) subfunction in recent years largely reflect negative credit subsidy estimates for the single-family mortgage insurance program within the Federal Housing Administration (FHA). Expected negative credit subsidies for FHA-insured mortgages increased in the years after the housing market turmoil of the late 2000s as a result of several factors, including better credit quality of FHA-insured mortgages, increases in the fees that FHA charges to borrowers, and higher FHA loan volumes The other advancements of commerce (376) subfunction includes a diverse range of activities within the Department of Commerce, the Small Business Administration (SBA), many independent federal regulatory bodies, and other entities. Funding for the decennial census falls within this subfunction and is reflected in peaks at 10-year intervals visible in Figure 12 . The U.S. Postal Service (USPS; postal service subfunction 376) operates under a mandate to cover its costs with its own revenues, and thus runs without an operating subsidy from the federal government. Congress does appropriate funds to offset postal revenues that were foregone by charging concessionary rates for certain postal services, although as can be seen in Figure 12 , that funding has decreased over time. Funding within the transportation budget function primarily supports activities of the U.S. Department of Transportation (DOT), including grants and other forms of financial support provided to state and local governments. That funding also supports some operations of the U.S. Coast Guard, which was transferred from DOT to the U.S. Department of Homeland Security in 2003, as well as various boards and commissions involved in transportation issues. Figure 13 shows funding trends within the transportation budget function. Some ground transportation programs have had a special budgetary status since 1988, in which BA is treated as mandatory but outlays are classified as discretionary. This status enables some transportation funding to sidestep budgetary restraints that affect most other federal funding. Moreover, that dual designation of surface transportation funding complicates analysis of trends in federal spending to support various forms of transit. Thus, trends in funding for ground transportation shown in Figure 13 exclude the vast majority of federal highway funding supported by the Highway Trust Fund, which is classified as mandatory, rather than discretionary, BA. Moreover, those amounts do not reflect expenditures of state governments, which are typically required to match federal funds at some level. Discretionary funding for ground transportation also does not reflect transfers from the U.S. Treasury's general fund to the Highway Trust Fund. The ground transportation (401) subfunction includes federal support for mass transit and Amtrak, as well as funding for operations of DOT bureaus such as the Federal Railroad Administration and the Federal Highway Administration, as well as various transportation-related safety or regulatory bodies. The peak in discretionary funding for ground transportation during the late 1970s and early 1980s evident in Figure 13 reflects, in large measure, grants to local governments to expand, modernize, or operate mass transit systems. Through the 1980s, however, that support was reduced. A second peak reflects increased funding for road and other infrastructure projects in ARRA. Funding within the air transportation (402) subfunction has varied less. Increased funding for airport security after the attacks of September 11, 2001, is visible in Figure 13 . The Transportation Security Administration (TSA) was created within DOT in November 2001, but was transferred to the U.S. Department of Homeland Security (DHS) in March 2003. Funding within the water transportation (403) subfunction, again measured as a percentage of GDP, has been even more stable. The Community and Regional Development budget function (450) includes funding for various federal programs that support state and local government development initiatives in urban and rural areas, as well as funding to support responses to natural and other disasters. Figure 14 shows funding trends within that budget function. The largest item within the Community Development (451) subfunction is the U.S. Department of Housing and Urban Development's (HUD's) Community Development Fund, which provides resources for the Community Development Block Grant (CDBG) program. That subfunction also includes programs administered by the U.S. Department of Agriculture (USDA), the U.S. Department of the Treasury, and other federal agencies. Federal community development funding fell from almost 0.2% of GDP in the late 1970s to about half that level in the 1990s. Funding since FY2000 has fluctuated significantly, reflecting congressional responses to natural and other disaster-related events, and economic recessions. The Area and Regional Development (452) subfunction includes a wide range of programs, from operations of the Department of Interior's Bureau of Indian Affairs (BIA) and Bureau of Indian Education (BIE), to assorted USDA rural development initiatives, as well as Department of Commerce's Economic Development Administration (EDA) programs and federally chartered regional development commissions, such as the Appalachian Regional Commission, the Delta Regional Authority, the Denali Commission, and the Northern Border Regional Commission. An anti-recession measure—the Public Works Employment Act ( P.L. 95-28 )—increased funding for FY1977 and FY1978 with the aim of supporting local public works-focused job creation efforts. The disaster relief and insurance (453) subfunction mainly funds the Federal Emergency Management Agency, which has been part of the Department of Homeland Security (DHS) since 2003. That subfunction also includes other programs within USDA, SBA, and HUD. Funding for the disaster relief and insurance subfunction has been volatile in large part because it is driven by responses to natural and manmade disasters that by definition are difficult to anticipate. The largest spike in funding reflects responses to Hurricanes Katrina, Rita, and Wilma, which hit the Gulf Coast in 2005. A smaller spike at FY2013 reflects funding for responses to Hurricane Sandy, which hit the Atlantic Coast. Funding within the General Science, Space, and Technology budget function (250)—shown in Figure 15 —has been dominated for most of the past half century by spending to support operations of the National Aeronautics and Space Administration (NASA), which falls within the space flight, research and supporting activities subfunction (252). In some years during the mid-1960s, as the Apollo program was moving toward its aim of manned lunar exploration, NASA accounted for over 4% of total federal spending—well beyond the scale used in Figure 15 . After the Apollo program ended in the early 1970s, NASA funding levels in inflation-adjusted terms and as a percentage of GDP declined in the face of budgetary pressures. The narrow spike visible in Figure 15 reflects funding for a replacement space shuttle after the January 1986 Challenger disaster. From FY1993 to FY2016, BA for NASA fell from about 0.2% of GDP to about 0.1% of GDP, as funding did not keep pace with inflation and economic growth. Funding for the general science and basic research subfunction (251) mostly supports the National Science Foundation (NSF) and the basic research activities of the Office of Science within the Department of Energy (DOE). As a proportion of GDP, it rose, albeit unsteadily, from the mid-1980s to the late 2000s. In 2006, the George W. Bush Administration's American Competitiveness Initiative, established by and subsequently authorized by Congress in the America COMPETES Act ( P.L. 110-69 ) and America COMPETES Reauthorization Act of 2010 ( P.L. 111-358 ), set out a goal to double funding for NSF and the DOE Office of Science. That goal has not been achieved, especially when expressed as a share of GDP. In FY2009, ARRA provided a temporary boost in funding for science and basic research. The Agriculture budget function (350) includes the Agricultural Research and Services (352) subfunction and the Farm Income Stabilization (351) subfunction. Nearly all funding within that budget function supports operations of the U.S. Department of Agriculture (USDA). Some of the largest USDA programs, however, such as the Supplemental Nutrition Assistant Program (SNAP) and some child nutrition programs, are classified within the Income Support budget function. Most Forest Service and USDA conservation activities fall under the Natural Resources and Environment budget function, and provision of foreign food aid falls under the International Affairs budget function. Figure 16 shows trends within the Agriculture budget function. The largest components of discretionary funding within the Agricultural Research and Services subfunction support activities of the Agricultural Research Service and the National Institute of Food and Agriculture. Funding for the Animal and Plant Health Inspection Service (APHIS) quadrupled between FY1999 and FY2003. APHIS also received extra funds to respond to bird flu threats in FY2015, which are reflected in a spike visible in Figure 16 . Overall, funding for Agricultural Research and Services as a percentage of GDP has declined from about 0.05% in the late 1970s to about half that level in FY2016. The sharp funding increase within the Farm Income Stabilization subfunction for FY1992 reflects implementation of the Federal Credit Reform Act of 1990 (FCRA; P.L. 101-508 ), which changed the budgetary treatment of federal loan and loan guarantee programs. The spike in FY2008 reflects ad hoc disaster assistance. Many farm income stabilization programs are mostly funded via mandatory spending, although administrative costs are generally covered by discretionary spending. The Administration of Justice (750) budget function includes most federal judicial, law enforcement, and correctional activities. Figure 17 shows funding trends within that budget function. The Federal Law Enforcement Activities (751) subfunction includes operations of the Department of Homeland Security (DHS), such as the U.S. Customs and Border Protection (CBP), the U.S. Immigration and Customs Enforcement (ICE), and the U.S. Secret Service, as well as operations of the U.S. Department of Justice (DOJ), including the Federal Bureau of Investigation (FBI), the Drug Enforcement Administration (DEA), the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and the U.S. Marshals (USMS). Counterterrorism activities, which account for roughly half of the FBI's funding, are classified under the Defense-Related Activities (054) subfunction. Funding within the Federal Law Enforcement subfunction, measured as a percentage of GDP, more than doubled in the period FY1980 to FY2010. Funding increases for CBP and ICE account for much of that increase. In FY1977, CBP and ICE accounted for just over a third (35%) of all funding within the federal law enforcement activities subfunction, while in FY2016 they accounted for over half (54%). Since FY2010, however, funding as a percentage of GDP has fallen to a level slightly above what it was in the mid-2000s. During that time period, funding for CBP and ICE rose by 10% in nominal terms, while funding for the rest of the subfunction was essentially flat. The Federal Litigative and Judicial Activities subfunction (752) includes operations of the judicial branch and trial-related activities such as pre-trial detention by U.S. Marshals and publicly funded legal defense services. The subfunction also covers operations of offices of U.S. Attorneys and legal activities of DOJ, as well as boards and commissions that address legal matters. Funding for this subfunction, measured as a percentage of GDP, has trended slightly upward until FY2010 and slightly downward since then. The Federal Correctional Activities subfunction (753) includes the DOJ Federal Prison System. The small increase visible in Figure 17 reflects a one-time increase of about $1 billion for prison buildings and facilities in FY1990. The Criminal Justice Assistance subfunction (754) includes DOJ programs that assist state and local governments combat crime, violence against women, and drug trafficking; and that strengthen local juvenile justice and other local initiatives. The increase in funding visible in Figure 17 in FY1994 reflects enactment of the Violent Crime Control and Law Enforcement Act of 1994 ( P.L. 103-322 ), by which Congress and President Bill Clinton aimed to fund the hiring of an additional 100,000 local police officers via the community-oriented policing (COPS) program. After decreases in funding for COPS during the mid-2000s, additional funds were provided as part of the ARRA stimulus. Since then, the level of funding, measured as a percentage of GDP, has decreased. The downward spike in proposed spending for FY2017 and FY2018 reflects CHIMPs (changes in mandatory program spending) affecting the Crime Victims Fund, which according to budgetary scoring rules can be used to offset discretionary spending, and does not represent a diminution of federal support for state grants. The General Government (800) budget function includes costs of operating the legislative and executive branches, as well as administering federal personnel policy, managing federal records and property, and providing fiscal support to state and local governments. Figure 18 shows trends in funding by subfunction within that budget function. The Legislative Functions (801) subfunction includes activities of Congress and congressional agencies, such as the Government Accountability Office (GAO), the Congressional Budget Office (CBO), and the Congressional Research Service (CRS). The subfunction also includes the Capitol Police and the Architect of the Capitol, along with various congressional commissions and boards. From FY1977 to FY2000, funding for the legislative functions subfunction, measured as a percentage of GDP, trended slightly downward. Since then, funding for that subfunction has ranged from 0.03% to 0.04% of GDP. The Executive Direction and Management (802) subfunction includes activities of the White House, the Executive Office of the President, agencies closely connected to the President such as the Office of Management and Budget (OMB), the U.S. Trade Representative, and certain drug control activities. Various boards, commissions, councils, and offices associated with the presidency are also included. Over the FY1977-FY2017 period, funding within that subfunction has not exceeded 0.01% of GDP. The Central Fiscal Operations (803) subfunction includes operations of the Internal Revenue Service (IRS) as well as fiscal and currency operations of the U.S. Treasury. In FY2017, the IRS accounted for about 90% of the funding within that subfunction. Thus, to large extent, the decline in funding for the subfunction, measured as a percentage of GDP, reflects trends in funding for the IRS. The General Property and Records Management (804) subfunction includes operations of the General Services Administration (GSA) and the National Archives and Records Administration (NARA). Fluctuations in funding within this subfunction in large part reflect costs of GSA's Federal Buildings Fund. That fund operates somewhat as a revolving fund that receives rent payments from federal agencies. Proceeds, through appropriations law, are used to lease properties or to acquire and maintain federally owned properties, although it has received supplemental appropriations to fund buildings in some years. In other years, rental revenues exceeded building expenses, resulting in negative budget authority. The Central Personnel Management (805) subfunction includes operations of the Office of Personnel Management (OPM) as well as several offices concerned with federal workforce issues such as the Merit Systems Protection Board, the Office of Special Counsel, and the Office of Government Ethics. Funding for this subfunction was about 0.05% of GDP in the late 1970s, and that percentage has declined since then. The General Purpose Fiscal Assistance (806) subfunction covers various forms of assistance to state and local government. The high levels of funding visible in Figure 18 in the 1970s reflect credit support offered to New York City. The subfunction also includes federal support for the District of Columbia. Since the early 1980s, when this subfunction funding accounted for about 0.2% of GDP, funding according to that measure has declined. The Other General Government (808) subfunction includes a broad array of miscellaneous federal activities. The uptick visible in Figure 18 in the mid-2000s reflects federal support for electoral reform. | This report provides a graphical overview of historical trends in discretionary budget authority (BA) from FY1977 through FY2016, preliminary estimates for FY2017 spending, and the levels reflecting the President's proposals for FY2018 through FY2022 using data from the FY2018 budget submission released on May 23, 2017. This report, by illustrating trends in broad budgetary categories, provides a starting point for discussions about fiscal priorities. Other CRS products analyze spending trends in specific functional areas. Functional categories (e.g., national defense, agriculture, etc.) provide a means to compare federal funding for activities within broad policy areas that often cut across several federal agencies. Subfunction categories provide a finer division of funding levels within narrower policy areas. Budget function categories are used within the budget resolution and for other purposes, such as estimates of tax expenditures. Spending in this report is measured and illustrated in terms of discretionary budget authority as a percentage of gross domestic product (GDP). Measuring spending as a percentage of GDP in effect controls for inflation and population increases. A flat line on such graphs indicates that spending has increased at the same rate as overall economic growth. In some cases, rescissions, offsetting receipts, or budgetary scorekeeping adjustments can result in negative budget authority. Discretionary spending is provided and controlled through appropriations acts, which provide budget authority to federal agencies to fund many of the activities commonly associated with such federal government functions as running executive branch agencies, congressional offices and agencies, and international operations of the government. Essentially all spending on federal wages and salaries is discretionary. Administrative costs for entitlement programs such as Social Security are generally funded by discretionary spending, while mandatory spending—not shown in figures presented in this report—generally funds the benefits provided through those programs. For some federal programs, such as surface transportation, the division of funding into discretionary and mandatory categories can be complex. Spending caps and budget enforcement mechanisms established in the Budget Control Act of 2011 (P.L. 112-25; BCA) strongly affected recent budgets. The BCA set discretionary spending caps on defense (budget function 050) and non-defense funding and created a formula to lower those caps to achieve a portion of spending cuts called for in the BCA. Congress modified BCA caps several times, first for FY2013 as part of the fiscal cliff deal at the start of January 2013 (American Taxpayer Relief Act of 2012; P.L. 112-240), then through the Bipartisan Budget Act of 2013 (BBA2013; P.L. 113-67) and the Bipartisan Budget Act of 2015 (P.L. 114-74), thus avoiding decreases in levels of discretionary funding. The Trump Administration has proposed changes in BCA caps to allow higher defense spending and to constrain non-defense spending. A first continuing resolution (P.L. 114-223) was enacted on September 29, 2016, which provides discretionary funding through December 9, 2016. A second continuing resolution (P.L. 114-254), enacted on December 10, 2016, extended funding through April 28, 2017. A stopgap funding measure (P.L. 115-30) was enacted on April 28, 2017. An omnibus appropriations measure (P.L. 115-31) enacted on May 5, 2017, provided funding for the remainder of FY2017. As the 115th Congress begins consideration of the FY2018 budget, past spending trends may help frame policy discussions. For example, rapid growth in national defense and other security spending during the past decade, along with the fiscal consequences and responses to the 2007-2009 Great Recession, has played an important role in fiscal discussions. Since FY2010, base defense discretionary spending has essentially been held flat and non-defense discretionary spending has been reduced significantly. The base defense budget excludes war funding (Overseas Contingency Operations/Global War on Terror). While war funding levels are well below those of the last decade, they still represent significant commitments of federal resources. |
Section 319(a) of the Bipartisan Campaign Reform Act of 2002 (BCRA), also known as the McCain-Feingold law, establishes increased contribution limits for House candidates whose opponents significantly self-finance their campaigns. This provision, in tandem with Section 304, which applies a similar program to Senate candidates, is frequently referred to as the "Millionaire's Amendment." Generally, the complex statutory formula providesâusing limits that were in effect at the time the case was consideredâthat if a candidate for the House of Representatives spends more than $350,000 of personal funds during an election cycle, individual contribution limits applicable to his or her opponent are increased from the usual current limit ($2,300 per election) to up to triple that amount (or $6,900 per election). Likewise for Senate candidates, a separate provision generally raises individual contribution limits for a candidate whose opponent exceeds a designated threshold level of personal campaign funding that is based on the number of eligible voters in the state. For both House and Senate candidates, the increased contribution limits are eliminated when parity in spending is reached between the two candidates. BCRA also requires self-financing candidates to file special disclosure reports regarding their campaign spendingâas such expenditures are madeâin addition to reporting in accordance with the regular periodic disclosure schedule. In 2004 and 2006, Jack Davis was a candidate for the House of Representatives from the 26 th Congressional District of New York. During the 2004 election cycle, he spent $1.2 million, which was principally from his own funds, and during the 2006 cycle, he spent $2.3 million, which (with the exception of $126,000) came from personal funds. In 2006, after the Federal Election Commission (FEC) informed Davis that it had reason to believe that he had violated BCRA's disclosure requirements for self-financing candidates by failing to report personal expenditures during the 2004 election cycle, Davis filed suit in the U.S. District Court for the District of Columbia seeking declaration that the Millionaire's Amendment was unconstitutional and an injunction preventing the FEC from enforcing the law during the 2006 cycle. A district court three-judge panel concluded sua sponte that Davis had standing to bring the suit, but rejected his claims on the merits and granted summary judgment to the FEC. Invoking BCRA's provision for direct appeal to the Supreme Court for actions brought on constitutional grounds, Davis appealed. Reversing the three-judge district court decision, in a 5-to-4 vote, the Supreme Court in FEC v. Davis invalidated the Millionaire's Amendment as lacking a compelling governmental interest in violation of the First Amendment. Justice Alito wrote the opinion for the majority and was joined by Chief Justice Roberts, and Justices Scalia, Kennedy, and Thomas. Justice Stevens wrote an opinion concurring in part and dissenting in part, and was joined, in part, by Justices Souter, Ginsburg, and Breyer. Justice Ginsburg also wrote an opinion, concurring in part and dissenting in part, which was joined by Justice Breyer. The Court remanded the case to the district court for proceedings consistent with its opinion. Citing prior decisions, the Court began its opinion by noting that it has long upheld the constitutionality of limits on individual contributions and coordinated party expenditures. While recognizing that contribution limits implicate First Amendment free speech interests, it has sustained such limits on the condition that they are "closely drawn" to serve a "sufficiently important interest" such as the prevention of corruption or the appearance of corruption. On the other hand, the Court observed that it has definitively rejected any limits on a candidate's expenditure of personal funds to finance campaign speech, finding that such limits impose a significant restraint on a candidate's right to advocate for his or her own election, which is not justified by the compelling governmental interest of preventing corruption. Instead of preventing corruption, use of personal funds lessens a candidate's reliance on outside contributions, thereby neutralizing the coercive pressures and risks of abuse that contribution limits seek to avoid. With regard to the Millionaire's Amendment, the Court observed that while it does not directly impose a limit on a candidate's expenditure of personal funds, it "imposes an unprecedented penalty on any candidate who robustly exercises that First Amendment right." Further, it requires a candidate to choose between the right of free political expression and being subjected to discriminatory contribution limits. If it simply increased the contribution limits for all candidatesâboth the self-financed candidate as well as the opponentâit would pass constitutional muster. Although many candidates who can afford significant personal expenditures in support of their own campaigns may choose to do so despite the Millionaire's Amendment, the Court determined that they would bear "a special and potentially significant burden if they make that choice." In fact, the Court concluded that if a candidate vigorously exercises the right to use personal funds, it creates a fundraising advantage for his or her opponents. In its 1976 landmark decision Buckley v. Valeo, the Supreme Court upheld a provision of the Federal Election Campaign Act (FECA) providing presidential candidates with the option to receive public funds on the condition that they comply with expenditure limits, even though it found overall expenditure limits to be unconstitutional. Distinguishing the Millionaire's Amendment from FECA's presidential public financing provision, the Davis Court observed that the choices presented by each of the statutes are "quite different." By forgoing public financing, a presidential candidate can still retain the unencumbered right to make unlimited personal expenditures. In contrast, the Millionaire's Amendment fails to provide any options for a candidate to exercise that right without limitation. Finding that the Millionaire's Amendment imposes a "substantial burden" on the First Amendment right to expend personal funds in support of one's own campaign, thereby triggering strict scrutiny, the Court announced that it is not sustainable unless it can be justified by a compelling governmental interest. As the Court held in Buckley, reliance on personal funds reduce s the threat of corruption, and therefore, the burden imposed by the Millionaire's Amendment cannot serve that governmental interest. Responding to the FEC's argument that the statute's "asymmetrical limits" are justified because they level the playing field for candidates of differing personal wealth, the Court pointed out that its jurisprudence offers no support for the proposition that this rationale constitutes a compelling governmental interest. According to the Court, preventing corruption or its appearance are the only legitimate compelling governmental interestsâthat have yet been identifiedâto justify restrictions on campaign financing. Moreover, "'the concept that government may restrict the speech of some elements of our society in order to enhance the relative voice of others is wholly foreign to the First Amendment.'" Specifically, the Court cautioned that restricting a candidate's speech in order to level opportunities for election among candidates presents "ominous implications" because it would permit Congress to "arrogate the voters' authority to evaluate the strengths of candidates competing for office." Voters are entrusted with the duty to judge candidates for public office and, according to the Court, Different candidates have different strengths. Some are wealthy; others have wealthy supporters who are willing to make large contributions. Some are celebrities; some have the benefit of a well-known family name. Leveling electoral opportunities means making and implementing judgments about which candidates should be permitted to contribute to the outcome of an election. The Constitution, however, confers upon voters, not Congress, the power to choose the Members of the House of Representatives, Article I, § 2, and it is dangerous business for Congress to use the election laws to influence the voters' choices. In considering the constitutionality of the disclosure requirements contained within the Millionaire's Amendment, the Court emphasized that it has repeatedly held that compelled disclosure significantly infringes on privacy of association and belief, as guaranteed under the First Amendment. Therefore, it has subjected such requirements to exacting scrutiny in order to ascertain whether there is a "relevant correlation" or "substantial relation" between the governmental interest and the information required to be disclosed. In view of its holding that the Millionaire's Amendment is unconstitutional, the Court likewise reasoned that the burden imposed by its disclosure requirements cannot be justified, and accordingly, struck them down. In a dissent, Justice Stevensâjoined, in part, by Justices Souter, Ginsburg, and Breyerâargued that the Millionaire's Amendment represents Congress's judgment that candidates who spend over $350,000 of their own money in a campaign for a House or Senate seat have an advantage over other candidates who must raise contributions. The statute imposes no burden on self-financing candidates and "quiets no speech." Instead, the dissent found that it does no more than merely "assist the opponent of a self-funding candidate" to make his or her voice heard and that "this amplification in no way mutes the voice of the millionaire, who remains able to speak as loud and as long as he likes in support of his campaign." As a result of finding no direct restriction on the speech of the self-financed candidate, the dissent would subject the Millionaire's Amendment to a less rigorous standard of review. Indeed, the dissent specifically criticized the Court's landmark Buckley ruling, which struck down limits on expenditures, arguing that "a number of purposes, both legitimate and substantial," can justify the imposition of reasonable spending limits. Maintaining that combating corruption and the appearance of corruption are not the only governmental interests justifying congressional regulation of campaign financing, the dissent remarked that the Court has also recognized the governmental interests of reducing both the influence of wealth and the appearance of wealth on the outcomes of elections. While conceding that such prior decisions have focused on the aggregations of wealth that are accumulated in the corporate form, it reasoned that the logic of such decisionsâparticularly concerns about the "corrosive and distorting effects of wealth" on the political processâcould be extended to the context of individual wealth as well. In a separate dissent, Justice Ginsburgâjoined by Justice Breyerâconcluded that sustaining the constitutionality of the Millionaire's Amendment would be consistent with the Court's earlier holding in Buckley v. Valeo . She resisted, however, joining Justice Stevens's dissent to the extent that it addresses the Court's ruling in Buckley invalidating expenditure limits. Noting that the Court had not been asked to overrule Buckley âand that this issue had not been briefedâJustice Ginsburg preferred to leave reconsideration of that case "for a later day." The Court's decidedly antiregulatory opinion in Davis appears to reaffirm its finding in the landmark 1976 decision, Buckley v. Valeo, that Congress has no compelling interest in attempting to level the playing field among candidates. In fact, the Davis Court determined that Congressional attempts to do so would supplant the choices of the voters. Notably, the decision also seems to be a departure from its 2003 decision in McConnell v. FEC âupholding key portions of BCRAâwhere the Court expressed deference to Congress's expertise in regulating the system under which its Members are elected. While Justice Stevens still appeared to subscribe to this view, the majority of the Davis Court seemed less deferential. | The "Millionaire's Amendment" is a shorthand description for a provision of the Bipartisan Campaign Reform Act of 2002 (BCRA), also known as the McCain-Feingold law, which established increased contribution limits for congressional candidates whose opponents significantly self-finance their campaigns. In 2008, in a 5-to-4 decision, Davis v. Federal Election Commission , the Supreme Court invalidated this provision. The Court found that the burden imposed on expenditures of personal funds is not justified by the compelling governmental interest of lessening corruption or the appearance of corruption and therefore, held that the law is unconstitutional in violation of the First Amendment. |
The United States has long distinguished settlement or permanent immigration from temporary immigration. Current U.S. immigration policy governing lawful permanent immigration emphasizes four major principles: (1) family reunification; (2) immigration of persons with needed skills; (3) refugee protection; and (4) country-of-origin diversity. Family reunification, which has long been a key principle underlying U.S. immigration policy, is embodied in the Immigration and Nationality Act of 1952, as amended (INA), which specifies five categories of family-based immigrants. These include the numerically unlimited category of immediate relatives of U.S. citizens (spouses, minor children, and parents) and four numerically limited family preference categories. The latter vary according to individual characteristics such as the citizenship status of the petitioning U.S.-based relative, and the age, family relationship, and marital status of the prospective immigrant. In addition, the INA limits family preference immigration from any single country to 7% of each category's total. Family-based immigration currently makes up two-thirds of all legal permanent immigration. Each year, the number of foreign nationals petitioning for lawful permanent resident (LPR) status exceeds the total number of immigrants that the United States can accept annually under the INA. Consequently, a visa queue has accumulated with roughly 4 million persons who qualify as family-based immigrants under the INA but who must wait for a numerically limited visa to immigrate to the United States. Interest in immigration reform and concerns over "chain migration"—a term that some use to characterize the process by which family-based immigration allows foreign nationals who obtain LPR status and citizenship to then sponsor other relatives under the family-based immigration provisions—has increased scrutiny of family-based immigration and has revived discussion about the appropriate number of annual permanent immigrants. This report reviews family-based immigration policy. It outlines a brief history of U.S. family-based immigration policies, discusses current law governing family-based immigration, and summarizes recommendations made by previous congressionally mandated commissions charged with evaluating immigration policy. It then presents data on legal immigrants entering the United States during the past decade and discusses the queue of approved immigrant petitioners waiting for an immigrant visa. It closes by discussing selected policy issues and legislative proposals. Although U.S. immigration policy incorporated family relationships as a basis for admitting immigrants as early as the 1920s, the promotion of family reunification found in current law originated with the passage of the INA in 1952. While the 1952 act largely retained the national origins quota system established in the Immigration Act of 1924, it also established a hierarchy of family-based preferences that continues to govern contemporary U.S. immigration policy, including prioritizing spouses and minor children over other relatives, as well as relatives of U.S. citizens over those of LPRs. The Immigration and Nationality Act Amendments of 1965 (P.L. 89-236), enacted during a period of broad social reform, eliminated the national origins quota system, which was widely viewed as discriminatory. It gave priority to immigrants with relatives living permanently in the United States. The law distinguished between immediate relatives of U.S. citizens, who were admitted without numerical restriction, and other relatives of U.S. citizens and immediate and other relatives of LPRs, who faced numerical caps. It also imposed a per-country limit on family-based and employment-based immigrants that limited any single country's total for these categories to 7% of the statutory total. Twenty-five years later, Congress passed the Immigration Act of 1990 ( P.L. 101-649 ), which increased total immigration under what some have called a "permeable cap." The act provided for a permanent annual flexible cap of 675,000 immigrants, and increased the annual statutory limit of family-based immigrants from 290,000 to the current limit of 480,000. Provisions of the 1990 act are described later in this report in the section titled " Current Laws on Family-based Immigration ." Current U.S. immigration policy retains key elements of its landmark 1952 and 1965 reformulations. Given that continuity in immigration policy, earlier recommendations for revising family-based immigration policy to address certain perennial issues—in particular, the large "visa queue" of prospective family-based immigrants awaiting a numerically limited visa, and the high proportion of immigrants who enter based upon family ties—still have relevance. Key reform proposals originated from two congressionally mandated commissions established to evaluate U.S. immigration policy. Recommendations from these commissions are discussed in the section of this report titled " Findings from Earlier Congressionally Mandated Commissions ." The INA enumerates a permanent annual worldwide level of 675,000 immigrants ( Table 1 ). This limit, sometimes referred to as a "permeable cap," is regularly exceeded because immigration for certain LPR categories is unlimited. The permanent annual worldwide immigrant level includes 1. family-sponsored immigrants (480,000 plus certain unused employment-based preference numbers from the prior year); 2. employment-based preference immigrants (140,000 plus certain unused family preference numbers from the prior year); and 3. diversity visa lottery immigrants (55,000). Family-sponsored immigrants include five categories ( Table 1 ). The first, immediate relatives of U.S. citizens , includes spouses, unmarried minor children, and parents of adult U.S. citizens. Immediate relatives can become LPRs without numerical limitation, provided they meet standard eligibility criteria required of all immigrants. The next four categories, family preference immigrants, are numerically limited. The first includes unmarried adult children of U.S. citizens. The second includes two subgroups of relatives of lawful permanent residents, each subject to its own numerical limit: the first subgroup (referred to as 2A) includes spouses and unmarried minor children of LPRs, and the second subgroup (referred to as 2B) includes unmarried adult children of LPRs. The third family preference category includes adult married children of U.S. citizens, and the fourth includes siblings of adult U.S. citizens. The annual level of family preference immigrants is determined by subtracting the number of visas issued to immediate relatives of U.S. citizens in the previous year, plus the number of aliens paroled into the United States for at least a year, from 480,000 (the total family-sponsored level) and adding—when available—employment preference immigrant numbers unused during the previous year. Unused visas in each category roll down to the next preference category. Under the INA, the annual level of family preference immigrants may not fall below 226,000. If the number of immediate relatives of U.S. citizens admitted in the previous year happens to fall below 254,000 (the difference between 480,000 for all family-based immigrants and 226,000 for family preference immigrants), then family preference immigrants may exceed 226,000 by that amount. However, since FY1996, annual immediate relative immigrants have exceeded 254,000 each year, ranging from a low of 258,584 immigrants in FY1999 to a high of 580,348 immigrants in FY2006. As such, the annual limit of family preference immigrants effectively has remained at 226,000 for the past two decades. Reflecting the INA's numerical limits, actual legal immigration to the United States is dominated by family-based immigration. In FY2016, a total of 804,793 family-based immigrants made up just over two-thirds (68%) of all 1,183,505 new LPRs. This proportion has remained stable for the past decade (see Table A-1 , Table A-3 , and Table A-5 ). The 566,706 immediate relatives in FY2016 represented over two thirds (70%) of all family-based immigration and almost half (48%) of all legal permanent immigration ( Table 2 ). In addition to annual numerical limits on family preference immigrants, the INA limits LPRs from any single country to 7% of the total annual limit of family preference and employment-based preference immigrants. The per-country limit does not indicate that a country is entitled to the maximum number of visas each year, but only that it cannot receive more than that number. Two exemptions from this rule include all immediate relatives of U.S. citizens; and 75% of all visas allocated to second (2A) family preference immigrants (spouses and children of LPRs). Because the number of foreign nationals potentially eligible for a visa exceeds the annual visa limit under current law, waiting times for available family-based visas can extend for years, particularly for persons from countries with many petitioners, such as India, China, Mexico, and the Philippines. For further discussion, see the sections later in this report titled, " Supply-Demand Imbalance for U.S. Lawful Permanent Residence " and " Assessing the Per-Country Ceiling ." Becoming an LPR on the basis of a family relationship first requires that the petitioning or sponsoring U.S. citizen or lawful permanent resident in the United States establish his or her relationship with the prospective LPR. To do so, the sponsor must first file Form I-130 Petition for Alien Relative with DHS's U.S. Citizenship and Immigration Services (USCIS). Upon approval of the Form I-130, the prospective LPR must file a Form I-485 Application to Register Permanent Residence or Adjust Status . Immediate relatives, unlike family-preference immigrants, can file both petitions concurrently. If the prospective LPR already resides legally in the United States, USCIS handles the entire adjustment of status process whereby the alien adjusts from a nonimmigrant category (which had initially permitted him or her to enter the United States legally) to LPR status. If the prospective LPR does not reside in the United States, USCIS must review and approve the petition before forwarding it to the Department of State's (DOS's) Bureau of Consular Affairs in the prospective immigrant's home country. The DOS Consular Affairs officer, when the alien lives abroad, or USCIS adjudicator, when the alien is adjusting status within the United States, must be satisfied that the alien is entitled to LPR status. Such reviews ensure that potential immigrants are not ineligible for visas or admission under the inadmissibility grounds in the INA. In both cases, if the petition is approved, DOS determines whether a visa is available for the foreign national's immigrant category. Available visas are issued by "priority date," the filing date of their permanent residence petition. For more information, see the section on " Supply-Demand Imbalance for U.S. Lawful Permanent Residence " in this report. While the INA contains multiple grounds for inadmissibility, the public charge ground (i.e., the individual cannot support him or herself financially and must rely upon the state) is particularly relevant for family-sponsored immigration. All family-based immigration requires that U.S.-based citizens and LPRs petitioning on behalf of (or sponsoring) their alien relatives submit a legally enforceable affidavit of suppor t along with evidence that they can support both their own family and that of the sponsored alien at an annual income no less than 125% of the federal poverty level. Alternatively, sponsors may share this responsibility with one or more joint sponsors, each of whom must independently meet the income requirement. Current law also directs the federal government to include "appropriate information" regarding affidavits of support in the Systematic Alien Verification for Entitlements (SAVE) system. This level of support is legally mandated for 10 years or until the sponsored alien becomes a U.S. citizen. Laws for adjusting status vary depending on how the foreign national entered the United States. If a foreign national entered the United States legally, overstayed his or her visa, and then married a U.S. citizen, he or she can adjust status under INA §245(a), assuming other requirements for admissibility are met. However, if a foreign national under the same circumstances married an LPR instead of a U.S. citizen, the INA treats such individuals as unauthorized aliens who entered illegally: they must leave the country, and are barred from re-entering for either 3 years or 10 years, depending on whether they resided in the United States illegally for 6-12 months or for more than 12 months, respectively. Spouses and children who accompany or later follow qualifying or principal immigrants are referred to as derivative immigrants. Under current law, derivative immigrants are entitled to the same status and same order of consideration as the principal immigrants they accompany or follow-to-join , assuming they are not entitled to an immigrant status and the immediate issuance of a visa under another section of the INA. As such, derivative immigrants count equally as principal immigrants within the numerical limits of each immigration category. For instance, the 67,356 immigrants admitted under the 4 th family preference category (siblings of U.S. citizens) in FY2016 ( Table 2 ) include 23,815 qualifying immigrants or actual siblings of U.S. citizens as well as 16,468 spouses of qualifying immigrants and 27,073 children of qualifying immigrants. Derivative immigrant status attaches to approval of the principal immigrant's petition and requires no separate petition. In contrast, children classified as immediate relatives of U.S. citizens are not treated by the INA as derivatives and must each have a separate petition filed on their behalf. In FY2016, derivative immigrants represented 9% of all family-based immigration, 43% of all other immigrant categories, and 20% of total immigration. Table 3 distinguishes principal from derivative immigrants for FY2016. Absolute numbers of principal qualifying immigrants made up 76% of total LPRs and 91% (not shown) of all family-based LPRs in that year. Differences appear by category with 3 rd and 4 th preference immigrants comprised of greater numbers of derivative than principal immigrants. Those categories contrast sharply with immediate relatives of U.S. citizens, and 1 st and 2 nd family preference category immigrants, where principal immigrants outnumber derivative immigrants. In comparison, all other (non-family) immigrants are more evenly divided between the two immigrant types. How the INA governs child immigrants depends on the child's age and marital status, as well as the citizenship status of the sponsoring U.S. relatives. The five family-sponsored categories described above distinguish between "minor children" under age 21, and adult "sons and daughters" age 21 and above, as well as between unmarried and married children. Within the five categories, the INA prioritizes minor over adult children, unmarried over married children, and children of U.S. citizens over children of LPRs. In the two cases (immediate relatives of U.S. citizens and LPRs) where it is necessary to determine if the child is a minor, age varies by sponsorship category. For children sponsored as immediate relatives, age is determined based on when the I-130 petition was filed. For children sponsored under the 2 nd family preference category, age is determined based on when an immigrant visa number becomes available, reduced by the amount of time (converted into years) that it took USCIS to process and approve the petition. Additionally, under current law, only adult U.S. citizens may sponsor their foreign-born parents as immediate relatives and their foreign-born siblings as 4 th family preference immigrants. Foreign-born children under age 18 become naturalized U.S. citizens automatically upon admission to the United States if at least one parent is a U.S. citizen by birth or naturalization. Orphans adopted abroad by U.S. citizens must have been adopted by age 16 (with exceptions) to acquire automatic citizenship upon admission to the United States. Foreign national spouses of U.S. citizens and LPRs who acquire legal status through family-based provisions of the INA must have a two-year evaluation period for marriages of short duration (under two years at the time of sponsorship). Such foreign nationals receive conditional permanent residence status . This nonrenewable legal immigrant status, granted on the day the foreign national is admitted to the United States, is intended to help USCIS determine if such marriages are bona fide. During the two-year conditional period, USCIS may terminate the foreign national's conditional status if it determines that the marriage was entered into to evade U.S. immigration laws or was terminated other than through the death of the spouse. Within 90 days before the end of the two-year conditional period, the foreign national and his or her U.S.-based spouse must jointly petition to have the conditional status removed. If the petitioner and beneficiary fail to file the joint petition within the 90-day period, a waiver must be obtained to avoid loss of legal status. Assuming conditions in the law have been met and an interview with an appropriate immigration official uncovers no indication of marriage fraud, conditional permanent resident status converts to lawful permanent resident status. USCIS may waive the requirements noted above and remove an alien's conditional status in the following situations: (1) if the noncitizen spouse can show that he or she would suffer "extreme hardship" if deported from the United States; (2) if the conditional resident establishes that he or she entered into the marriage "in good faith," that the marriage was legally terminated, and that the noncitizen was "not at fault" in failing to meet the joint petition requirements; (3) if the alien spouse entered into the marriage in good faith but he or she or his or her child was battered or subjected to extreme cruelty by the citizen or resident spouse; or (4) if the noncitizen entered into the marriage in good faith that was subsequently deemed illegitimate because the U.S. citizen or LPR spouse engaged in bigamy. In all cases, USCIS reviews the legitimacy of the marriage prior to removing or waiving the condition. The INA does not affirmatively define the terms "spouse," "wife," or "husband." Previously, the 1996 Defense of Marriage Act (DOMA) declared that the terms "marriage" and "spouse," as used in federal enactments, excluded same-sex marriage. However, the Supreme Court's June 26, 2013 decision in United States v. Windsor struck down DOMA's provision defining "marriage" and "spouse" for federal purposes. DHS subsequently approved the first immigrant visa for the same-sex spouse of a U.S. citizen, and then-Secretary of Homeland Security Janet Napolitano directed USCIS to "review immigration visa petitions filed on behalf of a same-sex spouse in the same manner as those filed on behalf of an opposite-sex spouse." That policy remains in effect. Immigration statistics for FY1996 through FY2016 reveal several trends among immigrants by category ( Figure 1 ). First, total lawful permanent residents increased 29% over this period (with substantial fluctuations) from 915,900 in FY1996 to 1,183,505 in FY2016. Second, the number of immediate relatives increased by 89% over this period, from 300,430 to 566,706, the largest increase of all family-based categories. Because annual family-sponsored preference immigrants are effectively capped at 226,000, immediate relatives—which are not numerically limited—accounted for the entire increase in total family-based immigration over this period. Increasing numbers of immigrants in other LPR categories explain why the proportion of family-based immigration to total immigration has remained constant at about two thirds over these two decades (66%). (For more data, see Table A-1 , Table A-2 , Table A-3 , Table A-4 , Table A-5 , and Table A-6 .) As noted in the section of this report titled, " Laws Governing the Immigration Process," individuals can become LPRs either by adjusting to LPR status if they currently reside in the United States, or by applying for LPR status from abroad. Figure 2 presents the percentage of LPRs who adjusted status by immigration category. As such, it represents the proportion of LPRs in each class category that was already residing in the United States at the time LPR status was granted. About half of all immediate relatives of U.S. citizens adjusted their status from within the United States over this period, while most family-based preference category immigrants, particularly in recent years, were admitted from abroad. In contrast, all other non-family-based immigrants mostly adjusted their status from within the United States. Issues that are regularly raised in debates on family-based immigration policy include the supply-demand imbalance for U.S. lawful permanent residence, the per-country ceilings, limitations on foreign nationals who wish to visit U.S.-based relatives, the impetus to violate U.S. immigration laws, aging out of certain legal status categories, the marriage timing of immigrant children, and policies toward unaccompanied alien children. Each year, the number of foreign nationals petitioning for LPR status through family-sponsored preferences exceeds the number of immigrants that can be admitted to the United States according to current law. Consequently, a "visa queue" or waiting list has accumulated of persons who qualify as immigrants under the INA but who must wait for a visa to receive lawful permanent status. As such, the visa queue constitutes not a backlog of petitions to be processed but, rather, the number of persons approved for visas that are not yet available due to the numerical limits enumerated in the INA. The most recent data available indicate that the visa queue of numerically limited family-preference immigrant petitions as of November 1, 2017, stood at 3.95 million applications ( Table 4 ), a 7% decrease over the prior year's queue of 4.26 million. Within this population, queue size generally correlates inversely with preference category. For example, petitions filed under the (highest) 1 st preference category (288,826) represent just 7% of the total queue while those filed under the (lowest) 4 th preference category (2,344,993) make up 59% of the queue. Waiting periods vary significantly depending on preference category and comprise both a statutory and a processing waiting period. Statutory limits to the number of visas given by category create waiting times that typically account for most of the waiting period. As noted, while U.S. immigration policy grants unlimited admission to immediate relatives of U.S. citizens, it limits annual immigration under the four family-sponsored preference categories to 226,000. The number of immigrants is also subject to the 7% per-country ceiling discussed above, which, for "over-subscribed" countries with relatively large numbers of LPR status petitions such as Mexico and China, increases visa waiting times substantially. The Visa Bulletin , a monthly update published online by DOS, illustrates how the visa queue translates into waiting times for immigrants ( Table 5 ). DOS issues the numerically limited visas for family-sponsored preference categories according to computed cut-off dates . DOS adjusts these cut-off dates each month based on several variables, such as the number of visas used to that point, the projected demand for visas, and the number of visas remaining under the annual numerical limit for that country and/or preference category. Filing dates for qualified applicants are referred to as priority dates . Applicants with priority dates earlier than the cut-off dates in the Visa Bulletin are currently being processed. All family-preference category visas were oversubscribed as of February 1, 201 8. Table 5 indicates, for example, that LPR petitions filed under the 1st family preference category (unmarried children of U.S. citizens) on or before March 15 , 20 11 , were being processed close to seven years later for most countries. Countries that send many immigrants to the United States, such as China, India, Mexico, and the Philippines, currently have above-average waiting times. For instance, LPR petitions filed under the 1st family preference category for unmarried Filipino children that had been filed on or before August 1, 200 5 , were being processed on February 1, 201 8 , more than 12 years later. The Visa Bulletin does not indicate how long current petitioners must wait to receive a visa, only how long they can expect to wait if current processing conditions continue into the future. However, visa processing rates vary for a variety of reasons, and changes in processing conditions can lead to visa retrogression, where dates are pushed back and petitioners have to wait longer, or visa progression, where dates advance forward and petitions are processed sooner. Visa retrogression occurs when more people apply for a visa in a particular category or country than there are visas available for that month. In contrast, visa progression occurs when fewer people apply. As each fiscal year closes (on September 30th), priority date progression or retrogression may occur to keep visa issuances within annual numerical limitations. Substantial increases in the rate at which family-based LPR petitions have been filed over the past two decades have extended actual waiting times for the most recent petitioners. Hence, while many interpret the cut-off dates as a rough estimate of waiting times to receive a visa, this interpretation may not always be accurate in certain situations for some categories. While the visa queue reflects excess demand to immigrate permanently to the United States over the statutorily determined supply of slots, many criticize it for keeping families separated for what they view as excessive periods of time and for prompting actual and potential petitioners to subvert U.S. immigration policy through unauthorized or illegitimate means (see the section of this report, " Impetus to Violate Immigration Laws "). Earlier debates over the visa queue are discussed in the section of this report titled, " Findings from Earlier Congressionally Mandated Commissions ." As noted, the INA establishes a per-country ceiling limiting total legal immigration from any single country for family-preference and employment-sponsored preference immigrants to 7% of the worldwide immigration level to the United States. Exceptions to this rule include the admission of all immediate relatives of U.S. citizens and 75% of all visas allocated to 2 nd (A) preference category of spouses and children of LPRs. The per-country ceiling especially restrains immigrants from countries with large numbers of LPR petitioners, such as Mexico, the Philippines, India, and China. Petitioners from these countries experience relatively longer average waiting times to receive a visa than petitioners from other countries ( Table 5 ). Proponents of the per-country ceiling assert that U.S. immigration policy has been more equitable and less discriminatory in terms of country of origin following passage of the Immigration Amendments of 1965. That act and its subsequent amendments, which ended the country-of-origin quota system favoring European immigrants, imposed worldwide and per-country limits on Western Hemisphere immigrants. Proponents also note the two major INA exceptions to the per-country ceilings—immediate relatives of U.S. citizens and 75% of 2 nd (A) preference immigrants—that benefit oversubscribed countries such as Mexico, India, and China. Immigration reform advocates argue that family reunification should be prioritized over per-country ceilings, and cite the visa queue faced by prospective family-based LPRs from India, China, Mexico, and the Philippines. They assert that the current per-country ceilings are arbitrary and should be increased to enable families from all countries to reunite. Because U.S. immigration law presumes that all aliens seeking temporary admission to the United States wish to live here permanently, tourists and other temporary visitors must demonstrate their intent to return to their home countries. Consequently, aliens with pending LPR petitions (who intend to live permanently in the United States) as well as foreign nationals with U.S. citizen and LPR relatives, who wish to either tour the United States or visit their U.S.-based relatives, are often denied nonimmigrant visas to visit. The presumption of intention to immigrate is stated explicitly in Section 214(b) of the INA, and is the most common basis for rejecting nonimmigrant visa applicants. As an example, an adult unmarried Mexican daughter of U.S. citizen parents wishing to visit them on a tourist visa would likely face challenges to demonstrate that she possessed sufficient ties to Mexico to prevent her from staying in the United States. If denied a tourist visa, and having no occupational options available through employment-based immigration, her only alternative would be to apply for LPR status under the 1 st family sponsored preference category, which, based on the cut-off dates shown in the latest Visa Bulletin ( Table 5 ), could take roughly 21 years. During this period, she would be unable to visit her parents in the United States. As noted, many foreign nationals with approved petitions to reside legally and permanently in the United States face extensive waiting times for obtaining a visa. As such, some have characterized current U.S. family-based immigration policy as promising what cannot be fulfilled within a reasonable period of time. Given the corresponding family separation that such wait times cause, some aliens who might otherwise abide by U.S. immigration laws may choose either to violate the terms of their temporary visas by "overstaying" in the United States or to enter the United States without inspection (i.e., illegally). However, the number of unauthorized aliens who reside in the United States specifically because their attempts to acquire LPR status within a reasonable period did not succeed is unknown. It is also not known how many unauthorized aliens have petitions pending and are therefore part of the 3.95 million family-based visa queue. "Aging out" refers to the change in eligibility for a foreign national to receive an immigration benefit as they get older. It typically applies to children. In the case of family-based immigration, it is particularly noticeable because of the different treatment of minor children of U.S. citizens versus minor children of LPRs. Minor children of U.S. citizens are protected from aging out by the Child Status Protection Act of 2002 ( P.L. 107-208 ), which provided them with durable status protection. That protection means that for immigration purposes, age is recorded as of the date an immigration petition was filed and remains in effect (or "freezes") regardless of the length of time needed to obtain lawful permanent residence. In contrast, if minor children of LPRs who are sponsored under the 2(A) family preference category (see Table 1 ) turn 21 after a petition for lawful permanent residence has been filed on their behalf (but before they receive LPR status), they automatically "age out" of the 2(A) category and must be sponsored for immigration under the 2(B) category. This occurs because children of LPRs lack the durable status protection of immediate relative children of U.S. citizens. The net result of this 2(A) to 2(B) shift upon aging out is a substantially longer waiting time to obtain LPR status. The Visa Bulletin ( Table 5 ) indicates that reclassification of 2(A) to 2(B) petitions currently extends the visa cut-off date and any attendant family separation by at least five years. (See also " Child Immigrants " above.) Differential treatment for unmarried children under the 1 st family preference category and married children under 3 rd family preference categories may motivate potential LPR petitioners to delay marriage in order to receive more favorable immigration treatment under the INA. The INA prioritizes the former family preference category over the latter, a ranking that translates into a difference in visa cut-off dates of between one and four years, depending on the country of emigration ( Table 5 ). This difference in cut-off dates occurs because unmarried children of U.S. citizens do not retain a durable marital status when they apply for LPR status under the 1 st family preference category. Hence, the desire to remain in the 1 st family preference category may motivate such petitioners to postpone marriage until their visas become available. The number of unaccompanied alien children (UAC) from Mexico, El Salvador, Guatemala, and Honduras seeking to enter the United States has increased substantially in recent years. In FY2014, total UAC apprehensions reached a peak of over 68,500 (up from 8,000 in FY2008). They have since fluctuated, and in the first three months of FY2018, they exceeded 11,000. Since FY2009, children from El Salvador, Guatemala, and Honduras (Central America's "Northern Triangle") have accounted for almost all of the increased UAC apprehensions. While policies addressing the surge in unaccompanied minors generally lie outside the scope of family-based immigration policy, the issue highlights the importance of family reunification as a key motivating factor for migrating to the United States. U.N. survey data indicate that sizable percentages of children residing in Northern Triangle countries have at least one parent living in the United States. Family reunification is a key feature of UAC processing in the United States. Upon apprehension, unaccompanied children are immediately put into removal proceedings. Yet, by law, persons apprehended by Customs and Border Protection (CBP) and whom CBP determines to be unaccompanied children from countries other than Mexico and Canada must be turned over to the care and custody of the Department of Health and Human Services (HHS), Office of Refugee Resettlement (ORR) while they await their removal hearing. ORR is required by statute to ensure that UACs "be promptly placed in the least restrictive setting that is in the best interest of the child." In FY2017, an estimated 84% of children were placed with parents, legal guardians, and close relatives who resided in the United States. The desire for family reunification is also driven by the perception by potential migrants that children who are not immediately returned to their home countries can reside with their family members for periods extending several years. Many contend that the considerable length of time unaccompanied minors can expect to wait until their removal hearing contributes to incentivizing the migration. Complicating this situation is the fact that sizable proportions of these family members are estimated to be unauthorized aliens. According to the Pew Research Center, the estimated percent unauthorized of Salvadorans, Guatemalans, and Hondurans living in the United States in 2015 was 51%, 56%, and 60%. Long-standing debates over the level of annual permanent immigration have regularly placed scrutiny on family-based immigration and revived debates over whether its current proportion of total lawful permanent immigration is appropriate. The following section discusses a set of broad immigration policy questions that have been raised by two congressionally mandated commissions as well as other observers. Key reform proposals on a broad range of immigration policy challenges were made by two congressionally mandated commissions established to evaluate U.S. immigration policy: the 1981 Select Commission on Immigration and Refugee Policy chaired by Theodore Hesburgh (the Hesburgh Commission) and the 1995 U.S. Commission on Immigration Reform chaired by Barbara Jordan (the Jordan Commission). The Jordan Commission relied on findings of its predecessor. The Hesburgh Commission acknowledged that certain large-scale and relatively predictable demographic trends—fertility and mortality rates, for instance—could allow policymakers to formulate immigration policies around predetermined optimal population sizes. Although the United States has never had a policy specifying an appropriate population size for the nation, the Hesburgh Commission was aware of arguments for either increasing or decreasing immigration levels because of fiscal, cultural, environmental, and economic pressures, as well as for foreign policy objectives and national security. Family reunification was cited by both the Hesburgh and the Jordon Commissions as the primary goal of U.S. immigration policy. The Jordan Commission rejected formulaic procedures for determining immigrant criteria, such as point systems, supporting instead the existing framework that allows U.S.-based relatives to decide whom to sponsor for immigration to the United States. The Hesburgh Commission, noting the imbalance between the demand for lawful permanent U.S. residence and visa supply, asserted that "raising false hopes among millions with no prospect of immigration" would foster unauthorized immigration and "widespread dissatisfaction with U.S. immigration laws." Both commissions considered options for reconfiguring family-based categories, typically favoring spouses and minor children over other relatives, and the relatives of U.S. citizens over those of LPRs. The Hesburgh Commission recommended eliminating the 4 th family preference category, siblings of U.S. citizens. The Jordan Commission went farther, recommending the elimination of what are currently the 1 st , 3 rd , and 4 th family preference categories, thereby allowing only spouses, minor children, and parents of U.S. citizens (immediate relatives), and spouses and minor children of LPRs (2A preference category) as family-sponsored preference immigrants. Justifications for these revisions included reunifying U.S. citizens and LPRs with their closest and most dependent relations, reducing unreasonably long visa wait times, and improving the credibility of the immigration system while eliminating false expectations of prompt U.S. permanent resident status for more distant relatives of U.S. citizens and LPRs. The Hesburgh Commission recommended more flexible family-based immigration numerical limits. For instance, it suggested establishing two numerical targets, one annual, and another for a longer term, such as five years. This would allow annual immigration to vary, possibly within an established range, accommodating unpredictable situations such as domestic concerns or international conditions while maintaining a long-term ceiling. Another option suggested by the Hesburgh Commission would permit borrowing between ceilings for subcategories (family, employment, refugee) to accommodate such situations. In a 2013 hearing on the American immigration system, Dr. Michael Teitelbaum, commissioner and vice chair of the former U.S. Commission on Immigration Reform (Jordan Commission), testified before the House Judiciary Committee. Six weeks later, Dr. Susan Martin, former executive director of the Jordan Commission, testified at a hearing on comprehensive immigration reform before the Senate Judiciary Committee. During their presentations, Teitelbaum and Martin both reiterated recommendations from the Jordan Commission's 1995 and 1997 reports. Their testimony, occurring 15 years after the commission completed its assessment of U.S. immigration policy, underscored the continued relevance of past congressional debates on current issues surrounding family-based immigration. As noted, the INA allows LPRs and U.S. citizens to sponsor spouses and unmarried children. U.S. citizens, in addition, may sponsor parents, married adult children, and siblings. The INA, however, does not permit either U.S. citizens or LPRs to sponsor other relatives such as grandparents, grandchildren, cousins, aunts, and uncles. Some supporters of current law argue that parents and children should be considered immediate family members regardless of their age or marital status. They contend that siblings are considered immediate relatives in many cultures. A central argument for expanding family-based immigration is to reduce the current visa queue of roughly 4 million persons with approved immigration petitions who must wait years to receive a visa to immigrate. As highlighted by Visa Bulletin cut-off dates ( Table 5 ), family separation can last for years or even decades, which some contend keeps families and individual lives and careers suspended and causes considerable emotional and psychological distress. Advocates of lower immigration levels take issue with broadening family reunification. While they accept that family reunification is an important goal, they argue that the United States has neither the responsibility nor obligation to effectively reconstitute immigrants' families beyond immediate relatives. They assert that U.S. immigration policy is currently among the most generous in the world and would continue to be so even if legal immigration were substantially curtailed. Those favoring limiting family-based preference immigration to just immediate family members (i.e., spouses and minor unmarried children) note that the Jordan Commission recommended this limitation in 1995. Some observers fault U.S. immigration policy for operating largely irrespective of current economic and labor market conditions. Because current family-based immigration provisions do not require minimum education or skill requirements, they arguably do not yield optimal labor market benefits for the United States. Critics also contend that current policies foster greater demand for taxpayer-funded social services by admitting relatively less-educated persons who frequently work in lower-paid occupations or who have higher unemployment rates. Although critics argue that family-based immigration policies do not adjust for changing labor market requirements in specific industries and for specific occupations, others cite evidence of their positive impact on long-term employment needs. Studies suggest that while employment-based immigrants serve short-term labor market needs, family-based immigrants serve such needs more effectively over the long term. A related argument posits that the skills of immigrants entering the United States under the current immigration system match those required of the future workforce more accurately than some suggest. The foreign born also work in certain occupations, such as health care with above-average expected growth. Some cite these trends to argue that current immigration policies admit people whose occupational and sectoral employment profiles match projected demands of the U.S. economy. Apart from skill levels, demographically, the foreign-born population in recent decades has contributed almost all the growth in the working age population. Proponents of family-based immigration also argue that family reunification in the United States helps U.S. immigrants contribute more to their communities and the U.S. economy through improved productivity, health, and emotional support. Similarly, proponents of the 4 th family preference siblings category, which the Jordan Commission recommended eliminating, argue that immigrant siblings are often involved with entrepreneurial enterprises and family businesses, a traditional immigrant pathway to economic mobility and a source for economic revitalization in disadvantaged urban and rural areas. "Chain migration" is a term some have used to characterize the process by which family-based immigration can create self-perpetuating and expanding migration flows, as foreign nationals who obtain lawful permanent resident status and citizenship then sponsor other relatives under the family-based immigration provisions. As noted, while immigrants sponsored under the four family preference categories face numerical limits as well as a per-country ceiling, immediate relatives of U.S. citizens are admitted without numerical restriction of either type. Some have likened the potential for immigrant population growth under current policy to a genealogical table, where a new "link" of an immigrant chain is formed each time an admitted immigrant sponsors a new family-related immigrant who then may do the same for another new immigrant. Critics of family-based immigration policy argue that such processes could potentially generate hundreds of new immigrants from a single LPR. Theodore Hesburgh, chair of the U.S. Select Commission on Immigration and Refugee Policy, offered the following illustration in 1981: Assume one foreign-born married couple, both naturalized, each with two siblings who are also married and each new nuclear family having three children. The foreign-born married couple may petition for the admission of their siblings. Each has a spouse and three children who come with their parents. Each spouse is a potential source for more immigration, and so it goes. It is possible that no less than 84 persons would become eligible for visas in a relatively short period of time. Although family-based immigration could hypothetically generate such large impacts, empirical studies of actual "immigrant multipliers" estimate more modest effects. Carr and Tienda have produced several empirically rigorous analyses estimating multipliers for recent cohorts of immigrants. In one, they examined persons who acquired LPR status from 1980 to 2000, deriving a separate multiplier for each of the four five-year intervals across the two decades. That analysis yielded an immigration multiplier of 3.46 for the period from 1996 to 2000, meaning that, on average, every 100 initial immigrants who acquired LPR status during that period subsequently sponsored 346 new immigrants. Because this multiplier covers the most recent 5-year period of the four computed across a 20-year analysis, it is considered more relevant for current analyses of chain migration and has been widely cited by other policy analysts in discussions of chain migration. In a subsequent analysis, Tienda estimated separate multipliers for immigrants from China (6.24), India (5.11), the Philippines (6.38), and Mexico (5.07) for the same five-year period. Several factors may limit the impact of chain migration. First, with the exception of the 2 nd family preference category, family-sponsored immigration requires that sponsoring immigrants possess U.S. citizenship. Recent studies indicate that many LPRs who are eligible to become U.S. citizens choose not to do so. Second, not all persons eligible to immigrate to the United States wish to do so. Both decisions—to naturalize for U.S.-based LPRs and to emigrate for relatives overseas—are affected by an array of individual-level characteristics and macro-level conditions in both the United States and the origin country. Consequently, estimates of multipliers are likely to vary substantially by country and period considered. Finally, as discussed above, long wait times for visas pose an impediment for many immigrants sponsoring relatives under the family-preference categories. Legislative options to address selected stand-alone policy issues surrounding family-based immigration—the supply-demand imbalance for U.S. lawful permanent residence, the per-country ceilings, limitations on foreign nationals who wish to visit U.S.-based relatives, the impetus to violate U.S. immigration laws, aging out of certain legal status categories, the marriage timing of immigrant children, and policies toward unaccompanied alien children—have been debated by scholars and policymakers as well as addressed in a range of legislative proposals. A broader policy question, in the context of current immigration debates, may be whether and how to address overall levels of legal immigration. Options at this level can generally be characterized as expanding, contracting, or revising family-based immigration. Such options revolve around classifying family categories as numerically limited or unlimited, decreasing or increasing current numerical limits, expanding or reducing the number of family preference categories, revising priorities among the different family-based categories, and using different selection procedures and criteria for admitting lawful permanent residents. Examples of recent legislative proposals that focus on altering the level of permanent immigration include S. 744 , the Border Security, Economic Opportunity, and Immigration Modernization Act introduced in the 113 th Congress and S. 1720 , the Reforming American Immigration for a Strong Economy (RAISE) Act introduced in the 115 th Congress. S. 744 , which passed the Senate in the 113 th Congress, would have, among other things, reclassified spouses and minor unmarried children of LPRs as immediate relatives, thus exempting them from family preference numerical limits. It would have reallocated family preference visas and eliminated the 4 th family preference category for adult siblings of U.S. citizens. The bill would have also provided additional visas to allow pending immigrants in the immigrant visa queue to all receive LPR status within seven years. In contrast, the RAISE Act would reduce the number of immediate relative and family preference category immigrants within family-sponsored immigration and eliminate the immigrant visa queue by invalidating most pending immigrant petitions. These two proposals are not the only approaches being considered to address levels of permanent immigration but they illustrate alternative perspectives on the goals of U.S. immigration policy from which these proposals arise. | Family reunification has historically been a key principle underlying U.S. immigration policy. It is embodied in the Immigration and Nationality Act (INA), which specifies numerical limits for five family-based immigration categories, as well as a per-country limit on total family-based immigration. The five categories include immediate relatives (spouses, minor unmarried children, and parents) of U.S. citizens and four other family-based categories that vary according to individual characteristics such as the legal status of the petitioning U.S.-based relative, and the age, family relationship, and marital status of the prospective immigrant. Of the 1,183,505 foreign nationals admitted to the United States in FY2016 as lawful permanent residents (LPRs), 804,793, or 68%, were admitted on the basis of family ties. Of the family-based immigrants admitted in FY2016, 70% were admitted as immediate relatives of U.S. citizens. Many of the 1,183,505 immigrants were initially admitted on a nonimmigrant (temporary) visa and became immigrants by converting or "adjusting" their status to a lawful permanent resident. The proportion of family-based immigrants who adjusted their immigration status while residing in the United States (34%) was substantially less than that of family-based immigrants who had their immigration petitions processed while living abroad (66%), although such percentages varied considerably among the five family-based immigration categories. Since FY2000, increasing numbers of immediate relatives of U.S. citizens have accounted for the growth in family-based immigration. In FY2016, related (derivative) immigrants who accompanied or later followed principal (qualifying) immigrants accounted for 9% of all family-based immigration. In recent years, Mexico, the Philippines, China, India, and the Dominican Republic have sent the most family-based immigrants to the United States. Each year, the number of foreign nationals petitioning for LPR status through family-sponsored preference categories exceeds the numerical limits of legal immigrant visas. As a result, a visa queue has accumulated of foreign nationals who qualify as immigrants under the INA but who must wait for a visa to immigrate to the United States. The visa queue is not a processing backlog but, rather, the number of persons approved for visas not yet available due to INA-specified numerical limits. As of November 1, 2017, the visa queue numbered 3.95 million persons. Every month, the Department of State (DOS) issues its Visa Bulletin, which lists "cut-off dates" for each numerically limited family-based immigration category. Cut-off dates indicate when petitions that are currently being processed for a numerically limited visa were initially approved. For most countries, cut-off dates range between 23 months and 13.5 years ago. For countries that send the most immigrants, the range expands to between 2 and 23 years ago. Long-standing debates over the level of annual permanent immigration regularly place scrutiny on family-based immigration and revive debates over whether its current proportion of total lawful permanent immigration is appropriate. Proposals to overhaul family-based immigration were made by two congressionally mandated commissions in 1980 and 1995-1997. More recent legislative proposals to revise family-based immigration include S. 744, the Border Security, Economic Opportunity, and Immigration Modernization Act in the 113th Congress and S. 1720, the Reforming American Immigration for a Strong Economy (RAISE) Act in the 115th Congress. Those who favor expanding family-based immigration by increasing the annual numeric limits point to the visa queue of approved prospective immigrants who must wait years separated from their U.S.-based family members until they receive a visa. Others question whether the United States has an obligation to reconstitute families of immigrants beyond their nuclear families and favor reducing permanent immigration by eliminating certain family-based preference categories. Arguments favoring restricting certain categories of family-based immigration reiterate earlier recommendations made by congressionally mandated immigration reform commissions. |
"Too big to fail" (TBTF) is the concept that a financial firm's disorderly failure would cause widespread disruptions in financial markets and result in devastating economic and societal outcomes that the government would feel compelled to prevent, perhaps by providing direct support to the firm. Such firms are a source of systemic risk —the potential for widespread disruption in or even total collapse of the financial system. Although TBTF has been a perennial policy issue, it was highlighted by the near-collapse of several large financial firms in 2008. Some of these large firms were nonbank financial firms, but a few were depository institutions. To avert the imminent failures of Wachovia and Washington Mutual, the Federal Deposit Insurance Corporation (FDIC) arranged for them to be acquired by other banks without government financial assistance. Citigroup and Bank of America were offered additional preferred shares through the Troubled Asset Relief Program (TARP) and government guarantees on selected assets they owned. In many of these cases, policymakers justified government intervention on the grounds that the firms were "systemically important" (popularly understood to be synonymous with too big to fail). Some firms were rescued on those grounds once the crisis struck, although the government had no explicit policy to rescue TBTF firms beforehand. In response to the crisis, the Dodd-Frank Wall Street Reform and Consumer Protection Act (hereinafter, the Dodd-Frank Act; P.L. 111-203 ), a comprehensive financial regulatory reform, was enacted in 2010. Among its stated purposes are "to promote the financial stability of the United States…, to end "too big to fail," to protect the American taxpayer by ending bailouts." The Dodd-Frank Act took a multifaceted approach to addressing the TBTF problem. This report focuses on one pillar of that approach—the Federal Reserve's (Fed's) enhanced (heightened) prudential regulation for all banks that have more than $50 billion in assets. Recent Congresses have debated modifying this enhanced regulatory regime, with several proposals to reduce the number of firms subject to the regime. In the 115 th Congress, H.R. 10 , the Financial CHOICE Act of 2017, would provide banks with an "off ramp" from enhanced regulation if they maintained a leverage ratio of 10%. H.R. 3312 , the Systemic Risk Designation Improvement Act of 2017, would replace the $50 billion threshold with a case-by-case designation process, while automatically subjecting banks that have been designated as globally-systemically important banks (G-SIBs) by the Financial Stability Board (FSB), an international forum. Section 401 of S. 2155 , the Economic Growth, Regulatory Relief, and Consumer Protection Act, would automatically subject banks that had been designated as G-SIBs and banks with over $250 billion in assets to enhanced regulation. Banks with between $100 billion and $250 billion in assets would still be subject to supervisory stress tests, and the Fed would have discretion to apply other individual enhanced prudential provisions to these banks if it would promote financial stability or the institution's safety and soundness. Banks with assets between $50 billion and $100 billion would no longer be subject to enhanced regulation, except for the risk committee requirement. This report begins with a description of enhanced prudential regulation. It discusses the advantages and disadvantages to this approach to mitigating TBTF. It then considers whether banks with more than $50 billion in assets are systemically important, and then discusses proposals to modify the current regime, notably the $50 billion threshold. Finally, the report presents its key findings. Enhanced regulation of banks with more than $50 billion in assets is only one facet of the current approach to addressing TBTF. This report focuses on enhanced regulation and does not analyze other current policies or proposed alternatives to address TBTF. For an overview of the TBTF issue and policy options, see CRS Report R42150, Systemically Important or "Too Big to Fail" Financial Institutions , by [author name scrubbed]. Title I of the Dodd-Frank Act creates an enhanced prudential regulatory regime that automatically applies to all bank holding companies with total consolidated assets of $50 billion or more and nonbank financial firms that are designated by the Financial Stability Oversight Council (FSOC) as systemically important. Title I allows the Fed to tailor differing prudential standards by institution or subgroup based on any risk-related factor. Enhanced regulation automatically applies to U.S. bank holding companies (BHCs) with more than $50 billion in assets. The BHC structure allows for a large, complex financial firm to operate multiple subsidiaries in different financial sectors, including banks. In general, the regime's requirements are applied to all parts of the bank holding company, not just its banking subsidiaries. If a bank does not have a holding company structure, it is not subject to enhanced regulation. The Congressional Research Service (CRS) found one bank that is currently over $50 billion and does not have a BHC structure. Some large investment banks, including Goldman Sachs and Morgan Stanley, were granted bank holding company charters in 2008, whereas others failed or were acquired by BHCs; as a result, all of the largest U.S. investment banks are now BHCs, subject to the enhanced prudential regime. Under Title I's "Hotel California" provision, investment banks or other BHCs with more than $50 billion in assets that participated in the Troubled Asset Relief Program (TARP) cannot escape enhanced regulation by debanking (i.e., divesting of their depository business). The enhanced prudential regime also applies to foreign banking organizations that have more than $50 billion in global assets and operate in the United States. However, the implementing regulations have imposed significantly lower requirements on foreign banks with less than $50 billion in U.S. nonbranch assets compared to those with more than $50 billion in U.S. nonbranch assets. Foreign banks with more than $50 billion in U.S. nonbranch assets must form intermediate holding companies for their U.S. operations; those intermediate holding companies are essentially treated as equivalent to U.S. banks for purposes of applicability of the enhanced regime and bank regulation more generally. For example, the intermediate holding company is also subject to the same general capital requirements applicable to all U.S. banks. For foreign banks with less than $50 billion in U.S. assets, the rule defers to the parent bank's home country regulation in several areas (e.g., stress testing) when it is comparable to U.S. regulation. But they must still comply with the emergency debt-to-equity ratio, the risk committee requirements, and a streamlined version of the living wills requirements. Hereafter, the report will refer to the bank holding companies and foreign banking operations meeting the criteria described above as banks with more than $50 billion in assets , unless otherwise noted. CRS was not able to locate an official list of banks subject to enhanced regulation (which varies, depending on the requirement, for foreign banks). There is, however, official information available on which banks have participated in two specific requirements under enhanced regulation. In 2017, 27 BHCs and 12 intermediate holding companies of foreign banks were subject to the Title I Federal Reserve stress test or would be subject to future stress tests because they had more than $50 billion in U.S. assets (see Table 1 ). About 130 banks (foreign and domestic) submitted resolution plans (or living wills) pursuant to Title I when the requirement came into effect, however, because they have more than $50 billion in worldwide assets and operate in the United States. There are a number of other large financial firms operating in the United States that are not BHCs and are not automatically subject to enhanced regulation, which are discussed below. Similar to BHCs, thrift holding companies (THCs) have subsidiaries that accept deposits, make loans, and can also have nonbank subsidiaries. THCs are also regulated by the Fed. However, to date, enhanced prudential regulatory requirements have not been applied to thrift (savings and loan) holding companies with $50 billion or more in assets, because implementation of the Dodd-Frank Act is ongoing and prefatory material accompanying a 2014 regulation noted that "the Board may apply additional prudential requirements to certain savings and loan holding companies that are similar to the enhanced prudential standards if it determines that such standards are consistent with the safety and soundness of such companies." Official regulatory data report six THCs with more than $50 billion in assets; they are predominantly insurance or investment companies. Credit unions, securities holding companies, and other nonbank financial firms with more than $50 billion in assets are also not automatically subject to enhanced regulation. However, the FSOC may designate any nonbank financial firm as a systemically important financial institution (SIFI) if its failure or activities could pose a risk to financial stability. Designated SIFIs are then subject to the Fed's enhanced prudential regulation. Since inception, FSOC has designated three insurers (AIG, MetLife, and Prudential Financial) and one financial firm (GE Capital) as SIFIs. MetLife's designation was subsequently invalidated by a court decision , and GE Capital's and AIG's designations were later rescinded by FSOC. Because rules implementing most provisions for nonbank SIFIs have not yet been issued—and because this report focuses on banks—the application of the provisions discussed below to nonbank SIFIs is not covered. Although there is not an official source, a query of the private firm SNL Financial 's database identified 43 U.S. nonbank financial firms with more than $50 billion in assets in 2016. These firms include broker-dealers, insurance underwriters, specialty lenders, asset managers, investment companies, and financial technology companies. A Credit Union Times database includes only one credit union with more than $50 billion in assets (Navy Federal Credit Union). Many investment companies have more than $50 billion in assets under management; these are not assets that they own, but rather assets that they invest at the behest of customers. All bank holding companies are subject to long-standing prudential (safety and soundness) regulation conducted by the Fed. The novelty in the Dodd-Frank Act was to create a group of specific prudential requirements that apply only to large banks as described in the previous section. Many of these requirements overlap with parts of Basel III, an international agreement reached after the financial crisis to which the United States is a party. Under Title I of the Dodd-Frank Act, the Fed is responsible for administering enhanced prudential regulation. It promulgates regulations implementing the regime (based on recommendations, if any, made by FSOC) and supervises firms subject to the regime. The Dodd-Frank regime is referred to as enhanced or heightened because it involves higher or more stringent standards to banks with more than $50 billion in assets than it applies to smaller banks. It is a prudential regime because the regulations are intended to contribute toward the safety and soundness of the banks subject to the regime. The Fed's cost of administering the regime is financed through assessments on firms subject to the regime. The following sections provide more detail on the requirements that Title I of the Dodd-Frank Act places on banks with more than $50 billion in assets. As noted below, some parts of enhanced regulation have still not been implemented through final rules. Stress tests and capital planning are two enhanced requirements that have been implemented together. Title I requires company-run stress tests for any (bank or nonbank) financial firm with more than $10 billion in assets and Fed-run stress tests (called DFAST) for any bank holding company or nonbank SIFI with more than $50 billion in assets. These requirements were implemented through final rules in 2012 and were effective beginning in 2013. Stress tests attempt to project the losses that banks would suffer under a hypothetical deterioration in economic and financial conditions to determine whether banks would remain solvent in a future crisis. Unlike general capital requirements that are based on current asset values, the stress tests incorporate an adverse scenario that focuses on specific areas of concern each year. For example in 2017, the adverse scenario is "characterized by a severe global recession that is accompanied by a period of heightened stress in corporate loan markets and commercial real estate markets." Capital requirements are intended to ensure that banks have enough capital backing their assets to absorb any unexpected losses on those assets without resulting in insolvency. Title I requires enhanced capital requirements for banks with more than $50 billion in assets. Overall capital requirements were revamped after the financial crisis through Basel III. Basel III did not include enhanced capital requirements at the $50 billion threshold, but it did include more stringent capital requirements for the largest banks (described below in " What Other Size-Based Requirements Exist in Bank Regulation? "). For banks with more than $50 billion in assets, enhanced capital requirements were primarily implemented through capital planning requirements that are tied to stress test results. The final rule for capital planning was implemented in 2011. Under the Comprehensive Capital Analysis and Review (CCAR), banks must submit a capital plan to the Fed annually. The capital plans must include a projection of the expected uses and sources of capital, including the planned issuance of debt or equity and the planned payment of dividends. The plan must demonstrate that the bank will remain in compliance with capital requirements under the stress tests. If the Fed rejects the bank's capital plan (because the bank would have insufficient capital under the stress tests, for example), the bank will not be allowed to make any capital distributions, including dividend payments, until a revised capital plan is resubmitted and approved by the Fed. In 2017, the Fed removed qualitative requirements from the capital planning process for banks with less than $250 billion in assets that are not complex. Each year, the Fed has required some banks to revise their capital plans or objected to them on qualitative or quantitative grounds, or due to weaknesses in their process. Policymakers claimed that one reason they intervened to prevent large financial firms from failing during the financial crisis was because the opacity and complexity of these firms made it too difficult to wind them down quickly and safely. Title I requires banks with more than $50 billion in assets to periodically submit resolution plans (popularly known as "living wills") to the Fed, FSOC, and FDIC that explain how they can be safely wound down in the event of their failures. The living wills requirement was implemented through a final rule in 2011, and it became fully effective at the end of 2013. The final rule required resolution plans to include details of the firm's ownership, structure, assets, and obligations; information on how the firm's depository subsidiaries are protected from risks posed by its nonbank subsidiaries; and information on the firm's cross-guarantees, counterparties, and processes for determining to whom collateral has been pledged. In the final rule, the regulators highlighted that the resolution plans would help them understand the firms' structure and complexity, as well as their resolution processes and strategies, including cross-border issues for banks operating internationally. Notably, the resolution plan is required to explain how the firm could be resolved without disrupting financial stability under the bankruptcy code —as opposed to being liquidated by the FDIC under the Orderly Liquidation Authority created by Title II of the Dodd-Frank Act. The plan is required to explain how the firm can be wound down in a stressed environment in a "rapidly and orderly" fashion without receiving "extraordinary support" from the government (as some firms received during the crisis) or posing systemic risk. To do so, the plan must include information on core business lines, funding and capital, critical operations, legal entities, information systems, and which jurisdictions it is operating in. The resolution plans are divided into a public part that is disclosed and a private part that contains confidential information. Some of the resolution plans submitted have been tens of thousands of pages long. For banks with less than $100 billion in assets that are mainly depositories, there are reduced requirements for the plans. In addition, foreign banks with less than $50 billion in U.S. assets must file a limited resolution plan. Regulators have discussed further streamlining. If regulators find that a plan is incomplete, deficient, or not credible, they may require the firm to revise and resubmit. If the firm cannot resubmit an adequate plan, regulators have the authority to take remedial steps against it—increasing its capital and liquidity requirements; restricting its growth or activities; or ultimately taking it into resolution. Multiple firms' plans have been found insufficient since the process began in 2013, including all eleven that were submitted and subsequently resubmitted in the first wave. In 2016, Wells Fargo became the first bank to be sanctioned for failing to submit an adequate living will. Bank liquidity refers to a bank's ability to meet cash flow needs and readily convert assets into cash. Banks are vulnerable to liquidity crises because of the liquidity mismatch between illiquid loans and deposits that can be withdrawn on demand. Although all banks are regulated for liquidity adequacy, Title I requires more stringent liquidity requirements for banks with more than $50 billion in assets. These liquidity requirements are being implemented through three rules: (1) a 2014 final rule implementing firm-run liquidity stress tests, (2) a 2014 final rule implementing the Fed-run liquidity coverage ratio (LCR), and (3) a 2016 proposed rule that would implement the Fed-run net stable funding ratio (NSFR). The firm-run liquidity stress tests apply to all banks with more than $50 billion in assets, including intermediate holding companies of foreign banks. The LCR and NSFR apply to two sets of banks. A more stringent version applies to banks with at least $250 billion in assets and $10 billion in on-balance sheet foreign exposure. A less stringent version applies to banks with $50 billion to $250 billion in assets, except those with significant insurance or commercial operations. Regulators plan to issue rules extending the LCR and NSFR to large foreign banks operating in the United States at a later date. A final rule implementing firm-run liquidity stress tests was issued in 2014, effective January 2015 for U.S. banks and July 2016 for foreign banks. The rule requires banks with more than $50 billion in assets to establish a liquidity risk management framework involving a bank's management and board, conduct monthly internal liquidity stress tests, and maintain a buffer of high quality liquid assets. A final rule implementing the liquidity coverage ratio was issued in 2014. The LCR came into effect at the beginning of 2015 and was fully phased in at the beginning of 2017. 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 scenario of market stress where creditors are withdrawing funds. An asset can qualify as a HQLA if it has lower risk, 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. Different types of assets are relatively more or less liquid, and there is disagreement on what the cutoff point should be to qualify as a HQLA under the LCR. In the LCR, eligible assets are assigned to one of three categories. Assets assigned to the most liquid category are given more credit toward meeting the requirement, and assets in the least liquid category are given less credit. A proposed rule to implement the net stable funding ratio was issued in 2016. The NSFR is proposed to come into effect at the beginning of 2018. The NSFR would require banks to have a minimum amount of stable funding backing their assets over a one-year horizon. Different types of funding and assets receive different weights based on their stability and liquidity, respectively, under a stressed scenario. The rule defines funding as stable based on how likely it is to be available in a panic, classifies it by type, counterparty, and time to maturity. Assets that do not qualify as HQLA under the LCR require the most backing by stable funding under the NSFR. Long-term equity gets the most credit toward fulfilling the NSFR, insured retail deposits get medium credit, and other types of deposits and long-term borrowing get less credit. Borrowing from other financial institutions, derivatives, and certain brokered deposits cannot be used to meet the rule. One source of systemic risk associated with TBTF comes from "spillover effects." When a large firm fails, it imposes losses on its counterparties. If large enough, these losses could be debilitating to the counterparty, thus causing stress to spread to other institutions and further threaten financial stability. Title I requires banks with more than $50 billion in assets to limit their exposure to unaffiliated counterparties on an individual counterparty basis and to periodically report on their credit exposures to counterparties. In 2011, the Fed proposed rules implementing these provisions, but these provisions were not included in subsequent final rules. In 2016, the Fed reproposed a rule to implement a single counterparty credit limit (SCCL); to date, the counterparty exposure reporting requirements have not been reproposed. Counterparty exposure for all banks was subject to regulation before the crisis, but did not cover certain off balance sheet exposures or exposures at the holding company level. In the 2016 proposal, the SCCL was tailored to have increasingly stringent requirements as asset size increases. For banks with more than $50 billion in assets and less than $250 billion in total assets or $10 billion in foreign assets, net counterparty credit exposure would be limited to 25% of the bank's capital. There are two higher thresholds for larger banks that further limit counterparty exposure based on the systemic importance of the bank and its counterparty. The 2011 credit exposure reporting proposal would have required banks to regularly report on the nature and extent of their credit exposures to significant counterparties. These reports would help regulators understand spillover effects if firms experienced financial distress. The proposed SCCL rule states that future rulemaking implementing the credit exposure reports will be "informed" by the SCCL framework. The board of directors of publicly traded companies oversees the company's management on behalf of shareholders. Title I requires publicly traded banks with at least $10 billion in assets to form risk committees on their boards of directors that include a risk management expert responsible for oversight of the bank's risk management. Title I also requires the Fed to develop overall risk management requirements for banks with more than $50 billion in assets. A final rule implementing this provision was issued by the Fed in 2014, effective in January 2015 for domestic banks and July 2016 for foreign banks. The rule requires that banks with more than $10 billion in assets form a risk committee led by an independent director. The rule requires banks with more than $50 billion in assets to employ a chief risk officer responsible for risk management. Title I of the Dodd-Frank Act provides several powers to—depending on the provision—FSOC, the Fed, or the FDIC to use when the respective entity believes that a bank with more than $50 billion in assets poses a threat to financial stability. Unlike the provisions described earlier in this section, these provisions generally do not require any ongoing compliance and would be triggered only when a perceived threat to financial stability had arisen. Some of the following powers are similar to powers that bank regulators already have over all banks, but are new powers over nonbank SIFIs. However, they are noted here because they, to varying degrees, expand regulatory authority (or extend authority from bank subsidiaries to bank holding companies) over banks with more than $50 billion in assets vis-a-vis smaller banks. FSOC Reporting Requirements. To determine whether a bank with more than $50 billion in assets poses a threat to financial stability, FSOC may require the bank to submit certified reports. FSOC may make information requests only if publicly available information is not available, however. Mitigation of Grave Threats to Financial Stability. When at least two-thirds of FSOC find that a firm poses a grave threat to financial stability, the Fed may limit the firm's mergers and acquisitions, restrict specific products it offers, and terminate or limit specific activities. If none of those steps eliminates the threat, the Fed may require it to divest assets. The firm may request a hearing with the Fed to contest the Fed's actions. To date, this provision has not been triggered, and the FSOC has never identified any bank as posing a grave threat. Acquisitions . Title I broadens the requirement for banks with more than $50 billion in assets to provide the Fed with prior notice of U.S. nonbank acquisitions that exceed $10 billion in assets and 5% of the acquisition's voting shares, subject to various statutory exemptions. The Fed is required to consider whether the acquisition would pose risks to financial stability or the economy. E mergency 15 - to - 1 Debt - to - Equity Ratio . For banks with more than $50 billion in assets, Title I creates an emergency limit of 15-to-1 on its ratio of liabilities to equity capital (sometimes referred to as a leverage ratio ). A final rule implementing this provision was issued by the Fed in 2014 and was implemented in June 2014 for domestic banks and July 2016 for foreign banks. The ratio is applied only if a bank receives written warning from FSOC that it poses a "grave threat to U.S. financial stability," and ceases to apply when the bank no longer poses a grave threat. To date, this provision has not been triggered, and FSOC has never identified any bank as posing a grave threat. Early Remediation Requirements. Early remediation is the principle that financial problems at banks should be addressed early before they become more serious. Title I requires the Fed to "establish a series of specific remedial actions" to reduce the probability that a bank with more than $50 billion in assets experiences financial distress will fail. This establishes a requirement for bank holding companies similar in spirit to the prompt corrective action requirements that apply to insured depository subsidiaries. Unlike prompt corrective action, the early remediation requirements are not based only on capital adequacy. As the financial condition of the firm deteriorates, statute requires the steps taken under early remediation to become more stringent, increasing in four steps from heightened supervision to resolution. The Fed issued a proposed rule in 2011 to implement this provision that to date has not been finalized. Expand ed FDIC Examination and E nforcement P owers . Title I expands the FDIC's examination and enforcement powers. In order to determine whether an orderly liquidation under Title II of the Dodd-Frank Act is necessary, the FDIC is granted authority to examine the condition of banks with more than $50 billion in assets. Title I also grants the FDIC enforcement powers over banks with more than $50 billion in assets that pose a risk to the Deposit Insurance Fund. U.S. regulators have described the current bank prudential regulatory regime as tiered regulation , meaning that increasingly stringent regulatory requirements are applied as metrics, such as a bank's size, increase. These different tiers are applied on an ad hoc basis; in some cases, statute requires a given regulation to be applied at a certain size; in some cases, regulators have discretion to apply a regulation at a certain size; and in other cases, regulators must apply a regulation to all banks. In addition to $50 billion, notable thresholds found in bank regulation are $1 billion, $10 billion, "advanced approaches" banks, and "global systemically important banks" (G-SIBs). Prudential Requirements for Advanced Approaches and G-SIBs. In conjunction with the Dodd-Frank Act, bank regulation was reformed after the financial crisis by Basel III, a nonbinding international agreement that the United States is currently implementing. One tier of enhanced regulation applies to banks subject to the Basel III "advanced approaches" rule, which are those banks with $250 billion or more in assets or $10 billion or more in foreign exposure. Another tier of regulation applies to G-SIBs. Since 2011, the Financial Stability Board (FSB), an international forum that coordinates the work of national financial authorities and international standard-setting bodies, has annually designated G-SIBs based on the banks' cross-jurisdictional activity, size, interconnectedness, substitutability, and complexity. The FSB has currently designated 30 banks as G-SIBs, 8 of which are headquartered in the United States. In addition, several of the foreign G-SIBs have U.S. subsidiaries. U.S. bank regulators have incorporated the Advanced Approaches and G-SIB definitions into U.S. regulation for purposes of applying the following regulations: S upplementary L everage R atio (SLR) . Leverage ratios determine how much capital banks must hold relative to their assets without adjusting for the riskiness of their assets. Advanced approaches banks must meet a 3% SLR, which includes off-balance-sheet exposures. In April 2014, the U.S. bank regulators adopted a joint rule that would require the G-SIBs to meet an SLR of 5% at the holding company level in order to pay all discretionary bonuses and capital distributions and 6% at the depository subsidiary level to be considered well capitalized as of 2018. G-SIB Capital Surcharge. Basel III also required G-SIBs to hold relatively more capital than other banks in the form of a common equity surcharge of at least 1% to "reflect the greater risks that they pose to the financial system." In July 2015, the Fed issued a final rule that began phasing in this capital surcharge in 2016. Currently, the surcharge applies to the eight G-SIBs, but under its rule, it could designate additional firms as G-SIBs, and it could increase the capital surcharge to as high as 4.5%. The Fed stated that under its rule, most G-SIBs would face a higher capital surcharge than required by Basel III. Countercyclical Capital Buffer. In addition, the banking regulators issued a final rule implementing a Basel III countercyclical capital buffer applied to the advanced approaches banks. The countercyclical buffer would require advanced approaches banks to hold more capital than other banks when regulators believe that financial conditions make the risk of losses abnormally high. It is currently set at zero, but can be modified over the business cycle. Because the countercyclical buffer has not yet been in place for a full business cycle, it is unclear how likely it is that regulators would raise it above zero, and under what circumstances an increase would be triggered. Total Loss-Absorbing Capacity (TLAC) . To further the policy goal of preventing taxpayer bailouts of large financial firms, the Fed issued a 2017 final rule implementing a TLAC requirement for U.S. G-SIBs and the U.S operations of foreign G-SIBs effective at the beginning of 2019. The rule requires G-SIBs to hold a minimum amount of capital and long-term debt at the holding company level so that these equity- and debt-holders can absorb losses and be "bailed in" in the event of the firm's insolvency. In addition, the Fed tailored some of the Title I requirements for banks with more than $50 billion in assets in its implementation so that more stringent regulatory or compliance requirements were applied to advanced approaches banks or G-SIBs. For example, more stringent versions of the LCR, NSFR, and SCCL are all applied to advanced approaches banks than to banks with more than $50 billion in assets that are not advanced approaches banks. The SCCL as proposed also includes a third, most stringent, requirement that applies to only G-SIBs. These requirements all determine how the largest banks have to fund all of their activities on a day-to-day basis. In that sense, these requirements arguably have a larger ongoing impact on banks' marginal cost of providing credit and other services than most of the Title I provisions discussed in the last section that impose only fixed compliance costs on banks. Other Provisions U sing Size Thresholds. As noted in the previous section, two Title I requirements in the Dodd-Frank Act (company-run stress tests and risk committee requirements) were applied to banks with more than $10 billion rather than $50 billion in assets. Size thresholds are also used in other regulations besides enhanced regulation. For example, by statute, only banks with more than $10 billion in assets are subject to the Durbin Amendment, which caps debit interchange fees, and CFPB supervision for consumer compliance. By regulation, there are additional compliance standards for the Volcker Rule for firms with more than $10 billion and $50 billion in assets. Executive compensation rules for financial firms pursuant to the Dodd-Frank Act apply to only firms with more than $1 billion in assets by statute, with more stringent requirements for firms with more than $50 billion and $250 billion proposed by regulation. Fear of financial instability being triggered by the failure of large firms led the government to provide extraordinary assistance to prevent the failure of firms, such as Bear Stearns and AIG, during the financial crisis—hence the assertion that large financial firms were "too big to fail." In addition to fairness issues, economic theory suggests that expectations that a firm will not be allowed to fail create moral hazard —if the creditors and counterparties of a TBTF firm believe that the government will protect them from losses, they have less incentive to monitor the firm's riskiness because they are shielded from the negative consequences of those risks. If so, TBTF firms could have a funding advantage compared with other banks, which some call an implicit subsidy. According to Section 165 of the Dodd-Frank Act, the purpose of enhanced regulation is "to prevent or mitigate risks to the financial stability of the United States that could arise from the material financial distress or failure, or ongoing activities, of large, interconnected financial institutions." General prudential regulation applying to all banks is intended to be microprudential , focusing mainly on the individual institution's safety and soundness. Enhanced regulation is intended to be macroprudential , focusing mainly on the broader systemic risk posed by large institutions. Enhanced regulation is not necessarily mutually exclusive with other policy approaches to eliminating TBTF, although combining approaches could dilute any single approach's effectiveness. Different parts of the Dodd-Frank Act pursue several different approaches to eliminating TBTF. One rationale for enhanced prudential regulation holds that restraints on risk-taking at systemically important banks must be in place because eliminating such banks is infeasible or impractical, as is credibly eliminating all expectations of future government support. In this view, at least a few firms will likely come to dominate certain segments of the financial system due to economic incentives to grow larger, such as achieving economies of scale or increasing market power. Thus, breaking up large banks or eliminating all spillover effects would reduce the efficiency of the financial system. Eliminating TBTF through assurances that large firms would not be bailed out may lack credibility with market participants who witnessed the bailout of firms without a prior commitment to provide assistance in the previous crisis. If TBTF institutions cannot be eliminated, then enhanced regulation may be the most practical option for containing it. Few claim that prudential regulation can prevent all failures from occurring; regulated depository institutions have failed throughout U.S. history. Nor is a system without any failures necessarily a desirable one, since risk is inherent in all financial activities. However, enhanced regulation could potentially prevent large banks from taking greater risks due to moral hazard than their smaller counterparts. If successful, fewer large failures or market disruptions would occur, creating a more stable financial system and limiting potential taxpayer exposure through FDIC-insured losses. Certain observers are skeptical of the ability of the enhanced prudential regulatory regime to successfully increase systemic stability and eliminate the TBTF problem. Critics cite the fact that most large banks have grown or remained the same size in dollar terms since the enactment of the Dodd-Frank Act as evidence that TBTF has not been solved. Some critics argue that in general, more prudential regulation may be counterproductive because it curbs the role of market discipline, resulting from such things as creditors monitoring and disincentivizing risky behavior. Enhanced prudential regulation may arguably have a limited effect on market discipline, however, because it only incrementally increases the regulation of large banks. Although regulation is intended to limit risky behavior, it may inadvertently increase systemic risk by causing greater correlation of losses across firms by encouraging all firms to engage in similar behavior. For example, one economist testified that "many financial sector experts believe that coordinated supervisory stress tests encourage a 'group think' approach to risk management that may increase the probability of a financial crisis." Other critics question the effectiveness of regulators to prevent the buildup of excessive risk, pointing out they were arguably unable or unwilling to prevent excessive risk-taking before and during the crisis, including in some cases by large banks they directly regulated. Although regulators have adapted in response to weaknesses raised by the crisis, the next crisis is likely to pose a novel set of problems. In addition, some critics fear that the enhanced regime is particularly vulnerable to "regulatory capture," the phenomenon in which the regulated exercise influence over their regulators to undermine the intended goals of regulation. Some have argued that large banks are "too complex to regulate," meaning regulators are incapable of identifying or understanding the risks inherent in complicated transactions and corporate structures. For example, the six largest BHCs had more than 1,000 subsidiaries each, and the two largest had more than 3,000 each in 2012. Further, their complexity has increased over time—only one BHC had more than 500 subsidiaries in 1990, and the share of assets held outside of depository subsidiaries has grown over time for the largest BHCs. Arguably, one of the benefits of enhanced regulation is that it provides opportunities (through living wills, for example) for the Fed and FSOC to better understand the risks institutions pose and the characteristics that could make certain banks systemically important. Enhanced regulation could also fail to reduce systemic risk if problems at large firms during the crisis—such as excessive leverage, a sudden loss of liquidity, concentrated or undiversified losses, and investor uncertainty caused by opacity—were not caused by large firms per se, but were instead inherent in certain financial activities. If, in fact, they were representative of problems that firms of all sizes were experiencing, policy should directly treat these problems in a systematic and uniform way for all firms. In other words, prudential regulation could be applied to all firms operating in a given activity or area rather than just large banks, so arguments for and against these policy options do not apply only to their application to large banks. If systemic risk is caused mainly by activities, not large firms, then enhanced regulation could cause systemic risk to migrate away from large banks to other—potentially less regulated—firms, rather than being reduced. Specific components of the enhanced regulatory regime are arguably well targeted to mitigating some of the sources of systemic risk. Stress tests are intended to verify that large banks could survive another crisis, living wills are intended to explain to regulators how a failing bank can be safely wound down, counterparty credit limits are intended to limit spillover effects when firms fail, and liquidity requirements attempt to reduce reliance on funding sources that proved to be unreliable during the crisis. However, the degree to which these benefits are realized and the question of whether these benefits justify the cost the regulation may impose are contentious issues. Quantifying the benefits of systemic risk provisions is difficult because the benefits of preventing another financial crisis are large, but the probability of another crisis at any given time is small. Furthermore, the ability to isolate the benefits of any particular provision is hindered by the fact that maintaining financial stability likely depends on the joint effects of a number of policies. Some of these provisions come from the Dodd-Frank Act, and others come from Basel III. Comparing the magnitude of benefits to the costs they impose involves additional difficulty. Generally, enhanced prudential requirements impose costs on large banks. However, the extent to which those costs are passed on to customers potentially depends on a variety of economic factors, such as the degree of market competition and the price sensitivity of customers. Furthermore, from an economic net benefit perspective, the cost to large banks is less relevant than the overall effects on the costs and availability of credit. At least partly offsetting the higher costs of credit by banks subject to enhanced regulation would be relatively lower costs of capital for other firms. Some of these firms will be small banks, but some financial intermediation could also migrate from large banks to firms that are not regulated for safety and soundness. In that sense, even if a heightened prudential regime worked as planned, net benefits (i.e., reduction of overall systemic risk) could be smaller than anticipated. The possibility that TBTF banks create market distortions creates additional considerations. Normally, higher costs imposed by regulation reduce economic efficiency, which must be balanced against the benefits they provide. However, if TBTF banks create moral hazard (a market failure that reduces efficiency), then regulatory costs may increase efficiency (from a societal perspective) by reducing risk-taking. Put differently, if there is a TBTF subsidy, then enhanced regulation may reduce that subsidy by mitigating large banks' lack of prudence. Regardless of whether the benefits of enhanced regulation outweigh the costs, there is also the question of whether the regime could be modified to reduce costs without a meaningful decline in benefits. In particular, there are areas of potential overlap among provisions that potentially raise costs. Capital planning requirements impose a de facto additional capital requirement in addition to existing capital requirements that apply to all banks. There are three separate liquidity requirements imposed on banks with more than $50 billion in assets (in addition to liquidity requirements that apply to all banks). Banks with more than $50 billion in assets are required to prepare both living wills and credit exposure reports, both of which require banks to report on their counterparties. Banks with more than $50 billion in assets must also participate in company-run and Fed-run stress tests. Although systemic importance is not the only rationale provided for enhanced prudential regulation, it is the primary one. This section reviews data to attempt to determine whether all of the banks subject to enhanced regulation are systemically important. In particular, critics of the $50 billion threshold 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 nonbank financial activities). Definitively identifying banks that are systemically important is not easily accomplished, in part because potential causes and mechanisms through which a bank could disrupt the financial system and spread distress are numerous and not well understood in all cases. Size is one factor that could make a bank systemically important. For example, a bank with a large amount of liabilities would inflict larger losses on counterparties in the event of default. In addition, because such a bank has larger funding needs, if it experienced liquidity problems and was forced to sell assets—often referred to as forced deleveraging —the large selloff could decrease certain asset prices and trigger fire sales. These are just two examples of how size can cause spillover effects that spread systemic risk more broadly throughout the financial system. When examining banks' asset sizes, there is substantial variation across a number of bank characteristics, but none that clearly identify a cutoff point at which banks begin or cease to be systemically important. Among banks above the $50 billion threshold, organizations vary greatly in size, and except for the very largest, there are no natural breaking points that clearly distinguish one group of banks from another. The largest banks hold about 40 times as many assets as those near the threshold (as shown in Table 1 ), but beyond the largest handful of banks, size decreases fairly incrementally. Although not depicted in the table, the same difficulties are present when analyzing banks near but below the $50 billion threshold—asset size decreases incrementally, with no natural breaking points. Size is not the only potential characteristic through which a bank could disrupt financial stability. Regulators have developed certain methodologies to empirically measure systemic importance. A prominent example is the "method 1 systemic score" used to determine which institutions are designated as G-SIBs. The scoring methodology uses 12 indicators across five categories to calculate a bank's score. In addition to size, these categories are as follows: I nterconnectedness . How interconnected one institution is to other financial companies could lead to contagion effects if its default results in destabilizing losses at other institutions or markets. Interconnectedness is measured in method 1 by a bank's intra-financial system assets and liabilities. S ubstitutability . This metric determines whether other banks or financial institutions could perform the critical functions currently performed by the bank in question should it fail. Substitutability is measured in method 1 by a bank's assets under custody, payments activity, and underwriting. C omplexity . Banks differ substantially across their business models, and certain activities could make them more or less risky and, in the event they experienced distress or failure, more or less likely to destabilize the financial system. Many large bank organizations are engaged in numerous lines of business, including securities trading, insurance, swap dealing, custodial services, credit card issuance, merchant banking, and clearing and settlement services, among others. These activities may not necessarily be systemically risky (diversifying business lines could arguably make an individual institution less risky), but they may warrant additional regulatory scrutiny because they are outside the traditional prudential regulatory model for commercial banking and increase the number of markets and activities through which an institution could trigger a systemic event or spread systemic risk. Complexity is measured in method 1 by over the counter (OTC) derivatives, level 3 (i.e., illiquid) assets, and trading and available for sale (AFS) securities. C ross- J urisdiction A ctivity . Measured by cross-jurisdictional claims and liabilities, this metric captures the degree to which the bank operates internationally. The score is a weighted average of each institution's share of a global aggregate of each of the 12 indicators, expressed in basis points. Any institution with a score of more than 130 is determined to be systemically important to the global financial system. One drawback to using this indicator is that it is intended to measure global systemic importance, whereas the enhanced prudential regime is intended to apply to domestic systemically important banks. For example, cross-jurisdictional metrics may be more pertinent to global importance than domestic importance. Nevertheless, banks with low scores arguably may not be domestically systemically important. Examining the U.S. banks with more than $50 billion in assets reveals a wide range of scores, as seen in Table 2 . Eight banks exceed the 130 threshold. The rest are not close to this number, and half have a score of less than 15, including all of the banks with less than $100 billion in assets. Some relatively large banks have low scores. For example, Capital One had $334 billion in assets at the end of 2015, but a score of 20. Conversely, State Street, the smallest bank by asset size to be designated a G-SIB, had assets of $224 billion and a score of 148. Such scoring may suggest that size alone is not well correlated with systemic importance, and may also support assertions that the $50 billion threshold is set too low. However, given uncertainty about the relative importance to financial stability of the various indicators that comprise the score, it is useful to observe whether any banks play an outsized role in any individual activity that makes up the score. Table 3 illustrates that some banks with low aggregate scores nevertheless have individual indicators that are at least three times the median value for this group of banks. For example, five banks with aggregate scores under 15 have three times the median value for the underwriting indicator. Similarly, there are low-aggregate-scoring banks with high concentrations in payments, level 3 assets, and cross-jurisdictional indicators. Overall, 18 banks have three times the median value for multiple indicators, and 4 banks have three times the median for one indicator. Two of the four banks that have high values for one indicator have less than $100 billion in total assets. If the G-SIB indicators accurately correlate with systemic riskiness, it is unlikely that the 12 banks with values below three times the median for all of the indicators are systemically important. If a higher multiple of the median value is chosen to identify banks that play outsized roles in the activities shown in Table 3 , fewer banks would qualify. For example, if 10 times the median value were used as a threshold, then 11 banks would meet that threshold in multiple categories, and 3 banks would meet it in one category. Fed officials, former Representative Barney Frank, and critics of the Dodd-Frank Act have called for a higher threshold or for replacing the threshold with an alternative method, but no consensus has emerged over what should take its place. Others have called for eliminating enhanced regulation. The Treasury Department's June 2017 report on regulatory relief for banks (hereafter, the Treasury report) "recommends that Congress amend the $50 billion threshold under Section 165 of Dodd Frank for the application of enhanced prudential standards to more appropriately tailor these standards to the risk profile of bank holding companies," but does not contain a specific proposal for how it should be altered. This section reviews proposals to alter which banks are subject to enhanced regulation. It does not cover legislative proposals that would revise or eliminate specific provisions of enhanced regulation, such as stress tests or living wills. If Congress does not act, the Fed (at the recommendation of FSOC) has discretion to maintain the existing threshold at $50 billion indefinitely, or raise it at any time. If the Fed chooses to raise it, however, it can do so only for certain enhanced regulatory provisions. Statute does not allow the Fed to change the $50 billion threshold for capital planning, liquidity requirements, Fed-run stress tests, risk management requirements, certain assessments, and the requirements listed above in the section entitled " Provisions That Are Triggered in Response to Financial Stability Concerns ." However, statute allows the Fed to raise the threshold for resolution plans, credit exposure reports, and 25% concentration limits, as well as for some discretionary authority to impose additional requirements that the Fed has not exercised to date. Statute also requires the Fed to maintain a $10 billion threshold for risk committee and company-run stress test requirements. The Fed also has the authority to tailor the application of enhanced regulation for individual banks or groups of banks, increasing the stringency of regulation based on a number of "risk-related factors." The Fed has already tailored the application of a number of prudential requirements, as discussed in the section above entitled " What Other Size-Based Requirements Exist in Bank Regulation? " Another option is to regulate all banks similarly, regardless of size. This approach is compatible with eliminating the enhanced regulatory requirements or subjecting all banks to those requirements. An example of the former is H.R. 2094 in the 114 th Congress, which would have repealed Title I (and Title II) of the Dodd-Frank Act. Were Congress to repeal Title I, the Fed would still have broad authority to apply prudential standards differently based on size or other factors. For example, stress tests for large banks predated the enactment of the Dodd-Frank Act requirements. The efficacy of enhanced regulation for a subset of banks depends on whether one believes that size (or another attribute well correlated with size) is a unique cause of systemic risk. If one believes that systemic risk stems primarily from specific bank activities or attributes, such as bank runs, then there is little benefit from basing regulations on size. In that case, legislation could apply specific enhanced regulatory provisions to all or no banks. Alternatively, if one believes that some subset of banks poses unique risks, then a threshold-based regime can address those risks, in its current state or under one of the below proposals to modify it. A number of proposals would modify who is subject to the enhanced regulatory regime. This could be done by raising the threshold's asset value, using a different measure than total assets for a threshold, switching from a threshold to a case-by-case designation process, or some combination of proposals. Proposals to modify who is subject to enhanced regulation can be evaluated by comparing costs and benefits. These proposals are motivated by concerns that some of the banks with more than $50 billion do not pose systemic risk (discussed in the section above entitled " Are All Banks with More Than $50 Billion Systemically Important? ") and do not benefit from a perception that they are TBTF that results in excessive risk taking. If a bank does not pose systemic risk or is not perceived as TBTF, the main benefit of enhanced regulation is not present, "and it is subjected to unnecessary costs without any offsetting benefits." Although systemic risk mitigation is the main purpose of enhanced regulation, there are other potential benefits. First, enhanced regulation could reduce the likelihood that a bank's failure would result in taxpayer exposure to FDIC insurance losses or due to "bailouts," as the government lost money on TARP investments following the financial crisis in some midsized institutions (such as Ally Financial and CIT Group, which had between $50 billion and $250 billion in assets) although they were not viewed as systemically important. Second, a midsized bank that did not pose systemic risk could nevertheless potentially result in localized or sectoral disruptions to the availability of credit and the provision of financial services. Finally, some have argued that some enhanced prudential requirements (e.g., risk committees, chief risk officers, company-run stress tests) represent good risk management practices that any well-managed firm should apply in the interest of shareholders. There is also concern that enhanced regulation poses disproportionately greater compliance costs on banks closer to the threshold than the largest banks. This may be the case because of the relatively fixed compliance costs associated with certain elements of the enhanced regime, such as living wills, risk management, and stress tests. In contrast, some elements of the regime have already been tailored in an effort by the Fed to reduce the costs for smaller banks. One second-order benefit of setting the threshold relatively low is that it may avoid causing moral hazard. According to former Fed Governor Daniel Tarullo, "by setting the threshold for these standards at firms with assets of at least $50 billion, well below the level that anyone would believe describes a TBTF firm, Congress has avoided the creation of a de facto list of TBTF firms." Proposals to decrease the number of firms subject to enhanced regulation risk creating the perception of a list of TBTF firms. Congress could decide to raise the numeric threshold to a dollar amount above $50 billion. In 2014, former Fed Governor Daniel Tarullo suggested $100 billion. Former Representative Barney Frank reportedly suggested raising the threshold to $125 billion and indexing it. National Economic Council Director Gary Cohn reportedly suggested raising it to at least $200 billion (or replacing it). Higher thresholds have also been proposed, although more often using some hybrid method (see below). Any threshold above $225 billion would currently not capture all of the G-SIBs. If Congress chose to raise the threshold, it could do so only in Section 165, throughout Title I, or throughout the Dodd-Frank Act (see Appendix for more details). Alternatively, Congress could provide the Fed with broader discretion to raise the $50 billion threshold for more or all of the requirements found in the Dodd-Frank Act, instead of the current subset enumerated above. It would then depend on the Fed to decide which, if any, requirements merited a higher threshold. If policymakers believe that bank size is in itself an important determinant of systemic riskiness, then a numerical threshold is the best approach, although policymakers may debate the most appropriate number. Consensus on a revised threshold is hindered by, among other things, the lack of a natural breakpoint in the data. Just as there are banks just above and below the $50 billion threshold, there are currently banks just above and below $100 billion, $150 billion, $200 billion, and $225 billion in assets. In addition, the total assets of individual banks naturally fluctuate over time, due in part to factors such as inflation. Even if size is not the only determinant of systemic importance, size is a much simpler and more transparent metric than some alternatives discussed below. As a practical matter, if size is well correlated with systemic importance—so that policymakers could choose a threshold that did not apply enhanced regulation to too many firms above the threshold that are not systemically important and did not leave out too many firms below the threshold that are not systemically important—it could serve as a good proxy that was easy and inexpensive to administer. Critics of size-based thresholds are skeptical of this criterion. The presence of banks just below the threshold could distort behavior and reduce economic efficiency if banks take actions solely for the purpose of staying under the threshold. Acting Comptroller of the Currency Keith Noreika argues that "for midsize institutions, the threshold approach … represents a barrier to growth because, above that line, compliance costs rise so dramatically. The effect is to discourage competition with the largest institutions." In addition, many economists believe that the economic problem of "too big to fail" is actually a problem of firms that are too complex or too interdependent to fail. Size correlates with complexity and interdependence, but not perfectly, as discussed in the section above entitled " Are All Banks with More Than $50 Billion Systemically Important? " If size is not perfectly correlated with systemic risk, it follows that a size threshold is unlikely to successfully capture all those—and only those—firms that are systemically important. A size threshold will capture some firms that are not systemically important if set too low, or leave out some firms that are systemically important if set too high. If size is not well correlated with systemic risk or other policy goals, then Congress could consider replacing it with a numerical measure that is better correlated. This option could retain the automatic nature of the current threshold, or, as discussed in the next section, defer to regulators' judgment. An automatic alternative threshold could potentially be relatively simple or complex. Crafting a detailed, complex threshold likely involves the type of technical decisionmaking that Congress would delegate the Fed or FSOC to work out in subsequent rulemaking. The formula based on 12 metrics (with different relative weights) to determine which firms are G-SIBs is an example of a more complex numerical indicator (discussed in the section above entitled " Are All Banks with More Than $50 Billion Systemically Important? "). Notably, the eight G-SIBs under this metric are not the eight largest banks (they are the six largest, plus two others). Although the value is set to designate eight U.S. banks with the highest rating currently for G-SIB purposes, it could be set lower to potentially capture more than the current eight for domestic purposes. If no quantitative measure lines up well with systemic importance, another legislative option would be to replace the numerical threshold with a process to designate banks as "systemically important" on a case-by-case basis. Congress could consider whether or not to include restrictions such as a minimum size, below which designation would not be allowed. Notably, the Fed has already voluntarily identified large banks as systemically important for supervisory—as opposed to rulemaking—purposes. Currently, 12 banks (8 domestic G-SIBs and 4 foreign G-SIBs operating in the United States) are supervised by the Fed's Large Institution Supervision Coordinating Committee. According to Tarullo, "in determining which banking organizations belong in the LISCC portfolio, the Federal Reserve has focused on the risks to the financial system posed by individual firms—size has not been the dispositive factor. For example, three large banking organizations are not in that portfolio, even though they have larger balance sheets than the processing- and custody-focused bank holding companies that are in the LISCC portfolio." The Fed has also classified another set of banks as "large and complex." Congress could mirror the existing designation process used for systemically important nonbank financial firms, or create a different process. For nonbanks, designation is made by a two-thirds vote of FSOC members and must include the Treasury Secretary—giving him veto power, for better or worse. Congress would face the decision of whether a designation process for banks should include only the Fed, all the banking regulators, or all of FSOC. An argument against the latter is that many members of FSOC do not have banking expertise. An argument for the latter option is that many large banks have subsidiaries that participate in nonbank activities about which other members of FSOC are experts. Ideally, a case-by-case designation process would limit enhanced regulation to only the firms that pose systemic risk, thereby maximizing the benefits and minimizing the costs of the regime. There is no guarantee that systemically important firms would be correctly identified, however, because there is no definitive proof that a firm is systemically important until it becomes distressed. Designation is inherently more subjective than an asset threshold, and as agency leadership changes, standards and viewpoints on systemic importance could shift. Designation would also be more time-consuming and resource-intensive than a threshold. For example, FSOC designated four nonbank SIFIs in the first three years and none since under the existing process. The nonbank designation process has not proven stable, with three out of four SIFIs being de-designated so far. In the case of MetLife, the de-designation resulted from a legal challenge that is currently under appeal. Thus, designation would open an avenue to potential legal challenges that has already proven preliminarily successful for nonbanks. If the existing designation process is used, critics believe it is not transparent enough—although FSOC modified the process to increase transparency in 2015 —and does not provide designated firms enough opportunity to address the reasons that FSOC deems them to be systemically important. For opponents of enhanced regulation, a particular concern is that it could reinforce perceptions that the large firms subject to it are TBTF. If so, some would view designating a bank as systemically important as a more explicit signal to market participants that it is TBTF, thereby increasing moral hazard. If Congress could clearly identify some banks as systemically important, whereas the systemic importance of other banks was less clear, a hybrid option might be preferred. Current market structure illustrates why this may be the case—there are currently four banks with more than $1.8 trillion in assets, two additional banks with more than $0.8 trillion in assets, and no other banks with $0.5 trillion or more in assets. Under this proposal, there could be an automatic designation for banks that meet some simple standard, and those that did not would be subject to a case-by-case designation process. A hybrid option would reduce some of the drawbacks associated with the designation process (costliness, slowness) while maintaining the benefits (limiting enhanced regulation to only systemically important firms, assuming accurate designations). Although this would, in some sense, be the "best of both worlds," it would not avoid some of the implications of a designation-only regime, such as the possibility that designations could be challenged in court. H.R. 3312 / S. 1893 would automatically subject banks that had been designated as G-SIBs to enhanced regulation. The bill would allow the Fed to designate other banks for enhanced regulation if they could pose a threat to financial stability. Although Congress does not control the overall size of the Fed's budget, the bill requires the Fed to evaluate banks for designation "within the limits of its existing resources." According to CBO, the bill would raise federal direct spending by $53 million over ten years because it would increase the probability of additional bank failures that would use FDIC resources. It would raise federal revenues by $10 million over 10 years through higher deposit insurance assessments. Section 401 of S. 2155 would automatically subject banks that had been designated as G-SIBs and banks with more than $250 billion in assets to enhanced regulation. Banks with between $100 billion and $250 billion in assets would still be subjec t to supervisory stress tests, and the Fed would have discretion to apply other individual provisions found in Section 165 (see Appendix ) to these banks if it would promote financial stability or the institution's safety and soundness. Banks with assets between $50 billion and $100 billion would no longer be subject to enhanced regulation, except for the risk committee requirement. The bill would make tailoring of the regime mandatory instead of discretionary. The bill would also make other modifications to individual provisions of the enhanced prudential regime. Currently, eight banks headquartered in the United States have been designated as G-SIBs, along with certain foreign banks that have U.S. operations. Six of the eight U.S. G-SIBs are the very largest U.S. banks and account for all of the banks with more than $500 billion in assets, but the other two (which are G-SIBs because they are custody banks) rank somewhat lower. Some Members of Congress have been concerned that the FSB designation process, which is internationally negotiated, is superseding the FSOC designation process found in U.S. law. Another concern is that G-SIBs are designated based on their importance to the global financial system, whereas enhanced regulation is focused on importance to the U.S. financial system. Capital allows banks to absorb losses without failing, and banks are required to hold enough of it so that they meet minimum levels of certain calculated ratios. One type of ratio is a leverage ratio, which compares capital to assets (or another measure of exposures) and does not adjust the values of balance sheet items based on an estimation of this riskiness. H.R. 10 would provide depositories of all types and sizes that maintained a 10% leverage ratio with an "off ramp," under which they would no longer be subject to various banking regulations. The exempted regulations include current capital and liquidity requirements, regulations under which regulators can block capital distributions, and regulations that reference protecting against threats to financial stability. As a result, "off ramp" banks with more than $50 billion in assets would no longer be subject to Title I's enhanced regulation and any Basel III provisions, including those applying to only large banks. Traditional banks would have to meet a 10% leverage ratio under H.R. 10 . Nontraditional banks would have to meet a 10% supplementary leverage ratio, a higher standard that includes off-balance-sheet exposures. The bill defines traditional banks as those that have no trading assets or liabilities; do not engage in swaps except interest rate or exchange rate swaps; and have a total notional exposure of swaps of less than $8 billion. As the financial system has become more complex, postcrisis reforms to mitigate systemic risk, such as enhanced regulation, have made the regulatory regime more complex. Some critics argue that this approach is likely to backfire and simple regulations are more likely to be robust. Off-ramp proponents criticize this "needless complexity," which they see as an example of "central planning." In their view, the complexity generally benefits those largest banks that have the resources to absorb the added regulatory cost, thereby reducing competition. They argue that as long as sufficient capital is in place in case of losses, banks should not be subject to excessive regulatory micromanagement. Others, however, contend 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. The fact that the off ramp explicitly exempts qualifying banks from regulations that reference threats to financial stability underlines that its focus is on an institution's ability to absorb losses (microprudential concerns), not its systemic riskiness (macroprudential concerns). Predicting which banks would elect to hold the 10% leverage ratio involves a degree of uncertainty, but CBO did make such an estimate when scoring the bill. One source of uncertainty the CBO had to address is that some banks that hold enough capital to meet the requirement would not necessarily make the election. CBO estimated that half the banks with a leverage ratio (as defined by the bill) currently above 10%—most of which are banks with less than $50 billion in assets—would make the election. For those below currently 10%, CBO estimated a "small probability" they would choose to raise enough capital to make the election. As a result, CBO estimated that about five banks with more than $50 billion in assets and none of the eight U.S. G-SIBs would make the election. Discussions about raising the $50 billion threshold typically focus on the enhanced prudential standards found in Section 165 of the Dodd-Frank Act. This threshold is also referenced in a number of other sections of the act, however (see Appendix ). Legislative proposals to raise the threshold in Section 165 could include (as is the case in H.R. 3312 / S. 1893 ) or omit a change in the threshold found in these other sections as well. Some of these sections reference banks covered by Section 165, whereas other sections reference banks with more than $50 billion in assets. In the former case, changing the threshold only in Section 165 would automatically raise the threshold for these other sections, whereas in the latter case, those sections' thresholds would remain unchanged. Another option is to repeal some of these other provisions. For example, H.R. 10 would repeal the Hotel California provision, the powers to mitigate grave threats to financial stability, management interlocks, early remediation requirements, FDIC examination and enforcement authority, and certain assessments. In addition, Section 165 includes two requirements that apply to all banks with more than $10 billion in assets—company-run stress tests and risk committee requirements for publicly owned banks. Congress could decide to raise these thresholds at the same time or leave them unchanged. For example, S. 1139 would raise the threshold for stress tests from $10 billion to $50 billion. Congress could also consider whether the other thresholds (i.e., G-SIBs, advanced approaches banks) that regulators have voluntarily adopted for applying more stringent capital, leverage, and liquidity requirements, as well as TLAC, should be enshrined in statute, at current or modified levels. More generally, Congress could consider whether the current tiered regulatory approach with multiple thresholds or a "one size fits all" approach would be more desirable. Congress might also consider whether other financial stability provisions that are now determined on a discretionary basis should also be based on the Section 165 size threshold. For example, the other main financial stability title in the Dodd-Frank Act is Title II, which creates the orderly liquidation authority (OLA) to wind down firms that pose a risk to financial stability. The decision about whether to place a failing firm in OLA is not based on institution size, such as the $50 billion threshold. Instead, it is based on a finding by the Treasury Secretary that the firm's failure would have "serious adverse effects on financial stability in the United States," following a recommendation by two-thirds of the Fed's Board of Governors and two-thirds of the FDIC's board. The $50 billion threshold does not automatically change over time, even though prices, gross domestic product, and financial-sector assets all tend to increase from year to year. As a result, with no change in industry concentration, more and more banks would gradually become subject to enhanced regulation as time passes or would need to take active steps to restrict growth in order to avoid reaching the threshold. If Congress wished to avoid this outcome, it could index the threshold to some economic indicator. The more quickly the index rose, the more slowly new banks would cross the threshold. Of three metrics noted here, inflation tends to grow most slowly, whereas financial-sector assets grow the most quickly but are the most volatile. S. 1484 and S. 1910 in the 114 th Congress would have raised the threshold and indexed its future value to gross domestic product. The $50 billion threshold is based on total consolidated assets. Several alternate metrics that regulators monitor could potentially be included or excluded from this definition. For example, should the threshold include off-balance-sheet exposures, global assets of foreign banks instead of U.S. assets, or assets under custody? Altering the definition of assets would alter the number of firms that exceed the threshold at any given asset value. Holding companies with depositories may incorporate as bank holding companies or thrift (savings and loan) holding companies, depending on whether depository subsidiaries are chartered as banks or thrifts. The choice does not greatly alter the activities the holding company can engage in, particularly in its nonbank subsidiaries. (Neither thrifts nor banks must have holding companies, although only those with holding companies may have nonbank subsidiaries.) Section 165 is limited to bank holding companies with more than $50 billion in assets. (The Fed has stated it could apply similar requirements to THCs, but has not done so to date. ) Currently, these firms could be subjected to enhanced regulation through an FSOC nonbank SIFI designation, but none has been designated to date. As of June 2017, there is one bank without a holding company and six THCs that have more than $50 billion in assets. No THC has more than $300 billion in assets, but some have more than $200 billion. These include firms that are leading firms in the securities or insurance sectors that have limited banking operations. In addition, credit unions accept deposits but are not subject to enhanced prudential regulations if they exceed $50 billion in assets. Congress might consider whether there is any discernable difference between the complexity or interconnectedness of these THCs compared to their BHC peers that warrants their omission from the enhanced regulatory regime. The benefit of extending the regime to THCs depends, in practice, mainly on whether one believes that large THCs that are primarily securities or insurance firms can pose systemic risk, or whether only firms that are primarily banks pose systemic risk. Large THCs, including AIG (mainly an insurance firm), Lehman Brothers (mainly a securities firm), and Washington Mutual (mainly a depository), were at the center of systemic risk concerns during the financial crisis. Section 117 of the Dodd-Frank Act (popularly called the "Hotel California" provision) prohibits BHCs that received funds from the Troubled Asset Relief Program (TARP) from "debanking" (selling their bank subsidiaries) in order to escape enhanced regulation. Notably, the two largest investment banks became BHCs and received TARP funds during the financial crisis. Some large investment and insurance firms are BHCs but have limited banking operations. If Congress wanted to limit enhanced regulation to only banks, it could repeal Section 117. Alternatively, Congress could extend Hotel California to BHCs that were not TARP recipients if it wanted to prevent them from debanking to avoid enhanced regulation. H.R. 10 would repeal the Hotel California provision. As discussed above, the Fed has required foreign banks with more than $50 billion in nonbranch U.S. assets to form intermediate holding companies for their U.S. operations, which are subject to enhanced regulation and other prudential regulation. One concern with this approach is that it could be redundant with similar home country regulation for the parent company. This depends on whether the banks' home country regulators have similar regulatory provisions, and whether home country regulators have yet implemented them. The Dodd-Frank Act states that enhanced regulation of foreign banks should "give due regard to the principle of national treatment and equality of competitive opportunity; and take into account the extent to which the foreign financial company is subject on a consolidated basis to home country standards that are comparable" to U.S. standards. On the other hand, a number of these foreign banks are the U.S. operations of foreign G-SIBs, and may merit additional scrutiny by U.S. regulators because of potential systemic risk via a problem at their parent company. Alternatively, the intermediate holding company threshold could be expanded to include U.S. branch and U.S. agency assets of foreign banks. According to the Office of Financial Research, 13 U.S. branches and agencies of foreign banks (of which 10 are foreign G-SIBs) have more than $50 billion in assets but are not subject to all of the same enhanced prudential requirements as U.S. banks or intermediate holding companies. Omitting branch and agency assets can be justified in terms of deference to equivalent home country regulation, but whether assets are located in a branch or foreign-owned U.S. bank arguably does not change its impact on financial stability. The Treasury report recommends making parallel changes to the threshold for foreign banks' intermediate holding company requirements, exempting foreign banks from enhanced regulation provisions when there is home country regulatory equivalency, and applying the asset threshold to U.S. assets instead of global assets when applicable (for living wills, for example). The specific requirements of enhanced regulation are well-targeted to problems in the financial crisis, but overlap exists between individual provisions that may create excessive regulatory burden. Mitigating systemic risk is not the only rationale for enhanced regulation, but it is the primary one. Thus, if banks that do not pose systemic risk are subject to enhanced regulation, costs are imposed on those banks without yielding the primary benefit. The current system is tiered, so regulatory burden is lower in absolute terms for banks near the threshold, but may be higher in relative terms. Proponents of enhanced regulation see it as the only realistic option for coping with the risks posed by very large banks, which are a necessary and inevitable feature in financial markets. Although enhanced regulation raises costs, higher costs could theoretically increase economic efficiency if TBTF banks are taking excessive risk as a result of the moral hazard problem. Opponents fear that regulation will be ineffective, and it will increase moral hazard by reducing market discipline. However, any effect enhanced prudential regulation has on market discipline is arguably marginal, because large banks were already subject to a rigorous prudential regulation regime. Another possibility is that systemic risk is mainly caused by certain activities, not institutions. Enhanced regulation may not be effective if this is true, and could even exacerbate systemic risk if those activities migrate to less regulated institutions ("shadow banks"). Many economists believe that systemic risk is caused by banks that are too interconnected to fail or too complex to fail, as opposed to too big to fail. If size is well correlated with interconnectedness or complexity, then an asset threshold is a simple, inexpensive, and transparent way to determine who is subject to enhanced regulation. Data presented in this report indicate size is not perfectly correlated with interconnectedness or complexity. Some G-SIBs are relatively small by asset size, and some relatively large banks have relatively low systemic risk indicator scores. No bank with less than $200 billion receives a high score, but banks under that size have significant activities in at least one of the 12 indicators that make up the score. It is difficult to find an asset threshold value that is "just right." Set too high, and the threshold would exclude banks that are systemically important. Set too low, and it would include banks that are not systemically important. A case-by-case designation process is an alternative to a size threshold. A designation process defers to regulators' judgment and is inherently more subjective. Designation also risks a greater market perception of official TBTF status. A designation process has been used to designate non-banks as systemically important. That process has proven slow, reversible, and subject to legal challenges in practice. Currently, one firm is designated. A hybrid regime that mixes an automatic threshold with a case-by-case designation process reduces—but does not eliminate—some drawbacks to both. Congress could consider various modifications to the regime. For example, the regime could be extended to automatically capture types of depositories that are highly similar to bank holding companies such as thrift holding companies and banks without a parent holding company. Today, there are examples of both w $50 billion in assets, and there are examples of the former that are complex and predominantly engaged in nonbank activities. Looking back, AIG, Lehman Brothers, and Washington Mutual were all THCs at the center of the financial crisis. This appendix lists sections in the Dodd-Frank Act that only apply to banks with more than $50 billion in assets. Most, but not all, are regulatory requirements discussed above. The threshold is also used for bank assessments and to determine from whom FSOC can request information. The specific requirements of enhanced regulation are well-targeted to problems in the financial crisis, but overlap exists between individual provisions that may create excessive regulatory burden. Mitigating systemic risk is not the only rationale for enhanced regulation, but it is the primary one. Thus, if banks that do not pose systemic risk are subject to enhanced regulation, costs are imposed on those banks without yielding the primary benefit. The current system is tiered, so regulatory burden is lower in absolute terms for banks near the threshold, but may be higher in relative terms. Proponents of enhanced regulation see it as the only realistic option for coping with the risks posed by very large banks, which are a necessary and inevitable feature in financial markets. Although enhanced regulation raises costs, higher costs could theoretically increase economic efficiency if TBTF banks are taking excessive risk as a result of the moral hazard problem. Opponents fear that regulation will be ineffective, and it will increase moral hazard by reducing market discipline. However, any effect enhanced prudential regulation has on market discipline is arguably marginal, because large banks were already subject to a rigorous prudential regulation regime. Another possibility is that systemic risk is mainly caused by certain activities, not institutions. Enhanced regulation may not be effective if this is true, and could even exacerbate systemic risk if those activities migrate to less regulated institutions ("shadow banks"). Many economists believe that systemic risk is caused by banks that are too interconnected to fail or too complex to fail, as opposed to too big to fail. If size is well correlated with interconnectedness or complexity, then an asset threshold is a simple, inexpensive, and transparent way to determine who is subject to enhanced regulation. Data presented in this report indicate size is not perfectly correlated with interconnectedness or complexity. Some G-SIBs are relatively small by asset size, and some relatively large banks have relatively low systemic risk indicator scores. No bank with less than $200 billion receives a high score, but banks under that size have significant activities in at least one of the 12 indicators that make up the score. It is difficult to find an asset threshold value that is "just right." Set too high, and the threshold would exclude banks that are systemically important. Set too low, and it would include banks that are not systemically important. A case-by-case designation process is an alternative to a size threshold. A designation process defers to regulators' judgment and is inherently more subjective. Designation also risks a greater market perception of official TBTF status. A designation process has been used to designate non-banks as systemically important. That process has proven slow, reversible, and subject to legal challenges in practice. Currently, one firm is designated. A hybrid regime that mixes an automatic threshold with a case-by-case designation process reduces—but does not eliminate—some drawbacks to both. Congress could consider various modifications to the regime. For example, the regime could be extended to automatically capture types of depositories that are highly similar to bank holding companies such as thrift holding companies and banks without a parent holding company. Today, there are examples of both w $50 billion in assets, and there are examples of the former that are complex and predominantly engaged in nonbank activities. Looking back, AIG, Lehman Brothers, and Washington Mutual were all THCs at the center of the financial crisis. | The 2007-2009 financial crisis highlighted the problem of "too big to fail" financial institutions—the concept that the failure of a large financial firm could trigger financial instability, which in several cases prompted extraordinary federal assistance to prevent their failure. This report focuses on one pillar of the Dodd-Frank Act's (P.L. 111-203) response to addressing financial stability and ending too big to fail: a new enhanced prudential regulatory regime that applies to all banks with more than $50 billion in assets and to certain other financial institutions. Under this regime, the Federal Reserve is required to apply a number of safety and soundness requirements to large banks that are more stringent than those applied to smaller banks. These requirements are intended to mitigate systemic risk posed by large banks: Stress tests and capital planning ensure banks hold enough capital to survive a crisis. Living wills provide a plan to safely wind down a failing bank. Liquidity requirements ensure that banks are sufficiently liquid if they lose access to funding markets. Counterparty limits restrict the bank's exposure to counterparty default. Risk management requires publicly traded companies to have risk committees on their boards and banks to have chief risk officers. Financial stability, regulatory interventions that can be taken only if a bank poses a threat to the financial stability. Most of these requirements apply to about 30 U.S. bank holding companies or the U.S. operations of foreign banks. The requirements do not apply to other types of financial institutions with more than $50 billion in assets (unless individually designated by the Financial Stability Oversight Council), including a few large securities and insurance firms that are chartered as thrift holding companies. In addition, a number of provisions, such as higher capital requirements, that stem from the international "Basel III" agreement apply only to a handful of the largest banks. This is an example of how the current system is tailored, with the largest banks facing more stringent regulatory requirements than medium-sized and smaller banks. Congress is debating whether to modify the $50 billion threshold because some Members believe that it applies to too many banks that do not pose systemic risk. Bills to amend which banks are subject to enhanced regulation include H.R. 3312/S. 1893, H.R. 10, and S. 2155. Many economists believe that the economic problem of too big to fail is really a problem of firms that are too complex or too interdependent to fail. Size correlates with complexity and interdependence, but not perfectly. Size is a much simpler and more transparent metric than complexity or interdependence, however. As a practical matter, if size is well correlated with systemic importance, a dollar threshold could serve as a good proxy that is inexpensive and easy to administer. Designating banks on a case-by-case basis could raise similar issues that have occurred in the designation of nonbanks, such as legal challenges to overturn their designation. This report also examines the question of which banks are systemically important. However, examining the banks above and slightly below the threshold does not reveal any natural cut off points that divide bank organizations into two groups that clearly present substantively different risks to systemic stability. This is because the size differences between each bank and those nearest to it are incremental and because banks vary across numerous characteristics. For these reasons, making an objective and definitive size-based determination of the point that a bank becomes systemically important is difficult. Regulators do employ an empirical methodology to identify globally systemically important banks (G-SIBs) based on a score that is calculated using 12 indicators that measure the size, interconnectedness, substitutability, complexity, and cross-jurisdictional activity of a bank. However, the results of this exercise do not produce a clear and uncontestable score threshold at which institutions clearly become systemically important. |
The collection and use of personal information by websites, Internet service providers, direct marketers, data brokers, network advertisers, law enforcement entities, and others has raised privacy concerns. Personal information is readily available because of the widespread usage of the Internet and of cloud computing, the availability of inexpensive computer storage, and increased disclosures of personal information by Internet users in participatory Web 2.0 technologies. The increased availability of online personal information has fueled the creation of a new tracking industry. Behavioral advertising, a form of online advertising, is delivered based on consumer preferences or interest as inferred from data about online activities. In 2010, over $22 billion was spent on online advertising. This revenue allows websites to offer content and services for free. What They Know , an in-depth investigative series by the Wall Street Journal, found that one of the fastest growing Internet business models is of data-gatherers engaged in "intensive surveillance of people [visiting websites] to sell data about, and predictions of, their interests and activities, in real time." Websites such as Spokeo, an online data aggregator and broker, give site visitors vast quantities of personal information. Congress is examining the use of new technologies (such as flash cookies), and the privacy practices of the 15 websites identified as installing the most tracking technology on their visitors' computers. Consumers and public interest groups are filing complaints to challenge the collection and use of consumer data without consumer consent or knowledge. Online privacy concerns are widespread. Stakeholders routinely acknowledge that the continued success of electronic commerce depends upon the resolution of issues related to the privacy and security of online personal information. The U.S. Department of Commerce recently reiterated that the large-scale collection, analysis, and storage of personal information is central to the Internet economy; and that regulation of online personal information must not impede commerce. The Commerce Department's report on Commercial Data Privacy calls on Congress to create a "privacy bill of rights," and concludes that privacy policies are now widely viewed as ineffective for the protection of personal information. A recent Federal Trade Commission (FTC) Staff Report recommended implementation, either through legislation or self-regulation, of a Do Not Track system to allow consumers to opt out of online tracking or advertising. Developers, organizations, and businesses are voluntarily working on ways to allow users to opt out of behavior advertising. The U.S. Congress continues to examine the federal legal framework that protects personal information. Historically, Congress has played a major role in protecting personal information online. Beginning in the late 1990s, Congress passed laws aimed at specific online harms and amended existing laws to reflect the ways in which technology was being used to collect, use, and share personal information. Beginning with the 109 th Congress, every Congress has held numerous privacy-related hearings. The current Congressional privacy agenda is broad and includes items that Congress has worked on for several years, new issues posed by advances in technology, and items related to efforts to update the electronic surveillance laws for advances in technology. Reportedly, several Members in the 112 th Congress plan to introduce or reintroduce substantive privacy legislation. Online consumer privacy is an issue that is at the forefront of the Senate Commerce Committee's agenda, and it is a top priority for Chairman Rockefeller. Senator Kerry, Chairman of the Commerce Subcommittee on Communications, Technology and the Internet, along with Senator McCain, intend to introduce a privacy bill similar to the Obama Administration's legislative framework. Representative Rush reintroduced a comprehensive privacy bill, H.R. 611 , to require businesses to disclose details about their data-collection practices and allow consumers to make choices about such activities. Representative Stearns announced that he had drafted a consumer privacy bill with a provision to establish an FTC-approved self-regulatory program. The House Energy and Commerce Subcommittee on Commerce, Manufacturing, and Trade Chair Bono Mack said that the subcommittee will examine online privacy issues in hearings. Senate Judiciary Chairman Leahy has a long-standing interest in privacy, and his committee has several initiatives underway. A new Senate Committee on the Judiciary Subcommittee on Privacy, Technology and the Law was created in the 112 th Congress with jurisdiction covering oversight of laws and policies governing the collection, protection, use, and dissemination of commercial information by the private sector, including online behavioral advertising, privacy within social networking websites, and other online privacy issues. Senator Wyden has also announced plans to draft a bill to clarify what legal standards law enforcers and intelligence agents must satisfy before tracking an individual's physical movements using geolocation data generated by a mobile device. Important policy questions include whether Congress should draft legislation tailored to specific privacy threats (such as online behavioral advertising) or whether a broader, comprehensive federal privacy law is desirable. There is a growing consensus among stakeholders that basic privacy rules are necessary. However, consensus is lacking about the elements of a federal privacy law: what types of information it should cover (personal identifying information or more general information that is associated with a computer or device); how far it should reach; whether it should cover data collection or merely use; and who should be able to enforce it. One legal scholar posits that [i]t may be helpful to pull back the lens and see if it is possible to create a larger-scale outline of privacy. This broader perspective may help to illuminate the constituent elements of a privacy incursion, and the interrelationships between those elements. In this context, . . [there are] six discrete aspects of privacy relating to: (1) actors–relationships; (2) conduct; (3) motivations; (4) harms–remedies; (5) nature of information; and (6) format of information. Businesses view U.S. sector-by-sector regulation of personal information as an impediment to commerce and seek simplification. For example, Microsoft recommends a multi- pronged approach to the protection of individuals' privacy that includes legislation, industry self- regulation, technology tools, and consumer education. Three principles—transparency, control, and security—underpin Microsoft's approach to privacy. Under this approach, privacy protections would not be specific to any one technology, industry, or business model; would apply across sectors; would provide consistent baseline protections for consumers; and would simplify compliance. In addition, privacy legislation would preempt state laws that are inconsistent with federal policy. At the end of the 19 th century, a seminal law review article was published that developed the basic principle of American privacy law—the "right to be let alone." The article was written in response to invasions of personal privacy caused by the technological innovations of mass printing (newspapers) and the portable camera (photographs). Following this article, American common law jurisprudence developed four distinct tort remedies to protect personal privacy: false light, misappropriation, public disclosure of private facts, and intrusion upon seclusion. With the late 20 th century technological innovations of the Internet and the World Wide Web, the collection, use, and dissemination of electronic personal information is potentially much more invasive. As noted above, the right to privacy has long been characterized as the "the right to be let alone." And yet, today the more practical view may be that "[i]n the digital era, privacy is no longer about being 'let alone.' Privacy is about knowing what data is being collected and what is happening to it, having choices about how it is collected and used, and being confident that it is secure." Some advocate the expansion of this concept to include the right to "information privacy" for online transactions and personally identifiable information. The term "information privacy" refers to an individual's claim to control the terms under which "personal information"—information that can be linked to an individual or distinct group of individuals (e.g., a household)—is acquired, disclosed, and used. Others urge the construction of a market for personal information, to be viewed no differently than other commodities in the market. In the United States there is no comprehensive legal protection for personal information. The Constitution protects the privacy of personal information in a limited number of ways, and extends only to the protection of the individual against government intrusions. Constitutional guarantees are not applicable unless "state action" has taken place. Many of the threats to the privacy of personal information addressed in this report occur in the private sector, and are unlikely to meet the requirements of the "state action" doctrine. As a result, any limitations placed on the data collection activities of the private sector will be found not in the federal Constitution but in federal or state statutory law or common law. The federal Constitution makes no explicit mention of a "right of privacy," and the "zones of privacy" recognized by the Supreme Court are very limited. The Fourth Amendment search-and-seizure provision protects a right of privacy by requiring warrants before government may invade one's internal space or by requiring that warrantless invasions be reasonable. However, "the Fourth Amendment cannot be translated into a general constitutional 'right to privacy.' That Amendment protects individual privacy against certain kinds of governmental intrusion, but its protections go further, and often have nothing to do with privacy at all." Similarly, the Fifth Amendment's self-incrimination clause was once thought of as a source of protection from governmental compulsion to reveal one's private papers, but the Court has refused to interpret the self-incrimination clause as a source of privacy protection. In Whalen v. Roe , the Supreme Court recognized an implicit constitutional "right of informational privacy." Whalen concerned a New York law that created a centralized state computer file of the names and addresses of all persons who obtained medicines containing narcotics pursuant to a doctor's prescription. Although the Court upheld the state's authority, it found this gathering of information to affect two interests. The first was an "individual interest in avoiding disclosure of personal matters"; the other, "the interest in independence in making certain kinds of important decisions." These two interests rest on the substantive due process protections found in the Fifth and Fourteenth Amendments. More recently, the Court appeared to reiterate its recognition of a constitutional right to information privacy when it rejected 8-0 the National Aeronautics and Space Administration (NASA) contract workers' contentions that NASA violated their privacy rights under the U.S. Constitution by requiring them to answer questions about their drug treatment and asking their references whether they have any reason to question the individual's honesty or trustworthiness. Justice Samuel A. Alito, writing for the Court, said it was not necessary for the Court to decide whether NASA's questions about contract workers at the agency's Jet Propulsion Laboratory implicated privacy interests of "constitutional significance" because it was clear that any such constitutional interest, if it exists, did not prevent the government from taking reasonable steps that served legitimate government interests and gave the employees substantial protection against public disclosure of their personal information. Citing the Privacy Act's requirements that the government limit disclosure of information about the Jet Propulsion Lab (JPL) contract employees and the government's long-standing use of pre-employment investigations of federal job applicants, the court concluded "that the Government's inquiries do not violate a constitutional right to informational privacy." A patchwork of federal and state laws exists to protect the privacy of certain personal information. There is no comprehensive federal privacy statute that protects personal information held by both the public sector and the private sector. This report does not address state privacy laws. The private sector's collection and disclosure of personal information has been addressed by Congress on a sector-by-sector basis. Federal laws and regulations extend protection to consumer credit reports, electronic communications, federal agency records, education records, bank records, cable subscriber information, video rental records, motor vehicle records, health information, telecommunications subscriber information, children's online information, and customer financial information. Federal Trade Commission Act. The Federal Trade Commission Act (the FTC Act) prohibits unfair and deceptive practices in and affecting commerce. The FTC Act authorizes the Commission to seek injunctive and other equitable relief, including redress, for violations of the act, and provides a basis for government enforcement of certain fair information practices (e.g., failure to comply with stated information practices may constitute a deceptive practice or information practices maybe inherently deceptive or unfair). The first online behavioral advertising case was brought against an online network advertiser that acts as an intermediary between website publishers and advertisers. The Commission alleged that the online network advertiser violated the FTC Act by offering consumers the ability to opt out of the collection of information to be used for targeted advertising without telling them that the opt-out lasted only 10 days. The Commission's order prohibits the online network advertiser from making future privacy misrepresentations, requires the online network advertiser to provide consumers with an effective opt-out mechanism, and requires destruction of any data associated with a consumer collected during the time its opt-out was ineffective. The FTC recently approved a final consent order in a case involving the social networking service Twitter. The FTC charged that data security lapses allowed hackers to obtain unauthorized administrative control of Twitter. As a result, hackers had access to private "tweets" and non-public user information and took over user accounts. The order prohibits misrepresentations about the extent to which Twitter protects the privacy of communications, requires Twitter to maintain reasonable security, and mandates independent, comprehensive audits of Twitter's security practices. In December 2010, the FTC announced a case against a company selling a software program called Sentry Parental Controls that enables parents to monitor their children's activities online. The Commission alleged that the software company sold certain information that it collected from children via this software to third parties for marketing purposes, without parental consent. The Commission's order prohibits the company from sharing information gathered from its monitoring software and requires the company to destroy any such information in its database of marketing information. In September 2010, the Commission settled a case against a data broker that maintained an online service, which allowed consumers to search for information about others. The company allowed consumers to opt out of having their information appear in search results for a $10 fee. Four thousand consumers paid the fee and opted out, but their personal information still appeared in search results. The Commission's settlement requires the data broker to disclose limitations on its opt-out offer, and to provide refunds to consumers who had previously opted out. In March 2011, the FTC reached a settlement with Google over charges that it violated user privacy when it launched the Google Buzz social network. Google Buzz was offered to Google users through Gmail. Many who chose not to join the Google social network were enrolled anyway, and those who chose to join were not fully informed regarding the extent their personal information might be shared with, or exposed to, Google users outside of their own personal network. The Google privacy policy at the time stated, "When you sign up for a particular service that requires registration, we ask you to provide personal information. If we use this information in a manner different than the purpose for which it was collected, then we will ask for your consent prior to such use." The FTC alleged that the representations in Google's privacy policy were false or misleading, and despite its privacy policy that Google would ask for consumers' consent before using their information for another purpose, Google used it to populate its social network without getting user permission. The FTC charged that the policy was false or misleading and constituted a deceptive practice. The proposed settlement bars Google from future privacy misrepresentations, requires the company to implement a comprehensive privacy program, and requires independent privacy audits for the next 20 years. The Federal Trade Commission announced that it has accepted, subject to final approval, a consent agreement from Google that would resolve the Commission's allegations. This is the first time an FTC settlement order has required a company to implement a comprehensive privacy program to protect consumers' information. The FTC recently released a Staff Report on a Preliminary Framework on Protecting Consumer Privacy which includes three major elements: (1) companies should integrate privacy into their regular business operations and throughout product development; (2) provide meaningful privacy options while preserving beneficial uses of data, and provide choices to consumers in a simpler, more streamlined manner; and (3) improve the transparency of all data practices. The Framework's basic building blocks are scope, privacy by design, simplified choice, and greater transparency. The Framework applies to all commercial entities that collect or use consumer data that can be reasonably linked to a specific consumer, computer, or other device. The FTC recommends that companies provide consumers with reasonable access to data about themselves depending on the sensitivity of the data and the nature of its use, and provide prominent disclosures and obtain affirmative express consent before using consumer data in a materially different manner. The FTC Staff Report includes a recommendation to implement a universal choice Do Not Track mechanism for behavioral tracking or behavioral advertising. The Commerce Department's Internet Policy Taskforce (IPTF) is examining how commercial data privacy policy advances the goals of protecting consumer trust in the Internet economy and promotes innovation. The Taskforce released a "Green Paper" on consumer data privacy in the Internet economy on December 16, 2010, and made 10 separate recommendations about how to strengthen consumer data privacy protections. The IPTF concluded that the basic element of current consumer data privacy framework, the privacy policy, is ineffective because it is often a lengthy, dense, and legalistic document. The IPTF recommended updating the commercial data privacy framework because the notice-and-choice system does not provide adequately transparent descriptions of personal data use. The IPTF also concluded that the rules of the road are hard to discern for businesses and sometimes become clear only after FTC enforcement actions, and differing international legal frameworks and new technologies present privacy challenges and complicate commercial data flows across national borders. The IPTF's report recommends considering a clear set of principles concerning how online companies collect and use personal information for commercial purposes. These principles would build on existing Fair Information Practice Principles (FIPPs) of transparency, data use limitation, and accountability. The IPTF report also recommended that Congress authorize the FTC to enforce baseline privacy protections, and create incentives, such as safe harbors, for businesses to adopt self-regulatory privacy codes of conduct, and consider how to harmonize security breach notification rules. The IPTF report calls on Congress to review the Electronic Communications Privacy Act (ECPA) for the cloud computing environment. In light of calls for Congress to reform ECPA, a brief discussion of ECPA follows. In 1986, Congress enacted the Electronic Communications Privacy Act (ECPA) to strike a balance between the fundamental privacy rights of citizens and the legitimate needs of law enforcement with respect to data shared or stored in various types of electronic and telecommunications services. Since the ECPA was passed the Internet and associated technologies have expanded exponentially. ECPA consists of three parts: a revised Title III of the Omnibus Crime Control and Safe Streets Act of 1968 (also known as "Title III" or the "Wiretap Act"); the Stored Communications Act (SCA)); and provisions governing the installation and use of trap and trace devices and pen registers. ECPA prohibits the interception of wire, oral, or electronic communications unless an exception to the general rule applies. Unless otherwise provided, Title III prohibits wiretapping and electronic eavesdropping; possession of wiretapping or electronic eavesdropping equipment; use or disclosure of information obtained through illegal wiretapping or electronic eavesdropping; and disclosure of information secured through court-ordered wiretapping or electronic eavesdropping, in order to obstruct justice. The Stored Communications Act prohibits unlawful access to stored communications. The Pen Register and Trap and Trace statute proscribes unlawful use of a pen register or a trap and trace device. ECPA establishes rules that law enforcement must follow before they can access data stored by service providers. Depending on the type of customer information involved and the type of service being provided, the authorization law enforcement must obtain in order to require disclosure by a third party will range from a simple subpoena to a search warrant based on probable cause. ECPA reform efforts focus on crafting a legal structure that is up-to-date, can be effectively applied to modern technology, and that protects users' reasonable expectations of privacy. ECPA is viewed by many stakeholders as unwieldy, complex, and difficult for judges to apply. Cloud computing poses particular challenges to the ECPA framework. For example, when law enforcement officials seek data or files stored in the cloud, such as web-based e-mail applications or online word processing services, the privacy standard that is applied is often lower than the standard that applies when law enforcement officials seek the same data stored on an individual's personal or business hard drive. | There is no comprehensive federal privacy statute that protects personal information. Instead, a patchwork of federal laws and regulations govern the collection and disclosure of personal information and has been addressed by Congress on a sector-by-sector basis. Federal laws and regulations extend protection to consumer credit reports, electronic communications, federal agency records, education records, bank records, cable subscriber information, video rental records, motor vehicle records, health information, telecommunications subscriber information, children's online information, and customer financial information. Some contend that this patchwork of laws and regulations is insufficient to meet the demands of today's technology. Congress, the Obama Administration, businesses, public interest groups, and citizens are all involved in the discussion of privacy solutions. This report examines some of those efforts with respect to the protection of personal information. This report provides a brief overview of selected recent developments in the area of federal privacy law. This report does not cover workplace privacy laws or state privacy laws. For information on access to electronic communications, see CRS Report R41733, Privacy: An Overview of the Electronic Communications Privacy Act, by [author name scrubbed]. |
The renewal of military commission proceedings against Khalid Sheik Mohammad and four others for their alleged involvement in the 9/11 terrorist attacks has focused renewed attention on the differences between trials in federal court and those conducted by military commission. The decision to try the defendants in military court required a reversal in policy by the Obama Administration, which had publicly announced in November 2009 its plans to transfer the five detainees from the U.S. Naval Station in Guantanamo Bay, Cuba, into the United States to stand trial in the U.S. District Court for the Southern District of New York for criminal offenses related to the 9/11 attacks. The Administration's plans to try some Guantanamo detainees in federal civilian court proved controversial, and Congress responded by enacting funding restrictions which barred any non-citizen held at Guantanamo from being transferred into the United States for any purpose, including prosecution. These restrictions, which have been extended for the duration of FY2014, effectively make military commissions the only viable option for trying detainees held at Guantanamo for the foreseeable future, and have resulted in the Administration choosing to reintroduce charges against Mohammed and his co-defendants before a military commission. While military commission proceedings have been instituted against a number of suspected enemy belligerents held at Guantanamo, the Obama Administration has opted to bring charges in federal criminal court against many terrorist suspects held at locations other than Guantanamo. On July 5, 2011, Somali national Ahmed Abdulkadir Warsame was brought to the United States to face terrorism-related charges in a civilian court, after having reportedly been detained on a U.S. naval vessel for two months for interrogation by military and intelligence personnel. Some argued that Warsame should have remained in military custody abroad and face trial before a military commission, while others argued that he should have been transferred to civilian custody immediately. Similar controversy also arose regarding the arrest by U.S. civil authorities and subsequent prosecution of Umar Farouk Abdulmutallab and Faisal Shahzad, who some argued should have been detained and interrogated by military authorities and tried by military commission. This report provides a brief summary of legal issues raised by the choice of forum for trying accused terrorists and a chart comparing authorities and composition of the federal courts to those of military commissions. A second chart compares selected military commissions rules under the Military Commissions Act (MCA), as amended by the Military Commissions Act of 2009, to the corresponding rules that apply in federal court. This chart follows the same order and format used in CRS Report RL31262, Selected Procedural Safeguards in Federal, Military, and International Courts , to facilitate comparison with safeguards provided in international criminal tribunals. For similar charts comparing military commissions as envisioned under the MCA, as passed in 2006, to the rules that had been established by the Department of Defense (DOD) for military commissions and to general military courts-martial conducted under the Uniform Code of Military Justice (UCMJ), see CRS Report RL33688, The Military Commissions Act of 2006: Analysis of Procedural Rules and Comparison with Previous DOD Rules and the Uniform Code of Military Justice , by [author name scrubbed]. For a comparison of the rules established by the MCA 2006 with those found in the MCA 2009 and to the rules that apply to courts martial under the UCMJ, see CRS Report R41163, The Military Commissions Act of 2009 (MCA 2009): Overview and Legal Issues , by [author name scrubbed]. For additional analysis of issues related to the disposition of Guantanamo detainees, including possible trials in federal or military courts, see CRS Report R40139, Closing the Guantanamo Detention Center: Legal Issues , by [author name scrubbed] et al. On January 22, 2009, President Barack Obama issued an executive order requiring that the Guantanamo detention facility be closed no later than a year from the date of the order. The order established a task force ("Guantanamo Task Force") to review all Guantanamo detentions to assess whether each detainee should continue to be held by the United States, be transferred or released to another country, or be prosecuted by the United States for criminal offenses. Ongoing military commissions were essentially halted during this review period, although some pretrial proceedings continued to take place. One detainee, Ahmed Ghailani, was transferred in June 2009 to the Southern District of New York for trial in federal court on charges related to his alleged role in the 1998 East Africa Embassy bombings, and was subsequently convicted and sentenced to life imprisonment. President Obama's Detention Policy Task Force issued a preliminary report July 20, 2009, reaffirming that the White House considers military commissions to be an appropriate forum for trying some cases involving suspected violations of the laws of the war, although federal criminal court would be the preferred forum for any trials of detainees. The disposition of each case referred for criminal prosecution is to be assigned to a team comprised of DOJ and DOD personnel, including prosecutors from the Office of Military Commissions. The report also provided a set of criteria to govern the disposition of cases involving Guantanamo detainees. In addition to "traditional principles of federal prosecution," the protocol identifies three broad categories of factors to be taken into consideration: Strength of interest, namely, the nature and gravity of offenses or underlying conduct; identity of victims; location of offense; location and context in which individual was apprehended; and the conduct of the investigation. Efficiency, namely, protection of intelligence source and methods; venue; number of defendants; foreign policy concerns; legal or evidentiary problems; efficiency and resource concerns. Other prosecution considerations, namely, the extent to which the forum and offenses that can be tried there permit a full presentation of the wrongful conduct, and the available sentence upon conviction. On November 13, 2009, Attorney General Holder announced the decision to transfer five "9/11 conspirators" to the Southern District of New York to stand trial, and charges that had previously been brought against these individuals before military commissions were withdrawn without prejudice in January 2010. On January 22, 2010, the Guantanamo Task Force issued its final report concerning the appropriate disposition of each detainee held at Guantanamo. The Task Force concluded that 36 detainees remained subject to active criminal investigations or prosecutions; 48 detainees should remain in preventive detention without criminal trial, as they are "too dangerous to transfer but not feasible for prosecution"; and the remaining detainees may be transferred, either immediately or eventually, to a foreign country. The Administration's plans to bring Khalid Sheik Mohammed and other Guantanamo detainees into the United States proved controversial. Beginning in 2009, Congress began placing funding restrictions in annual appropriations and authorization measures to limit executive discretion to transfer or release Guantanamo detainees into the United States. Because no civilian court operates at Guantanamo, these limitations have effectively made military commissions the only viable option for trying Guantanamo detainees for criminal activity for the foreseeable future. In March 2011, Secretary of Defense Robert Gates announced that the government would resume the filing of charges before military commissions at Guantanamo. Shortly thereafter, Attorney General Eric Holder announced the Obama Administration's reversal of its decision to bring Khalid Sheik Mohammed and his alleged co-conspirators into the United States to face trial in federal court, and stated that they would instead be tried before a military commission at Guantanamo. In April 2012, charges were referred to a military commission against Khalid Sheikh Mohammed, Walid Bin Attash, Ramzi Bin Al Shibh, Ali Abdul-Aziz Ali, and Mustafa Ahmed Al Hawsawi for their alleged involvement in the 9/11 attacks. In October 2012, the U.S. Court of Appeals for the D.C. Circuit, in its first case of an appeal from a military commission conviction, reversed the conviction of Salim Hamdan after determining that Congress did not intend for the offenses it defined in the MCA to apply retroactively ( Hamdan II ). Because the court agreed that the crime of material support for terrorism did not exist as a war crime under the international law of war at the time the relevant conduct occurred (a requirement under the military commissions statute in effect at the time ), it vacated the decision below of the Court of Military Commissions Review (CMCR), which had unanimously affirmed Hamdan's conviction. Some have noted the prevalence of the charge of material support for terrorism in military commission cases to date and question the continued viability of the military commission system in light of this decision. The government did not appeal the decision to the Supreme Court. Instead, the government is appealing the second CMCR appeal of a final verdict, Al Bahlul v. United States. When that case reached the D.C. Circuit on appeal, the government essentially asked the appellate court to overturn Al Bahlul's conviction on the basis that Hamdan II provided binding precedent on the question presented, namely, the validity of convictions for conspiracy, solicitation, and material support of terrorism for conduct preceding passage of the Military Commissions Act (MCA) in 2006. ( Hamdan II did not address conspiracy or solicitation, but the government conceded that these offenses do not constitute universally recognized violations of the international law of war.) The court complied with the request in a per curiam order. The government sought and was granted a rehearing en banc in the Bahlul case. U.S. law provides for the trial of suspected terrorists, including those captured abroad, in several ways. Those who are accused of violating specific federal laws are triable in federal criminal court. Provisions in the U.S. Criminal Code relating to war crimes and terrorist activity apply extraterritorially and may be applicable to some detainees. Those accused of violating the law of war or committing the offenses enumerated in the Military Commissions Act (MCA), as amended by the Military Commissions Act of 2009, may be tried by military commissions under the MCA, or by general court-martial under the UCMJ. The procedural protections afforded to the accused in each of these forums may differ. The MCA authorizes the establishment of military commissions with jurisdiction to try alien "unprivileged enemy belligerents" for offenses made punishable by the MCA or the law of war. Notwithstanding the recent amendments to the MCA, which generally enhance due process guarantees for the accused, critics continue to question their constitutionality. One issue that has been raised by proponents of the use of military commissions is the concern that federal criminal courts would endow accused terrorists with constitutional rights they would not otherwise enjoy. The MCA does not restrict military commissions from exercising jurisdiction within the United States, and the Supreme Court has previously upheld the use of military commissions against "enemy belligerents" tried in the United States under procedural rules that differed from the federal rules. The Supreme Court has not settled the question regarding the extent to which constitutional guarantees apply to aliens detained at Guantanamo, making any difference in rights due to location of the trials difficult to predict. Some view the unpredictability of the Supreme Court's acceptance of the military commission procedures as a factor in favor of using civilian trial courts. The Fifth Amendment to the Constitution provides that "no person shall be ... deprived of life, liberty, or property, without due process of law." Due process includes the opportunity to be heard whenever the government places any of these fundamental liberties at stake. The Constitution contains other explicit rights applicable to various stages of a criminal prosecution. Criminal proceedings provide both the opportunity to contest guilt and to challenge the government's conduct that may have violated the rights of the accused. The system of procedural rules used to conduct a criminal hearing, therefore, serves as a safeguard against violations of constitutional rights that take place outside the courtroom, for example, during arrests and interrogations. The Bill of Rights applies to all citizens of the United States and all aliens within the United States. However, the methods of application of constitutional rights, in particular the remedies available to those whose rights might have been violated, may differ depending on the severity of the punitive measure the government seeks to take and the entity deciding the case. The jurisdiction of various entities to try a person accused of a crime could have a profound effect on the procedural rights of the accused. The type of judicial review available also varies and may be crucial to the outcome. International law also contains some basic guarantees of human rights, including rights of criminal defendants and prisoners. Treaties to which the United States is a party are expressly made a part of the law of the land by the Supremacy Clause of the Constitution and may be codified through implementing legislation, or in some instances, may be directly enforceable by the judiciary. International law is incorporated into U.S. law, but does not take precedence over statute. The law of war, a subset of international law, applies to cases arising from armed conflicts (i.e., war crimes). It remains unclear how the law of war applies to the current hostilities involving non-state terrorists, and the nature of the rights due to accused terrorist/war criminals may depend in part on their status under the Geneva Conventions. The Supreme Court has ruled that Al Qaeda fighters are entitled at least to the baseline protections applicable under Common Article 3 of the Geneva Conventions, which includes protection from the "passing of sentences and the carrying out of executions without previous judgment pronounced by a regularly constituted court, affording all the judicial guarantees which are recognized as indispensable by civilized peoples." The federal judiciary is established by Article III of the Constitution and consists of the Supreme Court and "inferior tribunals" established by Congress. It is a separate and co-equal branch of the federal government, independent of the executive and legislative branches, designed to be insulated from the public passions. Its function is not to make law, but rather to interpret law and decide disputes arising under it. Federal criminal law and procedures are enacted by Congress and codified primarily in title 18 of the U.S. Code. The Supreme Court promulgates procedural rules for criminal trials at the federal district courts, subject to Congress's approval. These rules, namely the Federal Rules of Criminal Procedure (Fed. R. Crim. P.) and the Federal Rules of Evidence (Fed. R. Evid.), incorporate procedural rights that the Constitution and various statutes demand. The charts provided at the end of this report cite relevant rules or court decisions, but make no effort to provide an exhaustive list of authorities. There is historical precedent for using federal courts to try those accused of terrorism or war related offenses, including some that might under some circumstances be characterized as "violations of the law or war." The U.S. Constitution empowers Congress to "define and punish Piracies and Felonies committed on the high Seas, and Offences against the Law of Nations." The First Congress provided for the punishment of persons who committed murder or robbery or the like on the high seas, declaring that each offender was to be "taken and adjudged to be a pirate and felon and being thereof convicted," would be sentenced to death. In 1798, Attorney General Charles Lee advised Secretary of State Timothy Pickering that federal courts were fully competent to try and punish pirates, whether U.S. citizens or aliens. Federal courts exercised jurisdiction in many such cases. More recently, several high-profile prosecutions involving terrorism abroad have resulted in federal convictions. The 1985 hijacking of the Achille Lauro by Palestinian Liberation Organization (PLO) terrorists resulted in the federal conviction of a Lebanese suspect on charges of aircraft piracy and hostage-taking, notwithstanding the defendant's claim to have been merely following military orders. Federal courts also handled prosecutions related to the 1993 bombing of the World Trade Center in New York City, the 2000 bombing of the U.S.S. Cole in the Gulf of Aden, and the 1998 U.S. Embassy bombings in Africa. Federal courts are currently handling several high-profile terrorism cases, including that of Sulaiman Abu Ghaith, a former Al Qaeda spokesman and son-in-law of Osama bin Laden who is on trial in Manhattan on charges of providing material support to Al Qaeda and conspiracy to kill Americans. This and other trials slated to begin soon are seen as providing test cases to demonstrate the efficacy or inadequacy of civilian courts for prosecuting terrorism suspects. In March 2010, the Department of Justice released a list of terrorism trials conducted since 2001, and reported a total of 403 unsealed convictions from September 11, 2001, to March 18, 2010. Around 60% of these convictions were charged under criminal code provisions that are not facially terrorism offenses, including such offenses as fraud, immigration violations, firearms offenses, drug-related offenses, false statements, perjury, obstruction of justice, and general conspiracy charges under 18 U.S.C. Section 371, some of which may not have law-of-war analogs that would permit their trial by military commissions. The remaining 40% are what the Justice Department labeled "Category I Offenses" for the purposes of its report, which covers crimes that are directly related to international terrorism. These crimes include the following: Aircraft Sabotage (18 U.S.C. §32) Animal Enterprise Terrorism (18 U.S.C. §43) Crimes Against Internationally Protected Persons (18 U.S.C. §§112, 878, 1116, l201(a)(4)) Use of Biological, Nuclear, Chemical or Other Weapons of Mass Destruction (18 U.S.C. §§175, 175b, 229, 831, 2332a) Production, Transfer, or Possession of Variola Virus (Smallpox) (18 U.S.C. §175c) Participation in Nuclear and WMD Threats to the United States (18 U.S.C. §832) Conspiracy Within the United States to Murder, Kidnap, or Maim Persons or to Damage Certain Property Overseas (18 U.S.C. §956) Hostage Taking (18 U.S.C. §1203) Terrorist Attacks Against Mass Transportation Systems (18 U.S.C. §1993) Terrorist Acts Abroad Against United States Nationals (18 U.S.C. §2332) Terrorism Transcending National Boundaries (18 U.S.C. §2332b) Bombings of Places of Public Use, Government Facilities, Public Transportation Systems and Infrastructure Facilities (18 U.S.C. §2332f) Missile Systems designed to Destroy Aircraft (18 U.S.C. §2332g) Production, Transfer, or Possession of Radiological Dispersal Devices (18 U.S.C. §2332h) Harboring Terrorists (18 U.S.C. §2339) Providing Material Support to Terrorists (18 U.S.C. §2339A) Providing Material Support to Designated Terrorist Organizations (18 U.S.C. §2339B) Prohibition Against Financing of Terrorism (18 U.S.C. §2339C) Receiving Military-Type Training from a Foreign Terrorist Organization (18 U.S.C. §2339D) Narco-Terrorism (21 U.S.C. §1010A) Sabotage of Nuclear Facilities or Fuel (42 U.S.C. §2284) Aircraft Piracy (49 U.S.C. §46502) Violations of the International Emergency Economic Powers Act (IEEPA, 50 U.S.C. §1705(b)) involving E.O. 12947 (Terrorists Who Threaten to Disrupt the Middle East Peace Process); E.O. 13224 (Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism or Global Terrorism List); and E.O. 13129 (Blocking Property and Prohibiting Transactions With the Taliban) The Constitution empowers Congress to declare war and "make rules concerning captures on land and water," to define and punish violations of the "Law of Nations," and to make regulations to govern the armed forces. The power of the President to convene military commissions flows from his authority as Commander in Chief of the Armed Forces and his responsibility to execute the laws of the nation. Under the Articles of War and subsequent statute, the President has at least implicit authority to convene military commissions to try offenses against the law of war. The authority and objectives underlying military courts-martial and military commissions are not coextensive. Rather than serving the internally directed purpose of maintaining discipline and order of the troops, the military commission is externally directed at the enemy as a means of waging successful war by punishing and deterring offenses against the law of war. Military commissions have historically been used in connection with military government in cases of occupation or martial law where ordinary civil government was impaired. Jurisdiction of military commissions is limited to time of war and to trying offenses recognized under the law of war or as designated by statute. While case law suggests that military commissions could try U.S. citizens as enemy belligerents, the Military Commissions Act permits only aliens to be tried. The United States first used military commissions to try enemy belligerents accused of war crimes during the occupation in Mexico in 1847, and made heavy use of them in the Civil War and in the Philippine Insurrection. However, prior to President Bush's Military Order of 2001 establishing military commissions for certain alien terrorism suspects, no military commissions had been convened since the aftermath of World War II. As non-Article III courts, military commissions have not been subject to the same constitutional requirements that are applied in Article III courts. The Military Commissions Act authorizes the Secretary of Defense to establish regulations for military commissions in accordance with its provisions. To date, there have been eight convictions of Guantanamo detainees by military commissions, six of which were procured by plea agreement. A few commission rulings have been appealed. The following charts provide a comparison of the military commissions under the revised Military Commissions Act and standard procedures for federal criminal court under the Federal Rules of Criminal Procedure and the Federal Rules of Evidence. Chart 1 compares the legal authorities for establishing both types of tribunals, the jurisdiction over persons and offenses, and the structures of the tribunals. Chart 2 , which compares procedural safeguards incorporated in the MCA to those applicable in federal criminal cases, follows the same order and format used in CRS Report RL31262, Selected Procedural Safeguards in Federal, Military, and International Courts , Selected Procedural Safeguards in Federal, Military, and International Courts , by [author name scrubbed], in order to facilitate comparison of the those tribunals to safeguards provided in the international military tribunals that tried World War II crimes at Nuremberg and Tokyo, and contemporary ad hoc tribunals set up by the UN Security Council to try crimes associated with hostilities in the former Yugoslavia and Rwanda. For a comparison with previous rules established under President George W. Bush's Military Order, refer to CRS Report RL33688, The Military Commissions Act of 2006: Analysis of Procedural Rules and Comparison with Previous DOD Rules and the Uniform Code of Military Justice . For a comparison of the rules established by the MCA 2006 with those found in the MCA 2009 and to the rules that apply to courts martial under the UCMJ, see CRS Report R41163, The Military Commissions Act of 2009 (MCA 2009): Overview and Legal Issues , by [author name scrubbed]. | The renewal of military commission proceedings against Khalid Sheik Mohammad and four others for their alleged involvement in the 9/11 terrorist attacks has focused renewed attention on the differences between trials in federal court and those conducted by military commission. The decision to try the defendants in military court required a reversal in policy by the Obama Administration, which had publicly announced in November 2009 its plans to transfer the five detainees from the U.S. Naval Station in Guantanamo Bay, Cuba, into the United States to stand trial in the U.S. District Court for the Southern District of New York for criminal offenses related to the 9/11 attacks. The Administration's plans to try these and possibly other Guantanamo detainees in federal court proved controversial, and Congress responded by enacting funding restrictions which effectively barred any non-citizen held at Guantanamo from being transferred into the United States. These restrictions, which have been extended for the duration of FY2014, effectively make military commissions the only viable option for trying detainees held at Guantanamo for the foreseeable future, and have resulted in the Administration choosing to reintroduce charges against Mohammed and his co-defendants before a military commission. While military commission proceedings have been instituted against some suspected enemy belligerents held at Guantanamo, the Obama Administration has opted to bring charges in federal criminal court against terrorist suspects arrested in the United States, as well as some terrorist suspects who were taken into U.S. custody abroad but who were not transferred to Guantanamo. Some who oppose the use of federal criminal courts argue that bringing detainees to the United States for trial poses a security threat and risks disclosing classified information, or could result in the acquittal of persons who are guilty. Others have praised the efficacy and fairness of the federal court system and have argued that it is suitable for trying terrorist suspects and wartime detainees, and have also voiced confidence in the courts' ability to protect national security while achieving justice that will be perceived as such among U.S. allies abroad. Some continue to object to the trials of detainees by military commission, despite the amendments Congress enacted as part of the Military Commissions Act of 2009 (MCA), P.L. 111-84, because they say it demonstrates a less than full commitment to justice or that it casts doubt on the strength of the government's case against those detainees. Others question the continued viability of military commissions in light of the recent appellate court decision invalidating the offense of material support of terrorism as to conduct occurring prior to the 2006 enactment of the MCA (Hamdan v. United States). This report provides a brief summary of legal issues raised by the choice of forum for trying accused terrorists and a chart comparing selected military commissions rules under the Military Commissions Act, as amended, to the corresponding rules that apply in federal court. The chart follows the same order and format used in CRS Report RL31262, Selected Procedural Safeguards in Federal, Military, and International Courts, to facilitate comparison with safeguards provided in international criminal tribunals. For similar charts comparing military commissions as envisioned under the MCA, as originally passed in 2006, to the rules that had been established by the Department of Defense (DOD) for military commissions and to general military courts-martial conducted under the Uniform Code of Military Justice (UCMJ), see CRS Report RL33688, The Military Commissions Act of 2006: Analysis of Procedural Rules and Comparison with Previous DOD Rules and the Uniform Code of Military Justice, by [author name scrubbed]. |
The automatic annual adjustment for Members of Congress is determined by a formula using a component of the Employment Cost Index (ECI), which measures rate of change in private sector pay. The adjustment automatically takes effect unless (1) Congress statutorily prohibits the adjustment; (2) Congress statutorily revises the adjustment; or (3) the annual base pay adjustment of General Schedule (GS) federal employees is established at a rate less than the scheduled increase for Members, in which case the percentage adjustment for Member pay is automatically lowered to match the percentage adjustment in GS base pay. Under the ECI formula, Members may not receive an annual pay adjustment greater than 5%. In the past, Member pay has been frozen statutorily in two ways: (1) directly, through legislation that freezes salaries for Members but not other federal employees, and (2) indirectly, through broader pay freeze legislation that covers Members and other specified categories of federal employees. This adjustment formula was established by the Ethics Reform Act of 1989. Votes potentially related to the annual adjustments since the implementation of this act are contained in this report. Member salaries are funded in a permanent appropriations account and not in the annual appropriations bills. Although discussion of the Member pay adjustment sometimes occurs during consideration of the annual appropriations bills funding the U.S. Department of the Treasury—currently the Financial Services and General Government appropriations bill—or the legislative branch, these bills do not contain funds for the annual salaries or pay adjustment for Members. Nor do they contain language authorizing an increase. The use of appropriations bills as vehicles for provisions prohibiting the automatic annual pay adjustments for Members developed by custom. A provision prohibiting an adjustment to Member pay could be offered to any bill, or be introduced as a separate bill. The Twenty-seventh Amendment to the Constitution, which was proposed on September 25, 1789, and ratified May 7, 1992, states: "No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened." Under the process established by the Ethics Reform Act of 1989, Member pay is automatically adjusted pursuant to a formula. Following ratification of the amendment, this procedure was challenged in federal court. The reviewing court held that the Twenty-seventh Amendment does not apply to the automatic annual adjustments, since Congress is considered to already have voted on future adjustments when the automatic mechanism was established. Therefore, according to the court, any adjustment pursuant to the Ethics Reform Act of 1989 is considered a ministerial act and not a separate legislative enactment subject to the Twenty-seventh Amendment. Since these decisions, numerous bills have been introduced to change the pay adjustment procedure to require congressional action to effect the pay change. The effect of the Twenty-seventh Amendment on pay adjustments that may occur separate from the procedures established by the Ethics Reform Act—including, but not limited to, pay reductions, alternative pay adjustment mechanisms, and Article III standing to challenge any future adjustments in federal court —remains unclear. The maximum potential January 2019 member pay adjustment of 2.3%, or $4,000, was known when the Bureau of Labor Statistics (BLS) released data for the change in the Employment Cost Index (ECI) during the 12-month period from December 2016 to December 2017 on January 31, 2018. Each year, the adjustment takes effect automatically unless it is either denied or modified statutorily by Congress, or limited by the General Schedule (GS) base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. The House-passed ( H.R. 5894 ) and Senate-reported versions ( S. 3071 ) of the FY2019 legislative branch appropriations bill both contained provisions to prevent this adjustment. The Member pay provision was included in the bills as introduced and no separate votes were held on this provision. Division B of P.L. 115-244 , enacted September 21, 2018, included the pay freeze provision. The maximum potential January 2018 member pay adjustment of 1.8%, or $3,100, was known when the Bureau of Labor Statistics (BLS) released data for the change in the Employment Cost Index (ECI) during the 12-month period from December 2015 to December 2016 on January 31, 2017. As noted above, each year, the adjustment takes effect automatically unless it is either denied or modified statutorily by Congress, or limited by the General Schedule (GS) base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. The 2018 GS base pay adjustment was 1.4%, automatically limiting any Member pay adjustment to $2,400. The House-passed ( H.R. 3162 ) and Senate-reported versions ( S. 1648 ) of the FY2018 legislative branch appropriations bill both contained provisions to prevent this adjustment. The Member pay provision was included in the bills as introduced and no separate votes were held on this provision. Neither bill was enacted prior to the start of FY2018, and legislative branch activities were initially funded through a series of continuing appropriations resolutions (CRs): P.L. 115-56 , through December 8, 2017; P.L. 115-90 , through December 22, 2017; P.L. 115-96 , through January 19, 2018; P.L. 115-120 , through February 8, 2018; and P.L. 115-123 , through March 23, 2018. P.L. 115-56 contained a provision, extended in the subsequent CRs, continuing "section 175 of P.L. 114-223 , as amended by division A of P.L. 114-254 ." This provision prohibited a Member pay adjustment in FY2017. Section 7 of the FY2018 Consolidated Appropriations Act ( P.L. 115-141 ) prohibited the adjustment for the remainder of the year. Below is a chronology of Member pay actions since the implementation of the Ethics Reform Act of 1989, which established the current pay adjustment system. In general, the salary adjustment projected by the formula is followed by a discussion of any action or potentially related votes. Any other action related to pay for Members of Congress that occurred during that calendar year is also listed. The maximum potential January 2017 Member pay adjustment of 1.6%, or $2,800, was known when the Bureau of Labor Statistics (BLS) released data for the change in the Employment Cost Index (ECI) during the 12-month period from December 2014 to December 2015 on January 30, 2016. Both the House-passed ( H.R. 5325 ) and Senate-reported ( S. 2955 ) versions of the FY2017 legislative branch appropriations bill—which would provide approximately $4.4 billion in funding for the activities of the House of Representatives, Senate, and legislative branch support agencies —contained a provision that would prohibit this adjustment. The Member pay provision was included in the bills as introduced and no separate votes were held on this provision. No further action was taken on H.R. 5325 or S. 2955 , but the pay prohibition language was included in the Further Continuing and Security Assistance Appropriations Act, 2017 ( P.L. 114-254 ). Absent the statutory prohibition on a Member pay adjustment, Members of Congress would have automatically been limited to a 1.0% ($1,700) salary increase to match the increase in base salaries for General Schedule (GS) employees. The maximum potential January 2016 Member pay adjustment of 1.7%, or $3,000, was known when the Bureau of Labor Statistics (BLS) released data for the change in the Employment Cost Index (ECI) during the 12-month period from December 2013 to December 2014 on January 30, 2015. The House-passed and Senate-reported versions of the FY2016 legislative branch appropriations bill ( H.R. 2250 ) both contained a provision prohibiting this adjustment. The pay adjustment prohibition was subsequently included in the Consolidated Appropriations Act, 2016 ( P.L. 114-113 ). Absent the statutory prohibition on a Member pay adjustment, Members of Congress would have automatically been limited to a 1.0% ($1,700) salary increase to match the increase in base salaries for General Schedule (GS) employees. The House budget resolution, H.Con.Res. 27 (Section 819), included a policy statement that Congress should agree to a concurrent budget resolution each year by April 15, and if not, congressional salaries should be held in escrow. The statement proposes that salaries would be released from the escrow account either when a chamber agrees to a concurrent resolution on the budget or the last day of the Congress, whichever is earlier. The House agreed to this resolution on March 25, 2015. The Senate agreed to its resolution on the budget, S.Con.Res. 11 , on March 27. The maximum potential January 2015 pay adjustment of 1.6%, or $2,800, was known when the BLS released data for the change in the ECI during the 12-month period from December 2012 to December 2013 on January 31, 2014. Each year, the adjustment takes effect automatically unless it is either denied statutorily by Congress, or limited by the GS base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. The House-passed and Senate-reported versions of the FY2015 legislative branch appropriations Act ( H.R. 4487 ) contained a provision prohibiting any Member pay adjustment. Although no further action was taken on that bill, the provision was subsequently included in Section 8 of Division Q of the FY2015 Consolidated and Further Continuing Appropriations Act, which was enacted on December 16, 2014 ( P.L. 113-235 ). Although discussion of Member pay is often associated with appropriations bills, the legislative branch bill does not contain language funding or increasing Member pay, and a prohibition on the automatic Member pay adjustments could be included in any bill, or be introduced as a separate bill. The President proposed a 1.0% increase in the base pay of GS employees for January 2015, which would automatically have limited any Member pay adjustment to 1.0%. The maximum potential 2014 pay adjustment of 1.2%, or $2,100, was known when the BLS released data for the change in the ECI during the 12-month period from December 2011 to December 2012 on January 31, 2013. The adjustment takes effect automatically each year unless (1) denied statutorily by Congress or (2) limited by the GS base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. The Continuing Appropriations Act, 2014 ( P.L. 113-46 , Section 146, enacted October 17, 2013), prohibited the scheduled 2014 pay adjustment for Members of Congress. The scheduled January 2014 across-the-board increase in the base pay of GS employees under the annual adjustment formula was 1.3%. A scheduled GS annual pay increase may be altered only if the President issues an alternative plan or if a different increase, or freeze, is enacted. The President issued an alternate pay plan for civilian federal employees on August 30, 2013. This plan called for a January 2014 across-the-board pay increase of 1.0% for federal civilian employees, the same percentage as proposed in the President's FY2014 budget. Legislation was not enacted to prohibit or alter the GS adjustment, and Executive Order 13655, issued on December 23, 2013, implemented a 1.0% increase for GS employees. Had the Member pay adjustment not been prohibited by law, the GS base pay adjustment would have automatically limited a salary adjus tment for Members of Congress to 1.0% ($1,700). The maximum potential 2013 pay adjustment of 1.1%, or $1,900, was known when the BLS released data for the change in the ECI during the 12-month period from December 2010 to December 2011 on January 31, 2012. The adjustment takes effect automatically unless (1) denied statutorily by Congress or (2) limited by the General Schedule (GS) base pay adjustment, since the percentage increase in Member pay is limited by law to the GS base pay percentage increase. The President's budget, submitted on February 13, 2012, proposed an average (i.e., base and locality) 0.5% adjustment for GS employees. President Obama later stated in a letter to congressional leadership on August 21, 2012, that the federal pay freeze should extend until FY2013 budget negotiations are finalized. Section 114 of H.J.Res. 117 , the Continuing Appropriations Resolution, 2013, which was introduced on September 10, 2012, extended the freeze enacted by P.L. 111-322 through the duration of this continuing resolution. H.J.Res. 117 was passed by the House on September 13 and the Senate on September 22. It was signed by the President on September 28, 2012 ( P.L. 112-175 ). A delay in the implementation of pay adjustments for GS employees automatically delays any scheduled Member pay adjustment. On December 27, 2012, President Obama issued Executive Order 13635, which listed the rates of pay for various categories of officers and employees that would be effective after the expiration of the freeze extended by P.L. 112-175 . The executive order included a 0.5% increase for GS base pay, which automatically lowered the maximum potential Member pay adjustment from 1.1% to 0.5%. As in prior years, schedule 6 of the executive order showed the new rate for Members. The annual adjustments take effect automatically if legislation is not enacted preventing them. Subsequently, a provision in H.R. 8 , the American Taxpayer Relief Act of 2012, which was enacted on January 2, 2013 ( P.L. 112-240 ), froze Member pay at the 2009 level for 2013. The language was included in S.Amdt. 3448 , a substitute amendment agreed to by unanimous consent. The bill, as amended, passed the Senate (89-8, vote #251) and the House (257-167, roll call #659) on January 1, 2013. H.R. 325 , which (1) included language holding congressional salaries in escrow if a concurrent resolution on the budget was not agreed to by April 15, 2013, and (2) provided for a temporary extension of the debt ceiling through May 18, 2013, was introduced on January 21, 2013. Salaries would have been held in escrow for Members in a chamber if that chamber had not agreed to a concurrent resolution by that date. Salaries would have been released from the escrow account either when that chamber agreed to a concurrent resolution on the budget or the last day of the 113 th Congress, whichever was earlier. H.R. 325 was agreed to in the House on January 23, 2013, and the Senate on January 31, 2013. It was enacted on February 4, 2013 ( P.L. 113-3 ). Both the House and Senate agreed to a budget resolution prior to that date, however, and salaries were not held in escrow. H.R. 807 , the Full Faith and Credit Act, was introduced in the House on February 25, 2013. The bill would prioritize certain payments in the event the debt reaches the statutory limit. An amendment, H.Amdt. 61 , was offered on May 9, 2013, that would clarify that these obligations would not include compensation for Members of Congress. It was agreed to the same day (340-84, roll call #140). The bill passed the House on May 13, 2013 (221-207, roll call #142). The projected 2011 adjustment of 0.9% was known when the BLS released data for the ECI change during the 12-month period from December 2008 to December 2009 on January 29, 2010. This adjustment would have equaled a $1,600 increase, resulting in a salary of $175,600. Under the ECI formula, Members could have received a salary adjustment of 1.3% in January 2012. The 2011 pay adjustment was prohibited by the enactment of H.R. 5146 ( P.L. 111-165 ) on May 14, 2010. H.R. 5146 was introduced in the House on April 27 and was agreed to the same day (Roll no. 226). It was agreed to in the Senate the following day by unanimous consent. Other bills that would prevent the scheduled 2011 pay adjustment were introduced in both the House and Senate. These include S. 3244 , which was introduced in the Senate on April 22, 2010, and agreed to by unanimous consent the same day. The bill was referred to the Committee on House Administration and the House Committee on Oversight and Government Reform. Additionally, P.L. 111-322 , which was enacted on December 22, 2010, prohibited any adjustment in GS base pay before December 31, 2012. Since the percent adjustment in Member pay may not exceed the percent adjustment in the base pay of GS employees, Member pay also was frozen during this period. The Senate passed S. 388 on March 1, 2011. The bill would have prohibited Members of the House and Senate from receiving pay, including retroactive pay, for each day that there is a lapse in appropriations or the federal government is unable to make payments or meet obligations because of the public debt limit. The House passed H.R. 1255 on April 1, 2011. The bill would have prohibited the disbursement of pay to Members of the House and Senate during either of these situations. No further action was taken on either bill. On April 8, 2011, the Speaker of the House issued a "Dear Colleague" letter indicating that in the event of a shutdown, Members of Congress would continue to be paid pursuant to the Twenty-seventh Amendment to the Constitution, which as stated above, states: "No law, varying the compensation for the services of the Senators and Representatives, shall take effect, until an election of Representatives shall have intervened"—although Members could elect to return any compensation to the Treasury. Section 5421(b)(1) of H.R. 3630 , as introduced in the House, would have prohibited any adjustment for Members of Congress prior to December 31, 2013. Section 706 of the motion to recommit also contained language freezing Member pay. On December 13, 2011, the motion to recommit failed (183-244, roll call #922), and the bill passed the House (234-193, roll call #923). The House-passed version of the bill was titled the "Middle Class Tax Relief and Job Creation Act of 2011." The Senate substitute amendment, which did not address pay adjustments, passed on December 17. It was titled the "Temporary Payroll Tax Cut Continuation Act of 2011." The bill was enacted on February 22, 2012 ( P.L. 112-96 ), without the pay freeze language. H.R. 3835 , introduced on January 27, 2012, also would have extended the pay freeze for federal employees, including Members of Congress, to December 31, 2013. This bill passed the House on February 1, 2012. H.R. 6726 , introduced on January 1, 2013, would have extended the pay freeze for federal employees, including Members of Congress, to December 31, 2013. This bill passed the House on January 2, 2013. Under the formula established in the Ethics Reform Act, Members were originally scheduled to receive a pay adjustment in January 2010 of 2.1%. This adjustment was denied by Congress through a provision included in the FY2009 Omnibus Appropriations Act, which was enacted on March 11, 2009. Section 103 of Division J of the act states, "Notwithstanding any provision of section 601(a)(2) of the Legislative Reorganization Act of 1946 (2 U.S.C. 31(2)), the percentage adjustment scheduled to take effect under any such provision in calendar year 2010 shall not take effect." Had Congress not passed legislation prohibiting the Member pay adjustment, the 2.1% projected adjustment would have been downwardly revised automatically to 1.5% to match the 2010 GS base pay adjustment. The provision prohibiting the 2010 Member pay adjustment was added to H.R. 1105 through the adoption of the rule providing for consideration of the bill ( H.Res. 184 ). The rule provided that the provision, which was printed in the report accompanying the resolution, would be considered as adopted. On February 25, 2009, the House voted to order the previous question (393-25, roll call #84) and agreed to the resolution (398-24, roll call #85). Under the formula established in the Ethics Reform Act, Members received a pay adjustment in January 2009 of 2.8%, increasing salaries to $174,000. As noted above, Member pay adjustments may not exceed the annual base pay adjustment of GS employees. The two pay adjustments may differ because they are based on changes in different quarters of the ECI or due to actions of Congress and the President. The 2.8% adjustment for Members, however, was less than the projected 2009 base GS adjustment of 2.9%. The GS rate became final on December 18, 2008, when President George W. Bush issued an executive order adjusting rates of pay. In March 2009, the Senate considered a number of attempts to alter the automatic annual adjustment procedure for Members of Congress. Senator David Vitter proposed an amendment ( S.Amdt. 621 ) to the FY2009 Omnibus Appropriations Act. The amendment would have repealed the provision of law that provides for the annual adjustments under the Ethics Reform Act. The Senate agreed to a motion to table the amendment on March 10, 2009 (52-45, vote #95). Prior to the vote, the Senate failed to agree to a unanimous consent request to consider S. 542 , a bill introduced by Senator Harry Reid which would have eliminated the automatic pay procedure effective February 1, 2011. On March 17, 2009, the Senate considered S. 620 , a bill also introduced by Senator Reid, which would have eliminated the procedure effective December 31, 2010. The Senate agreed to the bill by unanimous consent. The bill was referred to the House Administration Committee and the House Oversight and Government Reform Committee. The following day, an identical bill, H.R. 1597 , was introduced in the House by Representative Jim Matheson. Additional bills that would have affected congressional pay were also introduced in both chambers. Member pay language was also included in Senate amendments intended to be proposed to other bills . No further action was taken. Under the annual pay adjustment procedure, Members originally were scheduled to receive a 2.7% increase in January 2008, based upon the formula set forth in the Ethics Reform Act of 1989. This increase would have raised their salaries to $169,700. The scheduled Member increase was revised to 2.5%, resulting in a salary in 2008 of $169,300, due to factors related to the increase in the base pay of GS employees. The scheduled January 2008 across-the-board increase in the base pay of GS employees under the annual adjustment formula was 2.5%. A scheduled GS annual pay increase may be altered only if the President issues an alternative plan or if Congress legislates a different increase. President Bush did not issue an alternative plan for the annual pay adjustment, although he issued an alternative plan for the locality pay adjustment on November 27, 2007, providing a 0.5% adjustment (providing an average 3.0% overall adjustment). The Consolidated Appropriations Act, 2008, which was enacted on December 26, 2007, provided a 3.5% average pay adjustment for federal civilian employees. The President issued an executive order allocating this overall percentage between base and locality pay on January 4, 2008. Since the annual base portion of the pay adjustment for GS employees was less than the scheduled Member increase, Member pay was adjusted by the lower rate. On June 27, 2007, the House took action potentially relating to the January 2008 Member pay increase. The House agreed (244-181, vote #580) to order the previous question on the rule ( H.Res. 517 ) for consideration of H.R. 2829 , the FY2008 Financial Services and General Government Appropriations bill. By ordering the previous question, the House voted to prevent an amendment to the rule from being offered and brought the rule to an immediate vote. The House bill did not contain Member pay language, and the House did not vote on an amendment to accept or reject a Member pay increase. Under the terms of H.Res. 517 , as adopted, an amendment seeking to halt the pay raise was not in order. An amendment to the rule could have waived points of order so as to permit an amendment to the bill prohibiting a pay increase. During floor debate, at least one Member spoke against the previous question and indicated an intention to offer an amendment to the rule to prohibit the increase if it was defeated. 06/27/07 —The House agreed (244-181, vote #580) to order the previous question on the rule ( H.Res. 517 ) for consideration of H.R. 2829 , the FY2008 Financial Services and General Government Appropriations bill. By ordering the previous question, the House voted to prevent an amendment to the rule from being offered, and to bring the rule to an immediate vote. An amendment to the rule could have waived points of order so as to permit an amendment to the bill prohibiting a pay increase. Although H.Res. 517 was an open rule that allowed any germane amendment, an amendment to prohibit the pay adjustment would not have been germane. By agreeing to order the previous question, some Members considered the vote to be against consideration of an amendment prohibiting a pay raise. Had the House not agreed to a motion to order the previous question, they argued, a Member could have offered an amendment to the rule related to the pay adjustment. Under the terms of H.Res. 517 , as adopted, an amendment seeking to halt the pay raise was not in order. During floor debate, at least one Member spoke against ordering the previous question and indicated that, if the motion was defeated, he intended to offer an amendment to the rule to prohibit the pay increase. Members did not receive the annual pay adjustment of 1.7% scheduled for January 1, 2007, as a consequence of the votes Congress had taken in both 2006 and 2007. The salary of Members remained at the 2006 level of $165,200. Members initially had been scheduled to receive a 2.0% annual adjustment in January 2007, increasing their salary to $168,500. This increase was automatically revised downward to 1.7% to match GS base pay. Based on a formula required under the annual comparability pay procedure, General Schedule (GS) employees were authorized to receive a base pay increase of 1.7% in January 2007. The percentage was confirmed when the President issued an alternative plan for the locality pay adjustment, but not base pay, on November 30, 2006, and then an executive order issued on December 21, 2006, authorizing the average 2.2% pay adjustment for General Schedule employees. A series of votes in 2006 and 2007 prevented the scheduled adjustment. The continuing resolution enacted on December 8, 2006 ( P.L. 109-383 ), postponed any increase until February 16, 2007. The Revised Continuing Appropriations Resolution, 2007, which became law on February 15, 2007 ( P.L. 110-5 ), further prevented the scheduled 2007 adjustment from taking effect. On March 8, 2006, the Senate voted to change the application of the annual comparability adjustment for Members by denying an increase for those Members who voted against receiving one. On June 13, 2006, the House ordered the previous question on the rule for consideration of the FY2007 Treasury appropriations bill. This action prevented amendments to the rule, including those related to Member pay, from being considered. Congress subsequently voted to delay the scheduled January 2007 pay increase until February 2007. Congressional action, however, blocked any pay increase in 2007. After the relative increases in congressional pay as compared to the federal minimum wage became a campaign issue, Congress delayed any increase until February 16, 2007. 06/13/06 —The House agreed (249-167, vote #261) to order the previous question on the rule ( H.Res. 865 ) for consideration of H.R. 5576 , the FY2007 Transportation and Treasury Appropriation bill. By ordering the previous question, the House voted to prevent an amendment to the rule from being offered, and to bring the rule to an immediate vote. An amendment to the rule could have waived points of order so as to permit an amendment to the bill prohibiting a pay increase. Although H.Res. 865 was an open rule that allowed any germane amendment, an amendment to prohibit the pay adjustment would not have been germane. By agreeing to order the previous question, some Members considered the vote to be against consideration of an amendment prohibiting a pay raise. Had the House not agreed to a motion to order the previous question, they argued, a Member could have offered an amendment to the rule related to the pay adjustment. Under the terms of H.Res. 865 , as adopted, an amendment seeking to halt the pay raise was not in order. During floor debate, Representative Jim Matheson made known his intention to offer an amendment to the rule to prohibit the increase, and spoke against the previous question so that his amendment could receive a waiver to be considered. 12/8/06— Section 137 of P.L. 109-383 (120 Stat. 2679), which amended the Continuing Appropriations Resolution, delayed any increase in Member pay until February 16, 2007. 02/15/07 —The Revised Continuing Appropriations Resolution, 2007, became law ( P.L. 110-5 , 121 Stat. 12). Section 115 stated that the adjustment in Member pay scheduled for 2007 shall not take effect. In 2007, both the House and Senate took action on bills that would target the adjustments or benefits of Members under certain circumstances. Neither of these provisions became law. 1/18/07 —The Senate passed (96-2, vote #19) S. 1 , the Honest Leadership and Open Government Act of 2007. The bill contained a provision (§116) that would deny an annual pay adjustment to Members of Congress who vote for an amendment to prohibit an annual adjustment for Members, or who voted against the tabling of an amendment to prohibit the increase. This language was not included in the House amendment or in the final version of the bill, which became P.L. 110-81 . 1/23/07 —The House passed (431-0, vote #49) H.R. 476 . The bill would have denied pension benefits to Members of Congress if an individual is convicted of committing certain offenses while a Member of Congress. The bill was referred to the Senate Committee on Homeland Security and Governmental Affairs and no further action was taken. Members received a pay adjustment of 1.9% in January 2006, increasing their salary to $165,200 from $162,100. This increase became official when President Bush issued an executive order on December 22, 2005, containing his allocation of a 3.1% pay increase for GS federal employees, 2.1% for base pay and an average of 1.0% for locality pay. By setting the GS base pay component at a rate (2.1%) greater than the scheduled 1.9% Member pay increase, Members were able to receive the full 1.9% adjustment. In 2005, during consideration of the January 2006 adjustment, the House held one vote potentially relating to the pending January 2006 increase, and the Senate voted to deny the adjustment. The House vote occurred June 28, 2005, when it agreed to a rule providing for consideration of H.R. 3058 , the FY2006 Transportation, Treasury, and Housing and Urban Development, the Judiciary, District of Columbia, and Independent Agencies Appropriations bill. Special waiver language was needed in the rule to permit House consideration of an amendment that would prohibit the scheduled January 2006 pay increase. In the absence of such language, a pay amendment was out of order. This action was considered by some to be approval of an increase since the vote had the effect of not allowing Members to offer and consider nongermane amendments to the bill. They argued that if nongermane amendments had been allowed, one could have been offered to modify or deny the scheduled 1.9% Member pay increase. Others, however, expressed interest in introducing other nongermane amendments on unrelated issues. As a consequence, it cannot be said with any degree of certainty that Members would have voted to deny a pay increase if they had been given an opportunity. The Senate agreed October 18, 2005, to an amendment, by a vote of 92 to 6, to prohibit the scheduled January 2006 Member pay adjustment. The prohibition did not apply to the 1.9% increase scheduled for other top-level federal officials in the executive and judicial branches. The amendment was struck in conference. 03/08/06 —The Senate agreed (voice vote) to an amendment denying an annual pay adjustment to Members of Congress who vote for an amendment to prohibit an annual adjustment for Members, or who voted against the tabling of an amendment to prohibit the increase. The amendment ( S.Amdt. 2934 ) was offered by Senator James Inhofe during consideration of S. 2349 , the 527 Reform bill. The bill was not enacted into law. 06/28/05 —The House agreed (263-152, vote #327) to order the previous question on the rule ( H.Res. 342 ) for consideration of H.R. 3058 , the FY2006 Transportation and Treasury Appropriation bill. By ordering the previous question, the House voted to prevent an amendment to the rule from being offered, and to bring the rule to an immediate vote. An amendment to the rule could have waived points of order so as to permit an amendment to the bill prohibiting a pay increase. Although H.Res. 342 was an open rule that allowed any germane amendment, an amendment to prohibit the pay adjustment would not have been germane. By agreeing to order the previous question, some Members considered the vote to be against consideration of an amendment to permit a pay raise prohibition to be offered. Had the House not agreed to a motion to order the previous question, they argued, a Member could have offered an amendment to the rule related to the pay adjustment. Under the terms of H.Res. 342 , as adopted, an amendment seeking to halt the pay raise was not in order. During floor debate, Representative Jim Matheson made known his intention to offer an amendment to the rule to prohibit the increase, and spoke against the previous question so that his amendment could receive a waiver to be considered. 10/18/05 —The Senate agreed (92-6, vote #256) to an amendment prohibiting the 2006 annual federal pay adjustment for Members of Congress only. It did not apply to top-level executive and judicial branch officials. The amendment ( S.Amdt. 2062 ), was offered by Senator Jon Kyl during consideration of H.R. 3058 , FY2006 Transportation and Treasury Appropriation bill. The Senate provision was dropped in conference. Members received a pay adjustment of 2.5% in January 2005, increasing their salary to $162,100 from $158,100. One vote potentially relating to the Member pay adjustment scheduled for January 2005 was held in 2004. On September 14, the House agreed to a rule providing for consideration of H.R. 5025 , the FY2005 Transportation and Treasury Appropriation bill. Special waiver language was needed in the rule to permit House consideration of an amendment that would prohibit the scheduled January 2005 pay increase. In the absence of such language, a pay amendment was not in order. This House action, however, was considered by some to be approval of an increase since the vote had the effect of not allowing Members to offer and consider nongermane amendments to the bill. They argued that if nongermane amendments had been allowed, one could have been offered to modify or deny the scheduled 2.2% Member pay increase. Alternatively, however, a few Members expressed interest in introducing other nongermane amendments on entirely different issues. As a consequence, it cannot be said with any degree of certainty that Members would have voted to deny a pay increase had they had been given an opportunity. 09/14/04 —The House agreed (235-170, vote #451) to order the previous question on a rule ( H.Res. 770 ) providing for consideration of H.R. 5025 , the FY2005 Transportation and Treasury Appropriations bill. By ordering the previous question, the House voted to prevent an amendment to the rule from being offered, and to bring the rule to an immediate vote. An amendment to the rule could have waived points of order so as to permit an amendment to the bill prohibiting a pay increase. Although H.Res. 770 was an open rule that allowed any germane amendment, an amendment to prohibit the pay adjustment would not have been germane. By agreeing to order the previous question, some Members considered the vote to be against consideration of an amendment to permit a pay raise prohibition to be offered. Had the House not agreed to a motion to order the previous question, they argued, a Member could have offered an amendment to the rule related to the pay adjustment. Under the terms of H.Res. 770 , as adopted, an amendment seeking to halt the pay raise was not in order. Members received a pay adjustment of 2.2% in 2004, increasing their salary to $158,100 from $154,700. The adjustment was effective in two stages. The first adjustment increased Members' salary by 1.5%, to which they were initially limited because by law they may not receive an annual adjustment greater than the increase in the base pay of GS federal employees. After the passage of the FY2004 Consolidated Appropriations Act, which provided an average 4.1% GS pay increase, Members received the full 2.2% pay increase, with 0.7% retroactive to the first pay period in January 2004. Two potentially related votes related to the scheduled January 2004 adjustment. Action taken by the House on vote #463 (240-173) was considered by some to be approval of an annual increase since the vote had the effect of not allowing Members to offer and consider nongermane amendments to the bill. They argued that if nongermane amendments had been allowed, one could have been offered to modify or deny the scheduled 2.2% Member pay increase. While some Members have characterized this as a vote for the raise, some Members expressed interest in introducing other nongermane amendments on entirely different issues. As a consequence, it cannot be said with any degree of certainty that Members would have voted to deny a pay increase if they had been given an opportunity. On October 23, 2003, the Senate voted to table an amendment to prohibit the scheduled adjustment. 09/04/03 —The House agreed (240-173, vote #463) to order the previous question on a rule ( H.Res. 351 ) providing for consideration of H.R. 2989, the FY2004 Transportation and Treasury Appropriations bill. By ordering the previous question, the House voted to prevent an amendment to the rule from being offered, and to bring the rule to an immediate vote. An amendment to the rule could have waived points of order so as to permit an amendment to the bill prohibiting a pay increase. Although H.Res. 351 was an open rule that allowed any germane amendment, an amendment to prohibit the pay adjustment would not have been germane. By agreeing to order the previous question, some Members considered the vote to be against consideration of an amendment to permit a pay raise prohibition to be offered. Had the House not agreed to a motion to order the previous question, they argued, a Member could have offered an amendment to the rule related to the pay adjustment. Under the terms of H.Res. 351 , as adopted, an amendment seeking to halt the pay raise was not in order. 10/23/03 —The Senate agreed (60-34, vote #406) to a motion to table an amendment offered by Senator Russell Feingold to H.R. 2989 , the FY2004 Transportation and Treasury Appropriation bill, to block the pending January 2004 salary increase for Members. The amendment did not apply to other top-level federal officials. Members received a pay adjustment of 3.1% in January 2003, increasing their salary to $154,700 from $150,000. Members originally were scheduled to receive a 3.3% adjustment under the formula. By law, however, they were limited to the rate of increase in the base pay of General Schedule (GS) employees (3.1%), also effective in January 2003. Both houses held votes related to the scheduled January 2003 annual adjustment for Members. On July 18, 2002, the House agreed to a rule providing for consideration of H.R. 5120 , the FY2003 Treasury and General Government Appropriations bill. Special waiver language was needed in the rule to permit House consideration of an amendment that would prohibit the scheduled January 2003 pay increase. In the absence of such language, a pay amendment was out of order. On November 13, 2002, the Senate voted to table an amendment to prohibit the scheduled January 2003 annual adjustment from taking effect for Members of Congress. The amendment was offered to H.R. 5005 , the Homeland Security Act of 2002. 07/18/02 —The House agreed (258-156, vote #322) to order the previous question on a rule ( H.Res. 488 ) providing for consideration of H.R. 5120 , the FY2003 Treasury Appropriations bill. By ordering the previous question, the House voted to prevent an amendment to the rule from being offered, and to bring the rule to an immediate vote. An amendment to the rule could have waived points of order so as to permit an amendment to the bill prohibiting a pay increase. Although H.Res. 488 was an open rule that allowed any germane amendment, an amendment to prohibit the pay adjustment would not have been germane. By agreeing to order the previous question, Members voted not to consider an amendment to permit a pay raise prohibition amendment to be offered. Had the House not agreed to a motion to order the previous question, a Member could have offered an amendment to the rule related to the pay adjustment. Under the terms of H.Res. 488 , as adopted, an amendment seeking to halt the pay raise was not in order. The vote to order the previous question (and not allow any amendment to the rule) was seen by some as a vote to accept a pay adjustment. 11/13/02 —The Senate agreed (58-36, vote #242) to a motion to table an amendment offered by Senator Russell Feingold to H.R. 5005 , the Homeland Security Act of 2002, to block the pending January 2003 salary increase for Members. The amendment did not apply to other top-level federal officials. Members received a pay adjustment of 3.4% in January 2002, increasing their salary to $150,000 from $145,100. In 2001, the House held one vote potentially related to the scheduled pay adjustment, and the Senate twice considered the germaneness of Member pay adjustment amendments. The House, on July 25, 2001, agreed to a rule providing for consideration of H.R. 2590 , the FY2002 Treasury and General Government Appropriations bill. Special waiver language was needed in the rule to permit House consideration of an amendment that would prohibit the scheduled January 2002 pay increase. In the absence of such language, a pay amendment was out of order. The Senate presiding officer, on October 24, sustained a point of order against an amendment to the FY2002 foreign operations appropriations bill to block the 2002 increase because the amendment was not germane under Senate Rule 16. On December 7, the Senate sustained (33-65) a point of order that an amendment to prohibit Members from receiving the January 2002 increase was not germane, and the amendment fell. The amendment was offered during Senate consideration of H.R. 3338 , the FY2002 Department of Defense appropriation bill. 07/25/01 —The House agreed (293-129, vote #267) to order the previous question on a rule ( H.Res. 206 ) providing for consideration of H.R. 2590 , the FY2002 Treasury, Postal Service, and General Government Appropriations bill. H.Res. 206 was an open rule that allowed any germane amendment; an amendment to prohibit the pay adjustment, however, would not have been germane. By agreeing to order the previous question, Members voted not to consider an amendment to permit a pay raise prohibition amendment to be offered. Had the House not agreed to a motion to order the previous question, a Member could have offered an amendment to the rule related to the pay adjustment. Under the terms of H.Res. 206 , an amendment seeking to halt the pay raise was not in order. The vote to order the previous question (and not allow any amendment to the rule) was seen by some as a vote to accept a pay increase. 10/24/01 —The Senate sustained a point of order against an amendment, offered by Senators Russell Feingold and Max Baucus, to block the pending January 2002 salary increase. The Senate sustained the point of order because the amendment was not germane under Senate Rule 16. The action was taken during consideration of H.R. 2506 , the FY2002 foreign operations, export financing, and related programs appropriations bill. 12/07/01 —The Senate rejected (33-65, voted #360) a claim that an amendment offered by Senator Russell Feingold to prohibit Members from receiving the January 2002 increase was germane, and the chair then sustained a point of order that the amendment authorized legislation on an appropriation bill. The amendment was offered during floor consideration of H.R. 3338 , the FY2002 Department of Defense Appropriations bill. Members received a January 2001 annual pay adjustment of 2.7%, which increased their salary to $145,100 from $141,300. Under the Ethics Reform Act, Members originally were scheduled to receive a January 2001 annual pay adjustment of 3.0%. This adjustment automatically was revised downward to 2.7% to match the GS base pay increase. On July 20, 2000, the House agreed to the rule providing for consideration of H.R. 4871 , the FY2001 Treasury and General Government Appropriations bill. Special waiver language was needed in the rule to permit House consideration of an amendment that would prohibit the scheduled January 2001 pay increase. In the absence of such language, a pay amendment was not in order. On September 9, 2000, the Senate rejected the conference report on H.R. 4516 , the FY2001 Legislative Branch Appropriations bill, in part because Senators had not previously had a chance to introduce an amendment prohibiting the scheduled January 2001 pay increase. 07/20/00 —The House agreed (250-173, vote #419) to order the previous question on a rule ( H.Res. 560 ) providing for consideration of H.R. 4871 , the FY2001 Treasury, Postal Service, and General Government Appropriations bill. H.Res. 560 was an open rule that allowed any germane amendment; an amendment to prohibit the pay adjustment, however, would not have been germane. By agreeing to order the previous question, Members voted not to consider an amendment to permit a pay raise prohibition amendment to be offered. Had the House not agreed to a motion to order the previous question, a Member could have offered an amendment to the rule related to the pay adjustment. Under the terms of H.Res. 560 , as adopted, an amendment seeking to halt the pay raise was not in order. The vote to order the previous question (and not allow any amendment to the rule) was seen by some as a vote to accept a pay adjustment. 09/20/00 —The Senate rejected (28-69, vote #253) the conference report on H.R. 4516 , the FY2001 Legislative Branch Appropriations bill; the conference report also contained the FY2001 Treasury and General Government Appropriations bill. The Treasury bill had not been initially considered and amended on the Senate floor. The conference report was rejected, according to at least one Member, in part because Senators had not had a chance to introduce an amendment to the FY2001 Treasury bill to prohibit the scheduled January 2001 pay raise. Since Members customarily had offered amendments to prohibit scheduled pay increases in the Treasury bill, some Senators felt that they were denied an opportunity to introduce an amendment to block the scheduled January 2001 pay increase. Some Members also stated that they felt that they were denied the opportunity to debate the merits of a raise and conduct a vote. On December 14, 2000, the text of the FY2001 Treasury and General Government Appropriations bill was introduced as H.R. 5658 , which was not considered by either house, but incorporated by reference in H.R. 4577 , the FY2001 Omnibus Consolidated Appropriations bill ( P.L. 106-554 ). Members received a scheduled January 1, 2000, annual pay adjustment of 3.4%, which increased their salary to $141,300 from $136,700. On July 14, 1999, several Members testified before the House Rules Committee seeking approval to offer an amendment to H.R. 2490 , the FY2000 Treasury and General Government Appropriations bill, that would block a pay increase for Members, while allowing an increase for other federal employees. On July 15, the House agreed to the rule providing for consideration of H.R. 2490 . Special waiver language was needed in the rule to permit House consideration of an amendment that would prohibit the scheduled January 2000 pay increase. In the absence of such language, a pay amendment was not in order. Although a subsequent appropriations bill, H.R. 3194 , provided for a 0.38% across-the-board rescission in discretionary budget authority for FY2000, H.R. 3194 did not contain language reducing the pay of Members of Congress. H.R. 3194 , the FY2000 Consolidated Appropriations Act, was signed into law on November 29, 1999 ( P.L. 106-113 ). 07/15/99 —The House agreed (276-147, vote #300) to order the previous question on the rule ( H.Res. 246 ) for consideration of H.R. 2490 , the FY2000 Treasury and General Government Appropriations bill. H.Res. 246 was an open rule that allowed any germane amendment; an amendment to prohibit the pay adjustment, however, would not have been germane. By agreeing to order the previous question, Members voted not to consider an amendment to permit a pay raise prohibition amendment to be offered. Had the House not agreed to order the previous question, Members could have offered an amendment to the rule related to the pay adjustment. Under the terms of H.Res. 246 , as adopted, an amendment seeking to halt the pay raise was not in order. The vote to order the previous question (and not allow any amendment to the rule) was seen by some as a vote to accept a pay adjustment. On October 28, 1999, the House rejected a motion to recommit the conference report on an appropriations bill, H.R. 3064 , to instruct House managers to disagree with language in the report reducing the scheduled 3.4% January 2000 Member pay adjustment by 0.97%. The conference report on H.R. 3064 , the FY2000 District of Columbia, Departments of Labor, Health and Human Services, and Education Appropriations bill, also provided in separate language a government-wide across-the-board rescission of 0.97% in discretionary budget authority for FY2000. Although the House and Senate agreed to the conference report with the pay and discretionary budget authority reduction provisions, H.R. 3064 was vetoed by the President on November 3, 1999. 10/28/99 —The House rejected (11-417, vote #548) a motion to recommit the conference report on H.R. 3064 , District of Columbia, Departments of Labor, Health and Human Services, and Education Appropriations bill, FY2000, with instructions to House managers to disagree with pay language. Conference report pay language reduced the scheduled 3.4% January 2000 Member pay adjustment by 0.97% ( H.Rept. 106-419 , October 27, 1999, Division C (Rescissions and Offsets), §1001(e)). 10/28/99 —The House agreed (218-211, vote #549) to the conference report on H.R. 3064 , which included language reducing the scheduled 3.4% January 2000 Member pay adjustment by 0.97%. H.R. 3064 was vetoed by the President on November 3, 1999. Members did not receive the scheduled January 1, 1999, 3.1% pay adjustment. The salary for Senators and Representatives remained $136,700. The conference version of H.R. 4104 , the FY1999 Treasury, Postal Service, and General Government Appropriations bill, with a pay increase prohibition, was incorporated in the FY1999 Omnibus Consolidated and Emergency Supplemental Appropriations Act ( H.R. 4328 , P.L. 105-277 ). 07/15/98 —The House agreed (218-201, vote #284) to H.Res. 498 , the rule providing for consideration of H.R. 4104 . The rule waived points of order against language prohibiting a 1999 annual adjustment (§628 of the bill) for failure to comply with Rule XXI, Clause 2. The clause prohibits language in an appropriation bill that changes existing law. The effect of the rule was to ensure that the pay prohibition would not be procedurally challenged on the floor during debate on H.R. 4104 . This did not preclude an amendment from being offered on the floor to challenge the prohibition. 07/16/98 —The House rejected (79-342, vote #289) an amendment that sought to strike Section 628 of H.R. 4104 , which prohibited the January 1999 annual pay adjustment. 07/16/98 —The House passed (218-203, vote #293) H.R. 4104 with the pay prohibition language. 07/28/98 —The Senate adopted (voice vote) an amendment to S. 2312 , the Senate version of the FY1999 Treasury Bill, which made the pay prohibition language in S. 2312 the same wording as the pay prohibition language in H.R. 4104 . S. 2312 , as reported ( S.Rept. 105-251 ), contained language prohibiting the January 1999 pay adjustment. 09/03/98 —The Senate passed (91-5, vote #260) H.R. 4104 , amended, in lieu of S. 2312 , with the pay prohibition language. 10/01/98 —The House failed to agree (106-294, vote #476) to H.Res. 563 , the rule waiving points of order against consideration of the conference report on H.R. 4104 ( H.Rept. 105-592 ). As a result, the report was recommitted to conference. The pay prohibition language was not discussed during consideration of the rule. 10/07/98 —The House agreed (290-137, vote #494) to the conference report on H.R. 4104 , with the pay prohibition language ( H.Rept. 105-790 ). The Senate failed to reach agreement on adoption of the report. Conference report language was incorporated in H.R. 4328 , the FY1999 Omnibus Consolidated and Emergency Supplemental Appropriations bill. 10/20/98 —The House agreed (333-95, vote #538) to the conference report accompanying H.R. 4328 , the FY1999 Omnibus Consolidated and Emergency Supplemental Appropriations bill, with the pay prohibition language. 10/21/98 —The Senate agreed (65-29, vote #314) to the conference report accompanying H.R. 4328 , with the pay prohibition. H.R. 4328 was signed into law as P.L. 105-277 , on October 21, 1998. Members received the scheduled January 1, 1998, annual pay adjustment of 2.3%, increasing their salary from $133,600 to $136,700. On July 17, 1997, the Senate adopted an amendment to prohibit the scheduled adjustment. The amendment was offered to S. 1023 , the FY1998 Treasury and General Government Appropriations bill. The amendment did not apply to other top-level federal officials. The House version of the Treasury bill was silent on the issue. The House version, H.R. 2378 , was passed on September 17, 1997. Later that day, the Senate amended H.R. 2378 to include the language of its version in the nature of a substitute and passed the bill. The bill, with the pay prohibition, was then sent to the House. On September 24, 1997, the House disagreed with the Senate substitute amendment and agreed to a conference. After lengthy discussion on the merits of a Member pay adjustment, the House voted to order the previous question on a pending motion to instruct conferees on an issue unrelated to the pay issue. Because the House permits only one motion to instruct conferees, and ordering the previous question precludes amendment to the pending question, this vote in effect foreclosed the possibility of instructing conferees to omit the pay adjustment from the conference report. As a result of this House vote, H.R. 2378 was sent to conference by the House without instructions to prohibit the pay adjustment. Subsequently, the Senate language denying the increase was dropped in conference, and H.R. 2378 was signed into P.L. 105-61 on October 10, 1997, without the pay prohibition language. 07/17/97 —The Senate adopted (voice vote) an amendment prohibiting the scheduled January 1, 1998, annual adjustment for Members of Congress. The amendment was offered to S. 1023 , the FY1998 Treasury and General Government Appropriations bill. 07/22/97 —The Senate passed (99-0, vote 191) S. 1023 with the provision prohibiting the annual adjustment for Members of Congress. 09/17/97 —The Senate passed (voice vote) the House version of the FY1998 Treasury bill, H.R. 2378 , after striking all after the enacting clause and substituting the language of S. 1023 as amended to include the pay prohibition. 09/24/97 —The House voted (229-199, vote 435) to order the previous question on a pending motion to instruct conferees on an issue unrelated to the pay issue. Because the House permits only one motion to instruct conferees, and because ordering the previous question precludes amendment to the pending question, this vote in effect foreclosed the possibility of instructing conferees to omit the pay adjustment from the conference report. As a result of this House vote, H.R. 2378 was sent to conference by the House without instructions to prohibit the pay adjustment. Conferees dropped the Senate pay amendment and both houses agreed to the conference report on September 24, 1997. H.R. 2378 was signed into P.L. 105-61 on October 10, 1997. Members did not receive the annual pay adjustment of 2.3% scheduled for January 1, 1997, as a consequence of the votes taken in 1996. The salary of Members remained $133,600. The conference version of H.R. 3756 (the FY1997 Treasury and General Government Appropriations bill), with a pay adjustment prohibition, was incorporated into the FY1997 Omnibus Continuing Appropriations Act ( H.R. 3610 , P.L. 104-208 ). 07/16/96 —The House agreed (352-67, vote #317) to a floor amendment to H.R. 3756 prohibiting the 2.3% Member pay increase scheduled to take effect January 1, 1997. H.R. 3756 was the FY1997 Treasury and General Government Appropriations bill. 07/17/96 —The House passed (215-207, vote #323) H.R. 3756 with the provision prohibiting the annual adjustment for Members. 09/10/96 —After H.R. 3756 was reported by the Senate Committee on Appropriations, with amendments ( S.Rept. 104-330 ), and without the House-passed pay prohibition provision, the Senate agreed by voice vote to a floor amendment ( S.Amdt. 5208 ) prohibiting the annual pay adjustment. By unanimous consent, the Senate placed H.R. 3756 back on the calendar on September 12, 1996. 09/28/96 —The House agreed (370-37, vote #455) to the conference report on H.R. 3610 , the Omnibus Continuing Appropriations bill, FY1997, which contained a pay freeze provision. 09/30/96 —The Senate agreed (voice vote) to the conference on H.R. 3610 , the Omnibus Continuing Appropriations bill, FY1997, which contained a pay freeze provision. H.R. 3610 was enacted ( P.L. 104-208 ), on September 30, 1996. Members did not receive the scheduled January 1, 1996, annual 2.3% adjustment as a consequence of the votes taken in 1995. The salary of Members remained $133,600. P.L. 104-52 , the FY1996 Treasury and General Government Appropriations Act, included language prohibiting the adjustment. 08/05/95 —The Senate agreed (voice vote) to an amendment to H.R. 2020 prohibiting the Member pay adjustment of 2.3% scheduled to take effect in January 1996. The amendment did not apply to other top-level federal officials scheduled to receive the same 2.3% adjustment in January 1996. 08/05/95 —The Senate passed (voice vote) H.R. 2020 with the pay prohibition provision agreed to earlier in the day. 09/08/95 —The House approved (387-31, vote #648) a motion to instruct House conferees on H.R. 2020 to agree to the Senate amendment prohibiting the annual 2.3% adjustment scheduled in January 1996 for Members. The House disagreed to other Senate amendments and agreed to a conference. 11/15/95 —The House agreed (374-52, vote #797) to the conference on H.R. 2020 with a prohibition of the scheduled January 1996 pay increase. 11/15/95 —The Senate agreed (63-35, vote #576) to the conference on H.R. 2020 with a prohibition of the scheduled January 1996 Member pay increase. H.R. 2020 was signed into P.L. 104-52 on November 19, 1995. Members did not receive the scheduled January 1, 1995, annual 2.6% adjustment as a consequence of the votes taken in 1994. The salary of Members remained $133,600. P.L. 103-329 , the FY1995 Treasury and General Government Appropriations Act, included language prohibiting the adjustment. 06/15/94 —The House passed (276-139, vote #247) H.R. 4539 with a provision denying the scheduled January 1, 1995, 2.6% annual adjustment. The pay provision had been included in the bill reported by the House Appropriations Committee (H.Rept. 103-534). 09/27/94 —The House agreed (360-53, vote #441) to the conference report on H.R. 4539 with the provision denying the annual adjustment. 09/28/94 —The Senate agreed (voice vote) to the conference report on H.R. 4539 with the provision denying the annual adjustment. H.R. 4539 was signed into law ( P.L. 103-329 ) on September 30, 1994. During consideration of the budget resolution, a seven-year pay freeze was proposed but not adopted. 05/25/95 —The Senate passed a substitute amendment for the House-passed version of the FY1996 budget resolution ( H.Con.Res. 67 , 57-42, vote #232). The Senate version of the resolution ( S.Con.Res. 13 ), which was reported on May 15, 1995, and considered in the Senate from May 19 until May 25, assumed a freeze on Member pay at $133,600 for seven years ( S.Rept. 104-82 ). The conference agreement ( H.Rept. 104-159 ) did not contain this language. Legislation to prevent Member pay during a federal shutdown was considered but not enacted. 09/22/95 —The Senate adopted (voice vote) an amendment to the Senate version of the District of Columbia appropriations bill, FY1996 ( S. 1244 ) providing that Members not be paid during a government shutdown, nor receive retroactive pay. The provision was also included in the Senate substitute amendment to H.R. 2546 , the House version of the District of Columbia appropriations bill, on November 2, 1995. The provision was deleted in the conference report from January 31, 1996 ( H.Rept. 104-455 ). Members were paid during the November 14-19, 1995, and December 16, 1995-January 5, 1996, shutdowns because their pay is automatically funded in a permanent appropriation. 10/27/1995 —The Senate accepted an amendment ( S.Amdt. 3013 ) to S. 1357 , the Balanced Budget Reconciliation Act of 1995. This amendment would prohibit pay for Members of Congress and the President during a lapse in appropriations. 11/28/1995 —The Senate accepted an amendment ( S.Amdt. 3065 ) to S. 1396 , the Interstate Commerce Commission Sunset Act of 1995. The language was included in the Senate amendment to H.R. 2539 , the House version of this bill, but not in the conference report. Numerous measures were introduced during the 104 th Congress to prevent pay for Members of Congress in the event of a shutdown ( H.R. 2281 , H.R. 2639 , H.R. 2658 , H.R. 2671 , H.R. 2373 , H.R. 2855 , H.R. 2828 , H.R. 2882 , S. 1220 , S. 1428 , S. 1480 , and H.Con.Res. 113 ). These bills were referred to committee, but no further action was taken. Members did not receive the scheduled January 1, 1994, 2.1% adjustment as a consequence of votes taken in 1993 to prohibit the annual adjustment. The salary of Members remained $133,600. Votes to prohibit the scheduled January 1, 1994, annual adjustment were taken during consideration of the Senate Committee Funding Resolution ( S.Res. 71 ) and the Unemployment Compensation Act ( S. 382 , H.R. 920 ). 02/24/93 —The Senate adopted (voice vote) an amendment to the Senate Committee Funding Resolution ( S.Res. 71 ) expressing the sense of the Senate that Senators' pay be frozen for 11 months in calendar year 1994. This non-binding language in effect denied the scheduled 2.1% January 1994 annual pay adjustment for Senators. 02/24/93 —The Senate adopted (98-0, vote #16) an amendment to the previous amendment (see above) changing the pay freeze period to one year. 02/25/93 —The Senate agreed (94-2, vote #20) to S.Res. 71 with the non-binding amendment freezing Senators' pay for one year in calendar year 1994. 03/03/93 —The Senate adopted (voice vote) an amendment to S. 382 , the Emergency Unemployment Compensation Act, denying the scheduled 2.1% adjustment for Members on January 1, 1994. 03/03/93 —The Senate agreed (58-41, vote #23) to a motion to table an amendment to S. 382 prohibiting adjustments for all federal employees. 03/03/93 —The Senate passed (66-33, vote #24) H.R. 920 , the House version of the Emergency Unemployment Compensation Act, with a provision denying the scheduled 2.1% adjustment for Members on January 1, 1994. 03/04/93 —The House agreed (403-0, vote #54) to a motion to agree to the Senate pay amendment to H.R. 920 . H.R. 920 was signed into law ( P.L. 103-6 , 107 Stat. 35, March 4, 1993, §7). The Senate considered two pay-related amendments to S. 1935 , the Congressional Gifts Reform bill. The bill passed the Senate, but no further action was taken. 05/05/94 —The Senate rejected an amendment ( S.Amdt. 1680 ) to S. 1935 requiring Member pay to be reduced immediately by 15% (34-59, vote #103). 05/06/94 —An amendment ( S.Amdt. 1682 ) stating, "It is the sense of the Senate that any Member who voted May 5, 1994, to amend S. 1935 to reduce the pay of Members of the Senate by 15 percent should return to the U.S. Treasury the full amount of any pay that would not have been received had the amendment been enacted into law and that such Members should provide evidence to the public on an annual basis that they have done so," was withdrawn. On January 1, 1993, Members received an annual adjustment of 3.2%, increasing pay from $129,500 to $133,600. No votes were held in 1992 to prohibit the adjustment. Pursuant to the Ethics Reform Act of 1989, Representatives and Senators received an annual adjustment of 3.5% on January 1, 1992, increasing their pay from $125,100 to $129,500. No votes were held in 1991 to deny the scheduled adjustment. The House and Senate both recognized ratification of the Twenty-seventh Amendment to the Constitution, which provides that a pay adjustment for Members of Congress shall not take effect until an intervening election has occurred. 05/20/92 —The House adopted (414-3, vote #131) H.Con.Res. 320 , recognizing ratification of the Twenty-seventh Amendment. 05/20/92 —The Senate adopted S.Con.Res. 120 (99-0, vote #99), recognizing adoption of the amendment and S.Res. 298 (99-0, vote #100), also recognizing the amendment's adoption. Representatives and Senators received a 3.6% pay increase in January 1991 pursuant to the annual adjustment procedure established in Section 704 of the Ethics Reform Act ( P.L. 101-194 ). Pursuant to Section 703 of the Ethics Reform Act, Representatives' pay was also adjusted by 25%. Representatives' pay increased from $96,600 to $125,100, and Senators' pay increased from $98,400 to $101,900. Subsequently, the Senate voted to increase its pay by 22.8% to equal the salary of Representatives (from $101,900 to $125,100), in the Legislative Branch Appropriations bill, FY1992 ( H.R. 2506 ). The House agreed to this action. 07/17/91 —The Senate adopted (53-45, vote #133) an amendment to H.R. 2506 increasing Senators' pay to equal Representatives' pay; banning honoraria for Senators; and limiting their outside earned income to 15% of salary. 07/17/91 —The Senate passed (voice vote) H.R. 2506 with the pay provision. 07/31/91 —The House agreed (voice vote) to the conference report on H.R. 2506 with Senate pay provision. 08/02/91 —The Senate agreed (voice vote) to the conference report on H.R. 2506 with the pay provision. H.R. 2506 was signed into law ( P.L. 102-90 ) August 14, 1991. The pay increase became effective the same day. Section 702 of the Ethics Reform Act of 1989 ( P.L. 101-194 ) restored the previously denied January 1989 and 1990 annual adjustments (4.1% and 3.6%), compounded, for Representatives. Representatives' pay was increased 7.9%, from $89,500 to $96,600, effective February 1, 1990. Section 1101 of the Ethics Reform Act also adjusted Senators' pay. Effective February 1, 1990, pay was increased by 9.9%, from $89,500 to $98,400. This increase represented restoration of the previously denied 1988, 1989, and 1990 adjustments (2.0%, 4.1%, and 3.6%), compounded. Later in 1990, the Senate voted to reduce Member pay in an amendment to S. 110 , the Family Planning Amendments bill, although a cloture motion subsequently failed. 09/26/90 —The Senate adopted ( S.Amdt. 2884 , 96-1, vote #254) a Member pay amendment to the substitute amendment reported by the Committee on Labor and Human Resources to S. 110 . The amendment would have reduced Member salary by an amount corresponding to the percentage reduction of pay of federal employees who were furloughed or otherwise had their pay reduced resulting from a sequestration order. 09/26/90 —The Senate rejected (50-46, vote #256) a motion to invoke cloture on the Committee on Labor and Human Resources substitute amendment, which contained the Member pay provision. Subsequently, S. 110 was pulled from further consideration on the Senate floor by its sponsor. | Article I, Section 6, of the U.S. Constitution requires that compensation for Members of Congress be "ascertained by law, and paid out of the Treasury of the United States." Congress has relied on three different methods in adjusting salaries for Members. Specific legislation was last used to provide increases in 1990 and 1991. It was the only method used by Congress for many years. The second method, under which annual adjustments took effect automatically unless disapproved by Congress, was established in 1975. From 1975 to 1989, these annual adjustments were based on the rate of annual comparability increases given to the General Schedule (GS) federal employees. This method was changed by the 1989 Ethics Act to require that the annual adjustment be determined by a formula based on certain elements of the Employment Cost Index (ECI). Under this revised process, annual adjustments were accepted 13 times (scheduled for January 1991, 1992, 1993, 1998, 2000, 2001, 2002, 2003, 2004, 2005, 2006, 2008, and 2009) and denied 16 times (scheduled for January 1994, 1995, 1996, 1997, 1999, 2007, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, and 2019). Since January 2009, the salary for Members of Congress has been $174,000. Subsequent adjustments were denied by P.L. 111-8 (enacted March 11, 2009), P.L. 111-165 (May 14, 2010), P.L. 111-322 (December 22, 2010), P.L. 112-175 (September 28, 2012), P.L. 112-240 (January 2, 2013), P.L. 113-46 (October 17, 2013), P.L. 113-235 (December 16, 2014), P.L. 114-113 (December 18, 2015), P.L. 114-254 (December 10, 2016), P.L. 115-141 (March 23, 2018), and P.L. 115-244 (September 21, 2018). Although provisions prohibiting the annual adjustment often appear in appropriations acts, both the automatic annual adjustments and funding for Members' salaries are provided pursuant to other laws (2 U.S.C. §4501)—not the annual appropriations bills—and a provision prohibiting the scheduled adjustment could be included in any bill, or introduced as a separate bill. A third method for adjusting Member pay is congressional action pursuant to recommendations from the President, based on the recommendations of the Citizens' Commission on Public Service and Compensation established in the 1989 Ethics Reform Act. Although the Citizens' Commission was to have convened in 1993, it did not and has not met since then. This report contains information on actions taken affecting each pay year since the establishment of the Ethics Reform Act adjustment procedure. It also provides information on other floor action related to pay for Members of Congress. CRS Report 97-1011, Salaries of Members of Congress: Recent Actions and Historical Tables, by Ida A. Brudnick, has additional information on the rate of pay for Members of Congress since 1789; recent proposals to change Member pay; the adjustments projected by the Ethics Reform Act as compared with actual pay adjustments; details on enacted legislation with language prohibiting the automatic annual pay adjustment; and Member pay in constant and current dollars since 1992. Members of Congress only receive salaries during the terms for which they are elected. Former Members of Congress may be eligible for retirement benefits. For additional information on retirement benefit requirements, contributions, and formulas, see CRS Report RL30631, Retirement Benefits for Members of Congress, by Katelin P. Isaacs. |
Amid more than a half a century of antagonistic political relations between the United States and Cuba during which commercial ties were largely severed, U.S. exports of agricultural products to the island nation currently stand out as one of the few points of engagement between the two countries, if to a limited degree. U.S. exports of medicine and medical products is the other product category for which the U.S. government has eased its long-standing embargo on trade with Cuba. In a major diplomatic initiative, President Obama announced in December 2014 a significant shift in relations with Cuba with the goal of transitioning from a decades-long policy of sanctions that were designed to isolate Cuba toward a more normal bilateral relationship. To advance the goal of normalizing relations with Cuba, the President announced a series of actions designed to move the two nations closer to this objective. These included reestablishing diplomatic relations; reviewing the State Department's designation of Cuba as a state sponsor of international terrorism; and providing limited openings for increasing travel, and for expanding commerce and the flow of information. In May 2015, the State Department removed Cuba from the list of state sponsors of terrorism, and on July 20, 2015, the United States and Cuba reestablished diplomatic relations and reopened embassies in their respective capitals. In March 2016, President Obama visited Cuba, marking the first visit by a U.S. President in almost 90 years. While these actions are tangible steps in the direction of a more normal relationship with Cuba and will ease the embargo in some areas, the majority of economic restrictions first imposed on Cuba in 1962 remain in place. This report reviews the current state of agricultural trade between the United States and Cuba, identifies key impediments to expanding bilateral trade in agricultural products, identifies key provisions in the law to which these obstacles are anchored, and considers the potential consequences for trade in agricultural goods in the event that the current thaw in diplomatic relations was to be extended more broadly so that bilateral trade was returned to a more normal footing. It also summarizes several of the bills introduced in the 114 th Congress that propose to remove specific restrictions that impede trade in agricultural goods or that seek to lift the embargo on Cuba entirely. Relations between the United States and Cuba deteriorated sharply, and then decisively, in the early 1960s following a series of dramatic events that recast the U.S.-Cuba relationship along antagonistic lines. Chief among these events were Fidel Castro's action in the early 1960s to build a repressive communist regime and move Cuba toward close relations with the Soviet Union; the expropriation of U.S. economic assets on the island nation located a mere 90 miles from Florida; U.S. covert operations to overthrow the Castro regime in the failed Bay of Pigs invasion of Cuba in 1961; and the subsequent confrontation between the United States and the Soviet Union over the Kremlin's attempt to install offensive nuclear missiles in Cuba in 1962. In response to these events, President Kennedy imposed an embargo on trade with Cuba in 1962. The trade embargo was subsequently expanded—to prohibit most financial transactions and to freeze Cuban government assets in the United States. The web of U.S. sanctions on Cuba was strengthened in subsequent years and was also broadened to include various democracy-building measures with the enactment of additional laws, including the Cuban Democracy Act (CDA) of 1992 ( P.L. 102-484 ) and the Cuban Liberty and Solidarity (LIBERTAD) Act of 1996 ( P.L. 104-114 ), the latter frequently referred to as Helms/Burton legislation. In 2000, with passage of P.L. 106-387 , the Trade Sanctions Reform and Export Enhancement Act of 2000 (TSRA), Congress opened the door to U.S. agricultural exports to Cuba, but with restrictions on credit and financing. The U.S. sanctions regime against Cuba has been tweaked in various ways in the years since TSRA was enacted, but alterations have been mostly at the edges, and this continues to be the case. Notwithstanding the new diplomatic opening to Cuba that President Obama unveiled late in 2014 in tandem with his expressed desire to move toward a more normal relationship with Cuba, key restrictions on economic relations with Cuba persist. Among the plethora of restrictions that remain in place, those frequently identified as suppressing trade in U.S. products to Cuba include the following: a prohibition on the provision of credit and financing for U.S. exports; denial of access to government programs and commercial facilities that otherwise would be available to promote and facilitate U.S. agricultural exports to Cuba; the ban on general U.S. tourism to Cuba; and a general ban on U.S. imports of goods from Cuba, with a recently introduced exception for goods produced by Cuban entrepreneurs. Subsequently, the Obama Administration rescinded Cuba's designation as a state sponsor of terrorism in May 2015. Among a number of other actions taken to ease the embargo on Cuba, in 2015 and early 2016 the Obama Administration issued a policy of general approval for the export to Cuba of certain additional categories of goods and followed this up in January 2016 by permitting U.S. private export financing of these goods. But agricultural products continue to be excluded from private U.S. financing due to TSRA. That significant barriers continue to restrict the potential for U.S. agricultural exports to Cuba was acknowledged by the U.S. Department of Agriculture (USDA) in April 2015 testimony before the Senate Agriculture Committee. USDA asserted that if the embargo were removed, the United States could become "a major trading partner with Cuba," considering that Cuba imports around 80% of its food and that U.S. exporters enjoy significant logistical advantages over their major export competitors in Brazil and Europe. But USDA contends that these potential advantages are more than offset by a number of policies governing food and agricultural exports to Cuba, pointing to the prohibition on any U.S. government export assistance under TSRA, such as credit guarantees and market promotion programs, as one. Among impediments to expanding U.S. agricultural exports to Cuba that are not governed by the embargo, USDA cited Cuba's limited supply of foreign exchange and its requirement that all U.S. imports be funneled through Cuba's state corporation, Alimport—a requirement that is not imposed on all of Cuba's suppliers. Subsequently, in a report of June 2015 on the potential for U.S.-Cuba agricultural trade, USDA's Economic Research Service cited restrictions imposed by TSRA on the terms of payments and financing as a "major inhibitor of U.S. agricultural exports to Cuba." Under TSRA, payment or financing terms are limited to either cash in advance or financing by third-country financial institutions, with the latter being a more laborious process than making a conventional payment directly from the buyer's financial institution in Cuba to the seller's financial institution in the United States. Following President Obama's "normalization" initiative in late 2014, the U.S. Treasury altered its interpretation of "cash in advance" from one that required cash payment before the shipment of goods from a U.S. port of departure to one that requires cash payment before transfer of title. Moreover, U.S. institutions also were allowed to open correspondent accounts at Cuban financial institutions. Still, in its Cuba report of June 2015, USDA concludes that lacking the ability to extend credit to Cuban buyers places U.S. agricultural exporters at a competitive disadvantage in relation to other exporting countries. Prior to the Cuban revolution in 1959 that brought Castro to power and triggered the deterioration in U.S.-Cuban relations, the United States and Cuba conducted a brisk trade in agricultural products. During the three fiscal years before the revolution—FY1956-1958—Cuba ranked as the ninth largest market for U.S. agricultural exports and the second largest supplier of U.S. agricultural imports, according to the U.S. Department of Agriculture (USDA). In a report issued in June 2015, the agency notes that rice, lard, pork, and wheat flour led the list of U.S. farm exports to Cuba in value terms, with Cuba ranking as the largest foreign market for U.S. long-grain rice. Cane sugar, molasses, tobacco, and coffee topped the list of U.S. agricultural imports from Cuba during that period. With the advent of the Castro regime and the imposition of U.S. sanctions, U.S. agricultural trade with Cuba ground to a halt in the early 1960s. Trade in farm products remained at a standstill until Congress enacted the Trade Sanctions Reform and Export Enhancement Act of 2000 ( P.L. 106-387 ), or TSRA, which authorized certain sales of food, medicines, and medical equipment to a number of countries, including Cuba. TSRA did not change the general ban on imports from Cuba, including agricultural products, and it added prohibitions on extending credit to facilitate agricultural sales to Cuba and on providing any U.S. government support for exports to Cuba. Notwithstanding these disadvantages, U.S. agricultural exporters quickly established a foothold in Cuba, with export sales reaching a peak of $685 million in calendar year (CY) 2008 in the aftermath of several hurricanes and tropical storms ( Figure 1 ), representing 0.6% of total U.S. agricultural exports of $114.8 billion that year. The level of U.S. agricultural exports to Cuba has trended lower since 2008, averaging $365 million a year during the most recent three calendar years, from 2012 to 2014, or about 0.25% of average U.S. agricultural exports to the world of $145.4 billion over this period. Most recently, U.S. agricultural exports to Cuba dipped to $286 million in CY2014. A parallel trend is that U.S. exports to Cuba have become increasingly concentrated in a few commodities, with chicken meat (leg quarters), corn, soybean meal, and soybeans accounting for 84% of the total between 2012 and 2014 ( Table 1 ). A number of close observers have suggested the decline in U.S. food and agricultural exports to Cuba in recent years is likely the product of several factors, among which are a preference within the Cuban government for diversifying its supplier network; an effort to establish closer relations with certain allies, such as China and Vietnam; and the availability of credit offered by some non-U.S. suppliers that U.S. competitors are prevented from providing under the U.S. trade sanctions regime. Concerning the role of credit, USDA asserts that "U.S. restrictions on extending credit to Cuban buyers have made it harder for U.S. agricultural exporters to sell a larger volume and broader variety of commodities to Cuba." Figure 2 illustrates that as Cuba's agricultural imports from the United States have fallen in recent years, Cuba has increased its imports from the rest of the world, with the European Union and Brazil ranking as Cuba's largest suppliers in CY2014. In December 2014, the Senate Committee on Finance requested that the U.S. International Trade Commission (ITC) conduct an investigation and issue a report on trends in Cuban imports of goods and services, including from the United States. The committee also requested that the agency provide an analysis of U.S. restrictions affecting Cuba's purchases. In its letter to ITC, the committee identified three areas of particular interest: 1. An overview of Cuba's imports of goods and services from 2005 to the present, to the extent possible, including identification of major supplying countries, products, and market segments; 2. A description of how U.S. restrictions on trade, including those relating to export financing terms and travel to Cuba by U.S. citizens, affect Cuban imports of U.S. goods and services; and 3. For sectors where the impact is likely to be significant, a qualitative and, to the extent possible, quantitative estimate of U.S. exports of goods and services to Cuba in the event that statutory, regulatory, or other trade restrictions on U.S. exports of goods and services as well as travel to Cuba by U.S. citizens are lifted. The committee subsequently expanded its request to include the following elements: A qualitative analysis of existing Cuban non-tariff measures, Cuban institutional and infrastructural factors, and other Cuban barriers that would inhibit U.S. and non-U.S. firms in conducting business in and with Cuba, including restrictions on trade and investment; property rights and ownership; customs duties and procedures; sanitary and phytosanitary measures; state trading; protection of intellectual property rights; and infrastructure affecting telecommunications, port facilities, and the storage, transport, and distribution of goods; A qualitative analysis of any effects that such measures, factors, and barriers would have on U.S. exports of goods and services to Cuba in the event of changes to statutory, regulatory, or other trade restrictions on U.S. exports of goods and services to Cuba; and To the extent feasible, a quantitative analysis of the aggregate effects of Cuban tariff and non-tariff measures on the ability of U.S. and non-U.S. firms to conduct business in and with Cuba. In response to the Finance Committee's request, ITC held a hearing in June 2015 to solicit the views of a range of experts and interested stakeholders, among which were food and agricultural interests. Overall, ITC concluded in its March 2016 report that U.S. agricultural exports could expand significantly if U.S. restrictions on trade with Cuba were removed. In particular, ITC observed that U.S. agricultural suppliers view the inability to offer credit and U.S. restrictions on travel to Cuba as key obstacles to increasing U.S. farm exports. The ITC report makes a number of observations concerning U.S. farm and food exports to Cuba, including the following: 1. U.S. agricultural exports to Cuba have declined every year since 2009—in dollar terms, in market share, and in the variety of products shipped—whereas Cuba's overall agricultural imports have increased significantly over this period; 2. The United States is a competitive exporter of farm products, such as grains, meat, soybeans, and soybean products—products for which Cuba depends heavily on imports; 3. U.S. exporters enjoy advantages compared with major competitors, including the close proximity of U.S. ports to Cuba and lower shipping costs, which would allow them to be highly price competitive on certain agricultural products if U.S. travel and financing restrictions were lifted; 4. It is unclear whether lifting U.S. restrictions would lead the Cuban government to change its requirement that U.S. agricultural products be imported exclusively by the state trading agency, Alimport; 5. The potential for increasing U.S. exports could be tempered by Cuba's desire to diversify its supplier network to prevent it from becoming overly dependent on one country, particularly the United States; and 6. Other important factors in determining any expansion in U.S. agricultural exports would include the purchasing power of the Cuban economy, the availability of hard foreign currency, and the extent to which Cuba succeeds in its policy of import substitution through increases in agricultural production. The ITC report also provides an analysis of potential commodity-specific effects of removing U.S. restrictions on trade with Cuba. A summary of its conclusions is included in Table 2 . Overall, ITC concludes that if U.S. restriction on trade with Cuba were to be lifted, exports of the agricultural commodities listed in Table 2 could increase by 155% within five years to a total of about $800 million from a 2010-2013 average of just over $300 million. A University of Florida economist raised an agriculture-specific word of caution in citing a number of potential concerns for Florida agriculture in the event the current ban on imports from Cuba were to be lifted, among which were subsidized competition from Cuban farmers—who pay no rent to the government for their land, among other subsidies—and the possibility that imported Cuban produce could introduce new pests and diseases into Florida agriculture. In a separate analysis, USDA issued a report in June 2015 in which it assesses the potential for increased U.S. agricultural trade with Cuba. In its report, USDA points to several important similarities between Cuba and the Dominican Republic, including population size and per capita income in terms of purchasing power parity. Given these similarities, the report goes on to consider whether the Cuban market for U.S. agricultural exports, which averaged $365 million from 2012-2014, might have the potential to expand to a level closer to that of the Dominican Republic, which absorbed an average of $1.1 billion of U.S. agricultural products over the same three years. USDA cites Cuba's close geographic proximity to the United States as a potential advantage for U.S. food and agricultural product exports that could help to drive export gains. Another reason that the agency sees an opportunity to expand U.S. agricultural product exports to Cuba is that the U.S. share of the market in Cuba, at about 20%, is less than half the U.S. market share in the Dominican Republic. In terms of product mix, USDA, like the ITC report, sees the potential for U.S. rice to "regain a large share of Cuba's import market," if a normal trading relationship were to be established—but only if U.S. suppliers are allowed to provide competitive terms of credit. Among the advantages that favor U.S. rice compared with rice from current suppliers Vietnam and Brazil are the year-round availability of high-quality rice that Cuban consumers prefer, and transportation cost advantages. USDA suggests that exports of other U.S. commodities that have flagged in recent years, such as dry beans, wheat, and dry milk, could also rebound if normal trade relations were restored. In addition, USDA contends that tourist-oriented food service sales could support U.S. exports of cheese; yogurt; and higher value cuts of pork, poultry meat, and beef, particularly if restrictions on tourism to Cuba were relaxed. The agency also sees potential for expanded U.S. export sales of low-value cuts of pork, pork variety meats, chicken leg quarters, and milk powder, subject to further income growth within Cuba. These conclusions are largely reflected in the ITC report of March 2016. In recent years, Cuba has imported significant quantities of wheat, rice, and nonfat dried milk ( Figure 3 ), but almost all of this trade accrued to non-U.S. suppliers. Research conducted by Texas A&M University's Center for North American Studies is consistent with USDA's analysis in concluding that U.S. agricultural exports to Cuba have the potential to climb to $1.2 billion within five years if restrictions on trade financing and travel were to be relaxed. As concerns the potential effects on individual U.S. states of easing the trade embargo against Cuba along these lines, Texas A&M named Arkansas, Texas, Minnesota, Louisiana, Missouri, and Nebraska as the states that would be expected to benefit most from an expected increase in agricultural exports. Among the factors most likely to influence the volume and mix of U.S. agricultural exports to Cuba, Texas A&M cited remittances to Cuba from Cuban-Americans in the United States and access to foreign exchange based on Cuba's exports—led by tourism, nickel/cobalt, pharmaceuticals, sugar, and tobacco products. In addition to the potential for U.S. agricultural export gains from lifting certain trade restrictions with Cuba, or from removing the U.S. trade embargo completely, is the potential opportunity for Cuba to ship its agricultural products to the United States. A potential concern that could arise over U.S. imports of Cuban agricultural produce is that Florida farmers grow many of the same products during the same season as Cuba. Observers have pointed out that vegetables, citrus, sugar, and tropical fruit are among the overlapping product categories and concluded that if the prohibition on Cuban agricultural exports were removed, Florida growers could face increased competition." As previously noted, a corollary concern about such a policy change centers on the possibility that Florida growers could face subsidized competition: For example, some Cuban farms make no payments to the government for the use of their land. Concern about possible subsidized competition would be compounded if firms outside Cuba were to develop the island as a production platform for exporting produce to the United States, a development that some believe might alter the competitive structure of the U.S. winter fresh vegetable industry. Some also worry that opening the U.S. market to Cuba's produce could pose a threat to Florida agriculture by exposing it to new invasive pests and diseases. Cuba's agricultural exports are limited, averaging $526 million per year during CY2012-2014, according to USDA, and are concentrated in a few products—sugar accounted for 89% of its farm exports during this period, followed by honey with about 4% of the total. China and the European Union are the leading markets for Cuba's agricultural exports. Although not considered agricultural products per se, cigars and cigarettes also were significant export earners during this period, averaging $222 million per year. USDA suggests that Cuba could exploit comparative advantages it has in the production of certain crops, such as tropical fruit, vegetables, sugar, and tobacco, to boost its agricultural exports to the United States if the embargo on its products were lifted. Cuba was long known as a major producer and exporter of sugar, but its production and export trade have declined precipitously since the demise of the Soviet Union in 1991, so its capacity to be a major influence on the world market has diminished sharply. USDA states that Cuban sugar production has fallen from between 6.5 million and 8.5 million metric tons during the 1980s, when it exported some 90% of its output, to an average of 1.6 million metric tons during the three most recent marketing years of 2012/2013 through 2014/2015 with exports averaging just below 1 million tons annually. ( Figure 4 ). Given Cuba's resource endowments and history as a major sugar producer, Cuba might expand its output and exports with additional investments. Although the United States is the world's largest sugar importer and Cuba was the largest foreign source of sugar for the U.S. market prior to the U.S. embargo, any post-embargo access to the U.S. sugar market would have to be negotiated. Any such access might well be quite limited in scope given the existing limitations on sugar imports under the U.S. sugar program via tariff rate quotas (TRQs), free-trade agreements, and through a 2014 export limitation agreement with Mexico. The United States currently provides low- or no-duty access to most of its supplier countries based on historical trade patterns as determined under an agreement struck under the auspices of the World Trade Organization. In its June 2015 study, USDA concluded, "A more normal trading relationship with Cuba would likely result in the establishment of some U.S. sugar imports from Cuba, but at volumes much smaller than during the late 1950s." USDA cites a 2002 paper authored by two officials at the U.S. International Trade Commission that identifies six possible options for providing Cuba with access to the U.S. sugar market that the authors contend would be compliant with the existing multilateral trade agreements at the World Trade Organization (WTO): allocate WTO quotas on a first-come, first-serve basis; auction sugar quotas; redistribute the tariff-rate quota (TRQ) among countries, including Cuba; increase the TRQ to accommodate Cuba; replace the existing TRQ with a simple tariff; and provide market access for sugar as part of a free trade agreement with Cuba. When President Obama announced his initiative to alter the course of U.S.-Cuba relations late last year, he indicated that he does not have the authority to end the embargo because it is codified in legislation. Under the LIBERTAD Act, the President would be required to end the trade embargo if he determines that Cuba has elected a government under free and fair elections and has met other criteria, among which are showing respect for basic civil liberties and human rights of Cuban citizens and Cuba moving to establish a free market economic system. Otherwise, congressional action would be required to end it, either by amending or repealing the LIBERTAD Act and other embargo-related statutes. The text box below identifies existing statutes that contain restrictions that are of particular importance for trade in food and agricultural products with Cuba. Recognizing that U.S. farmers and exporters are competing for food and agricultural markets in Cuba under terms that place them at a distinct disadvantage compared with foreign competitors that are not subject to restrictions under the U.S. embargo, some Members of Congress have proposed legislation that would ease various elements of the U.S. economic embargo on Cuba, or repeal it entirely. A brief review of several of the legislative initiatives that address agricultural aspects of the trade embargo against Cuba follows. Three bills would lift the overall embargo: H.R. 274 (Rush), H.R. 403 (Rangel), and H.R. 735 (Serrano). H.R. 635 (Rangel), among its various provisions, has the goal of facilitating the export of U.S. agricultural and medical exports to Cuba by permanently redefining the term "payment of cash in advance" to mean that payment is received before the transfer of title and release and control of the commodity to the purchaser; authorizing direct transfers between Cuban and U.S. financial institutions for products exported under the terms of TSRA; establishing an export promotion program for U.S. agricultural exports to Cuba; and prohibiting restrictions on travel to Cuba. S. 491 (Klobuchar) would remove various provisions of law restricting trade and other relations with Cuba, including certain restrictions in the CDA, the LIBERTAD Act, and TSRA that currently prohibit financing of agricultural sales to Cuba, U.S. export assistance for sales to Cuba including credit and guarantees, and the entry of Cuban goods into the United States. S. 1049 (Heitkamp) would amend TSRA to allow for the private financing of agricultural commodity sales to Cuba. S. 1543 (Moran)/ H.R. 3238 (Emmer) would repeal or amend various provisions of law restricting trade and other relations with Cuba, including certain restrictions in the CDA, the LIBERTAD Act, and TSRA. It would repeal restrictions on private financing for Cuba in TSRA but continue to prohibit U.S. government foreign assistance or financial assistance, loans, loan guarantee, extension of credit, or other financing for export to Cuba, albeit with presidential waiver authority for national security or humanitarian reasons. Under the initiative, the federal government would be prohibited from expending any funds to promote trade with Cuba or develop markets in Cuba, although certain federal commodity research and promotion programs that are funded through mandatory assessments would be allowed. H.R. 3687 (Crawford) would amend TSRA to remove the prohibition on U.S. entities from making loans or extending credit to Cuba to facilitate sales of agricultural commodities. The bill would also permit U.S. government assistance in support of U.S. agricultural exports to Cuba—including the Market Access Program, the Export Credit Guarantee Program and the Foreign Market Development Cooperator Program and federal commodity promotion programs—provided the recipient of the assistance is not controlled by the Cuban government. It would also authorize investment for development of an agricultural business in Cuba so long as it is not controlled by the Cuban government or does not traffic in property of U.S. nationals confiscated by the Cuban government. | After more than half a century during which trade relations between the United States and Cuba have evolved from a tight economic embargo to a narrow window of trade in U.S. agricultural and medical products, the diplomatic initiative that President Obama announced in December 2014 to restore more normal relations with Cuba has raised the possibility that bilateral relations could move toward an expansion in commercial opportunities. Many U.S. agricultural and food industry interests believe the Cuban market could offer meaningful export expansion potential for their products—but only if a number of restrictions under the U.S. embargo on trade with Cuba were to be removed. Among the measures most often cited as inhibiting exports of U.S. products, while simultaneously benefiting foreign competitors, are a prohibition on the provision of private financing and credit on sales to Cuba; denial of access to U.S. government credit guarantees and export promotion programs; the ban on general tourism to Cuba; and the general prohibition on U.S. imports of Cuban goods. A question that arises for policymakers as diplomatic relations with Cuba are restored is what the potential opportunity is for U.S. food and agricultural exports to Cuba if bilateral relations are returned to a more normal status in the future. Corollary questions are what agricultural products Cuba might export to the United States if the existing prohibition on Cuban products were to be removed, and what implications trade in Cuban products could hold for U.S. agriculture. Numerous stakeholders within the food and agriculture industry, as well as the U.S. Department of Agriculture (USDA), contend that U.S. agricultural exports to Cuba could expand markedly if key elements of the embargo against Cuba were removed. The prohibition on providing private credit and financing and the ban on access to government export promotion programs are two that are often cited. USDA asserts that basic commodities, like U.S. rice, wheat, dry beans, and dried milk could readily gain market share in Cuba under more normal trade relations in view of the close proximity of U.S. ports to Cuba compared with export competitors. Higher value food and agricultural products might make inroads in Cuba over time, it is argued, particularly if Cuba could increase its access to foreign exchange by selling its products in the United States. Similarly, a report on Cuban imports and the effects of U.S. restrictions on U.S. agricultural exports to Cuba that the U.S. International Trade Commission issued in March 2016 at the request of the Senate Finance Committee concluded that the removal of U.S. restrictions on trade could result in significant gains for U.S. agricultural exports. A concern voiced by some in agriculture is that opening the U.S. market to Cuba could pave the way for a new influx of tropical fruit and vegetable products that would compete directly with winter-season production in Florida, particularly if foreign investors perceive the opportunity to create an export platform for the U.S. market in Cuba. Among the concerns raised is that Cuban production is often subsidized by the government; also, that allowing Cuban produce into the U.S. market could become a conduit for introducing new pests and plant diseases. While Cuba was once a leading sugar producer and the largest foreign supplier to the U.S. market prior to the embargo, its sugar industry has undergone a steep decline since the demise of the Soviet Union. Cuba continues to export limited quantities of sugar and might very well request access to the lucrative U.S. sugar market if normal trade relations were restored. But any such opportunity would most likely be the result of a negotiated agreement between the United States and Cuba. Some Members of Congress have introduced legislation in the 114th Congress that would ease U.S. economic sanctions on Cuba. These bills span a broad range of approaches, from a narrow focus on removing the ban on providing private financing and credit for the sale of agricultural goods to Cuba to far broader legislative initiatives that seek to lift the Cuban embargo altogether. |
The U.S. Constitution establishes qualifications for Representatives and Senators, but it is silent about the roles and duties of an individual Member of Congress. House and Senate rules require only that Members be present and vote on each question placed before their chamber. The job of a Member of Congress has been characterized as "a license to persuade, connive, hatch ideas, propagandize, assail enemies, vote, build coalitions, shepherd legislation, and in general cut a figure in public affairs." Beyond voting requirements, there is no formal set of expectations or official explanation of what roles or duties are required, or what different Members might emphasize as they carry out their work. In the absence of such formal authorities, many of the responsibilities that Members of Congress have assumed over the years have evolved from the expectations of Members and their constituencies. Today, the roles and duties carried out by a Member of Congress are understood to include representation, legislation, and constituent service and education, as well as political and electoral activities. In a typical week, Members may oversee constituent services in the state or district, travel between their state or district to Washington, DC, to participate in committee activities, greet a local delegation from the home state, meet with lobbyists, supervise office staff, speak on the floor, conduct investigations, interact with the news media, and attend to various electoral duties, including fundraising, planning, or campaigning for election. Given that no precise definition exists for the role of a Member, upon election to Congress, each new Member is responsible for developing an approach to his or her job that serves a wide range of roles and responsibilities. One observer of Congress notes that the first job of a Member is to come to grips with the dimensions of [their] role and develop a personal approach to [their] tasks. Given the many challenges, the overall conclusion is readily apparent: the key to effectiveness in Congress is the ability to organize well within a framework of carefully selected priorities. It is not possible, however, to construct a grand master plan such that priorities and the time devoted to each will neatly mesh, for legislative life is subject to sudden and numerous complications. Observers note that after identifying and organizing priorities, a Member typically carries out some of the resulting duties personally, and delegates others to congressional staff who act on his or her behalf. The staff may work in the Member's individual office, on committees to which the Member is assigned, in offices connected to leadership posts the Member may hold, and in the separate political and reelection operations the Member may maintain. In this understanding, the Member sets broad policies to fulfill his or her duties, and the appropriate staff act to carry them out. The distribution of responsibility will vary according to the preferences and priorities of the Member at the center of the effort. Nevertheless, the work carried out by staff is typically attributed to the effort of the Member. Many scholars of Congress see these Member choices and delegation arrangements as dependent in part on their goals. Generally, these observers suggest that Members pursue three primary goals: gaining reelection, securing influence within Congress, and making good public policy. The relative priority a Member may assign to these goals can affect a wide range of choices regarding a congressional career, including (1) the emphasis given to different roles and duties; (2) activities in the Washington, DC, and district or state offices; (3) staffing choices in Member and committee offices; and (4) preference for committee assignments. It can also affect a Member's approaches to legislative work, constituent relations, media relations, party issues, and electoral activities. Given the dynamics of the congressional environment, the priorities that Members place on various roles may change as their seniority increases, or in response to changes in committee assignments, policy focus, district or state priorities, institutional leadership, or electoral pressures. As part of a broader evaluation of House administrative practices in the mid-1970s, the House Commission on Administrative Review surveyed Members of the House and asked them to describe the major jobs, duties, and functions that they believed they were expected to perform. At the same time, the commission hired the research firm Louis Harris and Associates to conduct a survey of the public to gauge its expectations of Congress and its Members. The Member survey found that the three most frequently mentioned duties and activities were the drafting and introduction of legislation; helping constituents solve problems; and representing the interests of their districts and constituents. Other expectations included position taking and constituent education. Table 1 summarizes the responses received by role categories established by the commission. According to the public survey conducted by the commission, the most common expectations of Members were to represent the people and district according to the wishes of the majority; to solve problems in the district; and to keep in contact with the people in the district through regular visits and meetings in the district and polls or questionnaires. Other public expectations included regular attendance in legislative sessions and voting on legislation. Table 2 summarizes the most frequently mentioned responses to the public survey. Despite differences in point of view, both the Member and public survey results describe common interests in local representation, constituency services, legislative activity, and regular contact between the Member and the district. The differences between Member and public expectations may reflect the different perspectives on the work of a Member of Congress. Where Members are daily confronted with representational, legislative, and institutional duties, the public focuses on representational, legislative, and service responsibilities, apparently without recognizing a broader underlying institutional, procedural, and operational framework in which Members of Congress operate. Some observers suggest that this narrow public focus is in part a reflection of the attention the public gives, or does not give, to political matters in general. Common Member and public interest in local representation, constituency service issues, legislative activity, and regular contact between the Member and the constituency may partially explain how individual Members of Congress receive broad public satisfaction or approval of their performance while Congress as an institution, where Members engage the procedural and operational barriers the public disdains, routinely trails the executive and judicial branches in public approval. The responses to the Member and public surveys suggest that the roles and duties of a Member of Congress can be identified in part as an outgrowth of congressional and public expectations. These congressional roles may be described by focusing on some of the underlying tasks typically required to carry them out. Because some of the duties are complex, and some of the underlying tasks often overlap, some of the roles may overlap. The roles described below are derived from congressional duties mentioned in the Constitution; responses to the House surveys of Members and the general public; and scholarly studies. Broadly, a system of representative government assumes that the will of the people is consulted and accommodated when making public policies that affect them. Consequently, representational activity is present in all of the roles of a Member of Congress. Representational activity is seen in the legislative process, constituent service, oversight, and investigation duties that Members carry out. In Congress, Members are elected to represent the interests of the people in their congressional district or state. In addition, they represent regional and national interests in matters which might come before Congress. On the local level, Members of the House represent congressional districts of populations ranging approximately from 527,000 (Rhode Island's two congressional districts) to 994,000 (Montana's single district) constituents. Senators represent states that range in population from 568,000 (Wyoming) to more than 37.7 million (California). In the nation's capital, Members serve as advocates for the views and needs of their constituents as well as stewards of national interests. Representational work may involve legislative activity, such as analyzing the provisions of proposed legislation for their potential impact on the area represented, or constituent service activity, such as assisting individuals, local governments, and organizations in obtaining federal grants and benefits. Styles of representation differ. Some Members might view themselves as responding to instructions from their constituents—sometimes called the "delegate" style. Others might prefer to act upon their own initiative and rely upon their own judgment—sometimes called the "trustee" style. In practice, when considering new legislation or the effects of implementing existing law, the opinion of their constituency often may be uppermost in a Member's mind. Constituent views, however, may vary in intensity from issue to issue, or fall on several sides of an issue, and the Member would typically take into account opinions from other sources as well. Consequently, most Members typically balance or reconcile these competing viewpoints with their own judgment when casting their votes, providing constituent service, or conducting oversight. Another facet of representation involves presenting a view of government activity to constituents and the broader American public. Members of Congress regularly draw attention to policy issues and federal government activities in order to educate constituents and other citizens and to encourage more robust citizen participation in public affairs. This educational function is typically performed through newsletters and special mailings sent to residents in the district or state, or through a variety of media outlets, which may include a Member website, and appearances and interviews on local television and radio programs. In developing and debating legislative proposals, Members may take different approaches to learn how best to represent the interests of their district or state, together with the interests of the nation. This may require identifying local, national, and international issues or problems which need legislative action, and proposing or supporting legislation which addresses them. Throughout the legislative process, Members of Congress routinely attend committee hearings and briefings, hold meetings and conversations with executive branch officials and with lobbyists representing various interested groups, and have discussions with congressional colleagues. In addition, many Members receive staff briefings based on a broad range of sources, including congressional support agencies, local and national media outlets, specialized policy-oriented literature, and background material on legislative issues, among others. An important venue for congressional activities is the committee, through which much of the work of Congress is organized. Committees typically are the first place in which legislative policy proposals receive substantive consideration. Members of Congress are assigned to a number of committees and subcommittees simultaneously, and are expected to develop issue expertise in the policy areas that come before these panels. Typically, each Senator is assigned to three committees and at least eight subcommittees. With the exception of Members who serve on committees that their party has designated as exclusive, each Representative is typically assigned to two standing committees and four subcommittees. Committee members usually participate in hearings to question witnesses; engage in markup sessions to draft, amend, and refine the text of legislation; and vote on whether to send specific measures to the floor of their chamber. Members also testify before other congressional committees on matters of interest to their district or state, or on matters in which the Member has developed expertise. In addition to these duties, Senate committee membership involves review of executive and judicial nominations and may include consideration of treaties. Some Members, generally those with more seniority, also participate in conference committees. Conference committees are convened to work out differences when the House and Senate pass different versions of the same bill. Members of conference committees participate in the final resolution of policy disputes, legislative-executive bargaining, and significant policy decisions. Members generally participate in floor debate most fully when measures of importance to their home district or state are involved, or when matters reported from their legislative committees are under consideration. Floor activity might include preparing statements, conducting research to defend or deter provisions of a bill, and offering amendments. It may also mean debating other Members, in an effort to persuade the undecided, and engaging in extensive informal political negotiations to advance legislative goals. The constituency service role is closely related to the representative and educational roles of a Member of Congress. Frequently, when constituents or local firms or organizations need assistance from the federal government, they contact their Representative or Senators. Members then act as representatives, ombudsmen, or facilitators, and sometimes as advocates, in discussions with the federal government. The constituency service role may be highly varied, and involve several activities, provided to individual constituents, including outreach, in which Members introduce themselves and inform constituents of the services typically provided; gathering information on federal programs; casework, in which congressional staff members provide assistance in obtaining federal benefits or in solving constituents' problems with agencies; providing nominations to United States service academies; and arranging visits or tours to the Capitol or other Washington, DC, venues. Assistance on behalf of firms and organizations may involve providing letters and other communication in support of grant or other applications for federal benefits. The constituency service role also allows a Member the opportunity to see how government programs are working, and what problems may need to be addressed through formal oversight or legislation. In addition to its legislative responsibilities, Congress is responsible for seeing that the laws are administered according to congressional intent. While some Members receive feedback on the success of public policies through constituency service and the experiences of constituents who seek casework assistance, most of the oversight and investigation duties of Members are carried out through committees. Committees and Members can review the actions taken and regulations formulated by departments and agencies through hearings, studies, and informal communication with agencies and those affected by a program or policy. Oversight and investigation can take several forms. In addition to casework activity, the process of authorizing and appropriating funds for executive branch departments and agencies in committee hearings also affords Members and committees the opportunity to review the adequacy of those agencies' organization, operations, and programs. Investigatory hearings are often conducted in response to an emerging crisis or scandal. At various points in the oversight and investigative process of Congress, individual Members can participate in the proceedings, for example, by questioning executive branch leaders, or reporting the experiences constituents have had with particular programs or agencies. The Constitution places upon the Senate, but not the House, the responsibility for confirming nominations of individuals for appointive federal office, federal judicial nominations, and to ratify treaties negotiated by the executive branch with foreign nations. Individual Senators typically participate in hearings to determine the suitability of candidates nominated for executive office and the adequacy of the provisions of treaties. Senators may also participate in the floor debate on these matters. Some Members of Congress hold leadership positions within their chamber. Leadership responsibilities include leading negotiations within the party to formulate party positions on legislative issues, mediating political conflicts among Members of the same party, persuading Members to join in voting coalitions, keeping count as voting blocs form, participating in decisions to set the legislative agenda for the chamber, and negotiating agreements on when to schedule, and how to consider, specific bills on the floor. Representatives and Senators may also hold the position of chairman or ranking minority Member on a committee or subcommittee, and have responsibility, or participate in the process of, scheduling of that committee's business and selecting the issues that will compose the committee or subcommittee's agenda. Some Representatives and Senators also participate in a leadership capacity in their respective party caucus or conferences. Leadership duties may be carried out both by Members who hold formal leadership positions and those who do not. Issues on which individual Members have recently taken informal leadership roles include campaign finance reform, planning for the continuity of Congress, and lobbying and ethics reform. Members of Congress are supported by a personal office in which staff perform legislative research, prepare materials for the Member to study, provide constituency service, manage constituency correspondence, handle media relations, and perform administrative and clerical functions. Staff and office facilities are provided through funds appropriated annually, and allocated to Members according to the procedures of each chamber. The precise duties and tasks carried out in a Member office will vary with the Member's personal preferences, which are typically informed by seniority, committee assignment, policy focus, district or state priorities, institutional leadership, and electoral considerations. Each Member is allocated public funds to maintain office payroll and expense accounts, and typically supervises work carried out in Washington, DC, and state or district offices. Every Representative is authorized to have up to 18 full-time and 4 half-time positions to assist them in their duties. In the Senate, the number of authorized staff varies according to the population of the state a Senator represents. An integral part of the work of Members of Congress, their reelection plans, is separate from their official congressional duties. For those Members of Congress running for reelection, activities may include organizing and maintaining a personal campaign staff, campaigning, and raising funds for reelection or election to another office. Members may also be significant political leaders of their party, as public spokespersons, and as fund raisers for themselves and other congressional candidates. At the state or district level, they may also aid and influence the candidacies of state and local government officials. In addition, some Members also hold leadership posts within their national political parties, such as serving on their party's congressional campaign committee. House and Senate rules mandate that with very limited exceptions, political and campaign activities must be conducted outside of federal facilities, including congressional offices. With no formal or definitive requirements, each Member of Congress is free to define his or her own job and set his or her own priorities. Although elements of each of the roles described can be found among the duties performed by any Senator or Representative, the degree to which each is carried out differs among Members as they pursue the common goals of seeking reelection, building influence in Congress, and making good public policy. Each Member may also emphasize different duties during different stages of his or her career as other conditions of the Member's situation change. For example, some may focus on outreach, constituent service, and other state or district activity. Others may focus on developing influence in their chamber by developing policy expertise or advancing specific legislation. No Member, however, is likely to focus on any one role or duty at the exclusion of another, because the extent to which a Member successfully manages all of those roles is the basis on which his or her constituents may judge the Member's success. | The duties carried out by a Member of Congress are understood to include representation, legislation, and constituent service and education, as well as political and electoral activities. The expectations and duties of a Member of Congress are extensive, encompassing several roles that could be full-time jobs by themselves. Despite the acceptance of these roles and other activities as facets of the Member's job, there is no formal set of requirements or official explanation of what roles might be played as Members carry out the duties of their offices. In the absence of formal authorities, many of the responsibilities that Members of Congress have assumed over the years have evolved from the expectations of Members and their constituents. Upon election to Congress, Members typically develop approaches to their jobs that serve a wide range of roles and responsibilities. Given the dynamic nature of the congressional experience, priorities placed on various Member roles tend to shift in response to changes in seniority, committee assignment, policy focus, district or state priorities, institutional leadership, and electoral pressures. In response, the roles and specific duties a Member carries out are often highlighted or de-emphasized accordingly. Although elements of all the roles described can be found among the duties performed by any Senator or Representative, the degree to which each is carried out differs among Members. Each Member may also emphasize different duties during different stages of his or her career. With no written requirements, each Member is free to define his or her own job and set his or her own priorities. This report is one of several CRS reports that focus on congressional operations. Others include CRS Report RL34545, Congressional Staff: Duties and Functions of Selected Positions, by [author name scrubbed]; CRS Report RL33209, Casework in a Congressional Office: Background, Rules, Laws, and Resources, by [author name scrubbed]; and CRS Report RL33213, Congressional Nominations to U.S. Service Academies: An Overview and Resources for Outreach and Management, by [author name scrubbed]. |
Prior to 1958, U.S. Presidents who left office received no federal pension or other financial assistance. Some former Presidents—like Herbert Hoover and Andrew Jackson—returned to wealthy post-presidential lives. Other former Presidents—including Ulysses S. Grant and Harry S. Truman—struggled financially. Still others—including Andrew Johnson, John Quincy Adams, and William Howard Taft—served formally in the federal government after their presidencies. In 1958, prompted largely by former President Truman's financial difficulties, Congress enacted the Former Presidents Act (FPA; 3 U.S.C. §102 note). The FPA was designed to "maintain the dignity" of the office of the President by providing former Presidents—and their spouses—a pension and other benefits to help them respond to post-presidency mail and speaking requests, among other informal public duties often required of a former President and his spouse. As administered by the General Services Administration (GSA), the act, as amended, provides former Presidents with a pension, funds for travel, office space, support staff, and mailing privileges. According to the FPA, upon leaving office, former Presidents are to receive a pension that is equal to the pay for the head of an executive department (Executive Level I), which was $203,700 in calendar year 2015. Executive Level I pay increased to $205,700 in calendar year 2016. The widow of a former President is authorized to receive an annual pension of $20,000. Currently, four former Presidents receive pensions and benefits pursuant to the FPA. The President's FY2017 budget request seeks $3,865,000 in appropriations for expenditures for former Presidents, an increase of $588,000 (17.9%) from the FY2016 appropriation level. The request includes language stating that the appropriation includes funding for "future former President Barack Obama." President Obama's anticipated transition from incumbent to former President is scheduled to occur on January 20, 2017. For FY2016, President Obama requested and received appropriations of $3,277,000 for expenditures for former Presidents—an increase of $25,000 from FY2015 appropriated levels ( P.L. 114-92 ). The FPA is not the only authority that provides benefits to a former President. For example, pursuant to the Presidential Transition Act (3 U.S.C. §102 note), an outgoing President is entitled to receive seven months of "transition" services and facilities to assist his transition to post-presidential life. Federal law also provides former Presidents and their spouses lifetime Secret Service protection. In 1994, the law was amended to limit U.S. Secret Service coverage to 10 years for any President who entered office after January 1, 1997. President George W. Bush and his wife Laura Bush would have been the first former President and first lady who faced this statutory limit. The Former Presidents Protection Act of 2012 ( P.L. 112-257 ), however, reinstated Secret Service protection for former Presidents and their spouses until their deaths. The bill also reinstated Secret Service protection to the children of former Presidents until they are 16 years old. The bill was signed into law by President Barack H. Obama on January 10, 2013. On April 14, 2015, Representative Jason Chaffetz, Chairman of the House Committee on Oversight and Government Reform, introduced the Presidential Allowance Modernization Act ( H.R. 1777 ). Senator Joni Ernst introduced a similar bill ( S. 1411 ) with an identical title on May 21, 2015. The bills, among other changes, seek to cap a former President's pension at $200,000—removing the current pay link to that of Cabinet Secretaries. Both pieces of legislation seek to provide a former President an additional $200,000 annual allowance to be used as he determines. Pursuant to H.R. 1777 and S. 1411 , the values of a former President's pension and allowance would increase annually at the same percentage rate of increase authorized for benefits provided through Title II of the Social Security Act (42 U.S.C. §401). Additionally, the bills seek to remove other benefits currently provided to former Presidents, including those currently provided for travel, staff, and office expenses. Also, for every dollar a former President earned in each fiscal year that was in excess of $400,000, both H.R. 1777 and S. 1411 would require that federal government-provided annual allowance be reduced by $1. Further, if a former President held an elected position in the federal or District of Columbia governments, the bills would require that he forfeit his rights to a pension until he left office. H.R. 1777 and S. 1411 also seek to raise the pension available to the widow of a former President, from $20,000 to $100,000. H.R. 1777 was referred to the House Committee on Oversight and Government Reform. On May 19, 2015, the House Oversight and Government Reform Committee amended and reported H.R. 1777 in the nature of a substitute. The substitute language was nearly identical to H.R. 1777 , as introduced, but did not include language that would have required a former President to forfeit the pension benefit while he served an elected position in the District of Columbia government. At a May 19, 2015, markup of H.R. 1777 , Representative Elijah Cummings, a co-sponsor of the bill, stated that "taxpayers should not have to pay for a former President's allowance if the former President is making a comfortable living earning more than $400,000 a year after leaving office." In the report to accompany H.R. 1777 , the House Committee on Oversight and Government Reform stated that "[u]pdating the pension and allowances provided to former Presidents who earn significant incomes is needed given the country's fiscal position." On June 22, 2015, the Congressional Budget Office released a score of H.R. 1777 , as reported, that stated the legislation would reduce federal outlays by $10 million from 2016 through 2020. The score estimated that "at least two former Presidents would earn enough that they would not be eligible for an allowance beginning in 2016." On January 11, 2016, H.R. 1777 passed the House. The next day, H.R. 1777 was received in the Senate and referred to the Senate Committee on Homeland Security and Governmental Affairs. No further action has been taken on H.R. 1777 . On February 10, 2016, S. 1411 was ordered to be favorably reported, as amended, by the Senate Committee on Homeland Security and Governmental Affairs. Among the amendments made at the markup were the inclusion of a provision clarifying that GSA would be required to work with the Secret Service to ensure that any reduction in benefits to the former President would not affect a former President's security. The amended bill also included a provision stating that office space leases for current former Presidents would not be affected by any reduction in benefits. In short, any reduction in benefits related directly to office space lease payments would not go into effect until the termination of an existing lease agreement. The amendments also removed the language that would have required a former President to forfeit the pension benefit while he served an elected position in the District of Columbia government. No further action has been taken on S. 1411 . Some critics of the Former Presidents Act say it subsidizes Presidents who are not struggling financially. In the 112 th Congress (2011-2012), Representative Chaffetz, when introducing H.R. 4093 , noted that while he did not want former Presidents "living the remainder of their lives destitute," that "none of our former presidents are poor." Others may argue that while a former President may not hold a formal public position, he remains a public figure even after he leaves office. When former President Harry S. Truman returned to Independence, MO, following his presidential tenure, for example, he reportedly said it cost him $30,000 a year to reply to mail and requests for speeches. Some may argue that to cover such costs, a former President should be provided a pension and benefits that permit him to perform duties that emerge as a result of his unofficial public status. Former U.S. Presidents have returned to varied financial circumstances after leaving office. Some former Presidents created or returned to wealthy lives after the presidency. Others struggled financially. Contemporary former Presidents—like William J. Clinton and George W. Bush—write memoirs, head foundations, and give public speeches. No current former President has claimed publicly to have significant financial concerns. The United States is not the only country that pays a pension and provides other benefits to its former head of government. Since 2013 in Britain, all "great offices of state," including the Prime Minister, are on the ministerial pension scheme used for other members of Parliament, under the Parliamentary Contributory Pension Fund. Since 2012 in Canada, the pension for a former Prime Minister is calculated as 3% of his or her salary multiplied by his or her years of service. Pursu ant to Canada's Pension Reform Act, a former prime minister appears to remain eligible for pension benefits as a former member of Parliament. GSA is authorized by the FPA to provide limited funding for an office staff and "suitable office space, appropriately furnished and equipped," at a location within the United States designated by a former President, for the rest of his lifetime. In addition, each former President is authorized to receive a lifetime federal pension, travel funds, and franked mail privileges. Separate statutes provide U.S. Secret Service protection to former Presidents. In 1961, the Comptroller General of the United States determined that the FPA also applies to office supplies, such as stationery and local and long distance telephone service. Table 1 shows the FY2015 GSA appropriation provided for former Presidents, disaggregated by category of expenditure. The data in Table 1 show that in FY2015, costs of providing benefits to more recent former Presidents were higher than for their predecessors. For example, in FY2015, George W. Bush, the former President who left office most recently (January 2009), had the highest annual pension and benefit costs among the four living former Presidents ($1,098,000). Former President Jimmy Carter, the living former President with the longest tenure out of office (January 1981), drew the smallest pension and benefits ($430,000). Also in FY2015, former Presidents William J. Clinton and George W. Bush received larger appropriations to pay for personnel benefits ($119,000 and $102,000, respectively) than former Presidents Jimmy Carter and George H. W. Bush received ($0 for Carter and $65,000 for George H. W. Bush). The pension and benefits paid to former Presidents George W. Bush and Clinton in FY2015, when added together, comprise 62.2% of all benefits paid to the four living former Presidents and the widows of the former Presidents. In FY2015, office space rental payments were the highest category of cost for former Presidents George H. W. Bush, Clinton, and George W. Bush. As shown in Table 1 , former President George W. Bush received the highest FY2015 appropriation for office space ($434,000). Former President Clinton's office space costs ($429,000) were $5,000 less than former President George W. Bush's costs, which was a reversal from FY2014. According to GSA, the appropriations provided for office space are estimates "based on prior year actual obligations and anticipated changes" to those obligations for the next fiscal year. As shown in Table 3 , the actual office space costs for the former Presidents are lower than the appropriations displayed in Table 1 . According to GSA, excess office space funds can be reallocated to other costs for former Presidents that were underestimated or unanticipated. If excess funding is not needed during the fiscal year, it is returned to the Department of the Treasury. In addition to office space, pension costs have historically been a large share of federal appropriations. Pension costs were the highest category of spending for former President Carter in FY2015, while they were second only to office space for the other three living former Presidents. Table 2 shows the costs of pension and benefits provided to former Presidents for the past 15 fiscal years. The data indicate several trends. First, the aggregated adjusted value of pension and benefits provided to the former Presidents stayed relatively consistent from FY2000 through FY2001. From FY2001 to FY2002, the aggregated adjusted pension and benefits value increased 25.3% (from $3,361,000 to $4,211,000). The adjusted pensions remained above $4,000,000 until FY2005, when they declined to an aggregated total of $3,739,000. The total pensions continued to decline until they reached their lowest adjusted aggregated value in FY2008 ($2,728,000). The aggregated pensions grew from FY2008 through FY2010, and then they declined from FY2011 to FY2015. When adjusted for inflation, FY2003 had the highest costs for pension and benefits ($4,301,000) and FY2008 had the lowest costs ($2,728,000). Second, as shown in Figure 1 , despite the general trend toward overall increasing costs associated with providing pensions and benefits to former Presidents, the value of each individual former President's pension and benefits—when adjusted for inflation—has either declined or remained stable. George H. W. Bush is one exception to that trend. Between FY2000 and FY2015, George H. W. Bush's adjusted pension and benefits increased from $790,000 in FY1999 to $794,000 in FY2015. The annual appropriation data suggests that federal funding for former Presidents increases in the years immediately following the end of a President's term, as was the case for both FY2001-FY2002 and FY2009-FY2010. The Presidential Transition Act (PTA), as amended, authorizes the Administrator of GSA to provide services and facilities to each outgoing President and Vice President, "for use in connection with winding up the affairs of his office," for a period "not to exceed seven months from 30 days before the date of the expiration of his term of office." The PTA authorizes appropriations for specified activities during a presidential transition, including both those just mentioned and those in support of the incoming President and Vice President. The act authorizes "not more than $3.5 million ... for the purposes of providing services and facilities to the President-elect and Vice President-elect" and "not more than $1.5 million ... for the purposes of providing services and facilities to the former President and former Vice President." In the event that the outgoing Vice President is becoming President, the PTA limits the authorized expenditures in this area. The law also requires that the authorized amounts be adjusted for inflation "based on increases in the cost of transition services and expenses which have occurred in the years following the most recent Presidential transition." In FY2009, during which the most recent presidential transition occurred, $8 million was appropriated. In FY2013, the President's budget requested $8.95 million for PTA-authorized purposes. The President's FY2017 budget request seeks $9.5 million for GSA to carry out the PTA. The President's budget request states that anticipated PTA expenses include $1 million "for briefing personnel associated with the incoming administration." In addition to the $9.5 million requested by GSA, for FY2017 the Executive Office of the President's Office of Administration requested $7.6 million "for data migration services for processing of records of the department President and Vice President ... and for other transition-related administrative expenses." This request is separate from the $9.5 million. The FPA, as amended, requires the federal government to provide for each former President a taxable pension that is equal to the annual rate of basic pay for the head of an executive department (Executive Level I), which was $203,700 for calendar year 2015. Executive Level I pay was increased to $205,700 for calendar year 2016. The pension begins immediately upon a President's departure from office at noon on Inauguration Day, January 20. The Secretary of the Treasury disburses the monthly pensions. The FPA does not address whether a President who resigns from office is eligible to receive pension benefits and other allowances. Following a 1974 precedent set by the Department of Justice concerning President Richard Nixon's resignation from office, however, a President who resigns before his official term of office expires would be entitled to the same lifetime pension and benefits that are authorized for a President who completes his term. Former President Nixon, therefore, did receive a pension and other benefits. There is no precedent pertaining to whether a President who is removed from office following impeachment by the House and conviction in the Senate is entitled to his pension and related benefits. GSA is authorized to provide "suitable office space, appropriately furnished and equipped" at any location within the United States selected by a former President. This location does not need to be connected to any other facility related to the President, including the official Presidential Library or museums maintained by private foundations. The funding for this provision becomes effective six months after the expiration of a President's term of office. The FPA does not provide specifications or limitations pertaining to the size or location of a former President's office space. Since a former President's pension is comparable to the salary of the head of an executive branch agency, GSA has historically applied "the cabinet-level office standard" for the quality of a former President's office space, equipment, and supplies. Office space costs for the living former Presidents are shown in Table 3 . Six months after a President leaves office, provisions of the FPA, as amended, authorize the GSA Administrator to fund an office staff. During the first 30-month period when a former President is entitled to assistance under the FPA, the total annual basic compensation for his "staff assistance" cannot exceed $150,000. Thereafter, the aggregate rates of staff compensation for a former President cannot exceed $96,000 annually. The maximum annual rate of compensation for any one staff member cannot exceed the pay provided at Level II of the Executive Schedule, which was $183,300 in 2015 and $185,100 in 2016. Despite these limits, a former President is permitted to supplement staff compensation or to hire additional staff using private funds. According to a GSA legal opinion written on December 15, 1972, the office of a former President may continue to operate after the former President's death for a "reasonable period of time." The GSA Administrator has historically provided office staff up to six months from the date of the former President's death to complete unfinished business and to close the office. The office's closure date must be approved by the GSA Administrator. In 1968, the FPA was amended to authorize GSA to make funds available to a former President, and no more than two members of his staff, for official travel and related expenses. The FPA caps appropriations at $1 million for "security and travel related expenses" of a former President. The security and travel expenses of a former First Lady are authorized up to $500,000 per year, pursuant to the law. GSA makes the final determination on appropriate costs for travel expenses. The Secret Service provides lifetime protection to former Presidents. Former Presidents' spouses also receive protection until one of two events occurs: divorce from the former President or death of the former President followed by remarriage. Protection for a former President's children is available until they reach the age of 16. Legislation enacted in 1984 allows former Presidents or their dependents to decline Secret Service protection. Former Vice Presidents, their spouses, and children under the age of 16 are authorized to receive Secret Service Protection for six months after they leave office. The FY1995 Treasury, Postal Service, and General Government Appropriations Act amended 18 U.S.C. §3056 to limit protection to 10 years for former Presidents who began serving after January 1, 1997, and their spouses. Former President George W. Bush and his wife Laura Bush would have been the first former President and First Lady affected by this statutory limit. On January 10, 2013, however, President Obama signed into law the Former Presidents Protection Act of 2012 ( P.L. 112-257 ), which reinstated lifetime Secret Service protection for all former Presidents and their spouses. The Secretary of Homeland Security is authorized to direct the Secret Service to provide temporary protection to a former President or his spouse at any time. Currently, former Presidents Jimmy Carter, George H. W. Bush, William J. Clinton, and George W. Bush, and their wives receive Secret Service protection. The costs of providing protection for former Presidents and their spouses are funded through the budget of the Secret Service, as opposed to GSA. The Secret Service does not publicly disclose protection costs or details for security reasons. No statutes explicitly govern the payment of health benefits for former Presidents. Generally, however, former federal employees must be enrolled in the Federal Employees Health Benefits program for five years to qualify for health benefits. GSA, historically, has interpreted similar service requirements for a former President to qualify as a federal annuitant. Presidential terms are four years. Jimmy Carter served a single presidential term, and, therefore, does not qualify for federally funded health benefits. Although George H. W. Bush served only one term as President, he is entitled to federal health benefits because of his extensive federal service in other positions, including Member of Congress, Director of Central Intelligence, Ambassador to the United Nations, and Vice President. While former President George H. W. Bush is eligible for federal health benefits, he opts not to receive them. Since former President Clinton served two presidential terms and receives a monthly pension, GSA's position is that he qualifies for federal health benefits. George W. Bush is eligible for and receives federal health benefits. The incumbent President is charged with officially announcing the death of a former President by presidential proclamation and ordering the U.S. flags on all federal buildings to be flown at half-staff for 30 days (4 U.S.C. §7(m)). Former Presidents are entitled to an official state funeral, including traditions and requirements determined by the Armed Forces. According to state funeral policy, the incumbent President must notify Congress that the former President had requested a state funeral, and then set a date for the ceremony. The Secretary of Defense is then designated as the representative of the incumbent President for the purpose of making all state funeral arrangements in Washington, DC. The Secretary of Defense may designate the Secretary of the Army as his personal representative, who may then delegate to the commanding general of the U.S. Military District of Washington (MDW) the overall authority for planning and implementing the funeral arrangements within Washington, DC, and elsewhere. The former President's funeral plans are to be collected by those making the arrangements, and an aide is to be assigned to assist the former President's next of kin. Certain military honors and traditions may be extended by the military, based on the wishes and requests made by the former President's surviving family members. A guard of honor, which is composed of members from each of the Armed Forces, attends to the former President's remains. If a former President dies outside of Washington, DC, arrangements are made to return his remains to the District. The former President's remains are to lie in repose for one day, and then be moved to the Capitol Rotunda to lie in state for an additional 24 hours. A ceremony is then traditionally held at the Capitol, which includes the playing of a hymn and a cannon salute. A former President, as former C ommander-in- C hief, is also entitled to burial and ceremony in the Arlington National Cemetery. If the former President is to be buried outside of Washington, DC, however, honors will be rendered at the train station, terminal, or airport that serves as the point of departure for the remains. Traditionally, a flag is draped over the former President's casket. At the state funeral service, certain additional honors may be rendered, including musical honors and gun salutes. In addition, the U.S. Air Force m ay coordinate a flyover or the Armed F orces may stage a cannon salute. Congress has the authority to reduce, increase, or maintain the pension and benefits provided to former Presidents of the United States. Also, Congress has the ability to set limitations on the use of this funding by former Presidents and their staff. This section considers the potential effects of maintaining the FPA, modifying the FPA in ways similar to H.R. 1777 and S. 1411 (both entitled the Presidential Allowance Modernization Act), and other policy options for consideration. Currently, former Presidents are provided $96,000 for personnel compensation, a $205,700 pension, and as much as an additional $796,000 in various benefits. Former Presidents no longer serve a formal role in the federal government, but arguably continue to perform certain informal public roles. Some have argued that Presidents should continue to be provided access to pension benefits because of these informal roles, such as responding to mail and interview requests. Moreover, other public servants qualify for a pension—including executive, legislative, and judicial branch employees as well as Members of Congress. The FPA was enacted so former Presidents would not be forced "to write and lecture to gain a livelihood in their final days." Yet every living former President has already published an autobiography or presidential memoir. Pursuant to the FPA, there is only one occupation that would result in the temporary removal of FPA pension and benefits: "an appointive or elective office or position in or under the Federal Government or the government of the District of Columbia to which is attached a rate of pay other than a nominal rate." No living former President has publicly claimed to suffer financial difficulties as a result of continued public responsibilities or otherwise. To the contrary, the living former Presidents all earned money writing autobiographies and memoirs that focused on their presidential tenures. Some former Presidents also reportedly earn millions of dollars each year from paid speaking engagements. Some argue that the expectations placed on former Presidents have changed, and so too should the pension and benefits they are provided. H.R. 1777 and S. 1411 , for example, would cap a President's pension benefit at $200,000, and significantly limit the other benefits provided. Moreover, H.R. 1777 and S. 1411 seek to remove $1 in federal benefits for every $1 a former President earns in excess of $400,000. While the bills arguably would continue to allow current or future former Presidents from less affluent backgrounds to live comfortably after leaving office, some may argue that reducing the benefits provided to more affluent former Presidents could appear punitive or demonstrate that the federal service of a President from an affluent background was less worthy than the service of a President from less affluent means. Moreover, the bills may prompt privacy concerns for former Presidents. Details of a former President's earnings may not be made public, but the public would know—from a former President's qualification for or disqualification from the receipt of benefits—whether he earned more than $400,000 per year. While H.R. 1777 and S. 1411 seek to reduce costs associated with former Presidents, the bill includes language that would increase the pension provided to the widow of a former President from $20,000 to $100,000 per year. The widows of other federal employees and officials may be eligible to receive survivor benefits, and, in some cases, may receive a pension valued greater than the $20,000 provided annually to that of the widow of a former President. The widow of a former President must decline other available pensions to be eligible for the $20,000. Congress may choose to maintain the $20,000 pension benefit authority for the widows of former Presidents. On the other hand, Congress may determine that $20,000 annually is not the appropriate amount for the pension of a widow of a former President. Congress has the authority to set the pension of the widow of a former President at any value or to eliminate it. Some Members of Congress have argued that the FPA is unclear or overly permissive. Given past congressional debates on the extent of financial assistance to former Presidents, Congress may choose to consider legislation to clarify current laws governing certain allowances provided for in the act—for example, by limiting office space allocations. Because existing laws are unclear on whether GSA can reject a former President's choice in office size or location, rental pay ments in FY2012 ranged from $109 ,000 per year for former President Carter's office to $444,000 for former President Clinton's. Among the options that might be considered are placing a spending cap on office space for a former President, mandating that a former President's office be located in owned or leased federal office buildings, placing a cap on the square footage of a former President's office space, or leaving current provisions as they are. Additionally, Congress may choose to put limitations on the use of FPA travel benefits, for example, for travel for political purposes. Under the law, Presidents may choose to use the funds for any travel, including travel to campaign events. Congress may choose to amend the law to limit the use of travel funds to political events. Defining what is meant by a political event—or conversely, a nonpolitical event—however, may prove difficult. Appendix A. Legislative History of the Former Presidents Act Prior to 1958, chief executives leaving office entered retirement without federal assistance. By the end of the 19 th century, public sentiment reportedly dictated that it was not appropriate for former Presidents to engage actively in business affairs. Suitable post-presidency occupations included practicing law, obtaining a university professorship, or writing for a newspaper or magazine. Some former Presidents, like Rutherford B. Hayes, became successful entrepreneurs. Others, like Ulysses S. Grant, suffered financial losses and had personal possessions taken by creditors. Andrew Carnegie's Offer In 1912, discussions began in Congress about providing former Presidents and their spouses with annual pensions. That year, industrialist and philanthropist Andrew Carnegie reportedly offered to fund $25,000 annual pensions for all future former Presidents and their widows until they were provided for by the federal government. The pensions were to be funded by the Carnegie Foundation of New York, which was founded just a year earlier. The New York Times reported that many Members of Congress deemed it inappropriate for a private corporation to provide pensions to former Presidents. Former President William Howard Taft publicly declined to become the first beneficiary of Carnegie's former President's pension fund when he left office in 1913. At the time, some Members of Congress and the public believed that Carnegie's proposal was intended to bring attention to the financial difficulties that some former Presidents faced after leaving federal office. On that count , Carnegie's gambit was a success. In December 1912, two bills were introduced in Congress to provide pensions for former Presidents and their widows. The proposed Ho use legislation (H.R. 26464) would have provided a $2,000 per month pension for former Presidents, a $1,000 per month pension for widows, and a $200 per month pension for minor children under age 21, if both parents were deceased. The bill was referred to the House Committee on Pensions and was not reported. Legislati on introduced in the Senate (S. 7519) would have provided a $10,000 annual retirement pension for the President as C ommander - in -C hief of the Army. It would also have provided an annual pension of $5,000 for the unmarried widows of former Presidents. The bill was referred to the Senate Committee on Pensions, but it was not reported. Truman's Finances The idea to provide pensions to former Presidents was largely forgotten until President Harry S. Truman left office in 1953. In view of former President Truman's financial limitations in hiring an office staff to handle his mail and requests for speeches once he left the White House, the Senate considered legislation in 1955 to provide retirement benefits to former Presidents. The legislation aimed "to maintain the dignity of that great office" and to prevent an ex-President from engaging "in business or [an] occupation which would demean the office he has held or capitalize upon it in any way deemed improper." The proposal passed the Senate, but was never acted on by the House Committee on Post Office and Civil Service. President Truman's financial difficulties were disclosed in a 1957 letter to House Speaker Sam Rayburn that stated if such legislation were not enacted, former President Truman would be forced to "go ahead with some contracts to keep ahead of the hounds." Having rejected several business proposals that were offered to him when he left the presidency in 1953, former President Truman acknowledged his income was largely based on the sale of his father's farm and the proceeds from publication of his memoirs. In 1958, Mr. Truman became the first former President to grant a televised interview for "a substantial fee" when he appeared in 1958 on Edward R. Murrow's "See it Now." On January 14, 1957, Senator A.S. Mike Monroney introduced S. 607 (85 th Congress) to provide an annual pension of $25,000, clerical assistants, and free mailing privileges for former Presidents. A companion bill ( H.R. 4401 ; 85 th Congress ) was introduced by Representative John McCormack, majority leader of the House, on February 5, 1957. Both bills were strongly supported by Senator Lyndon B. Johnson, the Democratic leader in the Senate. Passing the Former Presidents Act Congressional debate in favor of the proposed pension legislation emphasized that the expenditures necessary to implement a $25,000 annual pension and office expenses for former Presidents were modest, "in consideration of the assurance it provides that former Presidents ... will not want either for a matter of subsistence or for the necessary clerical employees to answer the letters of the public." The House Committee on Post Office and Civil Service reported the bill, saying it would "avoid the possibility of indignities and of deterioration in public and world regard for the office of the President of the United States." The amount of the proposed pension for former Presidents was based on comparable pensions accorded five-star generals. Majority Leader John McCormack stated that the proposed retirement allowances provided recognition and gratitude for a former President's service to his country, which did not end with his term of office. He and others urged favorable consideration of S. 607 to authorize retirement benefits for an outgoing President. Congressman Chester "Chet" Holifield advocated for the bill by stressing the "burden" of duties placed on an ex-President who can receive "100 to 400 letters a day" and "300 to 400 invitations a month to speak." Holifield added that passing the bill was "something that we, the greatest Republic in the world, can do to show that we have respect for the office of President and that we recognize the duties and responsibilities that he has to carry on after he leaves that office." S. 607, as introduced, provided that the compensation for an administrative assistant, secretary, and other clerical assistants for each former President should not exceed the aggregate amount authorized for the staff of the Senators from the least populous state, which at the time was $100,000. During House debate on S. 607, however, it was argued that the staffing provision of the proposed legislation could involve salaries totaling as much as $120,000 for each former President's office, depending on the individual salary paid to each staff person. House and Senate conferees believed that even $100,000 was excessive, and imposed a $50,000 limitation on the total compensation authorized for a former President's office staff. The bill also originally authorized the GSA administrator to furnish suitable office space for each former President in a federal building "at such place within the United States as the former President shall specify." The conference committee deleted the reference to "federal building," allowing GSA to furnish suitable office space for a former President in non-federal office space. Despite strong support by the leadership of both the House and the Senate, opposition to the concept of providing benefits to former Presidents persisted. In an effort to bring their dissenting views "to the attention of the Members of the House of Representatives and of the American public," seven members of the House Committee on Post Office and Civil Service prepared a formal report on why they opposed authorizing presidential retirement benefits. They argued that no adequate need or justification to provide such benefits existed, and that enactment of S. 607 would create a "separate entity" for former Presidents, with "an aura of official standing" and a "wholly undefined relationship to the constitutional functions of the [f]ederal [g]overnment." Equally problematic for the seven dissenting Members was the "unprecedented vagueness" of the proposed legislation's provisions for staff and office allowances, which created "wide and dangerous loopholes." The Members were also concerned about the provision to provide each former President with suitable furnishings in an office space that could be located anywhere within the United States. Such a broad provision, the dissenting Members argued, took into account only the proposed costs for providing allowances to the two surviving former Presidents—Herbert Hoover and Truman—and overlooked potential future costs that could be incurred as subsequent Presidents began receiving pension benefits after leaving office. S. 607, as amended, was approved by the Senate on August 16, 1958; passed by the House on August 21, 1958; and signed into law by President Dwight D. Eisenhower on August 25, 1958. As enacted, the Former Presidents Act (FPA) provided each former President an annual taxable allowance of $25,000, payable monthly by the Secretary of the Treasury. The GSA administrator was authorized by the FPA to provide and fund an office staff and suitable office space, "appropriately furnished and equipped," at a location within the United States designated by a former President. The former President's staff would not be considered federal employees, but would be entitled to health care and benefits of federal employees. The FPA also authorized free mailing privileges for former Presidents. Pursuant to the act, the widow of a former President also was provided an annual pension of $10,000, if she waived the right to any annuity or pension authorized under any other legislation. Appendix B. Post-Presidential Lifespans Table B-1 shows the post-presidential retirement periods for the 30 Presidents who survived the presidency and who subsequently died. Former President Jimmy Carter is the former President with the longest post-presidential lifespan (more than 35 years). The shortest presidential retirement period was James K. Polk's 103 days. On average, former Presidents who have subsequently died have lived about 13 years (4,720 days) after leaving office. | The Former Presidents Act (FPA; 3 U.S.C. §102 note) was enacted to "maintain the dignity" of the Office of the President. The act provides the former President—and his or her spouse—certain benefits to help him respond to post-presidency mail and speaking requests, among other informal public duties often required of a former President. Prior to enactment of the FPA in 1958, former Presidents leaving office received no pension or other federal assistance. The FPA charges the General Services Administration (GSA) with providing former U.S. Presidents a pension, support staff, office support, travel funds, and mailing privileges. Pursuant to statute, former Presidents currently receive a pension that is equal to pay for Cabinet Secretaries (Executive Level I), which for calendar year 2015 was $203,700. Executive Level I pay was increased to $205,700 for calendar year 2016. In addition to benefits provided pursuant to the FPA, former Presidents are also provided Secret Service protection and financial "transition" benefits to assist their transition to post-presidential life. Pursuant to the FPA, former Presidents are eligible for benefits unless they hold "an appointive or elective office or position in or under the Federal Government or the government of the District of Columbia to which is attached a rate of pay other than a nominal rate." The President's FY2017 budget request seeks $3,865,000 in appropriations for expenditures for former Presidents, an increase of $588,000 (17.9%) from the FY2016 appropriation level. The increase in requested appropriations for FY2017 anticipates President Barack Obama's transition from incumbent to former President. For FY2016, President Obama requested and received appropriations of $3,277,000 for expenditures for former Presidents—an increase of $25,000 from FY2015 appropriated levels. Some critics of the Former Presidents Act say the statute subsidizes Presidents who are not struggling financially. Others argue that although a former President is not in a formal public position, he remains a public figure and should be provided a pension and benefits that permit him to perform duties that emerge as a result of his public status. In the 114th Congress (2015-2016), the House and Senate are considering similar legislation that would amend the FPA. Both bills (H.R. 1777 and S. 1411) would set a former President's pension at $200,000 annually, with increases each year by the same percentage authorized for benefits provided by the Social Security Act (42 U.S.C. §401). Both pieces of legislation would provide a former President an additional $200,000 annual allowance to be used as he determined and would remove other benefits currently provided to former Presidents—including those currently provided for travel, staff, and office expenses. Additionally, the bills propose that for every dollar a former President earned in each fiscal year in excess of $400,000, his federal annuity would be reduced by $1. GSA data on payments to former Presidents show that the value of benefits provided to each of the living former Presidents—when adjusted for inflation—has generally declined from FY1998 through FY2015. The nominal appropriation levels for former Presidents' benefits, however, increased through FY2011 and then declined from FY2011 through FY2015. This report provides a legislative and cultural history of the Former Presidents Act. It details the benefits provided to former Presidents and their costs. Congress has the authority to reduce, increase, or maintain the pension and benefits provided to former Presidents of the United States. This report considers the potential effects of maintaining the FPA or amending the FPA in ways that might reduce or otherwise modify a former President's benefits. |
The HOME Investment Partnerships Program was created by the Cranston-Gonzalez National Affordable Housing Act of 1990 ( P.L. 101-625 ). HOME is a federal block grant program administered by the Department of Housing and Urban Development (HUD) that provides funding for affordable housing activities to states and certain localities through formula grants. States and localities that receive HOME grants can choose to fund a wide range of rental and homeownership housing activities that benefit low-income households in order to best meet local affordable housing needs. This report provides an introduction to the HOME program, including a brief history, an overview of allowable uses of HOME funds, and a description of certain program requirements. It also provides information on funding for the program and how that funding has been used. In the late 1980s, some members of Congress expressed concern about the state of the nation's housing. This concern stemmed from an increasing awareness of a variety of problems related to housing, including homelessness, families living in sub-standard housing, and decreasing opportunities for homeownership. The concern over these issues led to a number of efforts to focus attention on housing policy, including the creation of a National Housing Task Force that included housing policy experts and industry leaders. In March 1988, the task force produced a report on its findings. Among the housing issues that the task force report identified was a diminishing supply of rental and homeownership housing that was affordable to low-income households. In a 1988 hearing on the task force report, some members of the Senate Committee on Banking, Housing, and Urban Affairs suggested that federal funding for housing programs was inadequate to meet the affordable housing needs identified in the report. Most federal housing assistance distributed to states and localities at the time was restricted to specific uses, such as Section 8 vouchers or Public Housing projects. Furthermore, programs that did give communities flexibility to choose how to use their funds, such as the Community Development Block Grant (CDBG) program, were primarily meant to fund economic development and community revitalization activities and restricted the ways in which funding could be used for affordable housing (for example, CDBG funds could be used for some housing rehabilitation but could not generally be used to construct new housing units). Concerned that existing programs were not meeting the nation's affordable housing needs, members of the Housing Task Force argued to the committee that the level of federal funding specifically dedicated to affordable housing should be increased in order to fully address affordable housing issues. At the same time, task force members argued that local jurisdictions should be allowed more control over the ways in which they used any such federal affordable housing funding. In 1990, Congress passed a major housing bill that responded to some of the issues raised by the Housing Task Force and other experts. The Cranston-Gonzalez National Affordable Housing Act ( P.L. 101-625 ), or NAHA, stated that the nation's housing policy was not meeting the goal of providing "decent, safe, sanitary, and affordable living environments for all Americans" that was first set out in the Housing Act of 1949. The law revised, amended, or repealed several existing housing programs and authorized some new programs, including the HOME Investment Partnerships Program (often just referred to as HOME). HOME is the largest federal block grant program that provides funding dedicated exclusively to increasing the availability of adequate, affordable housing for low-and very low-income households. The program places a particular emphasis on giving states and localities flexibility in how they achieve their affordable housing goals, and funds can be used for a variety of activities related to both rental and owner-occupied housing. HOME is also designed to expand the capacity of states and localities to meet their long-term affordable housing needs by leveraging federal funding to attract state, local, and private investment in affordable housing and by strengthening the ability of government and nonprofit organizations to meet local housing needs. HOME is authorized by Title II of NAHA. HUD promulgated regulations governing the program in September 1996. In July 2013, HUD issued a final rule making significant revisions to certain program requirements, representing the first substantive changes to the regulations since they were first finalized in 1996. This section of the report describes the structure of the HOME program, including the requirements that states and localities must meet in order to receive their own allocations of HOME funds, eligible uses of program funds, and certain requirements that HOME-assisted housing must meet. The following section on " HOME Program Funding " describes the funding for the program, including appropriations for HOME and the funding formula that is used to allocate the funds to states and eligible localities. Each fiscal year, Congress appropriates funding to HUD for the HOME program during the annual appropriations process. HUD then uses a formula to allocate 40% of the funds to states and the remaining 60% to eligible localities. (This is discussed in more detail in the " HOME Program Funding " section of this report.) States and localities that meet certain requirements to receive their own allocations of HOME funds are referred to as "participating jurisdictions" (PJs). States are automatically eligible to become PJs and receive the greater of their formula grant amount or $3 million annually. Localities can only become PJs if they are metropolitan cities or urban counties, and if they meet two funding thresholds. First, localities must be eligible for a minimum amount of funding under the formula, usually $500,000. Once localities meet this threshold, they must also meet a second threshold: localities must dedicate a total of at least $750,000 to affordable housing activities, either by having a HOME formula grant of at least $750,000 or by making up the difference between their grant amount and the $750,000 threshold with their own funds or HOME funds provided by the state from the state's formula allocation. Localities that do not meet the requirements to become participating jurisdictions may join with other contiguous localities to form consortia in order to reach the minimum funding thresholds. Localities that are not PJs can also participate in the HOME program by applying to their home state to receive a portion of the state's allocation of HOME funds. States in which no locality receives its own allocation of HOME funding have their grant amounts increased by $500,000. A state or locality that is otherwise eligible to receive HOME funds must submit a document describing how it plans to use HOME funds to meet its affordable housing needs for HUD's approval before it can become a PJ. (This document, called a Consolidated Plan, is described in more detail in the following subsection.) Once a state or locality has been designated a PJ, it remains one – and therefore continues to be eligible to receive its own allocation of HOME funds – unless its designation is revoked by the Secretary of HUD. The Secretary has the authority to revoke a jurisdiction's designation if he finds that the jurisdiction is not complying with program requirements, or if a locality's formula grant amount falls below certain thresholds over a specified period of time, although he is not required to do so. A participating jurisdiction can administer HOME funds itself, or it can designate a public agency or nonprofit organization to administer all or part of the HOME program on its behalf. Such an organization is referred to as a subrecipient. Participating jurisdictions or their subrecipients can distribute funds to a variety of organizations to undertake specific projects. These organizations can include developers, owners, and sponsors of affordable housing, Community Housing Development Organizations (CHDOs), private lenders, faith-based organizations, and third-party contractors. In order to receive HOME funding, a state or locality must submit a Consolidated Plan to HUD for approval. The Consolidated Plan covers a three- to five-year period and includes a detailed description of the jurisdiction's housing needs and an explanation of how it will use HOME funding and funding from three other HUD block grant programs to meet its specific housing needs. The Consolidated Plan also describes how the jurisdiction will leverage HOME funds to attract local, private, nonprofit, or other non-federal sources of funds for affordable housing, and it prioritizes projects by type and geographic location. While many activities are eligible uses of HOME dollars, participating jurisdictions must specify in their Consolidated Plan which activities they intend to fund. As part of the consolidated planning process, PJs submit annual Action Plans that describe the specific activities that a PJ plans to undertake during the year to address its housing needs and make progress towards the goals that are included in its Consolidated Plan. PJs also submit annual performance reports on their use of funds and their progress towards their goals. The Consolidated Plan is meant to be the product of "a participatory process among citizens, organizations, businesses, and other stakeholders" in a community. The HOME regulations stress community participation, especially by low- and moderate-income individuals, in developing the Consolidated Plan, and jurisdictions must submit a "citizen participation plan" that describes how citizens have been included and consulted in the process. In 2012, HUD implemented certain changes to the Consolidated Planning process. Specifically, HUD began providing additional data and mapping tools for PJs to utilize for planning purposes. The public can also access these data and mapping tools, which is intended to enable the community to be a more informed part of the consolidated planning process. Furthermore, HUD now requires Consolidated Plans to be submitted through a standardized template in the Integrated Disbursement & Information System (IDIS), the computer system into which PJs report their activities and uses of HOME funds. According to HUD, the new data are expected to help PJs produce better Consolidated Plans that more fully reflect local needs and to increase public participation in the process. The ability to submit plans directly to IDIS through a standard template is expected to make it easier for PJs to produce and submit Consolidated Plans, and to make it easier for HUD to track PJs' progress toward the goals that they include in their plans. In the years leading up to NAHA's passage, some experts argued that local affordable housing needs varied, and that localities should be free to develop solutions that fit local conditions. HUD describes one of the purposes of the HOME program as reinforcing the principle that states and localities should have flexibility and control over how to best meet their affordable housing needs. Accordingly, a wide range of activities related to increasing the supply of affordable housing for low-income households qualifies for HOME funding. These include both homeownership and rental housing activities. The eligible uses of HOME funds fall into four broad categories: Rehabilitation of Owner-Occupied Housing . Funds may be used to help existing homeowners repair, rehabilitate, or reconstruct their homes. Assistance to Home Buyers. Funds may be used to help home buyers acquire, acquire and rehabilitate, or construct homes. For example, down payment assistance is an eligible use of funds under this category. Rental Housing Activities . Funds may be used to help developers or other housing organizations acquire, rehabilitate, or construct affordable rental housing. Tenant-Based Rental Assistance . Funds may be used to help renters with costs related to renting, such as security deposits, rent, and, under certain circumstances, utility payments. "Tenant-based" means that the rental assistance moves with the tenant rather than being tied to a specific housing unit. A participating jurisdiction may use up to 10% of the funds it is allocated in a fiscal year for administrative purposes. The law requires participating jurisdictions to give preference to rehabilitation of existing rental and owner-occupied units. However, a PJ can undertake other activities if it determines that rehabilitation is not the most cost-effective way for it to increase its supply of affordable housing or that rehabilitation of the existing housing stock would not adequately meet its affordable housing needs. Participating jurisdictions can disburse HOME funds in a variety of ways. Forms of assistance that may be provided with HOME funds include grants, various types of loans, loan guarantees to lending organizations, interest rate subsidies, equity investments. Certain activities are not eligible for funding under the HOME program. Ineligible uses of HOME funds include modernizing public housing, providing tenant-based rental assistance under the Section 8 program, supporting ongoing operational costs of rental housing, paying back taxes or fees on properties that are or will be assisted with HOME funds, and providing non-federal matching funds for any other federal program. Other uses not authorized in statute or regulation are also prohibited. While PJs have much flexibility in choosing which eligible activities they will fund with HOME dollars, any projects funded through HOME must meet certain requirements in keeping with the program's stated objectives. This section describes some of the key requirements with which PJs must comply. A stated purpose of the HOME program, according to the authorizing statute, is to increase the supply of decent, affordable housing for people with low incomes and very low incomes. Accordingly, all HOME funds must be used to assist low-income households, which are defined as households with annual incomes at or below 80% of area median income (AMI). Deeper income targeting requirements apply to rental housing and tenant-based rental assistance. Owner-Occupied Housing . All HOME funds that are used for existing owner-occupied housing or to assist home buyers must benefit units that are occupied by households with incomes at or below 80% of area median income. Rental Housing and Tenant-Based Rental Assistance . At least 90% of HOME-assisted rental units must be occupied by households whose incomes are at or below 60% of area median income, and at least 90% of households that receive tenant-based rental assistance with HOME funds must have incomes at or below 60% of area median income. The remaining rental units or TBRA must benefit households with incomes at or below 80% of area median income. The income targeting requirements described above ensure that HOME-assisted units benefit low-income households. Additionally, HOME-assisted units must be affordable to low-income households, and must continue to be occupied by low-income households and remain affordable to such households over the long term. In order to achieve this goal, HOME-assisted units must meet a number of requirements. Some of these requirements govern the value of HOME-assisted units or the amounts that a household can pay to rent or purchase a unit. HOME-assisted units must also meet additional requirements, separate from the value of the home, to ensure affordability. As with income targeting, the precise requirements that must be met depend on whether HOME funding is used for assistance to home buyers, owner-occupied housing rehabilitation, or rental housing activities. Assistance to Home Buyers . Housing bought by home buyers with the assistance of HOME funds must meet the following requirements: The home buyer must belong to a low-income family, and the family must use the home as a principal residence. The initial purchase price or value after rehabilitation must be no more than 95% of the median purchase price of homes in the area, as determined by the Secretary of HUD and adjusted as the Secretary deems necessary for different types of structures and the age of the housing. Home buyer units must continue to meet the definition of affordability described above for between five and fifteen years, depending on the per-unit amount of HOME funds expended on a project. The housing must be single-family housing. If the housing is newly constructed, it must meet energy-efficiency standards. Participating jurisdictions must impose resale or recapture restrictions on units in which they have assisted the home buyer using HOME funds. These restrictions specify that if a homeowner sells his or her home during the affordability period, he or she is required to sell it to another qualified low-income buyer (resale) or to return some of the proceeds of the sale to the PJ in order to cover the HOME funds that were invested in the home (recapture). HOME-assisted home buyers must receive housing counseling. Home buyer units that are not sold to eligible home buyers within nine months of the project's completion are to be rented to eligible tenants. Resale and recapture restrictions are set by the jurisdiction and approved by the Secretary. Resale restrictions must ensure that, upon resale, (1) the housing remains affordable to low-income home buyers, and (2) the owner receives a fair return on investment. Recapture restrictions must ensure that the investment in the housing is recaptured in order to assist others who qualify for HOME-assisted housing. Owner-Occupied Housing Rehabilitation. Owner-occupied housing that is rehabilitated using HOME funds must meet the following requirements: The owner must belong to a low-income family at the time HOME funds are committed to the project, and the family must use the housing as a principal residence. The value of the housing after rehabilitation must be no more than 95% of the median purchase price of homes in the area, as determined by the Secretary of HUD and adjusted as the Secretary deems necessary for different types of structures and the age of the housing. There are no statutory long-term affordability requirements for owner-occupied units that are rehabilitated using HOME funds. However, the PJ can choose to impose an affordability period. Rental Housing . Rental housing that benefits from the use of HOME funds must meet the following requirements: HOME-assisted units must be occupied only by low-income households. Rents must not exceed HUD's published maximum rents for the HOME program. The maximum rent for a HOME-assisted rental unit is the lesser of (1) the fair market rent for comparable units in the jurisdiction, or (2) 30% of the adjusted income of a household whose income is 65% percent of area median income. If a project includes five or more HOME-assisted units, at least 20% of the HOME-assisted units must be occupied by families with incomes at or below 50% of area median income. Additionally, those families must have rents that meet one of the following requirements: —Rents are no higher than (1) the fair market rent for a comparable unit in the jurisdiction, or (2) 30% of 50% of area median income, whichever is lower. —Rents are no higher than 30% of the household's adjusted income. If rental projects temporarily fail to meet the requirements governing the incomes of occupants of HOME-assisted units because of an increase in the current tenants' income, the project is still considered to be in compliance as long as vacancies are filled according to these requirements. Rental units must continue to meet these requirements for between five and twenty years, depending on the per-unit amount of HOME funds expended on a project and the type of activity for which HOME funds are used. If the housing is newly constructed, it must meet energy-efficiency standards. The housing must be available to Section 8 voucher holders. PJs must repay any HOME funds used for rental units that are not rented to eligible tenants within 18 months of the project being completed. When using HOME funds for owner-occupied housing rehabilitation, home buyer assistance, or rental housing activities, participating jurisdictions must follow restrictions on the minimum and maximum amounts of HOME funds that they can contribute to a given project. When participating jurisdictions use HOME funds for tenant-based rental assistance, they must establish both a maximum subsidy amount and a minimum tenant contribution to the tenant's rent. Owner-Occupied and Rental Housing. The minimum amount of HOME funds that can be used for new construction, rehabilitation, or acquisition of owner-occupied or rental housing is $1,000 multiplied by the number of HOME-assisted units in a project. The maximum per-unit subsidy for a project varies by participating jurisdiction and is based on the Federal Housing Administration's mortgage limits for moderate-income multifamily housing. Tenant-Based Rental Assistance. The maximum HOME subsidy amount for tenant-based rental assistance is the difference between 30% of the household's adjusted monthly income and a jurisdiction-wide rent limit established by the participating jurisdiction. The rent limit must conform to certain parameters established by HUD. Each participating jurisdiction is also required to set a minimum tenant contribution for tenant-based rental assistance. The minimum tenant contribution can either be a flat dollar amount or a percentage of tenant income. HOME funds may be combined with other federal resources to support affordable housing projects. For example, a project that uses HOME funds might also use funds from other HUD programs, funds raised through the Department of the Treasury's Low-Income Housing Tax Credit (LIHTC) program, or funds from rural housing programs administered by the U.S. Department of Agriculture. Using a combination of federal funds from different sources for a single project is known as subsidy layering. The HOME statute and regulations require a participating jurisdiction that plans to use both HOME funds and other federal funds for a project to certify to HUD that the aggregate amount of federal funds, including HOME funds, that is invested in a housing project is no more than is necessary to provide affordable housing. As noted earlier, one of the stated purposes of the HOME authorizing legislation is to expand the capacity of nonprofit agencies to provide affordable housing for low and very-low income households. As a means of furthering this goal, the HOME statute requires each participating jurisdiction to reserve at least 15% of its HOME funding for Community Housing Development Organizations (CHDOs). CHDOs are private nonprofit organizations that meet certain legal and organizational requirements and have the capacity and experience to carry out affordable housing projects. CHDO reservation funds must be used for projects where the CHDO develops, owns, or sponsors affordable housing. CHDOs can engage in other eligible HOME activities using HOME funds, but any funding spent on projects in which the CHDO is not the developer, owner, or sponsor will not count toward the 15% set-aside requirement for CHDOs. For example, a CHDO could administer a TBRA program, but since the CHDO would not be developing, owning, or sponsoring affordable housing in this case the funds would not count towards the 15% of funds that must be reserved for CHDOs. The HOME final rule promulgated in July 2013 to amend the HOME program regulations made several changes related to CHDOs. Among other things, the rule made changes to the requirements that an organization must meet to qualify as a CHDO, and it clarified the activities that CHDOs can undertake with a reservation of CHDO funds. It also increased PJs' oversight of CHDO reservation funds by strengthening the requirement for PJs to ensure that organizations meet the definition of a CHDO and requiring PJs to document that an organization has the necessary capacity to undertake affordable housing activities each time the CHDO receives a commitment of HOME funds. The rule also requires PJs to commit funds to CHDOs for specific projects, rather than committing funds to CHDOs for projects that have not yet been identified. The 2013 rule also made changes to how a CHDO must demonstrate that it has the capacity to undertake affordable housing activities. Under the new rule, a CHDO must have paid staff with experience in the affordable housing role that the CHDO intends to play in a project (e.g., a CHDO that will develop affordable housing must have staff with development experience, and a CHDO that will own and manage affordable housing must have staff with owner and management experience). CHDOs can use consultants or volunteers to undertake some project activities, but it cannot use consultants or volunteers to demonstrate its capacity. A CHDO can use consultants to demonstrate development capacity during its first year as CHDO only, if the consultant trains the CDHO's staff to undertake affordable housing development. This section describes funding for the HOME program, including its appropriations history, the formula that HUD uses to distribute funds to PJs, and the distribution of HOME funds in FY2014 (the most recent HOME funding distributed as of the date of this report). It also discusses the concept of leveraging HOME funds to attract other sources of funding for affordable housing activities. Each year, during the annual appropriations process, Congress appropriates funding to the HOME account within HUD's overall appropriation. In FY1992, the first year in which HOME was funded, Congress appropriated $1.5 billion to the HOME account. From FY1993-FY1998, annual appropriations to the HOME account fluctuated between $1 billion and $1.5 billion, and from FY1999 through FY2011 appropriations fluctuated between $1.6 billion and $2 billion, reaching a high of just over $2 billion in FY2004. Since FY2012, appropriations to the HOME account have been $1 billion or below. Decreased funding for the HOME program in recent fiscal years reflects the overall fiscal environment, and may also reflect concerns about the oversight of HOME funds. (For more information on oversight issues, see the " Program Oversight " section of this report.) While most of the funding appropriated to the HOME account is used for formula grants to states and localities, over the years the HOME account has sometimes also included funding that was set aside for related affordable housing programs or activities. For example, in some years HOME account set-asides have included funding for technical assistance or transfers to the Working Capital Fund (which supports the development and maintenance of HUD's information technology systems). For several years prior to FY2008, two major set-asides funded through the HOME account were housing counseling (which is now funded in its own account) and down payment assistance through the American Dream Downpayment Initiative, or ADDI (which is no longer specifically funded, although down payment assistance is an eligible use of HOME funds). The former HOME account set-asides for housing counseling and ADDI are discussed in more detail in Appendix A . Since FY2012, the only set-asides funded within the HOME account have been HOME formula grants for the insular areas. Table 1 shows annual appropriations levels for the HOME program from FY1992 to FY2014, including the amounts appropriated for formula grants and for set-asides. The figures are not adjusted for inflation. HUD distributes the funds appropriated to the HOME program to participating jurisdictions using a formula. By law, 40% of the funds are allocated to states and the remaining 60% are allocated to localities. For the purposes of the HOME program, the District of Columbia and Puerto Rico are considered to be states. Before distributing funds to states and localities, HUD sets aside the greater of $750,000 or 0.2% of the total HOME appropriation for insular areas. In FY2014, the amount set aside for the insular areas was $2 million. Insular areas eligible for HOME funds are Guam, the Northern Mariana Islands, the United States Virgin Islands, and American Samoa. The HOME formula takes into account six factors. Four of these factors are weighted 20%: The number of occupied rental units in a jurisdiction that have at least one of four problems: (1) overcrowding, defined as more than one occupant per room; (2) incomplete kitchen facilities, defined as the lack of a sink with running water, a range, or a refrigerator; (3) incomplete plumbing, defined as the lack of hot and cold piped water, a flush toilet, or a bathtub or shower that is inside the unit and used solely by the unit's occupants; or (4) high rent costs, defined as rent that costs more than 30% of the household's income. The number of rental units in a jurisdiction that were built before 1950 and are occupied by poor households. The number of occupied rental units in a jurisdiction that have at least one of the four problems discussed above (overcrowding, incomplete kitchen facilities, incomplete plumbing, or high rent costs) multiplied by the ratio of the cost of producing housing within the jurisdiction to the cost of producing housing nationally. The number of families at or below the poverty level in a jurisdiction. The remaining two factors are weighted 10%: The number of rental units in a jurisdiction, adjusted for vacancies, where the head of household's income is at or below the poverty line. This number is multiplied by the ratio of the national rental unit vacancy rate over the jurisdiction's rental unit vacancy rate. The jurisdiction's population multiplied by its net per capita income. Once a participating jurisdiction receives its formula allocation, it has to meet several deadlines. The PJ has 24 months to commit HOME funds to specific projects (such as by signing a written agreement with a developer), and five years to expend the funds. If a PJ does not commit its funds within the time allotted, the funds will revert to HUD and be reallocated to other PJs. Furthermore, the 2013 final rule that made changes to the HOME program regulations specified that the PJ must repay any HOME funds provided to projects that are not completed within four years of the date that the funds are committed. In FY2014, every state received a HOME formula grant. (This includes Washington, D.C. and Puerto Rico, which are considered states for the purposes of the HOME program.) The median state grant amount was about $6 million, and the mean grant was close to $8 million. The mean is pulled upward by a few states that received especially large formula grant allocations; for example, California received the largest state allocation at nearly $31 million. As shown in Figure 1 , nearly half of the states received less than $5 million in funding, and all but twelve states received less than $10 million. Given the lower amount of funding appropriated to the HOME program in recent years compared to earlier years, the median and mean grant amounts are also lower than in some previous years. In FY2010, for example, the median state grant amount was almost $11 million and the mean was almost $14 million. Furthermore, in FY2010, ten states received grants of $5 million or less, and ten states received grants of $20 million or more (including five states with grants over $25 million). The largest state grant in FY2010 was $62 million, compared to $31 million in FY2014 (in both years, the largest state grant was to California). New York and Texas also received grants in FY2010 that exceeded the maximum grant amount awarded in FY2014. In FY2014, 587 localities or consortia also received their own HOME formula grant allocations. The median grant to localities was almost $580,000 and the mean grant was just over $1 million. Again, the mean grant amount is higher than the median because some localities received especially large grants. In particular, New York City received a grant of close to $60 million, nearly three times the size of the next largest formula grant to a locality (Los Angeles was the locality with the next-largest formula grant, at almost $21 million), and nearly twice the next highest formula grant amount awarded (the grant to the state of California of nearly $31 million). Most localities (about 450) received formula grants of less than $1 million. The smallest formula grant amount to a locality was less than $72,000 and was awarded to East Orange, NJ. An increasing number of participating jurisdictions and a decreasing amount of funding have meant that many cities and counties qualify for a relatively small grant amount. In FY2014, over 250 local jurisdictions received formula grants of $500,000 or less, including over 100 local jurisdictions with grants of less than $335,000. In its FY2014 and FY2015 budget submissions, the Obama Administration proposed legislative changes to the requirements for becoming and remaining a PJ that could affect the number of localities that would continue to qualify for their own formula allocations. Namely, the Administration has proposed removing the lower funding threshold to become a participating jurisdiction that applies in years when less than $1.5 billion is appropriated to the program (described in the " Participating Jurisdictions " section of this report) and ending the practice of allowing localities to remain PJs indefinitely after they first qualify. Instead, under the Administration's proposal, a locality that becomes a PJ would remain one for five years before having to qualify again. Appendix B at the end of this report shows the number of participating jurisdictions (localities and consortia) in each state in FY2014. It also shows the total combined formula grant funding that each state and its participating jurisdictions received that year, and the percentage of total HOME funding for formula grants that each state's combined allocation represents. Two stated goals of the HOME program are to leverage federal affordable housing funds by encouraging state, local, and private investment in affordable housing activities, and to increase the capacity of states and localities to meet their affordable housing needs. Accordingly, the HOME statute requires participating jurisdictions to match the HOME funds that they spend in a fiscal year with their own 25% permanent contribution to affordable housing activities. A PJ's matching funds can come from a wide variety of non-federal sources, including state or local governments, charitable organizations, and the private sector. The matching funds must be devoted to affordable housing activities that are eligible under the HOME guidelines, but they do not necessarily have to support projects that use HOME funds. The match can also take many forms, including in-kind contributions such as labor, construction materials, and land for HOME-eligible projects. Other contributions, such as foregone taxes, other foregone fees, and infrastructure improvements, may also count toward the matching requirement if they are used specifically for projects funded by HOME dollars. The matching requirement may not be met using federal funds. The matching requirement must be met in the same fiscal year that HOME funds are used, but if a jurisdiction provides more matching funds than are required in a given year, it can carry those funds forward to meet the matching requirement in subsequent years. The statute directs the Secretary to reduce or eliminate a participating jurisdiction's match requirement if the PJ certifies that it is under a condition of fiscal distress. The Secretary can choose to reduce or eliminate the match requirement if the President declares the jurisdiction to be a major disaster area. Although nearly all HOME funds are subject to the matching requirement, certain uses of funds are not required to be matched by the PJ. Funds that do not have to be matched include forgiven loans to Community Housing Development Organizations (CHDOs), funds used for administrative purposes (up to an allowable limit), and funds used to fill the threshold gap between a locality's formula allocation and its required $750,000 contribution to affordable housing activities, unless the locality obtains the latter from state HOME funds. Leveraging refers to a program's ability to use its own program dollars to attract additional funding from other sources, including non-federal sources of funds. Leveraging can be an important concept for affordable housing because attracting multiple funding sources makes projects more feasible, and because the ability to attract other sources of funds could reduce the amount of federal funding that needs to be invested in a project. Attracting other types of funding for affordable housing can also help to build the capacity of organizations that might not be able to undertake projects without the assistance of HOME funds. HOME does not have a specific leveraging requirement, although PJs do have to meet the matching requirement described previously. HUD reports leveraging statistics for HOME. According to HUD, every dollar of HOME funds used for housing units that were completed between FY1992 (the first year in which the program was first funded) and July 31, 2014, attracted $4.16 in non-HOME funds. This amount includes other federal funding sources as well as funding from other sources (such as states, local governments, and private entities). In 2008, the Government Accountability Office (GAO) released a report analyzing the leveraging statistics that HUD and the Department of the Treasury report for various programs and calculating alternative leverage measures. It found that alternative measures of a program's leverage ratio may provide a more complete picture of how effective a program is at leveraging specific types of funds. For example, according to the GAO report, for HOME-assisted units completed in FY2006, HUD's reported leverage ratio was $4 of non-HOME funding for every dollar of HOME funding. Using the same data, GAO found that for every dollar of HOME funding used in units that were completed in FY2006, HOME-assisted units used $1.92 of private spending, $1.33 of other federal spending, and $0.76 of state or local spending. Therefore, a leverage ratio that only took into account other non-federal sources of funding for HOME-assisted projects completed in 2006 would be $2.68 for every dollar of HOME funding ($1.92 of private funding and $0.76 of state and local funding). HUD reports a number of HOME program performance statistics. These include statistics on the types of completed units that have been assisted with HOME funding (rental units, home buyer units, and homeowner units,), the eligible activities funded with HOME dollars (rehabilitation, new construction, acquisition, and households that have received TBRA), and characteristics of households that benefit from HOME funds. Between the beginning of the HOME program in FY1992 and July 31, 2014, nearly 1.2 million units of affordable housing were constructed, rehabilitated, or acquired using HOME funding, and over 290,000 families were assisted through tenant-based rental assistance (TBRA). Together, this amounts to nearly 1.5 million completed units and TBRA-assisted households that have benefitted from HOME funds since the program's inception. Units assisted with HOME funds can be homeowner units (that is, existing owner-occupied housing that is rehabilitated with HOME funds), home buyer units (owner-occupied housing where HOME funds are used to help prospective home buyers acquire, rehabilitate, or construct the home), or rental units. Of the physical units that have used HOME funds since the program's inception (that is, excluding households that received TBRA), home buyer units represent the largest share, followed by rental units. As shown in Figure 2 , 42% of all completed units to date are home buyer units (about 490,000 units), 39% are rental units (about 460,000 units), and 19% are homeowner units (about 230,000 units). In FY2013 alone, HOME funds contributed to a total of about 21,000 completed housing units and tenant-based rental assistance for nearly 13,000 households. In addition to statistics on completed units, HUD also reports how much HOME funding was used for each unit type. Since the program began, over $28 billion of HOME funding has been spent on units that were completed as of July 31, 2014. As shown in Figure 3 , nearly $16 billion (55%) of HOME funding that has been spent on completed units was used for rental units or TBRA, while $8 billion (27%) was used for home buyer units and $5 billion (18%) for homeowner units. Of the amounts spent on rental housing since the program began, about 95% (nearly $15 billion) has been used to develop rental housing units, while the remaining 5% (less than $1 billion) has been used for TBRA. Eligible uses of HOME funds generally fall into four categories: owner-occupied housing rehabilitation activities, assistance to home buyers, rental housing development activities, and tenant-based rental assistance (TBRA). The HOME statute specifies that rehabilitation of both rental and homeowner units should be given preference over other types of eligible uses of HOME funds, such as acquiring or constructing affordable housing. As shown in Figure 4 , of the nearly 1.5 million housing units and TBRA households that have been assisted using HOME funding from the program's beginning through July 31, 2014, nearly 500,000 (34%) were rehabilitated units, about 390,000 (26%) were acquired units, and about 290,000 (20%) were newly constructed units. An additional 290,000 (20%) of "units" were households that received TBRA rather than physical housing units. Some activities are more expensive than others and require a larger investment of HOME funds. Therefore, the breakdown of total HOME funding used for each eligible activity looks somewhat different than the number of units completed for each eligible activity. For example, rehabilitated units accounted for just over one-third of the completed units (including TBRA) that used HOME funds, but the funds used for rehabilitation account for nearly 43% of total HOME funds expended on completed units (a total of about $12 billion since the program's inception). Acquired units accounted for over a quarter of completed units that use HOME funds, but account for only about 15% of the funding (about $4 billion). New construction and TBRA each accounted for about 20% of completed units, but new construction accounts for nearly 40% of the funds spent (almost $11 billion) while TBRA accounts for only 3% of funds spent (less than $1 billion). Figure 5 illustrates the amount of funding that has been spent on each activity since the program began. The difference between the percentage of funding going toward each activity and the percentage of completed units of each activity type reflects the difference in the average investment of HOME funds required for each activity. A newly constructed unit costs the most, on average: a newly constructed unit costs an average of $38,000 in HOME funds, while the average cost of rehabilitating a unit is $24,000 in HOME funds and the average cost of acquiring a unit is about $11,000 in HOME funds. Whether a PJ uses HOME funds for rehabilitation, acquisition, or new construction depends in part on the types of programs it is administering and the housing needs it is trying to meet. As shown in Figure 6 , about three quarters of home buyer units that receive HOME funds use those funds for acquisition costs (such as down payment assistance). A relatively small number of home buyer units use HOME funds for rehabilitation or new construction. In contrast, virtually all owner-occupied units with HOME investments use those funds for rehabilitation activities. For rental units that use HOME funds, about half of the units are rehabilitated. Most of the remaining HOME rental units are newly constructed, with just a small number of rental units receiving HOME funds for acquisition costs. HUD reports on certain characteristics of the households that benefit from HOME funds, including household income and household type (e.g., two-parent households, single-parent households, elderly households, etc.). As required by statute, all HOME funds benefit families with incomes at or below 80% of area median income. Not surprisingly, HOME funds used for rental activities (including tenant-based rental assistance and the construction, acquisition, and rehabilitation of rental housing) benefit a lower-income population than funds used for homeowner and home buyer units. As explained earlier in this report, HOME funds used for rental activities must target a lower-income population than funds used for homeowner or home buyer activities. Households at the lowest end of the income spectrum are also more likely to rent than to own their homes. Figure 7 shows the share of units for each unit type (homeowner, home buyer, rental, or TBRA) that has benefitted households at different income levels. As of July 31, 2014, HUD reported that nearly 80% of HOME-assisted TBRA households were families with incomes at or below 30% of area median income (AMI), as were nearly 44% of occupants of HOME-assisted rental units. In contrast, less than one-third of HOME-assisted homeowner units benefitted households with incomes at or below 30% of area median income, and only 6% of HOME-assisted home buyer units benefitted households with incomes in this range. Overall, about 30% of HOME-assisted units (including households that receive TBRA) are occupied by single-parent households. Nearly another 30% are occupied by single, non-elderly households. About 18% apiece are occupied by elderly households and two-parent households, and about 5% of households are categorized as "other." As shown in Figure 8 , different types of units are more or less likely to serve specific types of households. Specifically: Rental units assisted with HOME funds are most likely to be occupied by single, non-elderly households or elderly households, followed closely by single-parent households. Two-parent households are less likely to live in HOME-assisted rental units. HOME-assisted home buyer units are most likely to be occupied by single parents or two-parent households, followed by single, non-elderly households. Not surprisingly, few home buyer units are occupied by elderly households. By contrast, HOME-assisted owner-occupied units are most likely to be occupied by elderly households, as elderly households might be the most likely to seek HOME funds for repairs to their existing housing. HOME-funded TBRA is most commonly received by single-parent households, followed by single, non-elderly households. Oversight of the HOME program involves monitoring both processes and outcomes. Monitoring processes includes ensuring that HOME funds are committed and expended according to the timelines specified in statute and regulation and that program requirements are followed. Monitoring outcomes includes ensuring that investments of program funds ultimately help to achieve the program's goal, namely, providing housing that is affordable to low-income households. Given HOME's structure as a block grant program, participating jurisdictions (PJs) bear much of the responsibility for ensuring that subrecipients adhere to HOME program requirements and that specific projects result in their intended outcomes. Nonetheless, HUD is ultimately responsible for overseeing PJs' use of HOME funds to ensure that HOME funds are spent properly. HUD's oversight of PJs includes activities that occur both before and after funds are granted to PJs. Before granting funds to PJs, HUD must approve PJs' Consolidated Plans. As described earlier in the " The Consolidated Plan " section of this report, PJs submit Consolidated Plans to HUD describing their affordable housing needs and specifying how HOME funds will be used to meet those needs. Prior to approving a PJ's Consolidated Plan, HUD reviews the plan to ensure that it is complete, consistent with the purposes of the HOME statute, and meets all regulatory requirements. After funds are granted to PJs, HUD's oversight includes ensuring that PJs' activities match their Consolidated Plans and monitoring how and when PJs spend their funds. PJs report their commitments and expenditures of HOME funds to HUD through a computer system known as the Integrated Disbursement & Information System (IDIS), along with the activities to which funds are committed or expended. HUD uses this system to track PJs' commitments and expenditures of HOME funds and the progress of projects that are using HOME funds. HUD also publishes a number of reports related to PJs' activities and the status of HOME funds on its website. The HOME statute and regulations include provisions requiring PJs to lose or repay HOME funds to HUD if they are not spent in a timely manner or are not used for housing that meets the HOME requirements. HOME funds that are not committed by PJs within 24 months will expire, and those funds will be reallocated by formula to eligible PJs. PJs must expend HOME funds within five years. PJs are required to repay HOME funds used for any activities that do not meet the affordability period requirements or for activities that are terminated before project completion. PJs must also repay any funds spent on projects that are not completed as of four years of the date the funds were committed. The Secretary of HUD also has the authority to impose penalties on PJs that misuse HOME funds, such as preventing PJs from drawing down HOME funds, restricting PJs' activities, or removing PJs from formula allocations. While HUD is responsible for overseeing PJs, PJs are responsible for ensuring that their HOME-funded activities meet program requirements. PJs oversee subrecipients and any other entities that receive HOME funds from the PJ, and are supposed to monitor performance and address any problems. Participating jurisdictions must also comply with record-keeping and monitoring requirements to ensure that they are using funds appropriately, making progress toward their housing goals, and generally funding activities in line with their Consolidated Plans. Before disbursing any HOME funds to an entity (including a subrecipient, a contractor, or a household), a PJ must enter into written agreement with that entity. These written agreements may vary based on the project type and the entity's role, but all must ensure compliance with HOME program requirements. Certain minimum provisions that must be included in different types of agreements are described in the HOME program regulations at 24 CFR §92.504. PJs must review the performance of subrecipients and contractors on an annual basis. PJs must also perform on-site inspections of HOME-assisted projects when a project is completed and, for HOME-assisted rental housing, throughout the affordability period. HOME-assisted rental units must be inspected at least every three years during the affordability period (or more frequently if problems related to health and safety are discovered) and the property owner must certify annually that the project and the HOME-assisted units are "suitable for occupancy." Units occupied by households receiving HOME-funded TBRA should be inspected by the PJ annually. PJs must also examine the financial viability of HOME-assisted rental projects with ten or more units at least annually during the affordability period. Over the past several years, several concerns have been raised about whether PJs have adequately overseen projects that use HOME funds and, ultimately, whether HUD has adequately monitored PJs' uses of HOME funds. Some concerns related to HUD's oversight of PJs have been raised by HUD's Office of the Inspector General (OIG). A 2009 OIG report questioned several aspects of HUD's monitoring of program funds, including whether HUD's methodology for tracking when PJs had spent their funds was appropriate; whether the IDIS system allows HUD to adequately monitor information reported by PJs; and whether funds had been expended on projects that should have been classified as terminated. Other OIG reports have raised questions about whether HUD has ensured PJs' compliance with program rules. For example, a 2010 OIG audit report found that, in some cases, HUD had not ensured that PJs included appropriate resale and recapture provisions in projects that used HOME funds. The OIG has also reported conducting over 60 external audits of specific PJs in recent years, some of which were undertaken at the request of HUD. Another source of concern about HUD's oversight of the HOME program was a series of investigative articles published in the Washington Post beginning in the spring of 2011. These articles focused on PJs' alleged mismanagement of HOME funds used for rental housing developments and problems with HUD's oversight of PJs. The articles suggested that nearly 15% of HOME-assisted rental projects were experiencing significant delays, and that almost 700 rental housing projects that had been awarded a total of $400 million in HOME funds over the program's life had since stalled and were either incomplete or unoccupied. The article also claimed that HUD did not properly oversee funds that are awarded to PJs in order to identify such stalled or abandoned projects, that it had difficulty tracking program funds, and that it did not adequately demand reimbursement from PJs for misused funds. In response to the articles, HUD maintained that the Post' s methodology for identifying troubled projects was flawed and that the amount of funds that were mismanaged or committed to stalled projects was much smaller than the Post articles suggested. It also noted that some stalled projects were the result of a weak economy rather than mismanagement or other problems. HUD argued that its oversight of the program was adequate and that it had de-obligated HOME funds from PJs that did not meet commitment and expenditure deadlines and recovered additional funds that were spent improperly by PJs. Questions about HUD's oversight of HOME funds led Congress to hold hearings on the topic in 2011, during which several Members of Congress expressed concern about HUD's ability to ensure that HOME funds are used in a way that produces the program's intended results. Congress also included a number of provisions related to the oversight or use of HOME funds in both the FY2012 and FY2013 HUD appropriations laws, the Consolidated and Further Continuing Appropriations Act, 2012 ( P.L. 112-55 ) and the Consolidated and Continuing Appropriations Act, 2013 ( P.L. 113-6 ). (These provisions only apply to the HOME appropriations included in those laws, not HOME funds appropriated in other fiscal years.) The 2013 HOME program final rule, described next, included a number of provisions to better ensure that HOME funds were being spent properly, including similar provisions to those that were included in the FY2012 and FY2013 appropriations laws. The provisions in the 2013 final rule apply to all HOME funds, rather than just the funds that were appropriated within a specific appropriations law. In December 2011, HUD published a proposed rule in the Federal Register revising several aspects of the HOME program regulations. The final rule was promulgated in July 2013 and represented the first substantive changes to the HOME regulations since 1996. The stated purposes of the rule are to "address many of the operational challenges facing participating jurisdictions; improve understanding of HOME program requirements, update property standards to which housing funded by HOME funds must adhere, and strengthen participating jurisdictions' accountability for both compliance with program requirements and performance." To achieve these aims, the rule makes several changes to the HOME program. Some aspects of the rule are specifically concerned with oversight and would strengthen existing requirements or impose new requirements to attempt to enhance the accountability of states and localities that receive HOME funds. Other aspects of the rule would codify existing administrative requirements or best practices as identified by HUD. Several major provisions of the 2013 final rule are described here. Some of these provisions are also discussed elsewhere in this report, and the description of program requirements throughout the report reflects relevant changes made in the 2013 rule. Among other things, the final rule does the following: Requires PJs to adopt written policies to improve program oversight and monitoring of recipients of HOME funds, Updates the property standards that HOME-assisted housing must meet, Requires PJs to conduct annual examinations of the financial condition of rental projects with at least 10 HOME-assisted units, Requires repayment of HOME funds used for rental projects that are not rented to eligible tenants within 18 months, and Requires HOME-assisted home buyers to receive housing counseling. The rule also includes several provisions that are similar to those that were included in the FY2012 and FY2013 HUD appropriations laws. These provisions specify the following: HOME funds used for projects that are not completed within four years of the date the funds are committed are to be repaid by the PJ. The Secretary of HUD can extend this deadline by one year if he determines that the delay was caused by circumstances outside of the PJ's control. PJs cannot commit funds without conducting an underwriting review of the proposed project, assessing the developer's capacity and fiscal soundness, and examining market conditions. Home buyer units that are not sold to eligible home buyers within nine months of the project's completion are to be rented to eligible tenants. In order for CHDOs to demonstrate that they have the capacity to carry out housing activities, they must have paid staff with experience in the housing role the CHDO expects to play. Volunteers and donated staff cannot be used to demonstrate capacity (although they may assist with CHDO activities). Furthermore, a CHDO cannot rely on consultants to demonstrate capacity to undertake housing development, except in an organization's first year as a CHDO if the consultant trains the CHDO's staff. The 2013 rule also included several additional provisions related to CHDOs. Some of these provisions were described in the " Community Housing Development Organizations (CHDOs) " section of this report. Most of the provisions in the final rule became effective on August 23, 2013, with some exceptions. While the provisions in the FY2012 and FY2013 appropriations laws only applied to projects that used HOME funds appropriated in those years, these provisions now apply to all HOME funds committed after the effective date, regardless of the year the funds were appropriated. Appendix A. Select Programs Formerly Funded Within the HOME Account For several years prior to FY2008, two major HOME account set-asides provided funding for the American Dream Downpayment Initiative and HUD's housing counseling program. However, neither of these programs is currently funded through the HOME account. Housing counseling is now funded through its own account, and Congress has not appropriated funding for the American Dream Downpayment Initiative since FY2008. Each of these programs is described briefly below. American Dream Downpayment Initiative The American Dream Downpayment Initiative (ADDI) was funded in the HOME account from FY2003 through FY2008. Congress has chosen not to fund ADDI in FY2009 or subsequent years. ADDI was created by the American Dream Downpayment Act ( P.L. 108-186 ), signed into law on December 16, 2003. The program aimed to increase homeownership, especially among low-income and minority populations, by providing formula funding to all 50 states and qualified local jurisdictions for down payment and closing cost assistance for first-time home buyers. States and localities could use ADDI funds to provide closing cost and down payment assistance up to $10,000 or 6% of a home's purchase price, whichever was greater. Additionally, up to 20% of ADDI funds could be used to assist homeowners with rehabilitation costs, as long as the rehabilitation was completed within a year of the home's purchase. The formula used to award ADDI funds to states was based on the number of low-income households residing in rental housing in the state relative to the nation as a whole. For localities, the grant amount was based on the number of low-income households residing in rental housing in the jurisdiction relative to the entire state. In order for a local jurisdiction to receive its own allocation of ADDI funds, it had to have a population of at least 150,000 or be eligible for a minimum grant of $50,000 under the ADDI formula. While supporters of ADDI held that the program played an important role in increasing homeownership, critics argued that it was duplicative because states and localities could already choose to use their HOME funds for down payment assistance. ADDI was originally authorized to receive $200 million annually through FY2007, but the program never received more than $86 million in appropriations. The Consolidated Appropriations Act, 2008 ( P.L. 110-161 ) appropriated $10 million to ADDI and extended the program through the end of FY2008. President Bush's budget requested $50 million for ADDI in FY2009; however, the Omnibus Appropriations Act, 2009 ( P.L. 111-8 ) did not include funding for ADDI, and the program has not been funded in subsequent years. Housing Counseling From FY1997 through FY2008, funding for HUD's housing counseling program was appropriated as a set-aside in the HOME account. Through the housing counseling program, authorized under section 106 of the Housing and Urban Development Act of 1968 (P.L. 90-448), as amended, HUD competitively awards funding to HUD-approved agencies that provide counseling on a range of housing issues. For several years in the 2000s, President Bush requested that housing counseling be funded through its own account, but until FY2009 Congress continued to fund housing counseling as a set-aside in the HOME account. In FY2009, Congress appropriated funding for housing counseling in its own account rather than as a set-aside within HOME, and has continued to do so in subsequent fiscal years. For more information on the housing counseling program, including information on appropriations, see CRS Report R41351, Housing Counseling: Background and Federal Role , by [author name scrubbed]. Appendix B. Distribution of Participating Jurisdictions and Total HOME Funding by State | The HOME Investment Partnerships Program was authorized by the Cranston-Gonzalez National Affordable Housing Act of 1990 (P.L. 101-625). HOME is a federal block grant program that provides funding to states and localities to be used exclusively for affordable housing activities to benefit low-income households. Funds for HOME are appropriated annually to the Department of Housing and Urban Development (HUD), which in turn distributes funding to states and certain localities by formula. Forty percent of HOME funds are allocated to states and 60% are allocated to localities. The formula takes into account six factors, including the number of units in a jurisdiction that are substandard or unaffordable, the age of a jurisdiction's housing, and the number of families living below the poverty line in the jurisdiction. States and localities that receive HOME funds are known as "participating jurisdictions." Participating jurisdictions must match the HOME funds they spend with their own 25% permanent contribution to affordable housing activities. They also must submit a Consolidated Plan to HUD that identifies the community's housing needs and describes in detail how HOME and other HUD block grant funds will be used to meet those needs. Participating jurisdictions can administer HOME funds themselves, or they can designate public agencies or nonprofit organizations to administer all or part of the HOME program on their behalf. HOME funds can be used to finance a wide variety of affordable housing activities that generally fall into four categories: rehabilitation of owner-occupied housing; assistance to home buyers; acquisition, rehabilitation, or construction of rental housing; and tenant-based rental assistance. Projects that use HOME funding must meet certain income targeting and affordability requirements. Specifically, all HOME-assisted housing units must benefit households with incomes at or below 80% of area median income. Additionally, 90% of occupants of HOME-assisted rental units and households that receive tenant-based rental assistance must have incomes at or below 60% of area median income. HOME-assisted housing must also meet certain definitions of affordability and must continue to remain affordable to low-income households for a specified period of time. The specific affordability requirements vary according to the type of activity for which funds are used and the amount of HOME funding contributed to the project. Funding for HOME fluctuated between $1.5 billion and $2 billion for several years before falling to $1 billion in FY2012-FY2014. (The FY2013 appropriation was about $950 million after accounting for sequestration.) In FY2014, all 50 states and 587 localities received HOME formula grants, along with the District of Columbia, Puerto Rico, and four insular areas. The median state grant amount (including the District of Columbia and Puerto Rico) was about $6 million, and the median locality grant amount was about $580,000. |
There is continuing interest in the potential for ethanol to displace petroleum as a transportation fuel. In 2010, the United States consumed roughly 13 billion gallons of fuel ethanol, representing about 10% of all U.S. gasoline consumption (by volume). Fuel ethanol consumption has grown from roughly 1 billion gallons per year in the early 1990s, largely as a result of federal policies promoting its use, including tax incentives and mandates for the use of renewable fuels. Arguably the most significant incentive for ethanol's use is the renewable fuel standard (RFS) established in the Energy Policy Act of 2005 and expanded in the Energy Independence and Security Act of 2007. The RFS mandates the use of 9.0 billion gallons of renewable fuel in 2008, increasing steadily through 2022 ( Figure 1 ). While the RFS is not an explicit ethanol mandate, the vast majority of the requirement has been met using corn-based ethanol. Going forward, there are limitations on the amount of corn-based ethanol that may be used to meet the mandate, although it is likely that much of the additional mandate for "advanced biofuels" will be met using ethanol derived from sugarcane and from cellulosic feedstocks such as perennial grasses, fast-growing trees, and agricultural wastes. By 2022, EISA requires the use of 36 billion gallons of renewable fuels, and much of this would likely be ethanol from a variety of feedstocks. However, there is a key obstacle to the use of so much ethanol in gasoline. Currently, although some ethanol is sold as an alternative fuel (E85), most is sold as an additive in conventional and reformulated gasoline. Before EPA's decision on the Growth Energy waiver petition, the amount of ethanol that could be blended in gasoline for all conventional gasoline vehicles and engines was limited to 10% by volume (E10) by guidance developed by the Environmental Protection Agency (EPA) under the Clean Air Act (CAA), as well as by vehicle and engine warranties, and certification procedures for fuel-dispensing equipment. Under the RFS, assuming that most of the mandate is met using ethanol, gasoline blenders are likely to hit a limit in the next few years. In 2012, the RFS will require over 15 billion gallons of renewable fuel, while projected gasoline consumption in 2012 is just above 140 billion gallons. After 2012, the renewable fuel mandate will continue to increase. However, a limit of 10% ethanol would mean that ethanol for gasoline blending (not including E85) likely cannot exceed 14 billion gallons per year. This "blend wall" is the maximum possible volume of ethanol that can be blended into U.S. motor gasoline (see Figure 2 ). It is likely that the actual limit is lower, since older fuel tanks and pumps at some retail stations may not be equipped to handle ethanol-blended fuel. Because of this "blend wall," there is interest, especially among ethanol producers, in increasing the allowable concentration of ethanol in gasoline. Research is ongoing on intermediate-level blends, including 15%, 20%, 30%, and 40% ethanol (E15, E20, E30, and E40, respectively). On March 6, 2009, Growth Energy (on behalf of 52 U.S. ethanol producers) applied to EPA for a waiver from the CAA E10 limit. The application requested an increase in the maximum concentration to 15% (E15). The waiver would allow the use of significantly more ethanol in gasoline than was permitted under the 10% limit. Under EISA, EPA had 270 days (December 1, 2009) to grant or deny the waiver. In a November 2009 letter to Growth Energy, EPA noted that "it is clear that ethanol will need to be blended into gasoline at levels greater than the current limit of 10 percent" to meet the EISA mandates. In the letter, EPA noted that long-term testing on newer vehicles had not been completed, but that the agency expected that model year 2001 and newer vehicles "will likely be able to accommodate higher ethanol blends, such as E15." On October 13, EPA granted a partial waiver for MY2007 and later vehicles, and deferred a decision on MY2001-MY2006 vehicles until it received final testing data from the Department of Energy (DOE) —EPA granted that waiver on January 26, 2011. As part of the October 2010 decision, EPA denied the waiver for use of E15 in MY2000 and older passenger vehicles, as well as for all heavy-duty vehicles, motorcycles, marine engines, and non-road equipment. However, a group of engine and equipment manufacturers has challenged the partial waiver in court, arguing that EPA failed to estimate the likelihood of misfueling (using E15 equipment denied a waiver), and the economic and environmental consequences of that misfueling. EPA estimates that MY2007 and later vehicles will represent 29% of the cars and light trucks on the road in 2011. Expanding the waiver to MY2001 and later covers an additional 38% of vehicles. As newer vehicles are driven longer distances than older vehicles, MY2001 and later vehicles would represent an even larger share of vehicle miles traveled and fuel consumption. As part of the decision, EPA stated that it had "reasons for concern with use of E15 in nonroad products, particularly with respect to long-term exhaust and evaporative emissions durability and materials compatibility." EPA denied this part of the waiver petition but stated that the agency would revisit the issue if new data were submitted. In a July 2010 "Status Update" EPA stated that Although we continue to evaluate all available information, it has become clear that insufficient data have been submitted on the use of E-15 in older vehicles and non-road engines (such as chainsaws and marine engines) to enable EPA to make a decision on a waiver that would allow the use of E-15 for these engines. As noted by EPA, granting Growth Energy's petition to increase gasoline ethanol content to 15% addresses only one component of the blend wall. The other impediments—current state laws, vehicle and engine warranties, and distribution infrastructure—still need to be addressed before ethanol use in gasoline is taken beyond 10%. Further, for EPA to allow the sale of E15, a fuel supplier still needs to register the fuel with EPA and submit health effects testing for EPA to review—a process that has not yet been started. The "blend wall" is the upper limit to the total amount of ethanol that can be blended into U.S. gasoline. Before 2010 gasoline ethanol content for all uses was limited to 10% by volume, and in 2009 gasoline consumption was roughly 140 billion gallons. Therefore, the 10% blend wall is roughly 14 billion to 15 billion gallons of ethanol that could be blended into gasoline. The blend wall is largely driven by four factors. First, under the CAA it is unlawful to sell gasoline that contains additives at levels higher than those approved by EPA. For ethanol, the limit was 10% by volume for all vehicles through 2010. To allow a higher percentage, a fuel manufacturer would need to petition EPA for a waiver. (See " Approval of New Fuels and Fuel Additives .") Second, automakers currently warranty their vehicles to operate on ethanol/gasoline blends up to 10%. While there are data to suggest that newer vehicles could be operated reliably on higher levels of ethanol without modification, no automaker has yet approved those higher blends for use. Further, small engine manufacturers generally advise against using gasoline with more than 10% ethanol in machines such as lawnmowers, trimmers, and snowmobiles. Even with EPA's approval of higher ethanol blends for use in some vehicles, it is unclear whether vehicle and machine owners will be willing to use the new fuel without explicit approval from the engine/vehicle manufacturer. Third, most existing infrastructure (e.g., underground gasoline storage tanks, fuel pumps) is designed and certified to deliver blends up to E10. It is unclear whether it can tolerate higher ethanol concentrations. Underwriters Laboratories (UL), an independent testing and certification company, announced guidance supporting the use of ethanol blends up to a maximum of 15% in existing fuel pumps currently certified to dispense E10. However, according to the same announcement, UL stated that "under normal business conditions, E10 at the dispenser can vary from about seven to 13 percent ethanol." However, a similar variance is likely to exist for E15: according to a UL representative, "it cannot ever be said that [E15] is exactly 15 percent." Therefore, a higher maximum level, perhaps 18%, would be necessary to allow those pumps to be certified to deliver E15. In November 2010, the National Renewable Energy Laboratory (NREL) released a study (conducted by UL) on the compatibility of new and legacy equipment (listed to dispense up to E10) with E15. UL determined that some of the testing was inconclusive, and some parts did corrode. While modifications to address some of these corrosion issues might be relatively inexpensive, some may represent a significant cost to fuel retailers. In March 2010, UL certified two new pumps to dispense blends up to E25. Further, one pump manufacturer, Gilbarco, retroactively expanded its warranty coverage to E15 for pumps manufactured after April 1, 2008. Fourth, many state laws and regulations, including fire codes and other standards, limit ethanol in gasoline to 10%. To allow E15, these state laws and regulations would also need to be amended. In addition, private or state insurance restrictions may or may not reflect changes to UL certification. While all of these components of the blend wall are relevant, this report focuses on the process for addressing the first component, the CAA restriction on ethanol concentration in gasoline. For a blend of gasoline and gasoline additives to be approved under Section 211(f)(1)(A) of the CAA, it must be "substantially similar" to unleaded gasoline. EPA has defined "gasoline" to have an upper limit of 2.7% oxygen content (by weight), effectively limiting the ethanol concentration to roughly 7.5% (by volume). However, Section 211(f)(4) of the CAA (as amended by EISA) allows manufacturers of fuels and fuel additives to apply for a waiver from the "substantially similar" requirement if they can prove that the use of the fuel or additive will not "cause or contribute to" a vehicle not meeting applicable emissions standards over its useful life. The EPA Administrator, upon application of any manufacturer of any fuel or fuel additive, may waive the prohibitions established under paragraph (1) or (3) of this subsection or the limitation specified in paragraph (2) of this subsection, if he determines that the applicant has established that such fuel or fuel additive or a specified concentration thereof, and the emission products of such fuel or fuel additive or specified concentration thereof, will not cause or contribute to a failure of any emission control device or system (over the useful life of the motor vehicle, motor vehicle engine, nonroad engine or nonroad vehicle in which such device or system is used) to achieve compliance by the vehicle or engine with the emission standards with respect to which it has been certified pursuant to Sections 206 and 213(a) of this title. The Administrator shall take final action to grant or deny an application submitted under this paragraph, after public notice and comment, within 270 days of the receipt of such an application. EPA has twice granted waivers for 10% ethanol under Section 211(f). The first was granted in 1978 to Gas Plus, Inc. for blends of ethanol up to 10%. The second was in 1982 to Synco 76 Fuel Corp. for a blend of 10% ethanol plus a proprietary additive. To allow the use of E15 or E20, EPA would need to revise its definition of "substantially similar" to allow a higher oxygen content, or a manufacturer would need to petition EPA for a waiver under Section 211(f), as Growth Energy has done. According to EPA, there are no specific guidelines for what data must accompany a waiver application. However, based on communication between EPA's Office of Transportation and Air Quality (OTAQ) and the Minnesota Department of Agriculture, as well as a presentation made by a member of OTAQ staff to the American Petroleum Institute Technology Committee, a submission must include both evaporative and exhaust emissions; be comprehensive, assessing the emissions effects both short-term and over the full useful life of the vehicle; include tests on a variety of vehicles (e.g., new and used, car, truck, and motorcycle), and the selection of vehicles should reflect their frequency on the road; and assess the durability of vehicles and vehicle parts using the fuel, including assessments of the compatibility of the new fuel (or blend level) with engine materials, and the effects on operability and performance. Because gasoline is also used in other engines (e.g., lawnmowers, snowmobiles, boats, etc.), the long-term effects on emissions and engine durability for these engines must also be studied, according to EPA. In the case of higher-level ethanol blends, this may be a key concern. While newer automobiles have complex fuel systems, including computers that can measure and adjust fuel/air ratios in real time, most small non-road engines have much simpler carburetor systems with set fuel/air ratios. One potential problem is that ethanol contains oxygen: by increasing the oxygen content in the fuel—increasing the ethanol content from 10% to 20% effectively doubles the oxygen content—while keeping the amount of air coming into the engine constant, the engine will run much leaner. This could cause the engine to misfire, and/or to run much hotter than originally designed, especially in the case of air-cooled engines (e.g., lawnmowers). After the waiver is granted, but before sale of the new fuel is permitted, the fuel must be registered with EPA. That registration must include an assessment of the health effects of the fuel (e.g., inhalation exposure studies). Research has been completed or is ongoing on many of the above data requirements. Much of the preliminary research has been conducted by or for the state of Minnesota. Minnesota has a state law requiring the use of E10 across the state. Assuming E20 is approved as a motor fuel, the state will mandate its use starting in 2013. Therefore, Minnesota has headed much of the research that led to the Growth Energy waiver application. According to the Minnesota Department of Agriculture, some of the preliminary research has been completed or is ongoing on materials compatibility and driveability. In a presentation to EPA's Clean Air Act Advisory Committee's Mobile Sources Technical Review Committee, representatives of Chrysler and Honda highlighted key research areas in assessing mid-level ethanol blends. For cars and trucks they categorized the research into seven main topics: durability, tailpipe emissions, evaporative emissions, driveability, materials compatibility, emissions inventory, and on-board diagnostic (OBD) integrity. For most of these topics, they showed that fuel producers, automakers, EPA and/or DOE had completed "preliminary, partial or screening" assessments, but that comprehensive testing had just started in some areas, while other areas may still need to be addressed. According to their timeline, much of the comprehensive research would not have been completed before the end of 2009. Similar research must be completed for non-road engines. However, their timeline showed that the planning for that research was incomplete as of mid-2008. In its November 30, 2009, letter to Growth Energy, EPA noted that durability testing was ongoing at DOE. According to the letter, DOE was testing a total of 19 newer vehicles, had completed testing of two of those vehicles, and expected "testing [to] be completed on an additional 12 vehicles by the end of May 2010. As a result EPA expects to have a significant amount of the total data being generated through this testing program available to us by mid-June." The letter made no comment on the status of testing for older vehicles or for non-road engines. In its July 2010 update, EPA pushed back the expected completion date for testing of the newest (model year 2007 and later) vehicles to the end of September. The completion of that testing led to EPA's granting a partial waiver in October 2010. For vehicles between model years 2001 and 2006, EPA expected DOE to complete testing by late November 2010. EPA received that data and expanded the waiver in January 2011. For older vehicles and non-road engines, EPA stated that insufficient data have been submitted to alleviate concerns about durability and evaporative emissions—thus EPA denied that part of the waiver. However, as noted above, the partial waiver has been challenged in court by automakers and other equipment manufacturers concerned about the effects of misfueling. Under CAA Section 211(f)(4), as amended by Section 251 of EISA, the Administrator must grant or deny the waiver request within 270 days of receipt. Before being amended by EISA, the language in Section 211(f)(4) stated that "if the Administrator has not acted to grant or deny an application under this paragraph within one hundred and eighty days of receipt of such application, the waiver authorized by this paragraph shall be treated as granted." The amended section no longer specifies the status of a waiver request if EPA neither grants nor denies the request within 270 days, as was the case with Growth Energy's request. A question that has been raised is whether EPA can grant a partial waiver. For example, some contended that it is possible for EPA to quickly grant a waiver to allow E12 or E13, and take more time to review Growth Energy's application for E15. In press reports, Agriculture Secretary Tom Vilsack supported this strategy. In a June 2010 letter, Archer Daniels Midland Company (ADM) requested that EPA grant a waiver for E12 or determine that E12 is "substantially similar" to E10. In its decision on the Growth Energy petition, EPA determined that there were insufficient data to determine that E12 was substantially similar, that similar data concerns exist for older vehicles and non-road engines, and that for newer vehicles E12 is subsumed in the waiver for E15. According to CAA Section 211(f)(4), the EPA Administrator may waive the limitations "upon application of any manufacturer of any fuel or fuel additive." Therefore, presumably any gasoline or ethanol producer may petition EPA for the waiver, provided they can demonstrate to EPA that the new additive or (in this case) specified concentration of an existing additive will meet the criteria set out in Section 211(f)(4). In the case of the current waiver application, Growth Energy filed the application on behalf of 52 U.S. ethanol manufacturers, in partnership with the American Coalition for Ethanol, the Renewable Fuels Association, and the National Ethanol Vehicle Coalition. The provisions of Section 211 are explicit, and there seem to be few options outside of the Section 211(f)(4) waiver process for E15 or other intermediate blends to be approved. While there may be no administrative action that could permit the use of E15 other than an EPA waiver or a determination that E15 is "substantially similar" to gasoline, there are potential legislative options. These include amending the CAA to explicitly allow the use of E15 (or some other level of ethanol); amending the CAA to provide expedited approval of higher levels of previously approved fuel additives; and mandating the production and sale of flexible fuel vehicles (since intermediate blends between E85 and E0—straight gasoline with no ethanol—are already approved for use in these vehicles), and promoting (or mandating) the use of E85 fuel. As stated above, on March 6, 2009, Growth Energy petitioned EPA for a waiver to allow the use of up to 15% ethanol in gasoline. Under the CAA, EPA had up to 270 days (December 1, 2009) to approve or deny the waiver request, but on November 30, 2009, EPA sent a letter to Growth Energy stating that not enough testing had been completed, and that it would continue to evaluate the petition. On October 13, 2010, EPA granted a partial waiver for MY2007 and later passenger vehicles; EPA denied the waiver for MY2000 and older vehicles, as well as for heavy-duty vehicles, motorcycles, and non-road equipment; and deferred a decision on MY2001-MY2006 passenger vehicles. In its application, Growth Energy stated that "recent and extensive research demonstrates that use of higher ethanol blends will significantly benefit the environment by reducing greenhouse gas emissions, reducing harmful tailpipe emissions, reducing smog, using less energy for an equivalent amount of fuel, and protecting natural resources." Growth Energy contended that available data and multiple recent studies regarding the impact of various intermediate blends [of ethanol] on emissions, materials compatibility, durability, and driveability, were completed on extensive and representative test fleets, provide a reliable comparison to certification conditions, and demonstrate that use of E-15 will not cause or contribute to failure of any emission control device or system to meet its certification emissions standards. Growth Energy cited a DOE study that found a statistically significant decrease in carbon monoxide emissions using E15, and a marginally significant decrease in non-methane hydrocarbon emissions. The same study also found a statistically significant increase in acetaldehyde emissions, and a marginally significant increase in formaldehyde emissions. Both formaldehyde and acetaldehyde are regulated as toxic air pollutants under Sections 202 and 211 of the CAA. However, the fact that emissions increased using the fuel is not enough for EPA to deny the waiver: EPA would need to prove that the increase in emissions is enough to cause the vehicle or engine to fall out of compliance with emissions standards. Growth Energy asserts that the DOE study and other studies have found that the use of E15 results in emissions within applicable limits. In its November 30 letter to Growth Energy, EPA stated that "we want to make sure we have all necessary science to make the right decision," including more long-term testing data. On October 13, 2010, EPA granted a partial waiver for newer (MY2007 and later) passenger cars and light trucks, initially deferring a decision on MY2001-MY2006 passenger vehicles before granting the partial waiver on January 26, 2011, and denied the waiver for older passenger vehicles as well as all other vehicles. In its October 13 decision, EPA determined that there were insufficient data to alleviate concerns over potential emissions increases from older passenger vehicles and non-road engines. As stated above, the EPA waiver is not the only hurdle in enabling the use of intermediate-level ethanol blends. With the waiver granted, a fuel supplier still must register the fuel with EPA under the CAA, a process which includes an assessment of the health effects of the fuel. A key non-vehicle issue is whether existing infrastructure can support ethanol blends above E10. Like automobiles, while some existing gasoline tanks and pumps were designed and/or certified to handle up to E10, none to date have been designed or certified to handle higher ethanol blends. Even with approval by EPA for use in newer motor vehicles, presumably fuel suppliers and/or retailers would be unwilling to sell the fuel unless they are confident that it will not damage their existing systems or lead to liability issues in the future, and that they will not compromise their insurance coverage. Otherwise, it seems doubtful that fuel suppliers and retailers would voluntarily upgrade their systems to handle the new fuel. For example, underground storage tank (UST) owners must demonstrate that the components of their UST systems are compatible with the fuel they are storing under the UST provisions of the Solid Waste Disposal Act. EPA took comments through December 17, 2010, on updating its guidance to include ways for owners to demonstrate compatibility with E15. Further, loan covenants and insurance policies would need to be modified to reflect the use of the higher ethanol blend. In addition to fuel supply concerns, for vehicle and machine owners to accept the new fuel, engine and auto manufacturers would likely need to convince their customers that both new and existing equipment would not be damaged by using the new fuel, and that its use would not void vehicle and equipment warranties. This may be especially difficult for small-engine manufacturers and users who are currently concerned about the effects on their engines from E10, let alone higher blends of ethanol. Because of concerns over potential misfueling, a group of automobile and equipment manufacturers has challenged the partial waiver in court. They argue that EPA did not estimate the likelihood of misfueling or the potential economic and environmental effects. They also argue that some misfueling may be unavoidable if E15 becomes so prevalent that fuel suppliers stop selling E10. Many state laws and regulations limit the use of ethanol in gasoline to 10%. These state rules would also need to be updated to allow widespread use of E15. Further, gasoline retailers are concerned that they could lose insurance coverage if they distribute gasoline with higher than 10% ethanol concentration. A key issued raised with EPA's partial waiver decision is the likelihood of misfueling of E15 in vehicles and engines not approved for its use. As part of the October 2010 partial waiver approval, EPA proposed new rules to prevent misfueling, including requiring new labels for fuel pumps that dispense E15. EPA finalized the misfueling rules in June 2011. Along with public comments, EPA consulted with the Federal Trade Commission (FTC) to harmonize the design and content of the label with current FTC labeling rules for motor fuels. One of the key questions was whether the label should be treated as a cautionary label warning users of non-approved equipment or as one providing information but not necessarily a "warning label." Proponents of E15 were concerned that a too-strongly-worded warning label would lead to concerns about the fuel among owners of approved vehicles that could hamper its introduction into the marketplace. Ultimately, EPA and FTC settled on the word "attention" as providing the proper level of information and aligning the design and wording with other similar FTC labels. (See Figure 3 .) | On March 6, 2009, Growth Energy (on behalf of 52 U.S. ethanol producers) applied to the Environmental Protection Agency (EPA) for a waiver from the Clean Air Act (CAA) limitation on ethanol content in gasoline. Ethanol content in gasoline for all uses had been capped at 10% (E10); the application requested an increase in the maximum concentration to 15% (E15). A broad waiver would allow the use of more ethanol in gasoline than is currently permitted. On October 13, 2010, EPA issued a partial waiver for the use of E15 in model year (MY) 2007 and later passenger cars and light trucks. At the same time EPA denied the waiver request for the use of E15 in MY2000 and older vehicles, and in motorcycles, heavy trucks, and non-road applications, citing a lack of sufficient data to alleviate concerns about potential emissions increases from these engines. EPA deferred a decision on MY2001-MY2006 cars and light trucks until January 2011, when the agency expanded the waiver for those vehicles after analyzing final testing data from the Department of Energy (DOE). Concerned about potential damage by E15 to equipment not designed for its use, a group of vehicle and engine manufacturers has challenged the partial waiver in court. Of key concern before the waiver decision was made is the fact that a 10% limitation on ethanol content leads to an upper bound of roughly 15 billion gallons of ethanol in all U.S. gasoline. This "blend wall" will likely limit the fuel industry's ability to meet an Energy Independence and Security Act (EISA, P.L. 110-140) requirement to use increasing amounts of renewable fuels (including ethanol) in transportation. To meet the high volumes mandated by EISA, EPA recognized in a November 2009 letter to Growth Energy that "it is clear that ethanol will need to be blended into gasoline at levels greater than the current limit of 10 percent." The partial waiver for MY2001 and later vehicles—roughly two-thirds of the cars and light trucks on the road in 2011—will allow the use of more ethanol going forward, assuming other conditions are met. To receive a waiver, the petitioner must establish to EPA that the increased ethanol content will not "cause or contribute to a failure of any emission control device or system" to meet emissions standards. In addition to the emissions concerns, other factors affecting consideration of the blend wall include vehicle and engine warranties and the effects on infrastructure. Currently, no automaker warrants its vehicles to use gasoline with higher than 10% ethanol. Small engine manufacturers similarly limit the allowable level of ethanol. In addition, most gasoline distribution systems (e.g., retail pumps and tanks) are designed to dispense up to E10. While some of these systems may be able to operate effectively on E15 or higher, their warranties/certifications would likely need to be modified. Further, many current state laws prohibit the use of blends higher than E10. Questions have been raised whether fuel suppliers would be willing to sell E15 alongside or in lieu of E10. As EPA's waiver only applies to newer vehicles, a key question is how fuel pumps might be labeled to keep owners from using E15 in older vehicles and other equipment. Along with the waiver decision, EPA proposed new rules, including pump labeling, to prevent misfueling of E15 in vehicles not approved for its use. EPA finalized those rules in June 2011. EPA also sought comment (through December 17, 2010) on how to update guidance for underground storage tank (UST) owners, who must demonstrate compatibility of UST components with E15 before they may sell the fuel. Further, for EPA to allow the sale of E15, a fuel supplier would still need to register E15 with EPA and submit health effects testing for EPA to review—a process that had not been started as of late June 2011. |
Murder, committed under any of more than 50 jurisdictional circumstances, is a federal capital offense. So are treason, espionage, and certain drug kingpin offenses. The Federal Death Penalty Act and related provisions establish the procedure that must be followed before a defendant convicted of a federal capital offense may be executed. The Federal Death Penalty Act reflects the constitutional boundaries identified in Furman and subsequent related Supreme Court decisions. The opinion for the Court in Furman v. Georgia runs less than a page. It simply states the following: "The Court holds that the imposition and carrying out of the death penalty in these cases constitute cruel and unusual punishment in violation of the Eighth and Fourteenth Amendments." Furman drew two responses. Some states sought to remedy arbitrary imposition of the death penalty by making capital punishment mandatory. Some states and Congress narrowed the category of cases in which the death penalty might be a sentencing option and crafted procedures designed to guide jury discretion in capital cases in order to equitably reduce the risk of random imposition. The Court in Woodson rejected the first approach, and in Gregg endorsed the second. The Court has subsequently noted that Furman and Gregg "establish that a ... capital sentencing system must: (1) rationally narrow the class of death-eligible defendants; and (2) permit a jury to render a reasoned, individualized sentencing determination based on a death-eligible defendant's record, personal characteristics, and the circumstances of his crime." With respect to eligibility for the death penalty, the Court declared "that capital punishment must 'be limited to those offenders who commit a narrow category of the most serious crimes and whose extreme culpability makes them the most deserving of execution.'" "Applying this principle, [the Court] held in Roper and Atkins that the execution of juveniles and mentally retarded persons are punishments violative of the Eighth Amendment because the offender had a diminished personal responsibility for the crime." Moreover, the Eighth Amendment cannot accept imposition of the death penalty where it is disproportionate to the crime itself as, at least in some instances, "where the crime did not result, or was not intended to result, in death of the victim. In Coker , for instance, the Court held it would be unconstitutional to execute an offender who had raped an adult woman.... And in Enmund , the Court overturned the capital sentence of a defendant who aided and abetted a robbery during which a murder was committed but did not himself kill, attempt to kill, or intend that a killing would take place. On the other hand, in Tison , the Court allowed the defendants' death sentences to stand where they did not themselves kill the victims but their involvement in the events leading up to the murders was active, recklessly indifferent, and substantial." Imposition of the death penalty as punishment for a particular crime will be considered cruel and unusual when it is contrary to the "evolving standards of decency that mark the progress of maturing society." Those standards find expression in legislative enactments, prosecution practices, jury performance, and execution records, viewed in light of "the Court's own understanding and interpretation of the Eighth Amendment's text, history, meaning, and purpose." Once a defendant has been found to be a member of a capital punishment eligible class, the question becomes whether he is among that limited number within that class for whom the death penalty is an appropriate punishment. The Court, after Gregg , found acceptable sentencing schemes that reserved capital punishment for those cases in which the jury's consideration involved one or more aggravating factors and any mitigating factors. If an aggravating factor is not already required for eligibility, one must be found in the course of the individualized selection assessment. Aggravating factors must satisfy three requirements. "First the circumstance may not apply to every defendant convicted of the murder; it must apply only to a subclass of defendants convicted of murder. Second, the aggravating circumstance may not be constitutionally vague." Third, the aggravating circumstance may not be statutorily or constitutionally impermissible or irrelevant. As for mitigating evidence, evidence must be received and considered "if the sentencer could reasonably find that it warrants a sentence less than death." The Constitution insists "that the jury be able to consider and give effect to a capital defendant's relevant mitigating evidence.... [V]irtually no limits are placed on the relevant mitigating evidence a capital defendant may introduce concerning his own circumstances." The Eighth Amendment also condemns execution in a cruel and unusual manner. It proscribes any method of execution which presents an "objectively intolerable risk" that the method is "sure or very likely to cause serious illness and needless suffering." The federal and state capital punishment statutes all require, or at least permit, execution by lethal injunction. In Baze , the Court rejected an Eighth Amendment challenge which failed to show that the lethal injunction procedure at issue was sure or very likely to cause needless suffering. Existing federal law affords capital cases special treatment. There is no statute of limitations for capital offenses, but there is a preference for the trial of capital cases in the county in which they occur. The Attorney General must ultimately approve the decision to seek the death penalty in any given case. Defendants in capital cases are entitled to two attorneys, one of whom "shall be learned in the law applicable to capital cases." Defendants are entitled to notice when the prosecution intends to seek the death penalty, and at least three days before the trial, to a copy of the indictment as well as a list of the government's witnesses and names in the jury pool. Defendants have twice as many peremptory jury challenges in capital cases as in other felony cases and prosecutors more than three times as many. Should the defendant be found guilty of a capital offense, the Furman/Gregg -inspired sentencing procedures set forth in the Federal Death Penalty Act come into play. The death penalty may be imposed under its provisions only after (1) the defendant is convicted of a capital offense; (2) in the case of murder, the defendant has been found to have acted with one of the required levels of intent; (3) the prosecution proves the existence of one or more of the statutory aggravating factors; and (4) the imbalance between the established aggravating factors and any mitigating factors justifies imposition of the death penalty. Statute of Limitations and Related Matters : "An indictment for any offense punishable by death may be found at any time without limitation." This provision applies when the offense is statutorily punishable by death, even if the prosecution elects not to seek the death penalty or the jury fails to recommend it. Prosecutorial options are somewhat more limited than this statement might imply. In rare cases, due process may preclude a stale prosecution even in the absence of a statute of limitations. The due process delay proscription only applies where the delay is the product of prosecutorial bad faith prejudicial to the defendant: "[A]pplicable statutes of limitations protect against the prosecution's bringing stale criminal charges against any defendant, and, beyond that protection, the Fifth Amendment requires the dismissal of an indictment, even if it is brought within the statute of limitations, if the defendant can prove that the Government's delay in bringing the indictment was a deliberate device to gain an advantage over him and that it caused him actual prejudice in presenting his defense." Moreover, the statute of limitations only marks time from the commission of the crime to accusation, in the form of either arrest or indictment. Deadlines between accusation and trial are the province of the constitutional and statutory speedy trial provisions. Here too, the limits are not particularly confining in most instances. "The Sixth Amendment ... Speedy Trial Clause is written with such breadth that, taken literally, it would forbid the government to delay the trial of an 'accused' for any reason at all. [The] cases, however, have qualified the literal sweep of the provision by specifically recognizing the relevance of four separate enquiries: whether delay before trial was uncommonly long, whether the government or the criminal defendant is more to blame for that delay, whether, in due course, the defendant asserted his right to a speedy trial, and whether he suffered prejudice as the delay's result." The Speedy Trial Act provides a more detailed time table, but one that comes with a number of extensions and exclusions. All in all, time before trial is rarely a matter of the essence in a capital case. Justice Department Review : The decision to seek or not to seek the death penalty is ultimately that of the Attorney General. Under the procedure established in the United States Attorneys Manual, the United States Attorney where the trial is to occur files a recommendation with the Justice Department, ordinarily after conferring with the victim's family and in the case of a recommendation to seek the death penalty with defense counsel. The recommendation is referred to the Capital Review Committee. The Committee's task is to ensure that the decision to seek the death penalty reflects fairness, national consistency, statutory compliance, and law enforcement objectives. It makes its recommendation to the Attorney General through the Deputy Attorney General. Appointment of Counsel : Capital defendants are entitled upon request to the assignment of two attorneys for their defense. There is some uncertainty over whether they are to be appointed immediately following indictment for a capital offense or whether they need only be appointed "promptly" sometime prior to trial; and whether the right expires with the decision of the government not to seek the death penalty. The federal appellate courts are divided over whether a lower court's erroneous refusal to appoint a second attorney in a capital case is presumptively prejudicial or if the defendant must still show that the error was prejudicial. The trial court may authorize the payment of attorneys, investigators, experts, and other professional services reasonably necessary for the defense of indigent defendants charged with a capital offense. This does not entitle the accused to the attorney or expert of his choice or to a jury-selection expert. Moreover, removal of the defendant's attorney in a compensation dispute is not appealable until after the trial. Pre-trial Notice of Intent to Seek the D eath Penalty : Section 3593 obligates the prosecutor to advise the defendant and the court, "a reasonable time before trial" or before the acceptance of a plea, of the government's intention to seek the death penalty. Capital Juries : The Sixth Amendment affords the accused the right to trial before an impartial jury. The Federal Death Penalty Act affords the defendant convicted of a capital offense the right to a jury for sentencing purposes. The accused may waive his right to a jury trial, either by pleading guilty or by agreeing to a trial by the court without a jury. A convicted defendant may also waive his right to a jury during the capital sentencing phase. The prosecution, on the other hand, enjoys comparable prerogatives. It may insist upon a jury if there is to be a trial. It must also agree if the capital sentencing hearing is to be held before the court without a jury. Moreover, it too is entitled to an impartial jury. Thus, the Sixth Amendment permits the exclusion of those potential jurors who assert that they will not vote to impose the death penalty under any circumstances. In most felony cases, the accused may peremptorily reject up to 10 potential jurors without regard to cause, and the prosecution may peremptorily reject up to 6. In a capital case, each side has 20 peremptory challenges. In the case of multiple defendants, the court may, but need not, allow the defendants additional challenges and may require they agree upon their challenges. Death-Ineligible Offen d ers : Whether by statute, by constitutional command, or both, some offenders may not be exposed to a federal trial in which the prosecution seeks the death penalty for a federal capital offense; some may not be executed. A woman may not be executed while she is pregnant. Neither may a person who is mentally retarded be executed nor a person who lacks the mental capacity to understand that he is being executed and why. The Federal Death Penalty Act may not be employed to charge a juvenile for a capital offense committed when the accused was under 18 years of age. An accused who is incompetent to stand trial may not be tried for a capital offense or any other crime. Death-Eligible Offenses : Federal law permits imposition of the death penalty only where the defendant has been convicted of a death-eligible crime, where the aggravating and mitigating factors present in a particular case justify imposition of the penalty, and in a murder case where the defendant has been found to have the requisite intent for imposition of capital punishment. Federal law divides death-eligible offenses into three categories. The one group consists of homicide offenses, another of espionage and treason, and a third of drug offenses that do not involve a killing. Capital homicide offenses : Murder is a capital offense under more than 50 federal statutes. Some outlaw murder as such under various jurisdictional circumstances. Most, however, make some other offense, such as carjacking, a capital offense, if death results from its commission. A defendant convicted of a capital offense may be executed, however, only if it is shown beyond doubt at a subsequent sentencing hearing that one of the statutory aggravating circumstances exists, and that he either (A) killed the victim intentionally; (B) intentionally inflicted serious injuries that resulted in the victim's death; (C) intentionally participated in an act, aware that it would expose a victim to life-threatening force, and the victim died as a consequence; or (D) intentionally engaged in an act of violence with reckless disregard of its life-threatening nature and the victim died as a consequence. The court will sometimes permit a separate preliminary jury proceeding to determine the existence of the requisite intent. Some courts have upheld the submission of all four mental states to the jury. Even in the presence of the necessary intent and at least one of the statutory aggravating factors, a defendant may only be sentenced to death, if the jury unanimously concludes that on balancing the aggravating and mitigating factors imposition of the death penalty is justified. Subsection 3592(c) of the Federal Death Penalty Act lists 16 statutory aggravating factors: "(1) Death during commission of another crime. (2) Previous conviction of violent felony involving firearm. (3) Previous conviction of offense for which a sentence of death or life imprisonment was authorized. (4) Previous conviction of other serious offenses. (5) Grave risk of death to additional persons. (6) Heinous, cruel, or depraved manner of committing offense. (7) Procurement of offense by payment. (8) Pecuniary gain. (9) Substantial planning and premeditation. (10) Prior conviction for two felony drug offenses. (11) Vulnerability of victim. (12) Conviction for serious federal drug offenses. (13) Continuing criminal enterprise involving drug sales to minors. (14) High public officials. (15) Prior conviction of sexual assault or child molestation. (16) Multiple killings or attempted killings." The jury may also consider any non-statutory aggravating factors which it finds beyond a reasonable doubt to exist. The Constitution and the Federal Death Penalty Act favor the introduction of mitigating evidence during the capital sentencing proceeding. The Supreme Court declared some time ago that "the Eighth Amendment ... require[s] that the sentencer ... not be precluded from considering, as a mitigating factor, any aspect of a defendant's character or record and any of the circumstances of the offense that the defendant proffers as a basis for a sentence less than death." The Federal Death Penalty Act directs the finder of fact to consider any mitigating factor and permits the defendant to present any information relevant to a mitigating factor. This gives the defendant considerable latitude. Yet his options are not boundless. The evidence he offers must be relevant and not invite confusion or unfair prejudice. Moreover, the prosecutor may question the weight that a mitigating factor warrants. Subsection 3592(b) of the Federal Death Penalty Act describes seven statutory mitigating factors and adds a catch-all that encompasses "other factors in the defendant's background, record, or character or any other circumstance of the offense that mitigate against imposition of the death sentence." The other seven cover the following: "(1) Impaired capacity. (2) Duress. (3) Minor participation. (4) Equally culpable, disparate punished defendants. (5) No prior criminal record. (6) Disturbance. (7) Victim's consent." Treason : Treason is punishable by death or imprisonment for not less than five years and a fine of not less than $10,000. The death penalty for treason may only be imposed upon conviction, a finding of one or more of the statutory aggravating factors, and a determination that the aggravating factors outweigh any mitigating factors. The mitigating factors in a treason case are the same as those in a murder case, seven statutory factors and one catch-all: impaired capacity; duress; minor participation; equally culpable but less severely punished defendants; absence of prior criminal record; mental disturbance; victim consent; and any other mitigating factor relating to the offender or the offense. Different aggravating factors, however, apply in treason and espionage cases. The aggravating factors are four: prior treason or espionage conviction; grave risk to national security; grave risk of death; and "any other aggravating factor." Commentators have questioned whether the Constitution allows imposition of the death penalty in cases involving treason, espionage, or murder-less drug offenses, since in such cases the statute on its face authorizes the death penalty without requiring the death of a victim. The Court in Kennedy specifically distinguished this class of crimes from those involving violence against individuals. Each of the crimes presents considerations of its own and might under some circumstances survive scrutiny even under the individual violence standards. Nevertheless, it seems likely that any court confronting the issue would at a minimum consider the Kennedy standards (indicia of "the evolving standards of decency that mark the progress of a maturing society" read in conjunction with the Court's precedents). Under the Federal Death Penalty Act, the death penalty does not follow inevitably from a treason conviction. Capital punishment is confined to those cases marked by one of the three aggravating factors and by the absence of countervailing mitigating factors. The national security factor might be considered a bit too open ended, but that defect, if it is one, might be cured by jury instruction or appellate construction. Of the three—treason, espionage, and murder-less drug kingpin offenses—commentators seem to consider treason the most likely to survive constitutional scrutiny. Espionag e: Espionage is a death-eligible offense under any of three conditions. First, it is a capital offense to disclose national defense information with the intent to injure the United States or aid a foreign government, if the disclosure results in the death of an American agent. Second, it is a capital offense to disclose information relating to major weapons systems or elements of U.S. defense strategy with the intent to injure the United States or aid a foreign government. Third, it is a capital offense to communicate national defense information to the enemy in time of war. The statutory aggravating and mitigating factors are the same as those used in treason cases. Drug Kingpin (Continuing Criminal Enterprises) : Murder committed in furtherance of a drug kingpin (continuing criminal enterprise) offense is a capital crime. It is one of the many federal homicide offenses discussed earlier. Certain drug kingpin offenses, however, are capital offenses even though they do not involve a murder. A continuing criminal enterprise is one in which five or more individuals generate substantial income from drug trafficking. The leader of such an enterprise is subject to a mandatory term of life imprisonment, if the enterprise either realizes more than $10 million in gross receipts a year or traffics in more than 300 times of the quantity of controlled substances necessary to trigger the penalties for trafficking in heroin, methamphetamines, or other similarly categorized controlled substances under 21 U.S.C. 841(b)(1)(B). A drug kingpin violation is a capital offense, if it involves twice the gross receipts or twice the controlled substances distributed necessary to trigger the life sentence, or if it involves the use of attempted murder to obstruct an investigation or prosecution of the offense. Presenting and Weighing the Factors : The Federal Death Penalty Act establishes the same capital sentencing hearing procedures for all capital offenses—murder, treason, espionage, or murder-less drug kingpin offenses. The hearing is conducted only after the defendant has been found guilty of a death-eligible offense. It is held before a jury, unless the parties agree otherwise. The prosecution and the defense are entitled to offer and rebut relevant evidence in aggravation and mitigation without regard to the normal rules of evidence in criminal proceedings. As noted earlier, there is some question whether the prosecutors' arguments or rebuttal concerning the defendant's lack of remorse constitute a violation of the defendant's right not to testify. Some also question whether prosecutors are free to argue that the death penalty is made more appropriate by a defendant's insistence of his right to a trial. The prosecution bears the burden of establishing the existence of aggravating factors and the defendant of establishing mitigating factors. The burdens, however, are not even. The prosecution must show proof beyond a reasonable doubt; the defendant a less demanding proof by a preponderance of the evidence. The finding on aggravating circumstances must be unanimous; the finding on mitigating circumstances need only be espoused by a single juror. Capital punishment may only be recommended and imposed, if the jurors all agree that the aggravating factors sufficiently outweigh the mitigating factors to an extent that justifies imposition of the death penalty. If they find the death penalty justified, they must recommend it. If they recommend the death penalty, the court must impose it. If they cannot agree, the defendant must be sentenced to a term of imprisonment, most often to life imprisonment. Appellate Review : A defendant sentenced to death is entitled to review by the court of appeals. The defendant is entitled to relief if the court determines that (1) the sentence was the product of passion, prejudice, or other arbitrary factor; (2) the finding of at least one statutory aggravating factor cannot be supported by the record; or (3) there exists some other legal error that requires the sentence to be overturned. Convictions and sentences imposed in a capital case are subject to normal appellate and collateral review as well. Execution of Sentence : Once all opportunities for appeal and collateral review have been exhausted, a defendant sentenced to death is executed pursuant to the laws of the state where the sentence was imposed, or if necessary, pursuant to the laws of a state designated by the court. The United States Marshal has the authority to use state or local facilities and personnel to carry out the execution. The regulations permit six defense witnesses and 18 public witnesses to attend the execution. Video and audio recording are forbidden. | Murder is a federal capital offense if committed in any of more than 50 jurisdictional settings. The Constitution defines the circumstances under which the death penalty may be considered a sentencing option. With an eye to those constitutional boundaries, the Federal Death Penalty Act and related statutory provisions govern the procedures under which the death penalty may be imposed. Some defendants are ineligible for the death penalty regardless of the crimes with which they are accused. Children and those incompetent to stand trial may not face the death penalty; pregnant women and the mentally retarded may not be executed. There is no statute of limitations for murder, and the time constraints imposed by the due process and speedy trial clauses of the Constitution are rarely an impediment to prosecution. The decision to seek or forgo the death penalty in a federal capital case must be weighed by the Justice Department's Capital Review Committee and approved by the Attorney General. Defendants convicted of murder are death-eligible only if they are found at a separate sentencing hearing to have acted with life-threatening intent. Among those who have, capital punishment may be imposed only if the sentencing jury unanimously concludes that the aggravating circumstances that surround the murder and the defendant outweigh the mitigating circumstances to an extent that justifies execution. The Federal Death Penalty Act provides several specific aggravating factors, such as murder of a law enforcement officer or multiple murders committed at the same time. It also permits consideration of any relevant "non-statutory aggravating factors." Impact on the victim's family and future dangerousness of the defendant are perhaps the most commonly invoked non-statutory aggravating factors. The jury must agree on the existence of at least one of the statutory aggravating factors if the defendant is to be sentenced to death. The Federal Death Penalty Act permits consideration of any relevant mitigating factor, and identifies a few, such as the absence of prior criminal record or the fact that a co-defendant, equally or more culpable, has escaped with a lesser sentence. The Federal Death Penalty Act recognizes other capital offenses that do not necessarily involve murder: treason, espionage, large-scale drug trafficking, and attempted murder to obstruct a drug kingpin investigation. The constitutional standing of these is less certain or at least different. This report is an abridged version of CRS Report R42095, Federal Capital Offenses: An Overview of Substantive and Procedural Law, without some of the discussion, the footnotes, and much of the attributions of authority and quotations found there. |
Since early 2010, the Eurozone has been facing a major debt crisis. The governments of several countries in the Eurozone have accumulated what many consider to be unsustainable levels of government debt, and three—Greece, Ireland, and Portugal—have turned to other European countries and the International Monetary Fund (IMF) for loans in order to avoid defaulting on their debt. The crisis now threatens to spread to Italy and Spain, respectively the third and fourth largest economies in the Eurozone. Greece has been at the center of the Eurozone debt crisis. It has the highest levels of public debt in the Eurozone, and one of the biggest budget deficits. Greece was the first Eurozone member to come under intense market pressures and the first to turn to other Eurozone member states and the IMF for financial assistance. Over the past year, the IMF, European officials, the European Central Bank (ECB), and the Greek government have undertaken substantial crisis response measures. At the behest of European leaders in July 2011, holders of Greek bonds have also indicated that they will accept losses on their investments to alleviate Greece's debt payments in the short-run. If these plans are carried out, Greece will be the first advanced economy to default in almost half a century. The Greek debt crisis is of continuing interest to the U.S. Congress. The United States and the European Union (EU) have the largest economic relationship in the world, and there are concerns about how economic turmoil in Greece and the Eurozone more broadly could impact the U.S. economy. There has been particular concern about the exposure of U.S. financial institutions to Greece. Additionally, the United States has the largest financial commitment to the IMF of all the IMF members. Some Members of Congress have raised questions about whether Greece's IMF program is an appropriate use of IMF resources. These concerns have led to a number of congressional hearings and legislation in the 111 th and 112 th Congresses. This report explains the causes of the crisis, the policy responses to the crisis, and assesses crisis response measures to date. It also highlights the implications of the Greek crisis for the broader Eurozone debt crisis and EU integration. It concludes with an analysis of issues of particular interest to Congress, including the impact of the Greek debt crisis on the U.S. economy, the exposure of U.S. banks to Greece and other distressed Eurozone economies, and IMF involvement in the crisis. The Greek government has a long history of problems with its public debt—it has spent more than half the years since 1832, when it gained independence from the Ottoman Empire, in default. Economists point to several deeply entrenched features of the Greek economy and Greek society in general that have prevented sustained economic growth and created the conditions underlying the current crisis. Chief among these are pervasive state control of the economy, a large and inefficient public administration, endemic tax evasion, and widespread political clientelism (see text box below). An influx of capital at low interest rates during the 2000s and the global financial crisis of 2008-2009 further exacerbated these problems, straining public finances to an unsustainable degree. As Greece prepared during the 1990s to adopt the euro as its national currency, its borrowing costs dropped dramatically. Interest rates on 10-year Greek bonds were dropped by 18% (from 24.5% to 6.5%) between 1993 and 1999. Investors believed that there would be widespread convergence among countries in the Eurozone. This belief was reinforced by the policy targets, called convergence criteria, that countries had to meet in order to be eligible to join the Eurozone. Additionally, the common monetary policy was to be anchored by economic heavyweights, including Germany and France, and managed conservatively by the ECB. EU member countries were also to be bound by rules in the Stability and Growth Pact that limited government deficits (3% of GDP) and public debt levels (60% of GDP). These limits were to be enforceable through fines of up to 0.5% of GDP. All of these factors created new investor confidence in Greece and other Eurozone member states with traditionally weaker economic fundamentals compared to, for example, Germany. The influx of capital and pursuit of meeting convergence criteria did not result in a fundamental change in how the Greek economy was managed or in investments that increased the competitiveness of the economy. The Greek government took advantage of greater access to cheap credit to pay for government spending and offset low tax revenue. The government also borrowed to pay for imports from abroad that were not offset by exports overseas. Government budget and trade deficits ballooned during the 2000s (see Figure 1 ) and borrowed funds were not channeled into productive investments that would generate future growth, increase the competitiveness of the economy, and create new resources with which to repay the debt. Instead, the inflows of capital were used to fund current consumption that did not yield streams of revenue with which to repay the debt. EU policies that had been put in place to provide a check on the accumulation of public debt failed to do so. Since 2003, the EU has initiated more than 30 cases against members in violation of the fiscal rules set out in the Stability and Growth Pact, including Greece. Through this process, EU institutions have reprimanded member states in violation of the deficit and debt limits and pressured them to consolidate public finances. It has never imposed a financial sanction against a member state in violation of these limits, however. The Greek government's reliance on borrowing from international capital markets to pay for budget deficits and trade deficits left it vulnerable to shifts in investor confidence. If investors lost confidence in the Greek government's ability or willingness to repay its debt, they would stop lending to the government or charge interest rates that were higher than what the Greek government could afford. Lack of access to new funds would make it difficult for the government to borrow to repay existing debt as it became due (called rolling over its debt), meaning that the government would have to implement austerity measures quickly or risk defaulting on its debt. Starting in 2009, investor confidence in Greece's ability to service its debt dropped significantly. The global financial crisis of 2008-2009 and the related economic downturn strained the public finances of many advanced economies, including Greece, as government spending on programs, such unemployment benefits, increased and tax revenues weakened. Greece's reported public debt rose from 106% of GDP in 2006 to 126% of GDP in 2009. Additionally, in late 2009, the new government, led by Prime Minister George Papandreou, revealed that previous Greek governments had been under-reporting the budget deficit. The new government revised the estimate of 2009 budget deficit from 6.7% of GDP to 12.7% of GDP. This was shortly followed by rating downgrades of Greek bonds by major credit rating agencies. Allegations that Greek governments had attempted to obscure debt levels through complex financial instruments contributed further to a drop in investor confidence. Greece's 2009 budget deficit was subsequently revised upwards a number of times, finally to 15.4% of GDP. As investors became increasingly nervous that the Greek government's debt was too high, and that it would default on its debt, they started demanding higher interest rates for buying and holding Greek bonds (see Figure 2 ). Higher interest rates compensated investors for the higher risk involved in holding Greek government bonds, but they also drove up Greece's borrowing costs, exacerbated its debt levels, and caused Greece to veer towards default. European leaders, the IMF, and the ECB agreed that an uncontrolled, disorderly default on Greek debt would be extremely risky and should be avoided at all costs. They feared that such a default could spark a major sell-off of bonds of other Eurozone members with high debt levels and that European banks exposed to Greece and other Eurozone governments would not be able to weather losses on those investments. Fear of contagion and financial turmoil drove a major policy response by the Europeans, the IMF, the Greek government, and central banks in May 2010 to avoid a Greek default. When Greece again veered towards default more than a year later, a second crisis response was announced in the summer of 2011. To date, the policy responses have succeeded in avoiding a disorderly Greek default. They have been less successful in putting Greece on a clear path to recovery and containing the crisis. The first round of crisis response measures focused on financial assistance from the Eurozone and the IMF, paired with austerity measures and reforms implemented by the Greek government. Central banks also played a role in providing liquidity in the region. In May 2010, Eurozone leaders and the IMF announced a three-year package of €110 billion (about $158 billion) in loans to Greece at market-based interest rates. Of the €110 billion, the Eurozone countries pledged to contribute €80 billion (about $115 billion) and the IMF pledged to contribute €30 billion (about $43 billion). Disbursement of funds was made conditional on implementation of economic reforms, as discussed below. Seeking to prevent the spread of the crisis beyond Greece, EU leaders also created in May 2010 a new European mechanism for providing financial assistance to Eurozone member states under market pressures. The mechanism consists of two temporary, three-year lending facilities that could make loans totaling €500 billion (about $718 billion) to Eurozone members facing debt crises. EU leaders also suggested that the IMF could provide additional support. IMF and EU programs were subsequently provided to Ireland and Portugal (see Table 1 ). In March 2011, EU leaders agreed to create a permanent lending facility, the European Stability Mechanism (ESM), to replace the temporary facilities after they expired in mid-2013. As a condition of financial support from the IMF and Eurozone countries, the Greek government has undertaken ambitious fiscal consolidation measures and economic reforms. An austerity program outlined in May 2010 aimed to reduce the government's budget deficit by 11 percentage points through 2013, bringing it below 3% of GDP by 2014. The program's immediate objectives were a deep cut to public spending and enhanced revenue growth through tax increases and a crack-down on tax evasion. Most spending cuts have been to the civil service, including a reduction or freeze on civil service compensation and a civil service hiring freeze. On the revenue side, the government raised the average value-added tax rate and increased taxes on certain commodities (fuel, tobacco, and alcohol). The government aimed to raise additional revenues through strengthened tax collection and higher contribution requirements for tax evaders. The government has begun to implement healthcare and pension reforms deemed vital to consolidating public finances. The Greek pension system, considered one of the most generous in Europe, has long been a target of advocates of Greek economic reform. In July 2010, the parliament agreed to pension reform to increase the average retirement age and reformed how pension benefits would be calculated. Prime Minister Papandreou also launched a similar effort to reduce expenditures and strengthen accountability in what is considered an inefficient Greek healthcare system. Healthcare reforms have included a reduction in total expenditures and consolidation of hospitals. Structural reforms pursued in 2010 to boost Greek competitiveness were focused on the rigid and highly fragmented labor market. The ECB and the U.S. Federal Reserve (the "Fed") have also played a role in responding to the crisis. The ECB announced in May 2010 that, for the first time, it would start buying European government bonds in secondary markets to increase confidence and lower bond spreads for Eurozone bonds under market pressure. Between May 2010 and June 2011, the ECB purchased government bonds totaling €78 billion (about $112 billion), with the bulk purchased in the summer of 2010. Market analysts estimate that more than half (€45 billion, about $65 billion) of the ECB's bond purchases were Greek bonds. The ECB has also provided substantial liquidity support to private banks in Greece and other countries in the Eurozone, and has provided more flexibility in doing so than it did before the crisis. ECB liquidity support for Greek banks climbed from €47 billion (about $68 billion) in January 2010 to €98 billion (about $141 billion) in May 2011, roughly 40% of Greece's 2011 GDP. The Fed has supported the crisis response by re-establishing temporary reciprocal currency arrangements, known as swap lines, with several central banks in order to increase dollar liquidity in the global economy. These swap lines had been previously used during the global financial crisis. The swap lines were set to expire but have been subsequently extended until August 2012 amid continuing concerns about the Eurozone. While the swap lines were used most heavily immediately after the Fed re-established them, there has not been any amount outstanding on the swap lines between the winter of 2010 and summer of 2011. Starting in the spring of 2011, it became clear that the Greek economy was contracting more severely than expected and would require more assistance in order to avoid defaulting on its debt. After requiring Greece to adopt additional austerity measures, EU officials, the ECB, and the IMF debated for several weeks about what a second package for Greece would include. They quickly reached an agreement after a "speculative attack" on Italy in July 2011 (a rapid sell-off of Italian bonds, resulting in rising bond spreads on Italian bonds). European officials decided that in addition to more austerity measures and financial assistance, the holders of Greek bonds would also share in the crisis response by accepting some losses on their investments. As economic conditions worsened in the spring of 2011, the Greek parliament approved an additional round of austerity measures and structural reforms in June 2011. These reforms were necessary to get the next disbursement of funds from the original Eurozone-IMF financial assistance package, as well as for securing a second assistance package. The cornerstone of Greece's so-called medium-term fiscal strategy (MTFS) is a consolidation program through 2015 worth €28 billion (about $40 billion, 12% of GDP), including €6.5 billion (about $9 billion, 2.9% of GDP) of additional spending cuts and revenue measures to be implemented in 2011. In all, the MTFS, together with previously announced measures, is designed to bring the government budget deficit down to 0.9% of GDP by 2015. The newly proposed consolidation measures aim primarily to reduce over-staffing in the public sector, improve the financial performance of state-owned enterprises, and streamline social transfers. The other major component of the new fiscal strategy—and its most contentious—is an ambitious privatization and public real estate development program designed to raise €50 billion (about $72 billion) by 2015, including €15 billion (about $22 billion) by 2013. Concerns about the Greek government's administrative capacity have led to discussions that the sale of public assets will be, quite unusually, overseen by an independent privatization authority, which is expected to include EU and IMF representatives. In July 2011, European leaders announced a second financial assistance package for Greece totaling €109 billion ($157 billion). This second financial assistance program will provide loans to Greece on more favorable terms than the first package (lower interest rate and longer maturities), as well as extend the maturities on existing Eurozone loans to Greece. At the time of the announcement, it was unclear whether the IMF would be contributing to the second financial assistance package. The official European communiqué called on the IMF to "continue to contribute to the financing of the new Greek program" but subsequent news reports indicated that the IMF would refrain from contributing to the second package. To help contain the crisis, European leaders also announced that they would make the EFSF more flexible. Instead of just providing loans, they announced that the EFSF will be able to provide precautionary lines of credit to countries under market pressures, finance the recapitalization of Eurozone banks, and buy bonds in secondary markets with the consent of the ECB. These changes need to be ratified by national parliaments. In July 2011, European leaders and the Institute for International Finance (IIF), an association of private financial institutions, announced that holders of Greek bonds would contribute €50 billion (about $72 billion) through 2014 to the crisis response. Specifically, they would participate, on a voluntary basis, in bond exchanges and bond rollovers (€37 billion, about $53 billion) and debt buybacks (€12.6 billion, about $18 billion) to lower Greek debt payments over the short-term. The IIF designed a menu of options for the bond exchanges and rollovers and expect 90% of private creditors to participate. Those that do participate are expected to take a loss of 21% in the net present value of their bond holdings. When the exchanges and swaps are carried out, the major credit rating agencies are expected to classify the Greek government as officially in default, since bondholders will not get paid in full and on time as specified in the original bond contracts. The policy responses to Greece's debt crisis have not been taken lightly, and they have been reached only after months of negotiations among the ECB, Eurozone leaders, the IMF, and the Greek government. The policy measures aimed to prevent a disorderly Greek default, to restore debt sustainability in Greece, and to prevent the spread of the crisis to other Eurozone countries and the global economy. To date, they have succeeded in the first objective, but have had limited success in the second two. Providing financial assistance to Greece has been controversial. Many Eurozone countries, including Germany, had to overcome considerable political resistance to providing support to Greece. Opponents of EU assistance to Greece expressed exasperation with the idea of rescuing a country that, in their perspective, has not exercised budget discipline, had failed to modernize its economy, and had allegedly falsified financial statistics. Opponents also raised the issue of moral hazard and wished to avoid setting a "bail out" precedent. Likewise, providing IMF funds to Greece sparked intense debate, because the IMF has not lent to developed countries in recent decades and the IMF program for Greece is quite large relative to the size of its economy. Economic reforms have also been difficult for the Greek government for domestic political reasons. Papandreou's Panhellenic Socialist Movement (PASOK) came to office in October 2009 on a platform of social protection, promising to boost wages, improve support for the poor, and promote redistribution of income. The policies his government has since pursued to cut the budget deficit have required a full-scale retreat from these campaign pledges and are proving increasingly difficult to see through. Tens of thousands of public sector workers and their supporters have taken to the streets to protest the reforms. An opinion poll in June 2011 indicated that close to 50% of Greeks wanted parliament to reject new austerity measures, with only 35% in favor of parliamentary approval. Unemployment in Greece more than doubled between 2008 and 2011, rising from 7.7% to 15.8%. The inclusion of bondholders in the crisis response in July 2011 signaled a major shift in the approach to responding to the crisis, which previously had focused primarily on the provision of financial assistance to Greece and economic reforms in Greece. Private sector involvement in the crisis had long been resisted by some European officials and the ECB due to fears that it would spark broader contagion in the Eurozone. Others, including German Chancellor Angela Merkel, felt that the costs of the crisis should be shared with private creditors and not borne by Greek citizens and European taxpayers alone. The policy responses have effectively prevented a disorderly default by the Greek government. Greece has continued to pay its debts in full and on time. Investors are expected to take losses on their investments, but a plan has been laid out with input from the private sector, and is expected to proceed in a controlled manner. To date, the policy response has not put Greece on a clear path to recovery. In July 2011, the IMF estimated that Greece's public debt increased substantially between 2010 and 2011, from 143% of GDP to 166% of GDP. It also forecasted that Greece's debt will rise again in 2012 to 172% of GDP, and only start declining in 2013. Most analysts agree that the path to debt sustainability in Greece has been hampered by lack of growth in the Greek economy. Growth would lower Greece's debt and deficit levels as a percentage of GDP, make investors more inclined to resume lending to Greece, and offset the contractionary effects of fiscal reforms, making them more politically palatable. However, fostering short-term growth in the Greek economy has not been a central feature in the policy response to date, and growth in the economy is proving elusive, with the economy contracting at a faster rate than expected. In May 2010, the IMF estimated that the Greek economy would contract by 2.9% in 2011. Revised IMF estimates now project a sharper contraction for 2011 of 3.9%. Growth also contracted by 4.5% in 2010. Growth is proving difficult because austerity measures have depressed domestic sources of growth. Moreover, Greece cannot easily rely on exports for expanding its economy. As a member of the Eurozone, it cannot depreciate its currency against its major trading partners to help spur exports. Additionally, the policy responses to Greece's debt crisis have not provided enough assurance to bond markets to prevent the spread of the debt crisis to other Eurozone countries. Nervousness about Greece has caused bond spreads to rise for other Eurozone members with weak public finances. Higher borrowing costs exacerbate their debt situation. In December 2010, Ireland turned to the IMF and EU for financial assistance, with Portugal following in April 2011 (see Table 1 ). In the late summer of 2011, interest rate spreads on Spanish and Italian bonds started to rise. Belgium, Cyprus, and even France, whose fiscal position had been widely viewed as stable, have also come under scrutiny. There are different, but not mutually exclusive, views on why the policy responses to Greece's debt crisis failed to put a stronger "firewall" around the country and prevent the spread of the crisis. Some fault European leaders for failing to act decisively during the crisis. It has been argued that their slow, piecemeal approach to the crisis response, and public disputes about appropriate crisis response measures, have exacerbated investor anxiety rather than reassured markets. It may also be the case that the crisis spread not because of what was happening in Greece per se, but simply because other Eurozone countries faced fundamental fiscal challenges that were unsustainable. For example, Spain suffers from a serious housing bubble; Ireland, a bloated banking sector; and Portugal, a decade of anemic growth. Greece has a small economy, accounting for only 2.4% of total Eurozone GDP, but the implications of its crisis are far-reaching. Fundamentally, Greece's crisis has exposed some of the fears expressed by economists when the Eurozone was created. They worried about the tensions that could be created by a group of different countries sharing a common currency and monetary policy, while maintaining national fiscal policies. Greece's debt crisis showed that these concerns were valid and that European leaders and EU institutions were not prepared to swiftly respond to such a crisis. The Greece crisis has sparked larger discussions about how to resolve the tensions between a common monetary policy with national fiscal policies, while keeping the monetary union intact. Greece's crisis has also raised a number of more specific economic and political implications, detailed below: First, the policy responses to Greece's debt crisis have set precedents for how the debt crises in other Eurozone countries have been handled. The original crisis response for Greece focused on the provision of IMF and European financial assistance, in combination with austerity and structural reforms. This policy response was contentious and took weeks to negotiate. When Ireland and Portugal needed assistance, however, their programs were easier to negotiate, because Greece served as a template for designing the crisis response. Now that bondholders are being asked to share in the response to Greece's crisis response by taking losses on their investments, markets are concerned that there will be losses on Irish and Portuguese bonds in the future. European officials deny this to be the case. Second, Greece's crisis has exacerbated concerns about the health of the fragile European financial sector. Several large European banks, such as BNP Paribas, Société Générale, Deutsche Bank, UniCredit, and Intesa, are believed to be major private holders of Greek bonds. There have been continuing concerns about how these banks would be able to absorb losses on Greek bonds should Greece default or restructure its debt, particularly given widespread concerns that European banks may be undercapitalized. Specifically, there are concerns that the crisis could be transmitted through the European financial sector, triggering broader instability and requiring governments to recapitalize banks. European officials conducted two rounds of "stress tests" on European banks in June 2010 and July 2011. These tests examined how well European banks could absorb losses on distressed Eurozone bonds. Most banks performed well under the various scenarios laid out in the tests, but some questioned whether the tests were stringent enough. Third, Greece's debt crisis has created new financial liabilities for other European countries. Eurozone countries have extended bilateral loans to Greece, and made financial commitments to the broader European Financial Stability Facility (EFSF). If these financial commitments are called on, they could substantially raise the debt levels in Eurozone countries, many of which are grappling with their own debt problems. For example, France's total financial commitment to the rescue packages is 8% of GDP. Increasing the size of the EFSF, as some argue is necessary to give it the firepower it needs to respond to a potential crisis in Italy, for example, could increase France's commitments to 13% of GDP. If these commitments were called upon, France's debt level could rise to above 100% of GDP. Some argue that these commitments explain, at least in part, why French bond spreads have started to widen. Fourth, the Greek crisis has highlighted the policy constraints on members of the Eurozone. Many analysts have suggested that Greece would be better off if it could exit the Eurozone and issue a new national currency. A new national currency, devalued against the euro, could spur Greek exports and help growth return to the economy. As long as Greece is a member of the Eurozone, it does not have the exchange rate in its policy toolkit for responding to the crisis. Others, including the Papandreou government, argue that leaving the Eurozone would be a terrible economic decision for Greece, triggering a severe banking and financial crisis. They add that because Greece's debt burden is denominated in euros, a new, devalued national currency would increase the value of its debt in terms of national currency. Fifth, the Greek crisis has sparked a broader re-examination of EU economic governance, in order to improve the long-term functioning and stability of the currency union. The EU has been working on new legislation that would introduce significant reforms to economic governance. A proposed package of reform measures would strengthen enforcement of the Stability and Growth Pact, introduce greater surveillance of national budgets by the European Commission, and establish an early warning mechanism that would prevent or correct macroeconomic imbalances within and between member states. Sixth, Greece's debt crisis has posed challenges to and opportunities for deeper EU integration. In some ways, the crisis has highlighted limits to EU integration, revealing fundamental disagreements between member states about how much EU integration is desirable and highlighting the power that member states, particularly Germany and France, still leverage compared to EU institutions. On the other hand, the crisis has spurred tighter integration, through increased powers of the ECB and the creation of a permanent European lending facility. The Greek debt crisis has been an ongoing source of concern for some Members of Congress. The crisis has been referenced on the House and Senate floor a number of times, led to committee hearings, and resulted in legislation. Member concerns have concentrated on two aspects of the crisis: (1) the impact on the U.S. economy, particularly U.S. financial institutions; and (2) the appropriateness of IMF involvement in responding to the Greek crisis. Comparisons between the U.S. and Eurozone debt situations are addressed in CRS Report R41838, Sovereign Debt in Advanced Economies: Overview and Issues for Congress , by [author name scrubbed]. The bilateral economic relationship between the EU and the United States is one of the largest and strongest in the world, and economic turmoil in Greece and the broader Eurozone could have negative implications for the U.S. economy. At the start of the crisis, it was expected that austerity measures would slow growth in Europe and lead to a loss of confidence in the euro, causing a depreciation of the euro relative to the U.S. dollar. Both of these factors would depress demand for U.S. exports to the Eurozone and increase U.S. imports from the Eurozone, causing the U.S. trade deficit to widen. Likewise, slower growth rates in Europe could cause U.S. investors to look increasingly towards emerging markets for investment opportunities. On the other hand, a weaker euro could make European stocks and assets look cheaper and more attractive, attracting U.S. capital to the Eurozone. Figure 3 shows that even though growth has lagged in Greece, Ireland, and Portugal, the strong economic performance in the Eurozone "core" countries, including Germany, France, and the Netherlands, drove strong growth in the Eurozone through the first quarter of 2011. Real GDP growth in the Eurozone was 2.0% relative to the same quarter in the previous year in the second, third, and fourth quarters of 2010. Real growth increased to 2.5% in the first quarter of 2011, compared to the first quarter of 2010. Data releases for the second quarter of 2011, however, suggest that growth in the Eurozone may be starting to slow. There are a number of factors that affect the euro-dollar exchange rate (including U.S. policies, such as quantitative easing), and there has not been a clear, sustained depreciation in the euro against the dollar since the start of the crisis. Figure 4 shows upwards and downward swings in the euro-dollar exchange rate since May 2010, when Greece's financial assistance package was announced. As the crisis has continued, however, increased perceptions of risk have affected U.S. financial markets. Concerns focus on the interconnectedness of the U.S. and EU financial sectors, and the threat of the crisis spreading to larger Eurozone countries, including Spain or Italy. If the crisis does spread, the impact on the U.S. economy could be greater. Given the interconnectedness of the U.S. and European financial sectors, another source of concern is how much U.S. banks could lose if Greece or other Eurozone countries were to default on their debts, or, in other words, how "exposed" U.S. banks are to Greece and other vulnerable Eurozone countries. Direct exposure of U.S. banks to the Greek government is relatively small. According to the Bank for International Settlements (BIS), it totaled $1.5 billion in December 2010. Direct U.S. exposure to Greece more generally, including the Greek government and the Greek private sector, was $7.3 billion in December 2010. However, U.S. banks may be more heavily exposed to Greece through what the BIS calls "other potential exposures." The BIS defines "other potential exposures" as derivative contracts, guarantees, and credit commitments. U.S. bank exposure to Greece through these more indirect channels totaled an estimated $34.1 billion in December 2010, more than four times its direct exposure to Greece. By comparison, European banks have more direct exposure to Greece, and relatively less exposure through more indirect channels, than U.S. banks (see Figure 5 ). It is generally believed that for the Eurozone, "other potential exposures" primarily captures bank exposure through credit default swaps (CDS). CDSs provide insurance against default; if Greece defaulted on its debt, the sellers of CDS on Greek debt would be required to make payments to the buyers of CDS on Greek debt. Analysts disagree about whether the BIS data overstates U.S. exposure to Greece through CDSs, or provides an accurate estimate. Because the Greek bond exchanges and rollovers announced in July 2011 are to be provided on a voluntary basis, it is not expected to trigger payment on CDS contracts. Broader contagion of the Greek debt crisis to the Eurozone poses a greater risk to U.S. banks. U.S. banks are much more heavily exposed to the other Eurozone countries under market pressure, particularly Italy, than they are to Greece (see Figure 6 ). The BIS reports that while direct U.S. bank exposure to Italy was $36.7 billion in December 2010, "other potential exposures" exceeded $230 billion. Total U.S. bank exposure to Greece, Ireland, Italy, Portugal, and Spain, including "other potential exposures," is $641 billion. U.S. bank exposure to Greece and other vulnerable Eurozone countries is only one part of total U.S. financial system exposure. Money market, pension, and insurance funds could also be exposed to Greece and other vulnerable Eurozone countries, but information on the exposures of these funds is limited. Likewise, data on secondary exposures, such as U.S. bank exposure to German banks, which are in turn exposed to Greek banks, is limited. Depending on the exposure of non-bank financial institutions and exposure through secondary channels, U.S. exposure to Greece and other Eurozone countries could be considerably higher. There is some indication that U.S. financial institutions have responded to the ongoing economic turmoil in Europe by cutting their exposure to the region. It is reported that U.S. money funds, for example, have withdrawn all but extremely short-term lending to banks in the Eurozone. It is also reported that they have reduced the availability of credit to Eurozone institutions, even in stronger countries such as France. Of the 187 members of the IMF, the United States has the largest financial commitment to the institution. The IMF program for Greece has been supported by the Administration, but some Members of Congress have expressed concern about whether Greece's IMF program is an appropriate use of IMF resources. The IMF program for Greece is unusual for a number of reasons. First, the IMF has not generally lent to developed countries in recent decades. Second, the IMF loan to Greece is unusually large. The IMF has general limits on the size of its programs, but reserves the right to lend in excess of these limits in "exceptional" situations. The IMF loan to Greece represents exceptional access to IMF resources, at about 3,200% of Greece's IMF quota. IMF quotas are the main financial commitments that countries make upon joining the IMF, and are broadly related to their size in the global economy. Third, because there are questions about the solvency of the Greek government, there is concern that the IMF is providing resources to a country that will not be able to repay its debt to the IMF and other creditors. On the other hand, others argue that the IMF program for Greece is not unusual. The IMF lends to countries facing balance-of-payment difficulties, and it is widely agreed that Greece was facing substantial balance-of-payments problems when the original rescue program was agreed to in May 2010. Greece, as a member of the IMF, is entitled to draw on IMF resources, pending approval by the IMF management. Greece followed standard IMF procedures for obtaining the loan. The IMF also points out that the size of the loan to Greece is large, but that the policy reforms required of Greece to access the funds are just as large. They add that the IMF has several safeguards in place to protect IMF resources, including making the disbursement of funds conditional upon economic reforms. They also argue that the IMF has a strong historical record of countries meeting their repayment obligations. Member concerns about IMF resources being used to "bail out" Greece led to the passage of legislation in the 111 th Congress as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law in July 2010 ( P.L. 111-203 ). Section 1501 of the law requires U.S. representatives at the IMF to oppose loans to high- and middle-income countries with large public debt levels (greater than 100% of GDP) if it is "not likely" that they will repay the IMF. Prospective IMF loans to low-income countries are exempted from this requirement. If the IMF does approve a loan to a high- or middle-income country despite U.S. opposition, the law requires the Treasury Department to report regularly to Congress about conditions in that country. These reports would discuss the debt status of the country, economic conditions affecting its vulnerability, and its debt management status. The law currently applies to a very small number of countries. According to IMF data from April 2011, only nine countries in the world meet the conditions set out in the legislation. Some argue that the impact of the law will be limited, because the ability of a country to repay the IMF is already a fundamental requirement for IMF approval of a loan. Others argue that there could be instances in which the IMF and Treasury Department have different views on the likelihood of a country repaying the IMF. The law would have greater influence in these instances. Other legislation was introduced in the 111 th Congress in response to the Greek debt crisis, but did not become law. For example, H.R. 5299 and S. 3383 , among other provisions, called on the Treasury Secretary to oppose any IMF loans to EU member states until all EU member states had public debt levels less than or equal to 60%. These pieces of legislation did not move out of committee. Continuing concerns about use of IMF resources in the Greek debt crisis likely contributed, at least in part, to the introduction of legislation into the House ( H.R. 2313 ) and Senate ( S.Amdt. 501 ; S. 1276 ). These pieces of legislation call for rescinding the U.S. financial commitments to the IMF approved by Congress in 2009. The Senate voted against the amendment on June 29, 2011. The House version of the legislation has been referred to committee. The language to rescind U.S. commitments to the IMF approved in 2009 is also included in a draft FY2012 State and Foreign Operations appropriations bill, posted on the House Appropriations website. | The Eurozone is facing a serious sovereign debt crisis. Several Eurozone member countries have high, potentially unsustainable levels of public debt. Three—Greece, Ireland, and Portugal—have borrowed money from other European countries and the International Monetary Fund (IMF) in order to avoid default. With the largest public debt and one of the largest budget deficits in the Eurozone, Greece is at the center of the crisis. The crisis is a continuing interest to Congress due to the strong economic and political ties between the United States and Europe. Build-Up of Greece's Debt Crisis In the 2000s, Greece had abundant access to cheap capital, fueled by flush capital markets and increased investor confidence after adopting the euro in 2001. Capital inflows were not used to increase the competitiveness of the economy, however, and European Union (EU) rules designed to limit the accumulation of public debt failed to do so. The global financial crisis of 2008-2009 strained public finances, and subsequent revelations about falsified statistical data drove up Greece's borrowing costs. By early 2010, Greece risked defaulting on its public debt. Policy Responses with Limited Success EU, European Central Bank, and IMF officials agreed that an uncontrolled Greek default could trigger a major crisis. In May 2010, they announced a major financial assistance package for Greece, and the Greek government committed to far-reaching economic reforms. These measures prevented a default, but a year later, the economy was contracting sharply and again veered towards default. European leaders announced a second set of crisis response measures in July 2011. The new package calls for holders of Greek bonds to accept losses, as well as for more austerity and financial assistance. These responses have prevented a disorderly Greek default, but the prospects for Greek recovery remain unclear. The economy is contracting more severely than expected, and, as a member of the Eurozone, Greece cannot depreciate its currency to spur export-led growth. Unemployment is close to 16%. Additionally, the policy responses have not contained the crisis. Ireland and Portugal turned to the EU and IMF for financial assistance. In the summer of 2011, interest rates on Spanish and Italian bonds rose sharply. Broader Implications Greece's economy is small, but its crisis exposes the problems of a common currency combined with national fiscal policies. Additionally, its crisis set precedents for responding to crises in other Eurozone countries; highlighted concerns about the health of the European financial sector; created new financial liabilities for other Eurozone countries struggling debt; and sparked reforms to EU economic governance. It has also revealed tensions among EU member states about the desirability of closer integration. Issues for Congress Impact on the U.S. economy: U.S. exports to the EU could be impacted if the crisis slows growth in the EU and causes the euro to depreciate against the dollar. Through the first quarter of 2011, growth in the Eurozone was strong, but it may be starting to weaken. There has not been a clear depreciation of the euro against the dollar since the start of the crisis. As the crisis continues, increased perceptions of risk are impacting U.S. financial markets. If the crisis spreads in the Eurozone, the impact on the U.S. economy could be much greater. Exposure of U.S. banks: U.S. banks have little direct exposure to Greece ($7.3 billion), but other potential exposures (derivative contracts, guarantees, and credit commitments) to Greece are much higher ($34.1 billion). U.S. banks are more heavily exposed to Spain and Italy, with direct and other potential exposures totaling nearly $450 billion. IMF involvement: Some Members of Congress are concerned about IMF involvement in the Greek crisis. In 2010, Congress passed legislation aimed at limiting IMF support for advanced economies (P.L. 111-203). In 2011, legislation was introduced in the House and the Senate to rescind some U.S. contributions to the IMF (H.R. 2313; S.Amdt. 501). The Senate voted down this legislation in June 2011. |
The United States has long distinguished temporary migration from settlement migration. The Immigration and Nationality Act (INA) provides that foreign nationals may be admitted to the United States temporarily or may come to live permanently. Those admitted on a settlement basis are known as immigrants or legal permanent residents (LPRs), while those admitted on a temporary basis are known as nonimmigrants. Nonimmigrants are admitted for a designated period of time and for a specific purpose. Nonimmigrants include a wide range of people, such as tourists, foreign students, diplomats, temporary agricultural workers, exchange visitors, internationally-known entertainers, foreign media representatives, intracompany business personnel, and crew members on foreign vessels. U.S. immigration policy, embodied in the INA, presumes that all aliens seeking admission to the United States are coming to live permanently. As a result, nonimmigrants must demonstrate that they are coming for a temporary period and for a specific purpose. The U.S. Department of State (DOS) consular officer, at the time of application for a visa, as well as the Department of Homeland Security (DHS) immigration inspectors, at the time of application for admission, must be satisfied that the alien is entitled to a nonimmigrant status. The burden of proof is on the applicant to establish eligibility for nonimmigrant status and the type of nonimmigrant visa for which the application is made. If a nonimmigrant in the United States wishes to change from one nonimmigrant category to another, such as from a tourist visa to a student visa, the foreign national must file a change of status application with the U.S. Citizenship and Immigrant Services (USCIS) in DHS. If the foreign national leaves the United States while the change of status is pending, the foreign national is presumed to have relinquished the application. This report begins with a discussion of the policy tensions surrounding temporary admissions. It follows with a synthesis of the nonimmigrant categories according to the purpose of the visa. It discusses the periods of admission and length of stay and then summarizes grounds for inadmissibility and removal as well as reasons for termination of status. It also describes the circumstances under which nonimmigrants may work in the United States. The second portion of the report analyzes trends in temporary migration. It describes changes over time in nonimmigrant visas issued and nonimmigrant admissions. Various data on nonimmigrants who establish residence in the United States are also discussed. The report concludes with two detailed tables analyzing key admissions requirements across all nonimmigrant visa types. Interest in nonimmigrant visas as a group soared immediately following the September 11, 2001, terrorist attacks, which were conducted by foreign nationals admitted to the United States on temporary visas. At that time, policy makers raised a series of questions about aliens in the United States and the extent to which the federal government monitors their admission and presence in this country. The Enhanced Border Security and Visa Entry Reform Act ( P.L. 107-173 ), provisions in the Homeland Security Act ( P.L. 107-296 ), and provisions in the Intelligence Reform and Terrorism Prevention Act of 2004 ( P.L. 108-458 ), for example, included broad reforms of immigration law to tighten procedures and oversight of aliens temporarily admitted to the United States. Legislative activity, nonetheless, usually focuses on specific visa categories. The temporary worker provisions as well as the foreign student provisions have garnered considerable interest over the years. In addition, legislative revisions to temporary visa categories have usually occurred incrementally. For example, in the 111 th Congress several laws included provisions addressing aspects of temporary admissions, including Division A, Title XVI, §1611 of P.L. 111-5 , which required those employers receiving Troubled Asset Relief Program (TARP) funding to comply with more rigorous labor market rules when recruiting temporary foreign workers, and P.L. 111-230 , which temporarily increased certain fees by $2,000 to $2,250 per nonimmigrant. This report, however, does not track legislation. There is agreement that temporary migration is important to the U.S. economy and cultural life. There is also agreement that temporary migration should be managed more effectively. While revisions to temporary migration do not stoke the same intensity of debate that reform of permanent immigration or mechanisms for legalization do, they do provoke some controversies and concerns. The arguments sketched below are illustrative of the policy tensions surrounding temporary migration generally. In 2009, the United States had a positive $21.9 billion trade surplus in travel and tourism spending because foreign visitors spent more in the United States than U.S. tourists spent abroad. International students contribute nearly $20 billion to the U.S. economy through their expenditures on tuition and living expenses, according to the U.S. Department of Commerce. Almost 70% of all international students' primary funding comes from sources outside of the United States. Expanding temporary worker programs would boost economic output and create new middle class job opportunities for native-born Americans. The user fees paid by foreign nationals on temporary visas do not cover the costs of maintaining the aging infrastructures at ports of entry, nor do they cover the costs for managing the flow of 163 million annual admissions to the United States. The concentration of inspection activity at the border means that significant resources must be present in order to ensure efficient operations. Inefficiencies not only cause congestion, but they can be costly to businesses, both at the border and in the interior. Temporary workers have a deleterious effect on the salaries, compensation, and working conditions of U.S. workers, especially during periods of high unemployment. Tourism and international education and cultural exchange programs foster democratic principles and spread American values across the globe. Foreign visitors to the United States bring energy, ideas, and often fresh perspectives. U.S. employers 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. The ability to hire foreign temporary workers is an essential ingredient for economic growth and is typically based on the human capital needs of the national economy. Appropriately designed temporary worker visas strengthen natural security by re-directing potentially unauthorized migrants into guest workers, relieving the pressure on the border, and enabling DHS Customs and Border Protection (CBP) to focus on terrorists, organized criminals, and violent felons. National security may be put at risk when there is a high volume of nonimmigrants. There is considerable pressure to provide rapid processing of nonimmigrant visas and temporary admissions. Expedited processing, however, can lead to missed opportunities for interdicting threats. It is estimated that each year, hundreds of thousands of foreign nationals overstay their nonimmigrant visas and, as a consequence, become unauthorized aliens. The most recent estimates range from 31% to 57% of the unauthorized population, or approximately 3.3 million to 6.2 million nonimmigrant overstays. DHS Office of Immigration Statistics (OIS) published a report estimating that 1.8 million nonimmigrants had established residence in the United States in 2008. Not only are their ties to the United States tenuous, long-term temporary residents may also weaken support for the common good (e.g., public investments in education, infrastructure, and social programs) among the citizenry. That each of these arguments has some basis in fact is due to the multiplicity of temporary migration categories and their divergent purposes. Positive attributes of one nonimmigrant category may not apply to another. Similarly, critiques of one nonimmigrant category may not hold for another. There are 24 major nonimmigrant visa categories, and 87 specific types of nonimmigrant visas are issued currently. Most of these nonimmigrant visa categories are defined in §101(a)(15) of the INA. These visa categories are commonly referred to by the letter and numeral that denotes their subsection in §101(a)(15); for example, B-2 tourists, E-2 treaty investors, F-1 foreign students, H-1B temporary professional workers, J-1 cultural exchange participants, and S-4 terrorist informants. These temporary visas may be grouped under the broad labels described below. Ambassadors, consuls, and other official representatives of foreign governments (and their immediate family and servants) enter the United States on A visas. Official representatives of international organizations (and their immediate family and servants) are admitted on G visas. Those nonimmigrants entering under the auspices of the North Atlantic Treaty Organization (NATO) have their own visa categories. Aliens who work for foreign media use the I visa. B-1 nonimmigrants are visitors for business and are required to be seeking admission for activities other than purely local employment or hire. The difference between a business visitor and a temporary worker also depends on the source of the alien's salary. To be classified as a visitor for business, an alien must receive his or her salary from abroad and must not receive any remuneration from a U.S. source other than an expense allowance and reimbursement for other expenses incidental to temporary stay. The B-2 visa is granted for temporary visitors for "pleasure," otherwise known as tourists. Tourists, who are encouraged to visit as a boon to the U.S. economy, have consistently been the largest nonimmigrant class of admission to the United States. A B-2 nonimmigrant may not engage in any employment in the United States. Many visitors, however, enter the United States without nonimmigrant visas through the Visa Waiver Program (VWP). This provision of the INA allows the Secretary of Homeland Security to waive the visa documentary requirements for aliens coming as visitors from countries that meet certain statutory criteria. Currently, foreign visitors from 36 countries have VWP privileges. In FY2009, 16.2 million people entered under the VWP, constituting 50.5% of all temporary visitors and 44.9% of all nonimmigrant admissions. The border crossing card (BCC), or "laser visa," is issued to citizens of Mexico to gain short-term entry (up to six months) for business or tourism into the United States. It may be used for multiple entries and is good for at least 10 years. Mexican citizens can get a laser visa from the Department of State's Consular Affairs if they are otherwise admissible as B-1 (business) or B-2 (tourism) nonimmigrants, and the laser visa issued is a combined BCC/B-1/B-2 nonimmigrant visa. Current rules limit the BCC holder to visits of up to 30 days within the border zone of 25 miles along the border in Texas, New Mexico, and California and visits up to 30 days within a border zone of 75 miles in Arizona. Intracompany transferees who are executive, managerial, and have specialized knowledge and who are continuing employment with an international firm or corporation are admitted on the L visas. The L visas enable multinational firms to transfer top-level personnel to their locations in the United States for five to seven years. To be eligible for the L-1 visa, the foreign national must have worked for the multinational firm abroad for six months prior to transferring to a U.S. location. The spouses of L-1 nonimmigrants (i.e., L-2 nonimmigrants) are also allowed to work while they are in the United States. To qualify as an E-1 treaty trader or E-2 treaty investor, a foreign national first must be a citizen or national of a country with which the United States maintains a treaty of commerce and navigation. The foreign national then must demonstrate that the purpose of coming to the United States is one of the following: to carry on substantial trade, including trade in services or technology, principally between the United States and the treaty country; or to develop and direct the operations of an enterprise in which the national has invested, or is in the process of investing, a substantial amount of capital. Unlike most nonimmigrant visas, the E visa may be renewed indefinitely. Both the E-1 and E-2 visas require that a treaty exist between the United States and the principal foreign national's country of citizenship. The E-3 treaty professional visa is a temporary work visa limited to citizens of Australia. It is usually issued for two years at a time. Occupationally, it mirrors the H-1B visa in that the foreign worker on an E-3 visa must be employed in a specialty occupation. The major nonimmigrant category for temporary workers is the H visa. The current H-1 categories include professional specialty workers (H-1B) and nurses (H-1C). Temporary professional workers from Canada and Mexico may enter according to terms set by the North American Free Trade Agreement (NAFTA) on TN visas. There are two visa categories for temporarily bringing in seasonal workers (i.e., guest workers): agricultural guest workers enter with H-2A visas and other seasonal/intermittent workers enter with H-2B visas. The law sets numerical restrictions on annual admissions of the H-1B (65,000), the H-1C (500), and the H-2B (66,000); however, most H-1B workers enter on visas that are exempt from the ceiling. There is no limit on the admission of H-2A workers. Persons with extraordinary ability in the sciences, the arts, education, business, or athletics are admitted on O visas. Extraordinary ability in the fields of science, education, business, or athletics means a level of expertise indicating that the person is one of a small percentage who has risen to the very top of the field of endeavor. Extraordinary ability in the field of arts means distinction (i.e., renowned, leading, or well-known in the field of arts). Internationally recognized athletes or members of an internationally recognized entertainment group come on P visas. An athlete on a P-1 visa must have achieved significant international recognition in the sport. Those P-1 visas for a sports team must likewise be distinguished, and it requires the participation of athletic teams of international recognition. To qualify for P-1 visas for entertainment groups, the group must be internationally recognized, having a high level of achievement in a field evidenced by a degree of skill and recognition substantially above that encountered ordinarily. There are also P visas for performers in exchange programs and culturally unique performers. Aliens working in religious vocations enter on R visas. 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. The broadest category for cultural exchange is the J visa, which is also know as the Fulbright program. The J visa includes professors and research scholars, students, foreign medical graduates, teachers, resort workers, camp counselors, and au pairs who are participating in an approved exchange visitor program. The U.S. Department of State's Bureau of Educational and Cultural Affairs is responsible for approving the cultural exchange programs. J visa holders are admitted for the period of the program. Many foreign nationals on J-1 visas are permitted to work as part of their cultural exchange program participation. Their spouses and children may accompany them as J-2 nonimmigrants. The Q visa is an employment-oriented cultural exchange program, and its stated purpose is to provide practical training and employment as well as share history, culture, and traditions. U.S. Citizenship and Immigration Services (USCIS) approves the Q cultural exchange programs, and only employers are allowed to petition for Q nonimmigrants. The most common visa for foreign students is the F-1 visa. It is tailored for international students pursuing a full-time academic education. To obtain an F-1 visa, prospective students must be accepted by a school that has been approved by the government. They must also document that they have sufficient funds or have made other arrangements to cover all of their expenses for 12 months. Finally, they must demonstrate that they have the scholastic preparation to pursue a full course of study for the academic level to which they wish to be admitted and must have a sufficient knowledge of English (or have made arrangements with the school for special tutoring or to study in a language the student knows). Their spouses and children may accompany them on F-2 visas. Students on F visas are permitted to work in practical training that relates to their degree program, such as paid research and teaching assistantships. They are also permitted to engage in Optional Practical Training (OPT), which is temporary employment that is directly related to an F-1 student's major area of study. Those students who wish to pursue a non-academic (e.g., vocational) course of study apply for an M visa. Much like the F students, those seeking an M visa must show that they have been accepted by an approved school, have the financial means to pay for tuition and expenses and otherwise support themselves for one year, and have the scholastic preparation and language skills appropriate for the course of study. Their spouses and children may accompany them as M-2 nonimmigrants. Fiancés and fiancées of U.S. citizens may obtain K visas. The intending bride and groom must demonstrate that they intend to marry within 90 days of the date the K visa holder is admitted to the United States. Moreover, they must both be free to marry, and any previous marriages must have been legally terminated by divorce, death, or annulment. The V visa is a transitional nonimmigrant visa for immediate relatives (spouse and children) of LPRs who have had petitions to also become LPRs pending for three years. This visa enables families to reunite while they wait for their LPR visas to be processed. Only those immediate family members who filed Form I-130, Petition for Alien Relative, on or before December 21, 2000, are eligible. The law enforcement-related visas are among the most recently created. The S visa is used by informants in criminal and terrorist investigations. Victims of human trafficking who participate in the prosecution of those responsible may get a T visa. Victims of other criminal activities, notably domestic abuse, who cooperate with the prosecution are eligible for the U visa. Two miscellaneous nonimmigrant categories were some of the earliest nonimmigrant categories to be enacted. The C visa is for aliens traveling through the United States en route to another destination, and the D visa is for alien crew members on vessels or aircraft. The Departments of State (DOS) and Homeland Security (DHS) each play key roles in administering the law and policies on the admission of nonimmigrants. Although the DOS's Consular Affairs is responsible for issuing visas, the Customs and Border Protection (CBP) in DHS inspects all people who enter the United States. Both DOS consular officers (when the alien is petitioning abroad) and CBP inspectors (when the alien is entering the United States) must confirm that the alien is not ineligible for a visa under the so-called "grounds for inadmissibility" of the INA. These criteria categories are health-related grounds; criminal history; security and terrorist concerns; public charge (e.g., indigence); seeking to work without proper labor certification; illegal entrants and immigration law violations; lacking proper documents; ineligible for citizenship; and aliens previously removed. The law provides waiver authority of these grounds (except for most of the security and terrorist-related grounds) for nonimmigrants on a case-by-case basis. Specifically, §214(b) of the INA generally presumes that all aliens seeking admission to the United States are coming to settle permanently; as a result, most foreign nationals seeking to qualify for a nonimmigrant visa must demonstrate that they are not coming to reside permanently. During the period from FY1995 to FY2008, the §214(b) presumption was the most common basis for rejecting a nonimmigrant visa applicant. There are three nonimmigrant visas that might be considered provisional, in that the visa holder may simultaneously seek LPR status. As a result, the law exempts nonimmigrants seeking any one of these three visas—H-1 professional workers, L intracompany transfers, and V accompanying family members—from the requirement that they prove they are not coming to live permanently. Consistent with the grounds of inadmissibility, the legal status of a nonimmigrant in the United States may be terminated based upon the nonimmigrant's behavior in the United States. Specifically, the regulations list national security, public safety and diplomatic reasons for termination. If a nonimmigrant who is not authorized to work does so, that employment constitutes a failure to maintain a lawful status. A crime of violence that has a sentence of more than one year also terminates nonimmigrant status. Nonimmigrants who violate the terms of their visas or who stay beyond the period of admission are considered unauthorized aliens. As such, they are subject to removal proceedings and deportation. The time period that a visa lasts has two elements. One element addresses the question of how long the foreign national can stay in the United States. The other element answers the question of how long the visa is valid for entries into the United States. Congress has enacted amendments and the executive branch has promulgated regulations governing areas such as the length and extensions of stay. For example, A-1 ambassadors are allowed to remain in the United States for the duration of their service, F-1 students to complete their studies, R-1 religious workers for up to three years, and D crew members for 29 days. Many categories of nonimmigrants are required to have a residence in their home country that they intend to return to as a stipulation of obtaining the visa. The law actually requires J-1 cultural exchange visa holders to go home for two years prior to returning to the United States (with some exceptions). Separate from the length of stay authorized for the various nonimmigrant visas is the validity period of the visa issued by DOS consular officers. These time periods are negotiated country-by-country and category-by-category, generally reflecting reciprocal relationships for U.S. travelers to these countries. For example, a B-1 and B-2 visitor visa from Germany is valid for 10 years while B-1 and B-2 visas from Indonesia are valid for five years. The D crew member visa is valid for five years for Egyptians, but only one year for Hungarians. With the obvious exception of the nonimmigrants who are temporary workers (e.g., Hs, Os, Ps, Rs, and Qs), treaty traders (e.g., Es), or the executives of multinational corporations (e.g., Ls), most nonimmigrants are not allowed to work in the United States. Exceptions to this policy are noted in Table 2 , which follows at the end of this report. As stated above, working without authorization is a violation of law and results in the termination of nonimmigrant status. The H-2 visas require that employers conduct an affirmative search for available U.S. workers and that the U.S. Department of Labor (DOL) determine that admitting alien workers will not adversely affect the wages and working conditions of similarly employed U.S. workers. Under this process—known as labor certification—employers must apply to the DOL for certification that unemployed domestic workers are not available and that there will not be an adverse effect from the alien workers' entry. The labor market test required for H-1 workers, known as labor attestation, is less stringent than labor certification. Any employer wishing to bring in an H-1B nonimmigrant must attest in an application to the DOL that the employer will pay the nonimmigrant the greater of the actual compensation paid to other employees in the same job or the prevailing compensation for that occupation; the employer will provide working conditions for the nonimmigrant that do not cause the working conditions of the other employees to be adversely affected; and, there is no strike or lockout. Employers recruiting H-1C nurses must attest that their employment will not adversely affect the wages and working conditions of similarly employed registered nurses; H-1C nurses will be paid the wage rate paid by the facility to similarly employed U.S. registered nurses; the facility is taking significant steps to recruit and retain sufficient U.S. registered nurses; and the facility is abiding by specified anti-strike and layoff protections. There are no labor market tests for foreign nationals seeking these employment-related visas: E investors and treaty traders; J cultural exchange visitors; L intracompany transfers; O extraordinary ability in the sciences, arts, education, business, or athletics; P internationally recognized athletes or members of an internationally recognized entertainment group; Q international cultural exchange participants; and R religious workers. In the United States, data are collected on visa issuance and alien admission, both of which have strengths and shortcomings. While the number of visas issued shows the potential number of foreign nationals who may seek admission to the United States, admissions depict the actual entries of foreign nationals into the United States. The admissions data, however, simply enumerate port of entry inspections, thus counting frequent travelers multiple times. The lack of an exit registration system in the United States makes an actual count of out-migration impossible. Thus, the level of net migration of nonimmigrants (or the exact number of nonimmigrants in the United States at a given time) is unknown. The following sections present both admissions and issuance data for analysis of nonimmigrants by category and by geographic region. The latest estimates of the number of nonimmigrants who have established a residence in the United States are also presented. In FY2009, the DOS consular officers issued 5.8 million nonimmigrant visas. Combined, visitor visas issued for tourism and business comprised the largest group of nonimmigrants in FY2009—about 4.1 million, down from 5.7 million in FY2000. Cumulatively, all the categories of visas other than temporary visitors accounted for 29.3% of the visas issued in FY2009. Notable among the non-tourist categories of visas issued in 2009 were the 0.7 million students and exchange visitors (12.3%) and the 0.5 million temporary workers, managers, executives, and investors (8.7%). Figure 1 presents a more detailed breakdown of these categories and specifically displays students at 6.3%, exchange visitors at 6.0%, and workers at 5.9%. Visa issuances declined from their FY2001 peak of 7.6 million to a low point of 4.9 million in FY2003, and they stood at 5.8 million in FY2009. Figure 2 shows ebb and flow over the past decade, as the number of visas issued increased by 32.0% from FY2003 through FY2007 and then fell by 2.9% in FY2009. Visas issued to visitors for tourism fell by 40.7% from FY2000 to FY2003, rose by 34.3% from FY2004 to FY2007, and then dropped slightly, by 8.5%, in FY2009. The number of student visas issued experienced a less dramatic fluctuation, falling by 23.9% from FY2000 to FY2003 and then rising by 51.5% through FY2009. Visas issued to diplomats and to representatives of international organizations increased steadily, by 25.0% and 24.1%, respectively, over the decade. Trends in the number of employment-based nonimmigrant visas issued during this period illustrate the impact of the economic recession. These trends are more visible in Figure 3 , which excludes the B visas issued to tourist and business visitors. The number of temporary worker visas issued increased by 48.1% from 2000 to 2007 and then dropped by 33.9% from 2007 to 2009. Similarly, visas issued to intracompany transfers (Ls) rose by 38.2% from 2000 to 2007 and decreased by 19.8% from 2007 to 2009. The number of investor and treaty trader (E) visas issued increased by 11.3% from 2000 to 2007 and dropped by 14.8% from 2007 to 2009. Interestingly, the cultural exchange visas steadily increased by 36.7% from FY2000 to FY2007 and only dropped recently, by 8.1% in FY2009. The other source of nonimmigrant data, which comes from DHS's Customs and Border Protection (CBP), has two important caveats. First, not all nonimmigrant admissions are recorded in the CBP admissions data. Less than one-quarter of nonimmigrants entering the United States are required to fill out the arrival records, which are colloquially called I-94 admissions because I-94 is the immigration form number. Mexican nationals with border crossing cards and Canadian nationals traveling for business or tourist purposes are specifically excluded in the I-94 admission totals. Second, the I-94 data record the admissions rather than the persons. Since many types of visas allow people to depart and re-enter the United States, the CBP data record multiple admissions during the same year. During 2009, CBP inspectors tallied 163 million nonimmigrant admissions to the United States. Mexican nationals with border crossing cards and Canadian nationals traveling for business or tourist purposes accounted for the vast majority of admissions to the United States in FY2009, with approximately 126.8 million entries. The remaining categories and countries of the world contributed the 36.2 million I-94 admissions in FY2009. As with the visa issuance data, temporary visitors dominate the admissions data depicted in Figure 4 . Over three-quarters of all I-94 admissions were tourists in FY2009 and another 12.1% were business visitors. Similar to the visa issuance data, the other substantial categories are students (2.6%) and the employment based (e.g., workers (2.6%), executives and investors (2.0%), and cultural exchange (1.3%)). To more clearly observe the trends in temporary visitors, Figure 5 analyzes them separately. The FY2002-FY2009 trend data reveal that a large majority of such nonimmigrants are admitted for tourism (or "pleasure") purposes. The number of tourist entries on B-2 visas increased by 44.5% from FY2002 to FY2009, and the number of VWP tourists rose by 31.7% over this same period. The number of visitors for business, whether it was on B-1 visas or through the VWP, remained stable over the decade. The Guam Visa Waiver Program covers foreign nationals who were solely entering and staying in Guam for a period not to exceed 15 days. As expected, the FY2000-FY2009 trends in "other than visitor" nonimmigrant admissions depicted in Figure 6 are similar to FY2000-FY2009 trends in "other than visitor" visas issued depicted in Figure 3 . The admissions data, however, fluctuated less frequently and exhibited smoother trends. Overall, the I-94 admissions increased by 7.6%, from 33.7 million in FY2000 to 36.2 million in FY2009. Admissions peaked at 39.4 million in FY2008. The employment-based admissions mirrored the employment-based visas by tracking the economic recession. Admissions of temporary workers rose by 42.4% from FY2000 to FY2007 and then fell by 16.3% in FY2009. Similarly, admissions of intracompany transfers, exchange visitors, and treaty traders and investors increased by 24.4%, 39.1%, and 42.0%, respectively, and then dropped by 7.0%, 6.1% , and 4.0%, respectively. The I-94 admissions of students deviated from the overall trend and steadily rose by 36.0% over the decade, including a 13.1% gain from FY2007 to FY2009. As Figure 7 shows, there was a larger percentage of visas issued to foreign nationals from Asia than to any other region, accounting for 36.4%, or 2.1 million, nonimmigrant visas issued in FY2009. North American nonimmigrants (which included people from Mexico, Central America, and the Caribbean) accounted for the next-largest group of visa issuances at 22.2%, or approximately 1.3 million individuals. South America accounted for the third-largest groups with 19.9% of the nonimmigrant visa issuances, and Europe comprised 15.6% of the visas. Africa contributed 5.0% of the visas, while visa issuances for Oceania accounted for 0.8% of the total visa issuances in FY2009. When analyzing the times series data for visa issuances as depicted in Figure 8 below, the number of visas issued by DOS in FY2009 had fallen by 18.7%, from 7.1 million in FY2000 to 5.8 million in FY2009. Visas issued to foreign nationals from North America fell by 45.3%, from 2.4 million in FY2000 to 1.3 million in FY2009. Visas issued to Europeans also dropped from 1.1 million to 0.9 million (-17.1%) over the decade. Exhibiting a similar trend, visas issued to Asians decreased by 14.1%, from 2.5 million in FY2000 to 2.1 million in FY2009. South America was the only region of the world that saw an increase (of 40.0%), as visa issuances rose from 0.8 million in FY2000 to 1.2 million in FY2009. Foreign nationals from Europe had the plurality of I-94 admissions in FY2009, with 13.2 million admissions, or 36.5%, of all I-94 admissions ( Figure 9 ). That 26 of the VWP countries are European was likely a factor in that region's dominance of I-94 admissions. Although foreign nationals from Asia led in terms of visas issued in FY2009 at 36.4%, they contributed only 20.0%, or 7.2 million, I-94 admissions . In 2009, South Korea joined Brunei, Japan, and Singapore as the VWP participating countries from Asia. North American countries accounted for 29.3% of the I-94 admissions in FY2009, but these data do not incorporate the 126.8 million entries of Mexican nationals with border crossing cards and Canadian nationals traveling for business or tourist purposes. Figure 10 depicts the regional pattern of I-94 admissions into the United States between FY2000 and FY2009 and reveals a shift from Asia to North America. In FY2000, there were 8.7 million I-94 admissions from Asia and 7.8 million from North America. By FY2009, there were 10.6 million I-94 admissions from North America and only 7.2 million from Asia. The admission of foreign nationals from North America had increased by 36.2% in 10 years, while those from Asia fell by 17.2%. Furthermore, the European I-94 admissions increased from 12.4 million in FY2000 to 13.2 million in FY2009. The admissions of foreign nationals from Oceania reached 1.0 million for the first time in FY2008, and again in FY2009. As noted above, visas issued by DOS and I-94 admissions recorded by CBP capture different measures of temporary migration. Certain types of visas are valid for multiple entries and for multiple years. These time periods are negotiated country-by-country and category-by-category, generally reflecting reciprocal relationships for U.S. travelers to these countries. In addition, foreign visitors from 36 countries have VWP privileges, enabling visitors for business or for pleasure from these countries to seek admission to the United States without obtaining a visa in advance. One method of analyzing the relationship between visas issued and I-94 admissions is to calculate the ratio of the two data points. The overall ratio of visas issued by DOS to I-94 admissions recorded by CBP has fallen slightly from a 10-year high of 0.23 in FY2001 to 0.16 in FY2009. In other words, there were a total of 7.6 million visas issued and 32.8 million admissions in FY2001, in contrast to a total of 5.8 million visas issued and 36.2 million admissions in FY2009. This trend of ratios is depicted as the black line in Figure 11 . Figure 11 illustrates further that the ratio of visas to I-94 admissions is lowest for regions of the world that include most of the VWP countries: Europe and Oceania. The ratio of visas to I-94 admissions is highest for foreign nationals coming from Africa, and South America and Asia follow as a distant second and third, respectively. All three of the regions have ratios higher than the overall total. The ratio trend in Figure 11 suggests that foreign nationals coming from Africa—and to a somewhat lesser extent, those coming from South America and Asia—are not as likely to have visas that are valid for multiple entries and for multiple years as are foreign nationals from Europe and Oceania. Africans may also be less likely to make frequent return visits given the distance and cost of travel. Perhaps most interesting is the downward trend in the ratio of visas to I-94 admissions for foreign nationals from North America. Visas issued to foreign nationals from North America have fallen from a high of 2.8 million in FY2001 to a 10-year low of 1.3 million in FY2009. Meanwhile, the number of I-94 admissions rose from a 10-year low of 7.8 million in FY2000 to a high of 11.6 million in FY2007, and it stood at 10.6 million in FY2009. This change over time was due in large part to the issuance of biometric B-1 and B-2 border crossing cards to visitors from Mexico, which are good for 10 years. In FY2000 and FY2001, DOS issued 1.5 million B-1 and 2.0 million B-2 border crossing cards to Mexicans. The number of B-1 and B-2 border crossing cards issued to Mexicans fell to 0.7 million in FY2009. Not all nonimmigrant visas are for brief visits, and some lengths of stay are sufficiently long for a person to establish residence. As noted above, A-1 ambassadors are allowed to remain in the United States for the duration of their service, F-1 students are allowed to complete their studies, R-1 religious workers are allowed to remain for up to three years. The term "resident nonimmigrant" refers to those foreign nationals admitted on nonimmigrant visas whose classes of admission are associated with stays long enough to establish a residence (e.g., diplomats, students, and workers). In 2010, the DHS Office of Immigration Statistics (OIS) published a report that estimated the size and characteristics of the resident nonimmigrant population in the United States in 2008. OIS demographer Bryan Baker estimated the average daily population of resident nonimmigrants in the United States to have been 1.8 million in 2008. Of the 1.8 million nonimmigrants, 50.8% (0.93 million) were temporary workers and their families, 32.2% (0.59 million) were students and their families, 13.1% (0.24 million) were exchange visitors and their families, and 3.8% (0.07 million) were diplomats, other representatives, and their families. Figure 12 depicts these data. Given that the resident nonimmigrant population is dominated by workers, students, and exchange visitors, it is not surprising that OIS estimated that 25.6% were ages 18 to 24, and 54.6% were ages 25 to 44. More than half (55.7%) of resident nonimmigrants were male. As Figure 13 shows, slightly more than half (53%) of resident nonimmigrants were foreign nationals from Asian countries. Europe and North America comprised another 17.6% and 17.0%, respectively. The top six countries accounted for 56.8% of the total, and these countries are depicted in Figure 14 . As a major source country for both students and professional workers, India led with 21.9% of resident nonimmigrants in 2008. The other major sending countries were Canada (8.2%), South Korea (7.7%), China (6.6%), Mexico (6.6%), and Japan (6.0%). In addition to the estimates of the resident nonimmigrant population , OIS also reports on annual admissions of resident nonimmigrants. The latest report indicated that the number of resident nonimmigrant admissions decreased from 3.7 million in 2008 to 3.4 million in 2009, a 6.8% drop. Nonetheless, OIS states that the annual number of resident nonimmigrant admissions nearly tripled over the 20-year period from 1989 to 2009. As discussed above, most foreign nationals seeking to qualify for a nonimmigrant visa must demonstrate that they are not coming to reside permanently. Only three nonimmigrant visas permit the visa holder to simultaneously seek legal permanent residence (LPR) status: H-1 professional workers, L intracompany transfers, and V accompanying family members. Nonetheless, USCIS adjusted 667,776 foreign nationals to LPR status in 2009, which was 59.0% of all LPRs that year. Presumably, many of these foreign nationals had originally entered the United States as nonimmigrants. As Figure 15 illustrates, most of these adjustments are family members of citizens or persons who are in the United States legally. The H-1B visa often provides the link for foreign students (F, M) to become employment-based LPRs. Many anecdotal accounts tell of foreign students who are hired by U.S. firms as they are completing their programs. The employers obtain H-1B visas for the recent graduates, and if the employees meet expectations, the employers may also petition for the nonimmigrants to become LPRs through one of the employment-based immigration categories. Some policy makers consider this a natural and positive chain of events, arguing that it would be foolish to educate these talented young people only to make them leave to work for foreign competitors. Others consider this "F-1 to H-1B to LPR" pathway an abuse of the temporary element of nonimmigrant status and a way to circumvent the laws and procedures that protect U.S. workers from being displaced by immigrants. Research conducted in 2005 by B. Lindsay Lowell of the Institute for the Study of International Migration estimated that approximately 7% of foreign students adjusted to LPR status directly, and that an additional 7% to 8% of students adjusted to LPR status following a stint as an H nonimmigrant worker. In 2000, Lowell also published an analysis of all H-1Bs who ultimately became LPRs and estimated that about half of them did so at that time. Although the USCIS asks those who are adjusting to LPR status what their last nonimmigrant status was, there has been a data quality problem for many years. According to the DHS Office of Immigration Statistics, the data collected on last nonimmigrant status are missing on more than 40% of the adjustment of status records. Nonetheless, Jeanne Batalova of the Migration Policy Institute published analysis of the limited data that were available from FY1998 through FY2002. Batalova's analysis found that the percentage of foreign students adjusting remained rather flat, and may have diminished, but that the percentage of adjustments who were H nonimmigrant workers grew notably from FY1998 through FY2002. More recently, the conventional route has become Optional Practical Training (OPT), which is temporary employment that is directly related to an F-1 student's major area of study. In 2008, the Department of Homeland Security (DHS) reported that there were 23,000 F-1 foreign students engaged in OPT in science, technology, engineering, or mathematics (STEM) fields. To qualify for the 17-month extension, F-1 students must have received STEM degrees included on the STEM Designated Degree Program List, be employed by employers enrolled in E-Verify, and have received an initial grant of post-completion OPT related to such a degree. According to DHS, "This extension of the OPT period for STEM degree holders gives U.S. employers two chances to recruit these highly desirable graduates through the H-1B process, as the extension is long enough to allow for H-1B petitions to be filed in two successive fiscal years." It is estimated that each year, hundreds of thousands of foreign nationals overstay their nonimmigrant visas and, as a consequence, become unauthorized aliens. According to the latest estimates by the DHS Office of Immigration Statistics, about 10.8 million unauthorized aliens were living in the United States in January 2009, down from a peak of 11.8 million in January 2007. Reliable estimates of the number of nonimmigrant overstays are not available. The most recent sample estimates (based on 2006 data) range from 31% to 57% of the unauthorized population, or approximately 3.3 million to 6.2 million nonimmigrant overstays. The law and regulations set terms for nonimmigrant lengths of stay in the United States, typically have foreign residency requirements, and often limit what the aliens are permitted to do in the United States (e.g., gain employment or enroll in school). The two tables that follow, among other things, illustrate the complexity and diversity of policy on temporary admissions and the challenge for policy makers who may seek to revise it. Table 1 indicates whether the INA or regulations set any limits or requirements on how long nonimmigrants may stay in the United States and whether they must maintain a residence in their home country for each of the 87 visa classifications. Table 2 details whether there are any labor market tests or any limits on the numbers of aliens who can enter the United States according to each of the 87 visa classifications. Table 2 also presents DOS data on the number of nonimmigrant visas issued in FY2009. When a cell in the table is blank, it means the law and regulations are silent on the subject . | U.S. law provides for the temporary admission of various categories of foreign nationals, who are known as nonimmigrants. Nonimmigrants are admitted for a designated period of time and a specific purpose. They include a wide range of visitors, including tourists, foreign students, diplomats, and temporary workers. There are 24 major nonimmigrant visa categories. These visa categories are commonly referred to by the letter and numeral that denotes their subsection in the Immigration and Nationality Act (INA); for example, B-2 tourists, E-2 treaty investors, F-1 foreign students, H-1B temporary professional workers, J-1 cultural exchange participants, or S-4 terrorist informants. The U.S. Department of State (DOS) consular officer, at the time of application for a visa, as well as the Department of Homeland Security (DHS) inspectors, at the time of application for admission, must be satisfied that the alien is entitled to nonimmigrant status. The burden of proof is on the applicant to establish eligibility for nonimmigrant status and the type of nonimmigrant visa for which the application is made. Both DOS consular officers (when the alien is petitioning abroad) and DHS inspectors (when the alien is entering the United States) must confirm that the alien is not ineligible for a visa under the so-called "grounds for inadmissibility" of the INA, which include criminal, terrorist, and public health grounds for exclusion. U.S. Customs and Border Protection (CBP) inspectors in DHS tallied 163 million temporary admissions of foreign nationals to the United States during 2009. Mexican nationals with border crossing cards and Canadian nationals traveling for business or tourist purposes accounted for the vast majority of admissions to the United States, with approximately 126.8 million entries in FY2009. The remaining categories and countries of the world contributed 36.2 million admissions in FY2009. Since many types of visas allow people to depart and re-enter the United States, the CBP data record multiple admissions during the same year. In FY2009, DOS's consular officers issued 5.8 million nonimmigrant visas. Nonimmigrant visas issued abroad had dipped to 5.0 million in FY2004 after peaking at 7.6 million in FY2001. Combined, visitor visas issued for tourism and business comprised the largest group of nonimmigrant visas in FY2009, with about 4.1 million, down from 5.7 million in FY2000. Other notable groups were 0.7 million students and exchange visitors (12.3%) and 0.5 million temporary workers, managers, executives, and investors (8.7%). According to the most recent analysis, there were 1.8 million nonimmigrants who maintained a residence in the United States in 2008. Of the 1.8 million nonimmigrants, 50.8% (0.93 million) were temporary workers and their families, 32.2% (0.59 million) were students and their families, 13.1% (0.24 million) were exchange visitors and families, and 3.8% (0.07 million) were diplomats, other representatives, and their families. Although most nonimmigrants must demonstrate that they are not coming to reside permanently in the United States, many ultimately adjust their status to become legal permanent residents. The law and regulations set terms for nonimmigrant lengths of stay in the United States, typically have foreign residency requirements, and often limit what aliens are permitted to do in the United States (e.g., gain employment or enroll in school), but many observers assert that the policies are not uniformly or rigorously enforced. Achieving an optimal balance among major policy priorities, such as ensuring national security, facilitating trade and commerce, protecting public health and safety, and fostering international cooperation, remains a challenge. |
The franking privilege, which allows Members of Congress to transmit mail matter under their signature without postage, has existed in the United States since colonial times. During the 18 th and 19 th centuries, the franking privilege served a fundamental democratic role, allowing Members of Congress to convey information to their constituents about the operations of government and policy matters before Congress. Conversely, it also provided a mechanism for citizens to communicate their feelings and concerns to Members (prior to 1873, Members could both send and receive mail under the frank). Congress has also occasionally granted the privilege to various executive branch officers and others. Although the rise of alternative methods of communication in the late 19 th and early 20 th centuries have arguably reduced the democratic necessity of franking, Members of Congress continue today to use the frank to facilitate communication with their constituents. The franking privilege has carried an element of controversy throughout American history. During the 19 th century, the privilege was commonly attacked as financially wasteful and subject to widespread abuse through its use for other than official business. Although concerns about cost and abuse continued in the 20 th century, strong criticism of the franking privilege developed regarding the use of the frank as an influence in congressional elections and the perceived advantage it gives Members running for reelection. Contemporary critics of the franking privilege continue to express concerns about its cost and its effect on congressional elections. In attempting to balance a need for the franking privilege against charges of abuse, Congress has routinely amended the franking statutes. In general, the franking privileges granted at any time can be defined by five dimensions: who is entitled to frank mail, what is entitled to be franked, how much material can be sent, where the franked material can be sent, and when franked material can be sent. Changes to the franking privilege typically have not altered all of these dimensions, resulting in a variety of legislative arrangements of the privilege. Similarly, proposals for future changes may involve altering some, but not all, of these dimensions. Since 1789, Congress has statutorily altered the franking privilege numerous times. In addition, other bodies empowered to regulate congressional use of the frank—the House and Senate, the U.S. Postal Service, the House Administration Committee, the House Commission on Congressional Mailing Standards, the Senate Rules and Administration Committee, and the Senate Select Committee on Ethics and their predecessors—have exercised their authority to reform the governance of the franking privilege. The franking privilege has its roots in 17 th century Great Britain. The British House of Commons instituted it in 1660 and free mail was available to many officials under the colonial postal system. In 1775 the First Continental Congress passed legislation giving Members mailing privileges so they could communicate with their constituents, as well as giving free mailing privileges to soldiers. In 1782, under the Articles of Confederation, Congress granted Members of the Continental Congress, heads of various departments, and military officers the right to send and receive letters, packets, and dispatches under the frank. After the adoption of the Constitution, the First Congress passed legislation for the establishment of federal post offices, which contained language continuing the franking privilege as enacted under the Articles of Confederation. Under the Post Office Act of 1792, Members could send and receive under their frank all letters and packets up to two ounces in weight while Congress was in session. Subsequent legislation extended Member use of the frank to a specific number of days before and after a session, first by 10 days in 1810, then by 30 days in 1816, and finally to 60 days in 1825. The Act of 1825 also provided for the unlimited franking of newspapers and documents printed by Congress, regardless of weight. Scholarly work suggests that franked mail played an important role in national politics during the early 19 th century. Members mailed copies of acts, bills, government reports, and speeches, serving as a distributor for government information and a proxy for the then non-existent Washington press corps, providing local newspapers across the country with information on Washington politics. Because franking statutes allowed Members to both send and receive franked mail during much of the 19 th century, constituents could also mail letters to their Senators and Representatives for free. According to one scholar, Members spent up to three hours each day signing their names on envelopes, some Members franking up to 3,000 items daily when Congress was in session and occasionally hiring ghost-writers to sign their signature for them. This led one Member to describe the House of Representatives as a "bookbinder's shop." In 1845, Congress passed comprehensive franking legislation that instituted an accounting system, in which executive departments would pay for mail through general tax revenue, in hopes of easing the burden on the Post Office Department and reducing paid mail rates. Members of Congress continued to have their franking privilege paid for out of postal revenue. The accounting system was repealed in 1847 in favor of an annual appropriation to the Post Office Department to subsidize free and franked mail costs. After repeal of the accounting system, executive branch use of the frank reverted to the pre-1845 system. Popular perception of abuse of the franking privilege during the middle of the 19 th century led Congress to abolish the privilege in 1873. Members were provided with special stamps for official government communications, including responses to constituent letters, paid for out of the contingent funds of the House and Senate, but could not use free mail to contact constituents unsolicited. Over the following 22 years, the restrictions were gradually relaxed. In 1874, reduced postal rates for mailing the Congressional Record and bound public documents were approved. In 1875, Members were permitted to send printed speeches and reports for free under their frank, as well as seeds and agricultural reports. In 1891, Congress allowed Members to send mail under their frank to any officer of the federal government. Finally, in 1895, Congress restored the general right of Members to mail under the frank, including unsolicited mail to constituents. After the franking privilege was restored in 1895, Members were allowed to send (but no longer receive) "any mail matter to any Government official or to any person, correspondence, not exceeding one ounce in weight, upon official or departmental business." In 1904, the franking weight limit was raised to four ounces. In 1906, Congress explicitly prohibited the loan or use of the frank by anyone not legally entitled to use the frank, as well as use of the frank for the benefit of anyone not legally entitled to use it. In 1926, when the 69 th Congress consolidated and restated the general and permanent laws of the United States, both penalty mail and the franking privilege were placed in Title 39, the Postal Service. In 1953, in order to encourage fiscal responsibility and allow for more accurate financial management of the Post Office Department, Congress began reimbursing the Department for franking costs, which the Department would treat as revenue. In order to properly account for these costs, the Post Office Department also began systematic accounting of congressional franked mail costs. Beginning in 1961, Congress passed legislation that allowed Members to frank mail to "postal patrons," without a name or street address on the mailing. Strong objections to this policy, largely in the Senate, triggered a repeal in 1962. After a year of inter-chamber negotiation over such mailings, a compromise was reached: each chamber would handle "postal patron" mailings as it saw fit. That was the first instance of the House and Senate having different franking policies. The "postal patron" legislation also implicitly expanded the definition of "official business." Previously, a limited (albeit flexible) definition—including department documents to be forwarded and related correspondence—had been the common interpretation of the 1895 provisions. The House report accompanying the 1961 postal patron statute, however, suggested that the new law would help Members deliver "information on the issues pending before Congress" to their constituents. The nature of the postal patron provision meant that newsletters, questionnaires, and constituent reports might now be included in "official business." During this period, the Post Office Department was responsible for monitoring and regulating the use of free mailings. Post Office Department general counsel issued advisory opinions concerning use of the frank, and the Post Office Department attempted to collect postage due on mailings it found improper. Although the Post Office Department issued franking regulations, enforcement placed the Post Office in an awkward position, as an executive branch agency charged with monitoring the activities of Congress. In 1968, the Post Office Department stated that, although it would continue advisory opinions, "the final judge as to whether or not the franking privilege has been properly used must be the Congressman himself." In 1971, the Postal Service discontinued offering advisory opinions. With the Postal Service no longer offering advisory opinions, a series of lawsuits were brought in 1973 in response to alleged franking abuses by Members of Congress preceding the 1972 election, including a direct challenge to the constitutionality of the privilege. Some of the lawsuits contended that the franking statutes were being broken by Members of Congress; other lawsuits contended that the frank was unconstitutional because it gave incumbents an unfair advantage over challengers in congressional elections. In response to the legal challenges and a general sense that Congress was losing control over the franking privilege to judicial decisions, a new comprehensive franking statute was passed in 1973. It included tighter definitions of the types of mail eligible for the frank, prohibited Member mass mailings (defined as 500 or more pieces of substantially similar unsolicited mail) less than 28 days before primary and general elections in which the Member was a candidate for public office, and restricted the frankability of the Congressional Record to items that would be frankable if sent as letters. The statute created the Commission on Congressional Mailing Standards ("Franking Commission") to oversee the use of the frank in the House, and designated the Senate Select Committee on Standards and Conduct to make routine decisions regarding the use of the frank by that chamber. The Commission on Congressional Mailing Standards, consisting of six Members chosen by the Speaker, three from each major political party, including a chairman selected by the Speaker from among the Members on the Committee on House Administration, was authorized "to (1) issue regulations governing the proper use of the franking privilege; (2) to provide guidance in connection with mailings; and (3) to act as a quasi-judicial body for the disposition of formal complaints against Members of Congress who have allegedly violated franking laws or regulations." Franking reform continued in 1977, when the House and Senate amended their respective chamber rules. A temporary House Commission on Administrative Review, created in July 1976, recommended, with respect to the franking privilege, placing a ban on the use of private funds to print mailings distributed under the frank, limiting Members to six district-wide mailings per year, extending the pre-election mass mailing ban to 60 days from 28, and requiring that postal patron mailings be submitted to the Franking Commission for review. The commission's recommendations on the franking privilege were subsequently adopted by the House. The Senate adopted a resolution that extended the pre-election mass mailing ban to 60 days, placed a ban on the use of private funds to prepare franked materials, and required Senators to file public copies of postal patron mailings. Although the reforms of the 1970s addressed perceived problems of franking abuse, the cost of franking increased dramatically between FY1970 and FY1988. In response, Congress placed individual limits on Members' mail costs and required public disclosure of individual Member franking expenditures. In 1986, the Senate established a franking allowance for each Senator and for the first time disclosed individual Member mail costs. In 1990, the House established a separate franking allowance for its Members and required public disclosure of individual mail costs. The act also required the postmaster general to (1) monitor use of the frank by each Representative and Senator; (2) notify each Member on a monthly basis of the amount of his or her franking allowance used; and (3) prohibit the delivery of franked mail in excess of a Member's allowance. Tighter restrictions were also placed on Member mass mailings. Since October 1992, Members have been prohibited from sending mass mailings outside their districts. This action followed a U.S. court of appeals ruling that found the practice unconstitutional. Since October 1994, Senators have been limited to mass mailings that do not exceed $50,000 per session of Congress. Senators may not use the frank for mass mailings above that amount. In 1995, the House consolidated Members' allowances for clerk-hire, official office expenses, and mail costs into a single allowance, "Member's Representational Allowance" (MRA). Although a Representative's franking expenses were still restricted to the mail costs portion of the MRA, Members could use excess funds in the mail costs allocation for clerk-hire or office expenses. In 1999, House regulations were amended such that the combined funds in the MRA may be used without limitation in any one allocation category, subject to law and House regulation. In 1996, Congress extended the pre-election cutoff for Representative mass mailings to 90 days from 60, required each mass mailing to contain the statement, "This mailing was prepared, published, and mailed at taxpayer expense," and required that the Statement of Disbursements of the House contain Member mass mailing information. During the 109 th Congress, in response to allegations of misuse, the Committee on House Administration adopted a resolution restricting mass mailings made by House committees. The committee funding resolution for the 109 th Congress limited House committees to an aggregate franking cost of $5,000, and prohibited the use of committee funds for the production of material for a mass mailing unless the mailing fell under specific exceptions related to committee business. Under the new regulations, the chairman or ranking minority Member of a committee is required to submit a sample of the material to the House Commission on Congressional Mailing Standards for approval. In addition, no committee is permitted to send franked mail into a Member's district within 90 days of an election in which the Member is a candidate. Similar restrictions were adopted by the House Administration Committee in subsequent Congresses. During the 106 th Congress, the Committee on House Administration (at the time called the Committee on House Oversight) adopted a policy requiring advisory opinions for all unsolicited mass communications. Mass communications are defined as any unsolicited communication of substantial identical content to 500 or more persons in a session of Congress, and includes mailings, advertisements, automated phone calls, video or audio communications, and emails. Emails to constituents on subscriber lists, however, can be treated as solicited mailings not subject to the pre-election or mass mailing restrictions. During the 110 th Congress, the Committee on House Administration amended committee regulations to require that Members disclose the volume and cost of mass communications on a quarterly basis. The day-to-day operations of the Franking Commission are extensive. The commission offers both formal and informal advisory opinions on the eligibility for the frank of roughly 6,000 to 8,000 pieces of mail each year. Since its establishment in 1973, the commission has issued regulations and made rulings regarding, among other things, the allowable content of franked mail; the size, number, and placement of photographs in franked newsletters; and disclosure of Member mass mailings for public examination. The Franking Commission also handles, on average, about four or five formal complaints each year about particular pieces of franked mail. After a finding of fact, the commission is empowered to punish Members if appropriate. Inadvertent violations typically result in the Member simply reimbursing the House for the cost of the mailing. More serious violations can result in Members losing a portion of their representational allowance, or referral to the House for further action. Historically, Congress has regularly expanded and contracted the group of individuals granted the franking privilege. Currently, the franking privilege is granted (with differing restrictions) to Members of Congress, the Vice President, certain congressional officers, former Members of Congress, former Presidents, former Vice Presidents, widows of Presidents, and a relative of a Member who dies in office. In the past, Congress has granted the franking privilege to high-ranking officers in the executive branch, postmasters, military leaders, and soldiers during wartime. The Vice President is currently eligible for the franking privilege under similar terms as Members of Congress. The Vice President was first granted the franking privilege in 1792. Prior to 1873, the Vice President was treated as an official of the executive branch who had the franking privilege, and thus could use the frank without time or weight restriction. When the frank was restored in 1895, the Vice President was again granted the privilege. He was, however, subject to similar restrictions as Members. Currently, the secretary of the Senate, the sergeant at arms of the Senate, each of the elected officers of the House (other than a Member of the House), the legislative counsels of the House and Senate, the law revision counsel of the House, and the Senate legal counsel are granted the franking privilege. This follows a historical pattern of Congress granting the privilege to various officers of the legislative branch. Former Members of Congress are currently eligible for the franking privilege for the 90-day period immediately following the date on which they leave office. Prior to 1847, former Members of Congress were not granted any franking privileges. In 1847, Congress authorized former Members to send and receive public documents, letters, and packages under the frank until the first Monday of December following the expiration of their term of office. In 1863, the privilege for former Members was repealed; in 1872 it was restored. Former Members lost the privilege when Congress abolished all franking in 1873. In 1875, former Members were granted reduced rate postage for nine months after the expiration of their terms. In 1877, the date of expiration of the privilege was changed to the first day of December following the expiration of the Member's term in office. In 1895, Congress repealed the reduced rate privilege and restored the franking privilege. Former Members were again granted the franking privilege until December 1. After the Twentieth Amendment shifted the end of the congressional term to January 3 from March 4, Congress adjusted the date of expiration on the frank for Members of Congress to June 30 from December 1. In 1970, Congress authorized Members to send and receive as franked mail all public documents printed by order of Congress, until the last day of June following the expiration of their term in office. In 1973, Congress moved the expiration date to April 30. In 1975, Congress enacted the current law, authorizing the franking privilege for former Members for 90 days following the expiration of their term in office, and only for the sending of mail related to the closing of their office. Upon expiration of their term in office, Members who at some point during their career served as Speaker of the House are granted enhanced franking privileges. For five years after leaving Congress, former Speakers are granted the same franking privilege as current Members of Congress. This privilege entitles them to send as franked mail correspondence related to their official duties and to send and receive public documents ordered printed by Congress. The franking privilege was first authorized for a former Speaker in December 1970. H.Res. 1238 authorized a general allowance package for the outgoing Speaker, John W. McCormack, who was scheduled to retire from the House at the end of the 91 st Congress. McCormack was granted a franking privilege for 18 months beyond the 90 days granted to former Members. In 1974, Congress permanently authorized the franking privilege and other allowances to any former Speaker upon expiration of his/her term as a Representative, for "as long as he determines there is a need therefor." In 1993, Congress limited the period of time for use of the allowance to five years. Persons elected to Congress, prior to being sworn in, are currently granted the franking privilege on the same terms as sitting Members of Congress. Certain relatives of Members of Congress are eligible for the franking privilege when a Member dies in office. Originally enacted in 1968, this law extends the franking privilege to the spouse of a Member who dies in office. The privilege exists for 180 days and is to be used only to send mail related to the death of the Member. In 1981, the statute was broadened to allow a Member of the immediate family of the Member who dies in office to have the franking privilege in the event that there is no surviving spouse. Former Presidents have routinely been granted the franking privilege by statute, and in 1958 a general statute was passed providing franking privileges for all former Presidents. Since 1800, Congress has regularly, except for two instances, granted the franking privilege to widows of former Presidents. From 1789 until 1973, the privilege was granted through individual pieces of legislation. The first such grant was to Martha Washington in 1800. In 1973, Congress enacted general legislation to provide the franking privilege to all future surviving spouses of Presidents. Unlike Members of Congress and other federal officials legally entitled to use the frank, few restrictions regarding weight, substantive content, or volume of use have been placed on the franking privilege of former Presidents or widows of Presidents, particularly prior to 1973. As governed by the 1973 law, the current franking privilege for Presidents, spouses of Presidents, and surviving spouses of Presidents applies only to "nonpolitical mail sent within the United States and its territories." No limitation is imposed on volume of use or weight of franked mailings. Since 1873, officials in the executive branch have used penalty mail for official government correspondence. Prior to 1873, officials in the executive branch were occasionally granted the franking privilege: heads of departments, the President and Vice-President, and high ranking military officials. Early franking statutes granted the franking privilege to local postmasters. For many citizens seeking postmaster positions, the franking privilege was as important, or more important, than the salaried compensation for the job. When Congress chose to end the franking privilege for postmasters in 1845, over one-third quit. The privilege was restored in 1847. When the general franking privilege was abolished in 1873, postmasters were restricted to the use of penalty mail for official government communications. The first franking statute, passed by the Continental Congress in 1776, authorized free mail for Revolutionary soldiers. Similar legislation has occasionally been provided to American soldiers in other conflicts. Contemporary critics of the franking privilege generally articulate four objections: (1) the franking privilege is financially wasteful; (2) the franking privilege is abused for private and political gain; (3) the franking privilege gives unfair advantages to incumbents in congressional elections; and (4) the franking privilege has become outdated with the advent of other forms of communication. Although the word "frank" is derived from the Latin francus , meaning "free," the franking privilege is not free. Despite reforms that reduced official mail costs by over 85% between FY1988 and FY2015, critics continue to view the franking privilege as an unnecessary public expense. Overall congressional mail costs include official mail sent by Members (both regular and mass mail), committees, and chamber officers. During FY2015, Congress spent $8.3 million on official mail according to the U.S. Postal Service, representing slightly less than two-tenths of 1% of the $4.3 billion budget for the entire legislative branch for FY2015. House official mail costs ($6.8 million) were 82% of the total, whereas Senate official mail costs ($1.5 million) were 18% of the total. During FY2014, Congress spent $16.9 million on official mail. House official mail costs ($15.1 million) were 89% of the total, whereas Senate official mail costs ($1.8 million) were 11% of the total. These expenditures continue a historical pattern of Congress spending less on official mail costs during non-election years than during election years. However, analysis of monthly data on official mail costs indicates that, due to the structure of the fiscal year calendar, comparisons of election-year and non-election-year mailing data tend to overstate the effect of pre-election increases in mail costs, because they also capture the effect of a large spike in mail costs from December of the previous calendar year. Reform efforts during the past 30 years have reduced overall franking expenditures in both election and non-election years. Even-numbered-year franking expenditures have been reduced by over 85% from $113.4 million in FY1988 to $16.9 million in FY2014, while odd-numbered-year franking expenditures have been reduced by over 90% from $89.5 million in FY1989 to $8.3 million in FY2015. House mail costs have decreased from a high of $77.9 million in FY1988 to $6.8 million in FY2015. The Senate has dramatically reduced its costs, from $43.6 million in FY1984 to $1.5 million in FY2015. Concerns about the public expense of franking have existed virtually continuously since the earliest days of the nation. Two estimates made in the 1840s suggest that Congress was franking 300,000 letters and 4.3 million documents each year, with free mail accounting for more than half of the mail leaving Washington each day. These arrangements strained the Post Office Department. Congressional franking, combined with franking privileges granted to local postmasters and executive branch officials, meant that a significant portion of mail in the United States was posted for free. Because the Post Office Department was expected to generate revenue to cover costs, franked and other free mails forced the adoption of higher rates for paid mail. Memorials from many state legislatures urged Congress to restrict franking and reduce postage rates. Between 1840 and 1845, the postmaster general repeatedly asked Congress to abolish or restrict the franking privilege, or to have the government pay for free mail through general tax revenue instead of postal revenue. As with concerns about cost, critics have long objected to the franking privilege because of its abuse for illegal private and political gain. During the 19 th century, abuse of the franking privilege—either through loan of the frank to non-authorized users or its misuse by those entitled to the privilege—was common. Reports to Congress during the mid-19 th century routinely suggested that the laws prohibiting private use of the frank were universally "disregarded," most people possessing the privilege used it as a "private convenience for themselves and their friends," private companies regularly "secured envelopes with the frank on them," and that "a very small proportion of the matter transmitted through the mails [under the frank] ha[d] any reference to the actual business of Congress." John Quincy Adams, during his first year as a United States Senator (1803) noted that the franking regulations requiring all Senators to leave a copy of their signature with the local postal clerk for verification purposes were universally ignored. There is also the famous (and perhaps apocryphal) story of a Member franking his horse for transportation back home, claiming it was a "public document." The franking privilege of the postmasters was also valuable as a party-based patronage benefit, especially in the smaller offices. In 1840, Amos Kendall, auditor to the postmaster general, franked 13,000 letters to postmasters throughout the country, suggesting they subscribe to his newspaper, and implicitly threatening them politically if they did not. Contemporary regulations on the franking privilege severely restrict the types of overt franking abuse common in the 19 th century. Both the House and Senate require that Members receive an advisory opinion on all mass mailings. Contemporary critics of "abuse" of the franking privilege are often criticizing the incumbency advantage of the frank rather than abuse through the loan or illegal use of the frank. Although contemporary franking critics continue to voice concerns about the costs and abuses of the franking privilege, the most common contemporary criticism of franking regards its use in congressional elections, and the perceived advantage it gives incumbent Members running for reelection. Critics argue that the vast majority of franked mail is unsolicited and, in effect, publicly funded campaign literature. Critics also argue that incumbent House Members may spend as much on franked mail in a year as a challenger spends on his or her entire campaign. Critics also point out that franked mail costs are higher in election years than non-election years, indicating that Members may be using the frank in attempts to influence an election. Historically, although reformers of the franking privilege in the 19 th century were chiefly concerned with abuses that created unnecessary costs, the relationship between the frank and re-election was not unnoticed. Speeches in Washington, DC, were often delivered not for consumption by other Members, but for the purpose of publication and dissemination back in a Member's home district. Several observers noted that the objective was to send a signal to constituents that a Member was working hard on their behalf. Even when conceding that the franking privilege serves important purposes, some critics argue that these purposes have been outdated with modern technology. They point out that telephone, radio, television, and the Internet have expanded the mediums by which Members can communicate with their constituencies. Email now allows Members and constituents to communicate in written form without the marginal costs associated with letter writing. Defenders of congressional franking argue that the privilege continues to facilitate the same important democratic purposes—communication between citizens and representatives and the spreading of political news—that it served during the 18 th and 19 th centuries. In addition, proponents of franking argue that the rise of modern mass media has given the President certain media advantage over Congress, which can be partially counteracted by the franking privilege. Proponents of the franking privilege argue that the frank allows Members to fulfill their representative duties by providing for greater communication between the Member and an individual constituent. One defender of the frank has argued that "free transmission of letters on governmental business is directly connected to the well-being of the people because of the nature of the legislative function." Proponents of the franking privilege argue that representative accountability is enhanced by use of the frank. They contend that by regularly maintaining direct communication with their constituents, Members provide citizens with information by which they can consider current public policy issues, as well as policy positions on which voters can judge them in future elections. In addition, proponents argue that if legislative matters could not be easily transmitted to constituents free of charge, most Members could not afford to pay for direct communications with their constituents. Historically, the franking privilege was seen as a right of the constituents, not of the Member. When the franking statutes were first revised in 1792, a proponent argued that "the privilege of franking was granted to the Members ... as a benefit to their constituents." More generally, President Andrew Jackson suggested that the Post Office Department itself was an important element of a democratic republic: This Department is chiefly important as a means of diffusing knowledge. It is to the body politic what the veins and arteries are to the natural - carrying, conveying, rapidly and regularly to the remotest parts of the system correct information of the operations of the Government, and bringing back to it the wishes and the feelings of the people. Beyond direct communications with constituents about matters of public concern, proponents of franking argue that free use of the mails allows Members to inform their constituents about upcoming town-hall meetings, important developments in Congress, and other civic concerns. Without a method of directly reaching his or her constituents, proponents maintain that Members would be forced to rely on intermediaries in the media or significant personal costs in order to publicize information the Member wished the constituents to receive. Historically, the franking privilege has long been perceived as serving this role. In 1782, James Madison described the postal system as the "principal channel" that provided citizens with information about public affairs. The franking privilege allowed Congress to function as a central location for the dissemination of political news, and a large proportion of political news in the United States was delivered to citizens in the form of franked documents, reports, reprinted speeches, and proceedings of Congress. Scholars of Congress and the presidency have argued that the rise of mass media, particularly television media, have given the President a comparative advantage over Congress. While the President can employ the resources of the executive branch to promote his unitary message, individual Members of Congress lack the institutional resources to compete with the President and Congress as a whole lacks a unity of message. Proponents of franking argue that this puts Congress at an institutional disadvantage relative to the President. One way to maintain a balance between the President and the Congress, they argue, is to allow Members use of the franking privilege. In general, the franking privileges granted to Members at any given point in time can be defined by five dimensions: who is entitled to frank mail, what is entitled to be franked, how much material can be sent, where franked material can be sent, and when franked material can be sent. Changes to the franking privilege typically have not altered all of these dimensions at once, resulting in a wide variety of legislative arrangements of the franking privilege. Similarly, proposed options for future legislative changes may involve altering some, but not all, of these dimensions. Historically, the franking privilege has been expanded and contracted by Congress to cover as few as several hundred persons and as many as 10,000 or more. Currently, the franking privilege is limited to the Vice-President, Members of Congress, certain congressional officers, former Presidents, spouses of former Presidents, and widows of former Presidents. The frank is available for a limited period to former Members and certain relatives of former Members who die in office. Currently, there are no general restrictions regarding when the franking privilege may be used. Historically, Congress limited use of the privilege to when Congress was in session or specific dates surrounding the period when Congress was in session. Senators are currently restricted from mass mailing during the 60 day period prior to federal elections, and during the 60 period prior to primary elections in which they are a candidate for any public office. The restriction for Representatives is 90 days prior to federal or primary elections in which they are a candidate for any public office. In the past, Congress has not restricted the franking privilege prior to elections or has restricted it for shorter periods of time, such as 28 days. Current law, chamber rules, and committee regulations place substantial restrictions on the content of franked mail. The frank may not be used to solicit money or votes, and the materials being mailed cannot relate to political campaigns, political parties, biographical accounts, or holiday greetings. Current law also places specific regulations on the content of individual pieces of mail. Members are restricted in the number and placement of pictures of themselves, repeated use of their name, and the use of biographical material, most commonly found in constituent newsletters. Historically, there was less regulation on the content of franked mail. Historically, Congress has regulated the amount of franked mail Members may send in a variety of ways. During all of the 19 th century and most of the 20 th century, the total amount of franked mail individual Members could send was not limited. After the authorization of "postal patron" mailings, Members were limited to a specific number of mass mailings. Currently, Members are limited in their total amount of franked mail by cost. The House and Senate Appropriations Committees, and subsequently the respective chambers, determine the amount to be appropriated for each of the two bodies. Each Member receives an allotment from these appropriations. In the Senate, the allowance is administered by the Committee on Rules and Administration; in the House, by the Committee on House Administration. Representatives and Senators are authorized a specific dollar allotment for franked mail, according to a formula based on the number of addresses in their districts/states. In the Senate, the mail allowance is one of three allowances that comprise each Senator's "personnel and official expense accounts." The other two accounts provide funds for office staff and office expenses. Subject to law and Senate regulations, the combined funds may be used without limitation in any one allocation category. Since January 3, 1999, in the House the combined funds for each Representative's franked mail, office staff, and office expenses ("Members Representational Allowance") may be used without limitation in any one allocation category, subject to law and House regulation. Since October 1992, Representatives have been prohibited from sending mass mailings outside their districts. This action followed a U.S. court of appeals ruling that found the practice unconstitutional. Contemporary critics of the franking privilege have offered a number of suggestions to abolish or change the privilege. Several of these ideas have been incorporated in bills in recent Congresses. Among the ideas are the following proposals. Although the franking privilege has only been abolished once, bills for its abolition have been introduced regularly in Congress since the 1830s. Most proponents of abolishing the franking privilege, however, do not support a complete ban on free mail, and disagreement exists on what system would replace the frank. Some proponents advocate replacing the frank with a postage stamp allowance for Members as part of their representational allowance. This option, however, does not directly address contemporary concerns about the frank. Because all franking is now individually charged against Member expense accounts, switching to a stamp allowance would have only a symbolic effect as an abolition of the frank. A second option would be for Members to use the penalty mail system under the same restriction as other federal employees. This would restrict Members from sending any mail matter other than official correspondence in response to constituent requests. This option would likely reduce congressional mail costs significantly. It could also impair the ability of Members to communicate with their constituents. A ban on all unsolicited mass mailings could potentially save millions of dollars in congressional mail costs and reduce concerns about the effect of franked mass mailings on congressional elections. A related option would be to reduce the number of mailings that constitute a mass mailing to a smaller number from 500. H.R. 2687 introduced by Representative Ray LaHood during the 110 th Congress, would have effectively prohibited Representatives from mass mailing newsletters, questionnaires, or congratulatory notices. The prohibition would not have covered certain other types of mass mailings made by Members, including federal documents (such as the Congressional Record ) or voter registration information. The proposed legislation would have applied only to Representatives; it would not have affected mass mailings made by Senators. Similarly, H.R. 5151 , introduced in the 111 th Congress, would have restricted franked materials to documents transmitted under the official letterhead of Members. A ban on all unsolicited mass mailings could potentially save millions of dollars in congressional mail costs and reduce concerns about the effect of franked mass mailings on congressional elections. Unlike a ban on mass mailing, however, a ban on unsolicited mailings might be governed by rules similar to the House's current email policy, allowing unsolicited mass communications to constituents on a subscriber list. Opponents argue that a prohibition on unsolicited mail would restrict the ability of Members to communicate with their constituents. Bills to extend the current pre-election ban on mass mailings have been introduced in Congress in recent years, ranging from an extension of the prohibited period to 120 days prior to the general and primary elections to a year-long ban that would prohibit mass mailings during the second session of each Congress. Some critics of the franking privilege have raised concerns about its effect on elections and have advocated giving franking privileges to challengers in congressional elections. Advocates argue that giving the frank to challengers would reduce the incumbency advantage of Members of Congress by allowing non-incumbent candidates a similar ability to contact constituents. Opponents have argued that use of the frank is currently prohibited for political purposes and that challengers in congressional elections would inherently be using the frank for campaign purposes. Critics of the frank advocate reducing the overall mail allowance for both Senators and Representatives. Currently, each Senator's franking allowance is determined by a formula that gives a maximum allowance equal to the cost of one first-class mailing to every address in their state. Senate offices that exceed their allowance may supplement the allowance with official office account funds. Senators are, however, limited to $50,000 for mass mailings in any fiscal year. In the House, each Representative's mail allowance is combined with allowances for office staff and official office expenses to form the Member's Representational Allowance (MRA). Members may spend any portion of their MRA on franked mail, subject to applicable law and House regulations. Critics also suggest restricting Representatives to a total mass mailing limit, similar to the current restriction on Senate mass mail. Currently, individual Member franking costs are disclosed by both the House and Senate. In addition, all mass mailings contain the statement, "This mailing was prepared, published, and mailed at taxpayer expense." Advocates of increased disclosure support individual disclosure of all franking-related costs, not just mail costs. H.R. 5151 in the 111 th Congress, for example, would have required that current House disclosures include a break-down of expenses for each type of mass communication sent by Members. Other proponents propose putting the individual cost of each mass mailing on each piece of the mailing. H.R. 2788 , introduced in the 110 th Congress, would have required that each individual piece of franked mail contained in a mass mailing made by a Member of the House contain a statement indicating the aggregate cost of producing and mailing the mass mailing. Each piece of franked mail would have contained the statement, "The aggregate cost of this mailing to the taxpayer is____," with the blank space containing the total cost of producing and franking the mass mailing. The legislation would not have affected mass mailings made by Senators. Although the franking privilege has existed almost continuously since the founding of the nation, the legal restrictions on its use have routinely been altered by Congress. Two important trends emerge from this analysis. First, restrictions on the use of the frank— who is entitled to frank mail, what is entitled to be franked, how much material can be sent, where the franked material can be sent, and when franked material can be sent—have been both tightened and loosened by Congress throughout history. This reflects a normative ambiguity about the privilege, with Congress seeking to balance a perceived democratic need for the franking privilege against charges of abuse, wastefulness, and incumbency protection. Second, Members of Congress continue to use the frank to communicate with constituents, despite the rise of alternative forms of mass communication. Although illegal use of the frank has been largely curtailed, contemporary critics of the privilege continue to voice concerns about wastefulness and incumbency protection. Recent proposed changes to the franking privilege reflect these concerns, seeking to reduce the overall volume of franked mail and the impact of mass mailings on elections, while maintaining the ability of Members to effectively communicate with constituents. | The franking privilege, which allows Members of Congress to transmit mail matter under their signature without postage, has existed in the United States since colonial times. During the 18th and 19th centuries, the franking privilege served a fundamental democratic role, allowing Members of Congress to convey information to their constituents about the operations of government and policy matters before Congress. Conversely, it also provided a mechanism for citizens to communicate their feelings and concerns to Members (prior to 1873, Members could both send and receive mail under the frank). Congress has also occasionally granted the privilege to various executive branch officers and others. Although the rise of alternative methods of communication in the late 19th and early 20th centuries have arguably reduced the democratic necessity of franking, Members of Congress continue today to use the frank to facilitate communication with their constituents. The franking privilege has carried an element of controversy throughout American history. During the 19th century, the privilege was commonly attacked as financially wasteful and subject to widespread abuse through its use for other than official business. Although concerns about cost and abuse continued in the 20th century, strong criticism of the franking privilege developed regarding the use of the frank as an influence in congressional elections and the perceived advantage it gives incumbent Members running for reelection. Contemporary opponents of the franking privilege continue to express concerns about both its cost and its effect on congressional elections. In attempting to balance a democratic need for the franking privilege against charges of abuse, Congress has routinely amended the franking statutes. In general, the franking privileges granted to Members at any given point in time can be defined by five dimensions: who is entitled to frank mail, what is entitled to be franked, how much material can be sent, where franked material can be sent, and when franked material be sent. Historically, changes to the franking privilege typically have not altered all of these dimensions at once, resulting in a wide variety of legislative arrangements of the franking privilege. Similarly, proposed options for future legislative changes may involve altering some, but not all, of these dimensions. This report will be updated as legislative action warrants. See also CRS Report RS22771, Congressional Franking Privilege: Background and Recent Legislation, by Matthew E. Glassman; CRS Report RL34188, Congressional Official Mail Costs, by Matthew E. Glassman; and CRS Report RL34458, Franking Privilege: Mass Mailings and Mass Communications in the House, 1997-2015, by Matthew E. Glassman. |
Though only about three times the size of Washington, DC, and with a population of 4.7 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 regional stability and the free flow of goods and services essential to its existence. As a result, the nation is a firm supporter of both U.S. trade policy and the U.S. security role in Asia, but also maintains close relations with China. The 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 shifts in the political and social environment that may herald more political pluralism, including generational changes and an increasingly international outlook among Singaporeans. In May 2011, opposition parties claimed their most successful results in history, taking six of parliament's 87 elected seats, and garnering about 40% of the popular vote. Though this still left the PAP with an overwhelming majority in Parliament, the ruling party described the election as a watershed moment for Singapore and vowed to reform the party to respond to the public's concerns. 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, 89 and widely acknowledged as the architect of Singapore's success as a nation, resigned his post as "Minister Mentor" following the 2011 elections, citing a need to pass leadership 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. Singapore'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 public's demand for greater liberties for economic survival. 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. Although it has been elected by a comfortable majority in every election since Singapore's founding, the PAP "places formidable obstacles in the path of political opponents," according to the U.S. State Department's 2012 Country Report on Human Rights Practices. The report states that "the PAP maintained its political dominance in part by circumscribing political discourse and action." According to Amnesty International, defamation suits by PAP leaders to discourage opposition are widespread. The political careers of opposition politicians are marked by characteristic obstacles from the ruling party, including being forced to declare bankruptcy for failing to pay libel damages to prominent PAP members. Singapore's economy depends heavily on exports, particularly in consumer electronics, information technology products, pharmaceuticals, and financial services. The GDP per capita is $61,400 (2012 estimate). China, Malaysia, and the United States are Singapore's largest trading partners. The U.S.-Singapore Free Trade Agreement (FTA) went into effect in January 2004—the U.S.'s first bilateral FTA with an Asian country—and trade has burgeoned. In 2012, Singapore was the 17 th largest U.S. trading partner with $50 billion in total two-way goods trade, and a substantial destination for U.S. foreign direct investment. In 2012, U.S. exports to Singapore exceeded $30 billion, a historic high. Singapore was the largest U.S. trading partner in ASEAN in 2012, accounting for $31.4 billion in exports and $19.1 billion in imports. The U.S. trade surplus with Singapore is the fifth largest American surplus in the world. U.S. direct foreign investment in Singapore has increased more than 20%, exceeding $116 billion in cumulative investment in 2012. 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. With Japan's entry in the talks, the TPP participants represent a third of the world's trade. Singapore's record of championing rigorous trade pacts make it an important negotiating partner in pushing for a comprehensive agreement. Singapore has concluded at least 18 free trade agreements (FTAs) and is pursuing several more, including the Regional Comprehensive Economic Partnership (RCEP), a 16-nation group of Asian nations which is negotiating a free trade agreement at the same time some of its members are working on the TPP. Such agreements are relatively easy for Singapore to negotiate because, in addition to having a mature, globalized economy, it has virtually no agricultural sector and its manufacturing is limited to specialized sectors. The 2005 "Strategic Framework Agreement" formalizes the bilateral security and defense relationship. The agreement, the first of its kind with a non-ally since the Cold War, builds 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 agreement allows 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 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. As part of the agreements, squadrons of U.S. fighter planes are rotated to Singapore for a month at a time, and naval vessels make regular port calls. Changi Naval Base is the only facility in Southeast Asia that can dock a U.S. aircraft carrier. Singapore forces also train regularly in the United States. Security cooperation has continued to grow under the Obama Administration: the two sides have increased bilateral exercises and training, including combined air combat exercises for fighter units for the countries' air forces, as well as enhanced joint urban training at Singapore's sophisticated Murai Urban Training Facility. 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. It was also 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 a 10-month deployment in Southeast Asia. The stationing of the LCS, the first of four ships, 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 them 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. Singapore has been a strong champion of ASEAN, which helps Southeast Asia's mostly small countries to influence regional diplomacy, particularly vis-à-vis China. Renewed U.S. engagement 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. During an April 2013 visit to Washington, Prime Minister Lee advised the United States to strengthen its economic ties to the region and develop more trust with Beijing. 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. There 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. Although it has been elected by a comfortable majority in every election since Singapore's founding, the PAP "places formidable obstacles in the path of political opponents," according to the U.S. State Department's 2012 Country Report on Human Rights Practices. The report states that "the PAP maintained its political dominance in part by intimidating organized political opposition and circumscribing political discourse and action." According to Amnesty International, defamation suits by PAP leaders to discourage opposition are widespread. The PAP ideology stresses the government's role in enforcing social discipline and harmony in society, even at the expense of individual liberties. The political careers of opposition politicians are marked by characteristic obstacles from the ruling party, including being forced to declare bankruptcy for failing to pay libel damages to prominent PAP members. International watchdog agencies criticize Singapore's control of the press as well. In 2013, Reporters Without Borders ranked Singapore 149 th out of 179 countries in terms of press freedom, its worst performance ever on the index. 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. | 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 both U.S. international trade policy and the U.S. security role in Asia, but 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. 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. The 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 ever-increasingly international outlook among Singaporeans. In May 2011, opposition parties claimed their most successful results in history, taking six of parliament's 87 elected seats. Though this still left the PAP with an overwhelming majority in Parliament, the ruling party described the election as a watershed moment for Singapore and vowed to reform the party to respond to the public's concerns. In 2012, Singapore was the 17th largest U.S. trading partner with $50 billion in total two-way goods trade, and a substantial destination for U.S. foreign direct investment. The U.S.-Singapore Free Trade Agreement (FTA) went into effect in January 2004, and trade has burgeoned. In addition to trade, mutual security interests strengthen ties between Singapore and the United States. A formal strategic partnership agreement outlines access to military facilities and cooperation in counterterrorism, counter-proliferation of weapons of mass destruction, joint military exercises, policy dialogues, and shared defense technology. |
The Centers for Disease Control and Prevention (CDC) estimates that influenza ("flu"), aviral respiratory illness, causes 36,000 deaths and more than 200,000 hospitalizations in the UnitedStates each year. For many years, vaccination has been urged for those at highest risk of seriousillness from flu, such as older persons and those with chronic illnesses. Peculiarities of flu vaccineproduction, especially its finite shelf life (it is good only for the one season for which it is produced),have led to supply and demand imbalances in recent years. Overall demand for flu vaccine hasgrown over the past decade. But CDC reports that there have been vaccine surpluses each of the pastfive winters, and unused vaccine has been discarded. (See Table 1.) Within a season,maldistribution of vaccine may lead to shortages at particular times and places, despite an overallsurplus. Gauging demand from year to year in what is mostly a private-sector market is a matter ofboth art and science, an exercise fraught with difficulty. The shortage of flu vaccine in the fall of 2004 renewed discussion of the fragility of thenation's system for providing this potentially life-saving product. Some have expressed concern thatthis situation bodes ill for national preparedness for an influenza pandemic or a large-scalebioterrorism event. This report will describe the current system of flu vaccine production anddelivery, the causes of supply problems, and options for improvement. On October 5, 2004, Chiron (pronounced KÄ«Ì-ron), a California-based biotechnologycompany, notified U.S. health officials that British regulatory authorities had suspended productionof influenza ("flu") vaccine in its plant in Liverpool, England, due to vaccine safety concerns. Theplant was slated to provide between 46 million and 48 million doses of injectable flu vaccine(Fluvirin®) for the U.S. market for the imminent 2004-2005 flu season, almost half the plannednationwide supply of 100 million doses. Aventis-Pasteur (Aventis), a French-based company witha plant in Swiftwater, Pennsylvania, was slated to produce 52 million doses of its injectable fluvaccine (Fluzone®). After the Chiron suspension was announced, Aventis announced that its production for thisseason was on target, and could be augmented somewhat to a total of 58 million doses by continuingproduction through January 2005. An additional manufacturer, MedImmune, based in Maryland,produces a flu vaccine made of live virus for intra-nasal administration (FluMist,⢠also referred toas live attenuated influenza vaccine, or LAIV). MedImmune was slated to produce 2 million dosesfor the 2004-2005 season after the product was poorly received the prior year. The companyannounced that it could ramp up production somewhat, but because LAIV is a live virus product, itis not licensed for use in some of the high-risk priority groups identified by CDC. The DefenseDepartment sought to obtain doses of LAIV for its healthy recruits slated for overseas deployment,in order to assure force protection without consuming the limited civilian supply of injectablevaccine. The announcement of Chiron's suspension prompted CDC and its Advisory Committee onImmunization Practices (ACIP) to re-define the groups most at risk (enumerated in Table 2 ), to begiven priority for the available vaccine doses. CDC also activated its Emergency Operations Centerto coordinate nationwide tracking of available vaccine doses, high-priority individuals who mightneed them, and infections signaling the beginning of the winter flu season. Officials from theDepartment of Health and Human Services (HHS) and CDC repeated in public statements thatvaccine doses from Aventis would continue to roll off production lines for several months, and urgedthose at risk not to stand in long lines because they believed that there will not be futureopportunities to be vaccinated. On November 9, 2004, CDC announced an allocation plan todistribute the remaining vaccine doses to state health departments based on states' unmet needs. (1) The allocation plan wouldapply to Aventis doses that became available each week through December 2004 and January 2005. In addition, CDC developed clinician recommendations for the use of antiviral drugs . Theseare drugs that can be given before infection occurs as a preventive measure, or during illness tominimize serious complications. HHS estimated that 40 million doses of antiviral drugs would beavailable, including 7 million doses purchased by HHS to treat low-income individuals, and theremainder within the private sector. The Food and Drug Administration (FDA) sent a team to the Liverpool plant to determineif any of the affected Chiron vaccine lots could be salvaged, but announced on October 15, 2004 thatnone of the vaccine was safe for use. The FDA also sought to identify additional sources of vaccinefrom other manufacturers, domestically and abroad. (Both British and U.S. regulatory agencies arerequired to assure the safety and efficacy of the Chiron product, for export and import respectively.) On December 7, 2004, HHS announced that the FDA had authorized the use of a GlaxoSmithKlineinfluenza vaccine, Fluarix® (manufactured in Germany), in the United States under anInvestigational New Drug (IND) application, and had reached an agreement with the company topurchase 1.2 million doses for distribution to areas most in need. (2) Because the vaccine is notlicensed in the United States, the IND allowed it to be used as an investigational drug. Thosereceiving it would be required to sign a release form noting informed consent for use of theinvestigational product, and the company would be required to conduct enhanced monitoring of theproduct's use. In response to the shortage, the House Committee on Government Reform launched aninvestigation of the FDA to determine whether it knew or should have known of the impendingproduction failure, as its British counterpart did, since FDA is required to assure the safety andefficacy of this product for importation. The House Committee on Energy and Commerce launchedan investigation of the activities of HHS and Chiron leading up to the shortage. Also following announcement of the Chiron suspension, the Securities and ExchangeCommission (SEC) and the Justice Department launched inquiries into whether the company knewof the imminent failure of its annual production before its public announcement. In addition, severalclass-action stockholder lawsuits were filed against Chiron on the premise that the company had notfulfilled its disclosure obligations. States responded to the shortage by launching plans to locate and re-distribute or ration dosesof vaccine, and by pursuing widespread reports of price-gouging. Some states exercised authorityto prohibit administration of vaccine to non-priority individuals. Some localities held lotteries toapportion limited vaccine to those in priority groups. By early December 2004, some states werereporting that all those in priority groups who sought vaccine had received it, and that they had dosesremaining. In order to prevent possible wastage of vaccine, CDC sent an update to states onDecember 8, 2004, suggesting that they consider expanding vaccination recommendations to thoseoutside the priority groups, if circumstances warranted. A number of states that had earlier placedrestrictions on providers relaxed them in response. It is not uncommon for there to be a patchwork of vaccine shortages and surpluses at differenttimes and places in the course of a flu season, or for there to be early shortages that resolve into aneventual surplus at seasons' end. The causes of this paradoxical imbalance include the timing andseverity of the flu season, (which affect demand), the overall supply for the season, and the supplyat times of peak demand. (3) In early December 2004, CDC officials were reporting that the influenza season was off toa slow start, and a number of states were reporting a drop-off in demand for flu vaccine. Inmid-December 2004, the CDC published the results of two surveys. One found that as of November30, 2004, only about one-third of individuals in high-priority groups had been vaccinated, below thecoverage rate for the prior season. (4) The other survey of demand for vaccine, conducted by the HarvardSchool of Public Health, found that slightly less than two-thirds of seniors who sought to bevaccinated were successful, and that more than half of high-risk adults did not attempt to bevaccinated, some because they felt they would not be successful. (5) After the surveys werepublished, the ACIP reviewed the status of flu vaccine supply and issued revised guidelines forgroups that should receive vaccine, essentially restoring its pre-shortage recommendations. (6) The challenge for publichealth officials was to maintain demand among unvaccinated high-risk individuals as vaccinecontinued to be produced each week, while avoiding a surplus at year's end. Historically, manufacturers, distributors and providers have absorbed the cost of unusedvaccine. The cost of additional vaccine in 2004, when it was specifically requested by the U.S.government, would have to be borne by the U.S. government in this special circumstance. Somevaccine policy experts voiced concern about the possibility of a surplus, and discussion ensued aboutfinancial responsibility for vaccine doses that had not yet been delivered. A news report suggestedthat HHS would use federal funds designated for state immunization programs to purchase theinvestigational flu vaccine doses from Germany, thereby reducing the amounts available to supportchildhood immunization programs in states. (7) The CDC Director subsequently confirmed the use of the stateaccount but noted that it could potentially be reimbursed from other accounts. She also noted thatFY2005 appropriations had not yet been signed by the President and therefore were not available atthe time the purchase was arranged. (8) In FY2005 appropriations, Congress provided HHS with $100million to ensure year-round influenza vaccine production capacity, stating that the Secretary coulduse the funds for flu vaccine purchase if deemed necessary. (9) The flu vaccine supply for the 2005-2006 season became a matter of serious concern when,in early December 2004, British regulators extended their suspension of Chiron's Liverpool plantthrough March 2005. (10) While the action was intended to allow more time for Chiron's remediation efforts at the plant, manywere concerned that the company might not succeed in its efforts to return as a licensed U.S. supplierfor the upcoming season. It was reported that Aventis would be able to expand its production. Inaddition, HHS launched an unprecedented effort to license the GlaxoSmithKline vaccine in less thanone year, with the company saying it could supply 10 to 20 million doses for the U.S. market for2005-2006. The process typically takes several years. Another manufacturer, ID Biomedical ofCanada, sought FDA licensure for its flu vaccine but did not anticipate its availability in the U.S.before 2007. In general, vaccines, which are regulated as biologics by the FDA Center for BiologicsEvaluation and Research (CBER), are more tricky to produce than are drugs. Manufacturers mustsuccessfully grow the particular virus or other organism of interest while avoiding the growth ofother organisms that might contaminate the final product. Several peculiarities of the influenza virusitself and its production process make flu vaccine production especially complicated. There arenumerous points at which the process could fail, and has failed in recent years. The influenza virus changes over time. From year to year, the dominant strains of virus incirculation change, which is why we may get sick every year from flu, in contrast with havinglifelong immunity to more stable viruses such as measles. Each year in late winter, the FDA, withinput from the National Vaccine Advisory Committee and using surveillance information from theWorld Health Organization (WHO) and CDC, reviews virus strains in global circulation and selectsthree that are most likely to cause serious illness in the United States during the subsequent winterseason (i.e., one year hence). The chosen strains are incorporated into that next winter's trivalent fluvaccine, which typically contains at least one new strain each year. Strain selection may be basedon both the dominance and severity of strains in circulation, but may be limited by certain obstacles. For example, an especially virulent strain called Fujian was an obvious choice for the 2003-2004flu vaccine, but it could not be successfully grown in eggs in time to include it in the vaccine. Thisproblem was eventually surmounted, and based on its continuing circulation, the Fujian strain wasincluded in the 2004-2005 flu vaccine. To make large amounts of virus for vaccine production, the virus must be grown in fertilizedeggs. Large numbers of fertilized eggs are required each year to support vaccine production. Theymust be specially produced, assuring the health of the laying hens, appropriate sanitation, care intransport, incubation, and other actions as required by the FDA to assure vaccine safety and efficacy. This endeavor is far more complicated than the production of unfertilized eggs for food. Relianceon eggs and is a rate-limiting step in flu vaccine production, requiring many weeks for growing thevirus and extracting it from the eggs, and introducing contamination risks. Each year the current flu vaccine production system is a race against the clock. Strains mustbe selected by February in order that they can be grown, purified, processed and made into vaccine. Under optimal conditions vaccine is made in batches from August through November, barely makingit to market ahead of the annual influenza epidemic. Breakdowns in the process, especially oneoccurring in the fall as with the Chiron vaccine, can subvert the entire production volume. It isdifficult, if not impossible, to start over within a given season, so as with the Chiron situation, alarge-scale process failure can lead to complete loss of the entire season's vaccine production fromthat supplier. The flu vaccine production process can be optimized in a number of ways. A promisingoption is replacement of the cumbersome egg-growth step with cell culture methods, in which thevirus is grown in tubes or vats of certain cells. With this technique, growth is faster, more controlled,takes up less space, and introduces fewer contamination problems than using eggs. Cell culturetechniques could make the annual flu vaccine production cycle less prone to failures and moreamenable to re-starting production within a season if problems do arise. In other words, cell culturetechniques can provide surge capacity within existing infrastructure. This technique is not currentlyFDA-approved for flu vaccine production, but is in early stages of clinical trials, funded by theNational Institutes of Health (NIH). Potential problems must be evaluated, such as the risk of cellcomponents and genes getting into the vaccine or the virus. Also, for existing flu vaccinemanufacturers to use this method they would have to renovate existing facilities or construct newones, and would have to develop consistency in meeting good manufacturing practices (GMPs) andother standards if they are to reliably produce vaccine each year. Flu vaccine production can also be optimized by using reverse genetics to produce "vaccinestrains," strains of influenza virus with the right combination of traits to stimulate immunity, and togrow well in eggs. Currently, obtaining strains with the right characteristics for vaccine productionis a trial-and-error process; strains are grown together in batches and sampled in a search for thosewith the desired traits. With reverse genetics, the desired parts of the viral genome are cloned andcombined to create the needed traits more quickly and reliably. Reverse genetics is not currentlyapproved for vaccine production, but NIH-funded clinical trials are currently underway using thetechnique to produce vaccine for the strain of avian influenza ("bird flu") now circulating in Asia,in the event that it becomes a serious human pathogen. The safety and efficacy of flu vaccineproduced using this technique remains to be evaluated. In addition, there are potential consumeracceptance concerns, especially in Europe, because the vaccine virus produced is a geneticallymodified organism. Another opportunity to optimize annual flu vaccine production rests with steady enhancementof global influenza surveillance, which could improve the speed and accuracy of strain selection. Ultimately, the influenza virus holds two trump cards for which science does not offersolutions on the near horizon. First, there is a limited ability to predict how the virus will modifyitself into each year's dominant circulating strains. Once these strains emerge, there is a race againsttime to produce vaccine while the strains are actually causing illness somewhere on the planet. Second, the regular drifts of the viral genome (and the more cataclysmic shifts that define apandemic) are inherent in its genes, and the resulting evasion of the human immune response isinherent in our genes. This relationship has existed for eons, and no near-term scientificbreakthrough is likely to change it. Those seeking to prevent influenza infection are stuck with theprospect of annual flu vaccines for the foreseeable future. The flu vaccine shortage announced on October 5, 2004, unfolded within a complexinteraction of government and private sector actions, leading many to question whether the federalgovernment's authority is adequate to prevent these types of crises. States and the federalgovernment have different roles and authorities with respect to this event. In general, public healthauthority rests with the states as an exercise of their police powers. As a result, states took the leadin restricting vaccine distribution to high-risk individuals and in prosecuting price-gouging. Thefederal government, under the Commerce Clause in the Constitution, may regulate the safety andefficacy of vaccines in commerce in the United States, but this authority does not extend tocontrolling the distribution or administration of the product. In a public health emergency, the PublicHealth Service Act grants the Secretary of HHS broad authority to take such actions as necessary tocontrol infectious diseases. Traditionally, the federal government has supported states in exercisingtheir public health authorities rather than subsuming them. HHS Secretary Tommy G. Thompsonsaid that he did not intend to declare the flu vaccine shortage a public health emergency. (11) Flu vaccination is a medical procedure, and many people voluntarily choose to be vaccinatedin settings that are primarily non-governmental, such as a physician's office, a workplace, or a localgrocery store. While federal, state and local governments do not control these activities directly, theyplay an important role in studying the use and impacts of flu vaccination, making recommendationsand providing guidance on the use of flu vaccine, and educating providers and the public about theirfindings and recommendations. Examples of relevant public health research include studying theeffectiveness of vaccination in preventing illness in different risk groups, and the economic impactsof vaccination such as reduced absenteeism in the workplace. Government-supported educationefforts include educational materials for providers outlining the use of different types of flu vaccinesin specific populations, and flyers and public service announcements encouraging vaccination. Federal policies and recommendations also drive private-sector flu vaccine demand. Thisis discussed further in an upcoming section on "Determining Annual Flu Vaccine Production." Most federal activities related to flu vaccine are conducted by HHS. The National VaccineProgram Office in HHS serves to coordinate vaccine-related activities in several agencies, and is thehub for federal pandemic influenza preparedness activities. The FDA is responsible for assuring thesafety and efficacy of vaccines. (12) The NIH conducts intramural vaccine research and developmentand funds research in universities. The Health Resources and Services Administration (HRSA)administers the National Vaccine Injury Compensation Program (VICP), which providescompensation for injuries judged to have been caused by certain listed vaccines. The CDC housesthe National Immunization Program, which coordinates research projects, state grant programs(including funding for purchase of vaccines), and other immunization activities and supports theAdvisory Committee on Immunization Practices (ACIP). CDC also administers the Vaccines forChildren (VFC) program, authorized in Medicaid law to provide immunizations for children whoare uninsured, Medicaid recipients, Native Americans, and Alaska Natives at physicians' offices andFederally Qualified Health Centers. Vaccine responsibilities lie outside of HHS as well. The Department of Defense (DOD)maintains research and development programs for vaccines against both naturally occurringinfectious diseases and bioweapons agents. DOD administers routine and deployment-relatedvaccines to military personnel and some civilian employees and contractors. As a primary healthcareprovider, DOD also administers vaccines to its retirees and to current personnel and their families. The Department of Veterans Affairs administers vaccines to veterans within its healthcare system. Veterinary biologics are regulated by the U.S. Department of Agriculture (USDA), Animaland Plant Health Inspection Service (APHIS), under authority of the Virus, Serum and Toxin Act. These products must meet similar standards of safety, efficacy, purity, and potency as do humanproducts. APHIS currently licenses influenza vaccines for horses and swine. State and local governments carry out relevant activities within their public health authority,such as conducting vaccine clinics, maintaining immunization registries, and establishingimmunization requirements for school attendance. (These requirements apply to vaccine-preventablechildhood diseases such as measles and whooping cough, but not influenza at this time.) In responseto the current flu vaccine shortage, many states have taken action to prohibit administration ofvaccine to non-priority individuals and to track available vaccine, among other activities. For more information on the production, safety and availability of all types of vaccines, see CRS Report RL31793 , Vaccine Policy Issues for the 108th Congress , by [author name scrubbed]. Based on historical demand and on the new pediatric recommendation from the ACIP, thetwo manufacturers licensed for the 2004-2005 season, Aventis and Chiron, planned to make around100 million doses, about evenly split between them. The failure of all annual production by Chironcut the supply in half. Gauging demand from year to year in what is mostly a private-sector marketis a matter of both art and science, an exercise fraught with difficulty. In the winter of 2003-2004 Americans received 83 million doses of flu vaccine; 87 millionwere produced. According to the CDC, doses of unused flu vaccine have remained in each of thelast five seasons. (See Table 1. ) Vaccine manufacturers bear the loss from surpluses, and theyattempt to carefully gauge demand each year to avoid these losses. Demand has grown in the pastten years, though, as a result of growing ranks of high-risk groups such as the elderly, increasing useof vaccine by other high-risk groups, and growing interest from low-risk groups, such as employersseeking to decrease absenteeism by offering the vaccine to workers at no cost. Table 1. Surplus Flu Vaccine, 1999-2003 (doses in millions) Source: Communication from CDC, Oct. 20, 2004. Note: Target production for the 2004-2005 season was approximately 100 million doses. a. Most of this surplus was live attenuated (intra-nasal) influenza vaccine. Flu vaccine demand is also driven by federal policies and recommendations. In the springof 2004, for the upcoming flu season, the Advisory Committee on Immunization Practices (ACIP)added healthy young children aged 6 to 23 months to the list of groups that should receive thevaccine. To encourage beneficiaries to be vaccinated, Medicare began covering the full cost of fluvaccine and administration in 1993. The Healthy People 2010 project, a public-private nationalgoal-setting agenda for health, set a goal of 90% for influenza vaccine coverage for certain high-riskgroups. Recently there has been greater emphasis on the prevention of influenza in institutionalizedpopulations. In 2000 CDC published guidance encouraging standing orders programs to increaseflu vaccination coverage in long-term care facilities and other settings. These programs give nurses"standing orders" to administer annual flu vaccines to residents without a physician's explicitauthorization. To support this recommendation, in 2002 the Centers for Medicare and MedicaidServices (CMS) removed the physician signature requirement for flu vaccine for Medicare andMedicaid participating hospitals, long-term care facilities, and home health agencies. The ACIP alsorecommends that healthcare workers receive flu vaccine, following studies showing that vaccinationof workers reduces mortality in elderly residents in long-term care facilities. The path of flu vaccine from assembly line to injection is complex and largely outside ofgovernment control. Manufacturers sell the product to distributors, or may also sell it directly topharmacy chains, health maintenance organizations, hospitals, state health departments, and others. Vaccine may be transferred through multiple distributors along the way. The CDC, as a purchaser, would have access to distribution information for the product ithas purchased even if the product does not physically pass through CDC's direct control. But almost90% of the product is circulated outside of government control, and has not been tracked. TheGovernment Accountability Office (GAO) has noted the lack of a means to redirect flu vaccineduring a shortage, a system that would depend on centralized tracking. (13) In the face of the 2004shortage, HHS Secretary Thompson announced that CDC had set up a secure website for state healthofficials to use to identify available vaccine in their jurisdictions. Aventis and many of itsdownstream distributors provided information for the site, information which the Secretary stressedwas proprietary and which state health officials must protect as such. This marked the first time sucha system was used to track flu vaccine. Also, when the shortage was announced the FDA waivedits prohibition against the transfer of vaccine among hospitals and other healthcare entities, tofacilitate their own reallocation efforts. These downstream reallocations, while clearly helpful underthe circumstances, might not have been captured in the new CDC tracking system. In the afternoon of October 5, 2004, the day Chiron advised U.S. officials of its failedproduction for 2004-2005, CDC and the ACIP issued interim vaccine recommendations, designating"priority groups" for vaccine coverage following the shortage. The groups previously recommendedto receive vaccine and the narrowed recommendations announced after the shortage are listed in Table 2. CDC subsequently estimated that the pre-shortage target population of roughly 185 millionpeople (about 2/3 of the population) would be reduced to about 98 million priority recipients. Basedon historical vaccine usage by these groups (which ranges from 12.4% for pregnant women to 66.2%for those over age 64), CDC estimated that only about 43 million doses would be needed to vaccinatethose in priority groups. (14) CDC acknowledged that some vaccine was administered tonon-priority groups before the shortage was announced, and that despite best efforts, reallocation ofremaining vaccine to priority groups would be imperfect. On December 17, 2004, CDC announced that the ACIP had reviewed the current status offlu vaccine demand, and issued revised guidelines, essentially restoring the pre-shortagerecommendation that individuals aged 50-64 and out-of-home caregivers and household contactsof persons in high-risk groups be vaccinated. The ACIP suggested that health departments andhealth care providers consider delaying the implementation of the expanded recommendations untilJanuary 3, 2005, to provide more time for unvaccinated persons in high-priority groups to seekvaccination. (15) It is worth noting that the expansion of federal recommendations over time, and the growingrecognition of the health benefits of flu vaccination even in healthy individuals, drives demand andserves as a market incentive to increase supply. In the face of a severe shortage, public and privateactions to encourage flu vaccination in lower-risk groups have had to be abandoned for the2004-2005 flu season. Table 2. Federal Recommendations for Flu Vaccine, Before and After the Vaccine Shortage Sources: Pre-shortage recommendations: Prevention and Control of Influenza: Recommendations of the Advisory Committee on Immunization Practices(ACIP), MMWR Recommendations and Reports, May 28, 2004. Post-shortage recommendations: Interim Influenza Vaccination Recommendations, 2004-05 Influenza Season: Guidance from CDC, in coordination withthe ACIP, Oct. 5, 2004. Note: In a typical year, in addition to the high-risk groups noted above, many healthy persons without risk factors would also seek and receive vaccine. Actions During the 2004 VaccineShortage. While the federal government has broad authority to takeactions necessary to control infectious diseases in an emergency, traditionally theexercise of public health authority in this respect has rested with states. As aconsequence, when the flu vaccine shortage was announced and CDC recommendedthat vaccine be prioritized to certain groups, several states, counties and the Districtof Columbia issued orders requiring healthcare providers to comply, and establishedfines for the administration of scarce vaccine to non-priority individuals. Some ofthe states declared the situation a public health emergency, while others usednarrower authorities to support their orders. A number of states and localities relaxedthese restrictions beginning in December 2004, when they had vaccine dosesremaining after priority individuals were no longer seeking vaccine. A listing of stateactions is maintained by the Association of State and Territorial Health Officials(ASTHO) at http://www.astho.org . While CDC facilitated states' efforts by gathering information about suppliesand unmet needs during the shortage, the agency lacks authority to compelmanufacturers or distributors to provide this information. CDC reported goodvoluntary cooperation with the effort, but the GAO has repeatedly noted the absenceof a coordinated national system to assure that those most in need receive flu vaccinewhen supplies are limited. (16) Outgoing HHS Secretary Tommy G. Thompsonsaid shortly after the shortage was announced that he did not intend to declare thesituation a public health emergency, and the federal government would not exerciseauthority to control vaccine distribution or administration. (17) CDC's plan to identify vaccine doses in distribution and coordinate athree-part information exchange -- unmet need, available vaccine, and circulating fluvirus -- had not been done before and may serve as a useful exercise in preparednessfor a variety of public health emergencies. Since it was a new effort, its utility in theface of the vaccine shortage has yet to be demonstrated. Strategies for Rationing. Rationing of scarce resources is not a new concept in health-related services. Prioritization decisions have been made in many health-related areas including, forexample, organ donation and dialysis. Not all attempts at rationing have been metwith enthusiasm. One notorious example occurred in the 1960s, when a hospitalcommittee attempted to ration life-saving dialysis based on a notion of "socialworth." (18) This rationing mechanism led to heavy criticismof the committee, subsequently deemed the "God Committee" for its valuation ofsome human lives over others. In the late 1980s, Oregon developed a rationing system for its entire Medicaidprogram, allocating various types of services rather than distributing one scarceresource. The rationing system was designed to provide coverage to all Oregoniansliving below the federal poverty line, not just those who met more selective financialeligibility standards, by ranking condition-treatment pairs in order to determine onan annual basis what services would be covered for which ailments. The system wasbased upon a combination of cost-effectiveness, available funding, and aprioritization of medical services "from most to least important to the entirepopulation." (19) Oregon's rationing plan caused some controversywhen it was first enacted because it explicitly involved a concept of rationing inproviding access to care, and because it created difficulty in determining whichservices would be covered; however the system is still in place today. Despite the moral difficulties involved with rationing, allocation of scarcemedical resources must still occur when the supply is not sufficient to meet thedemand. Allocation decisions can be made with a range of rationing mechanisms,each with its own benefits and drawbacks. Potential mechanisms are discussedbelow. Not all of these options were considered in response to the 2004 flu vaccineshortage, but a number of them may come into play during an influenza pandemic orlarge-scale bioterrorism event, when governments will face more dire circumstances. The mechanisms are discussed in the context of vaccine rationing, but may also beapplied to the rationing of antivirals or other medications as well. Most Likely to Suffer HealthConsequences. In a selection system that gives a preferenceto those most likely to suffer health consequences, vaccine is given first to those mostlikely to catch the flu, suffer serious consequences such as hospitalization, and/or diefrom infection (e.g., the elderly, young children, pregnant women, and those withsuppressed immune systems). Recommended by: WHO, (20) CDC. (21) Benefit(s): Those most vulnerable to death or serious healtheffects from flu infection are protected from the virus. Drawback(s): This selection method does not address impactof epidemic on the continuation of essential services, nor does it focus on how to stopthe spread of the flu. This method also fails to address the state's obligation to thosewithin its control or custody, except to the extent that those in custody are at anincreased risk of suffering serious health effects from infection. (22) Key Personnel. With a preference forkey personnel, vaccine is given first to persons whose health is necessary to limitsocial disruption (e.g., health care workers, government employees and militarypersonnel). Recommended by: WHO, CDC. Benefit(s): This method limits social disruption, maintainshuman infrastructure for essential services. Drawback(s): A preference for key personnel may favorvaccinating those empowered to make decisions about who is vaccinated, creatingan appearance of conflict. The method does not address issues of how to stop thespread of the flu, or the morbidity and mortality rates of flu on various populations. In addition, it does not address the state's obligation to those within its control orcustody. Special Relationships. In a selectionsystem based on special relationships, vaccine is given first to those people whosehealth care is the responsibility of the state or federal government (e.g., prisoners, andmilitary personnel). Recommended by: American Civil Liberties Union, for at-riskprisoners. (23) Benefit(s): Governing bodies meet their obligations to protectthe health and safety of persons within their sole control. Drawback(s): Selection based on special relationships does notaddress issues of contagion, or the morbidity and mortality rates of flu on variouspopulations, except to the extent that those within the state's control are more likelyto suffer serious health effects and/or spread the virus. It also does not addressimpact of epidemic on the continuation of essential services. Most Likely to Spread Disease. In aselection system based upon those most likely to spread disease, populations knownfor rapidly transmitting infection are vaccinated first (e.g., children and prisoners). Recommended by: Some scientific studies. (24) Benefit(s): The spread of disease is curbed across thepopulation. Drawback(s): This selection method does not address impactof epidemic on the continuation of essential services, or state's obligation to thosewithin its control or custody, except to the extent that those in custody are at anincreased risk of spreading disease. This method also fails to address the morbidityand mortality rates of flu on various populations. Lottery. With a lottery system,vaccine is given to people who are selected randomly. Recommended by: Used in some places in the United Statesto allocate flu vaccine. (25) Benefit(s): The system does not require people to choose anyone person or population over others. Drawback(s): Registration and communication with lotterywinners could prove cumbersome. Lottery selection does not address impact of anepidemic on the continuation of social services and infrastructure. This method doesnot address the state's obligation to those within its control or custody. Lotteryselection also fails to address issues of how to stop the spread of the flu, or themorbidity and mortality rates of flu on various populations. (Note: some of thesedrawbacks could be averted if lottery selection were used in conjunction with otherselection criteria.) First come-first served. With a firstcome-first served selection system, vaccine is given to those who arrive first at adesignated time and place. Recommended by: Used in some places in the United Statesto allocate flu vaccine. (26) Benefit(s): This method is easy to coordinate, requires onlybasic advertising, and does not require people to choose any one person or populationover others. Drawback(s): A first come-first served method favors thosewith flexible schedules, transportation to vaccination site, and does not addressimpact of epidemic on the continuation of social services and infrastructure. Thismethod does not address the state's obligation to those within its control or custody,issues of contagion, or the morbidity and mortality rates of flu on variouspopulations. (Note: some of these drawbacks could be averted if first come-firstserved were used in conjunction with other selection criteria.) Some recent scientific studies suggest that there may be two additionalmethods of rationing vaccine. The first study indicates that vaccine is more effectivein some populations than in others. (27) Based upon this finding, vaccine doses could bewithheld from those populations in which it is least effective. The problem is thatthe group in whom the vaccine is least effective is also one that is most likely tosuffer health consequences from the flu: the elderly. For this reason, the vaccine'seffectiveness in a population is unlikely to be used as a tool for rationing. The second study indicates that less than a full dose of some types of fluvaccine may create a serum antibody response (indicating that the vaccine may beeffective) in healthy individuals. (28) This finding could lead to a system of rationingthat increases the number vaccine doses by giving certain populations less than a fulldose. However, this strategy has not been fully evaluated to test its effectiveness, andit was not implemented during the 2004 vaccine shortage. One confounding issue is that studies suggest that particular populations,including some minority groups, are less likely to participate in vaccinationprograms. (29) The rationing system of choice might have somemechanisms designed to encourage participation by targeted populations that historically have low rates ofvaccination. When designing a rationing policy, many of the aforementioned rationingmethods may be used alone, or in conjunction with one another. For example,priority could be given to both key personnel and those most likely to suffer serioushealth effects. In addition, if the number of eligible people were larger than thenumber of available doses, a lottery could be used to determine which of theprioritized people would receive vaccine. During the 2004 flu season, states and localities employed a variety ofrationing methods, many of which were derived from federal guidelines presented inTable 2. The guidelines call for the vaccination of some individuals who are mostlikely to suffer health consequences (some categories of elderly, sick, and children),as well as some who are most likely to spread the virus (some categories of children,health care workers, and institutionalized persons), and certain key personnel (somecategories of health care workers). Media reports of price gouging were widespread following the announcementof the vaccine shortage, with reports that distributors were seeking more than 10times the original price. The Attorneys General of Connecticut, Florida, Kansas, andTexas responded with lawsuits. In addition, most state attorneys general issuedconsumer alerts, urging consumers to report price gouging violators. According toa chart compiled by the National Association of Attorneys General, more than halfof the states have statutes prohibiting price-gouging, though there are a variety ofdefinitions and triggering events, not all of which would apply to this situation.However, the Association also provided information showing that most if not allstates could bring action under broader, more flexible authorities that prohibit "unfairand deceptive acts and practices." On October 14, 2004, HHS issued a press release urging states to aggressivelyprosecute flu vaccine price-gouging. (30) State action would require not only the requisiteauthority, but also the decision to act and the resources to do so. Some in Congress,concerned that states may not always be able to respond effectively, have asked aboutrelevant federal authorities. Neither CDC nor FDA has authority to act in this matter,though CDC (which activated its Emergency Operations Center when the shortagewas announced) gathered reports of price-gouging and referred them to stateattorneys general. On October 22, 2004, HHS announced that it had filed (along withthe Department of Justice) a friend of the court brief in support of Florida'sprice-gouging lawsuit against a distributor. (31) HHSreported that the brief lays out the public health threat posed by price gouging,namely that price gouging leads to allocation of scarce flu vaccine based on who hasthe most money and not on who has the most need, that it risks the health ofMedicare and Medicaid eligible patients, who are vulnerable and most in need of thevaccine, and that it may also lead to violations of the Federal Food, Drug, andCosmetic Act such as tampering with, and counterfeiting of, flu vaccine. On October 15, 2004, the House Committee on Government Reform calledon the Federal Trade Commission (FTC) to launch a nationwide investigation of fluvaccine price-gouging, and to report on enforcement actions it is taking or plans totake. (32) It is not clear under what specific authority the FTC would act, as there is no federalprice gouging statute. However, as noted above for states, the Commission couldpossibly bring an action under its general authority to prohibit unfair or deceptiveacts or practices under the Federal Trade Commission Act. Vaccines for the U.S. market are made by private, for-profit firms, and mostof the supply is privately controlled. For the 2004-2005 season, CDC purchased 11.4million doses of flu vaccine, or about 11% of total production. (See Table 3 for abreakdown of CDC purchases.) The public purchase price ranged from $6.80 to$10.00 per dose, depending on the formulation, which is generally lower than privatesector prices. Table 3. CDC Purchases of Flu Vaccine for2004-2005 Source: Communication from CDC on Oct. 10, 2004. Note: Table reflects purchasing contracts prior to announcement of shortage. Manufacturers point to a number of disincentives that deter them from the fluvaccine market, such as poor profitability, risk of a production failure, and injuryliability. (33) Policymakers point to a number of problems inassuring adequate supply, including too few manufacturers, low vaccination ratesamong groups who are advised to be vaccinated, unpredictable timing and severityof annual flu seasons, and reluctance of manufacturers to overshoot demandestimates. The 2004 flu vaccine shortage resulted from failure of production by acompany that held almost 50% of the market share, because there were only twocompanies producing injectable flu vaccine for the U.S. market. During the2001-2002 season, when there were three manufacturers supplying the U.S. market,one sustained significant losses from unused surplus vaccine, which led to itsdecision to drop out of the market Many have noted that expanded public purchase of vaccine would havehelped this situation only if such purchases had increased overall production byshifting some of the risk of over-production from the manufacturer to thegovernment. Then, if a product were to fail, the other supplier would have producedrelatively more and a shortage would not have been as severe. Long term, many feelthat it is essential to have more manufacturers involved, so the consequences of afailure of one would have less impact on supply. But absent a substantial increasein demand, diversification would likely cut into the market for existingmanufacturers, potentially reducing their incentives for remaining engaged. A number of these issues have been discussed in the context of ProjectBioShield, a program to promote research and development of countermeasures forbioterrorism. In some ways Project BioShield is an imperfect model for flu vaccineshortages, because BioShield is designed to create production incentives for productsthat lack a commercial market. Nonetheless, there are enough similar issues at playthat flu vaccine supply may be added to the agenda in ongoing discussions of theBioShield program. For example, the Project BioShield Act of 2004, P.L. 108-276 ,contains a provision which allows the Secretary of HHS to temporarily authorize theemergency use of non-licensed drugs and vaccines. Some in Congress called on theSecretary of HHS to exercise this new authority in response to the flu vaccineshortage, by locating available flu vaccine in other countries and making it availableto Americans as quickly as possible. As Congress considers follow-on legislation toaddress remaining concerns, additional issues such as ways to expand vaccineproduction capacity may also be relevant for flu vaccine. (34) The next section will explore several disincentives to flu vaccinemanufacture, and several proposals for removing these barriers or otherwisestabilizing the annual flu vaccine market. The Problem. It is oftensuggested that making flu vaccine is not a good business proposition. The product isnot highly profitable. Furthermore, production of vaccines is technically difficult,and lot failures resulting from sterility breaks or other causes are not uncommon. Fluvaccine is especially tricky because of the time constraints inherent in using eggs, andbecause vaccine does not have a shelf life beyond the year it is produced. It isdifficult to start from scratch if a problem crops up mid-way in production. If annualdemand is overestimated, unused vaccine is discarded at a loss to the manufacturer. Manufacturers have an obligation to investors to make sound businessdecisions, and to adhere to standards of transparency in their business conduct. Following Chiron's announcement of its failed flu vaccine production for 2004-2005,the company became the subject of Securities and Exchange Commission (SEC) andJustice Department inquiries, reportedly to determine whether Chiron knew of theimminent failure of its product before its public announcement. (35) Severalclass-action shareholder lawsuits were filed on the premise that the company had notfulfilled its disclosure obligations. (36) In early December 2004, British regulatorsextended their suspension of Chiron's Liverpool plant through March 2005. Thecompany has tried to balance its obligations to shareholders and its interests inremaining a U.S. supplier, saying that it seeks to produce vaccine for the 2005-2006season, but not stating with assurance that it could overcome regulatory hurdles byMarch 2005, when production for the upcoming season would have to begin inearnest. This situation also poses a challenge for CDC as it attempts, in itsdiscussions with other suppliers, to set production targets without knowing Chiron'sstatus with certainty. Proposals to Mitigate EconomicRisk. Some in Congress and others have proposed a number ofincentives to vaccine manufacturers to encourage entry into the market and toguarantee demand for vaccine, which would in turn promote diversity ofmanufacturers and increase annual supply. Government Buy-Back of Surplus. Under this proposal the federal government would purchase vaccine that remainedunused at the end of a season. This would work, in theory, by encouragingmanufacturers to produce more than they believed they could sell, thereby providinga cushion if annual supply were to fall short for any reason. However, ifmanufacturing problems or other supply disruptions did not occur, wastage of unuseddoses would become a government expense rather than a private one. In FY2005 appropriations, Congress provided HHS with$100 million toensure year-round influenza vaccine production capacity, stating that the Secretarycould use the funds for flu vaccine purchase if deemed necessary. Some haveconsidered these fund appropriate for the purchase of any surplus vaccine from the2004-2005 season, while others have argued that it was intended to back-stop the2005-2006 season if necessary (though if a surplus resulted in that season, it wouldoccur in FY2006). Still others have argued that the original intent of the funds wasto support pandemic influenza preparedness. Neither statutory language norcommittee report language clarifies the intended use of these funds. Government Purchase for Stockpiling. Under this proposal, the federal government would purchase doses of vaccine at thebeginning of the season, to serve as a cushion if needed. However, because of itsone-season shelf life, flu vaccine is not an attractive candidate for stockpiling. Products such as smallpox vaccine have a long shelf life, and stockpile purchases canbe considered one-time expenditures for which a high cost is acceptable. CDCpurchased 4.5 million doses of flu vaccine to stockpile for the 2004-2005 season, ata cost of $40 million. Two and a half million of these doses were produced byAventis and would be used to ameliorate the shortage, but it was a small amount inthe face of a shortfall of 46 million doses. A federal flu vaccine purchase ofsufficient magnitude to cushion a two-supplier market in the event that one failedwould be costly, considering that in each of the past five seasons there were surplusesof flu vaccine, and that the 2004 shortage may be the exception. But by expandingannual demand, stockpile purchasing could encourage additional manufacturers toenter the market. Incentives for Construction of NewFacilities. Since the shortage was announced, several vaccinemanufacturers expressed interest in entering the flu vaccine market. For newmanufacturers to be licensed in the United States, they must apply years in advancefor FDA approval, and pay for plant construction or renovation, clinical trials andother regulatory obligations before any profit can be realized. Given the high capitalcost for entry into this market, some have proposed offering tax credits or otherincentives to offset these costs and encourage new manufacturers to join the U.S. fluvaccine market. An Aventis executive, when asked about the impact of injury liability on fluvaccine producers, commented that it is a burden, that it is absorbed as a cost ofdoing business, and that his company is committed to remaining in the flu vaccinebusiness. (37) The chair of an Institute of Medicine (IOM)panel examining vaccine financing testified that when the panel attempted todetermine how serious this problem is, as far as its potential deterrent effect onmanufacturers and therefore on vaccine availability, the panel had difficulty obtainingpertinent information. (38) Vaccine manufacturers have two potential avenues for protection againstinjury liability claims. They can purchase insurance to cover the costs of defendingagainst or paying out claims, and incorporate costs into the price of vaccine. Also,certain vaccines are covered under the National Vaccine Injury CompensationProgram (VICP). Congress added flu vaccine to the VICP list in October 2004, inthe American Jobs Creation Act of 2004 ( P.L.108-357 ). Under VICP, an excise taxapplied to vaccine sales pays for a public compensation fund. Congress enacted theprogram in 1986 as a no-fault alternative to the tort system for resolving claimsresulting from adverse reactions to mandated childhood vaccines. Individuals of anyage alleging injury from any covered vaccine must seek compensation through theprogram first, though they may decline a proposed award and then seek a remedy incourt. The program is administered by the Office of Special Programs in the HealthResources and Services Administration (HRSA). (39) HRSAsays that the program has been successful in providing compensation to those injuredby vaccine-associated adverse events, in reducing liability for vaccine manufacturersand healthcare workers who administer vaccines, and in achieving vaccine marketstabilization. Others have reported problems in program administration andperformance. (40) A number of vaccines in the U.S. market are purchased by federal agenciesat prices that are discounted or capped through various mechanisms. Some haveargued that this depresses overall prices and contributes to the lack of attractivenessof vaccines as business ventures. Examples of such public purchases include CDCpurchases of pediatric vaccines for uninsured children, and purchases by the VeteransAdministration for its patient population. HHS notes that the Centers for Medicare& Medicaid Services (CMS) has more than doubled the Medicare payment rates forthe flu vaccine, from $8.92 in 2000 to $18.30 in 2004. (41) Accordingto HHS, this increase will help assure that beneficiaries can get the vaccine from theirphysicians' offices, and help cover the costs of vaccine and administration for theproviders. An Institute of Medicine (IOM) panel examining vaccine financing and itseffects on availability has recommended a different approach to financing, based onthe premise that vaccines confer benefit not just to the individuals who receive them,but to society as a whole. (42) The panel recommended replacing a governmentpurchase price with a federal subsidy to maintain affordable vaccine coverage fortarget groups, and mandating that private insurers cover federally-recommendedvaccines. The recommendations have not been universally embraced and theirimplementation has not gone forward, though they have stimulated furtherdiscussions of vaccine financing and availability among interested parties. Influenza circulates around the globe every year, changing slightly each yearso that healthy adults have partial immunity to new strains. The virus, its genome inconstant flux, typically makes healthy people sick, but not too sick, each year. Nowand then, usually several times in a century, the virus changes enough that there is nopartial immunity. This event, called an influenza pandemic, results in severe illnessand death, even in healthy people. The CDC estimates that in the United States,while an annual flu season results in 36,000 deaths, on average, a pandemic couldcause more than 200,000. The extent and severity of illness, and the disabling impacton healthy young people, could cause serious disruptions in services and social order. Some have expressed concern that the 2004 flu vaccine shortage presagesproblems for a national response to an influenza pandemic. The shortage was insome ways a relevant drill for pandemic preparedness, but in other ways wasdifferent. In the face of the shortage, many were concerned with the logistics offinding available vaccine and vaccinating high-risk individuals. Others wereconcerned about fairness in the way that companies and federal, state and localagencies handled the situation. Many of these concerns about limited resources and equity in their allocationwill be writ large during a flu pandemic. Potentially, a vaccine could not beproduced until a pandemic virus strain is actually circulating. For this and otherreasons, severe vaccine shortages are expected during an influenza pandemic. TheWHO and HHS each have published plans for influenza pandemicpreparedness. (43) Both stress the role of basic infection controlpractices and have expanded guidance for handling large numbers of victims, suchas expanding capacity for isolation and enacting plans to keep people at home. The WHO says that with current technology, worldwide production capacityfor influenza vaccine would cover only 5% of the world's population. Countries areadvised to consider how they would apportion this scarce resource. WHO notes thatbecause healthy individuals may become severely ill, or may even die from infectionwith a pandemic flu strain, consideration should be given to maintaining essentialservices by prioritizing vaccine delivery to critical service providers such ashealthcare, public health and public safety workers. Americans are accustomed todeferring to those who are most vulnerable in situations where risk of death is low,as they have been asked to do for the current flu vaccine shortage, but a pandemicmay require a different message. (See the previous section on "Vaccine Rationing"for further discussion.) Some in Congress have expressed concern that a portion of the U.S. fluvaccine supply is produced in a foreign facility. The concern is that during a flupandemic or other emergency, foreign governments may seize vaccines andproduction facilities within their borders. The International Federation ofPharmaceutical Manufacturers Associations reports that in 2003, more than 95% ofthe world's flu vaccine was produced in nine countries: Australia, Canada, France,Germany, Italy, Japan, Netherlands, the United Kingdom, and the United States. (44) The globalflu vaccine market is a confusing patchwork of companies and subsidiaries that maybe based in one country, producing vaccine in another, and marketing in multipleother countries. Aventis and Chiron are the only companies currently licensed by theFDA to produce injectable flu vaccine for the U.S. market, though other companieshave expressed interest in having their products licensed in the future. While both the WHO and HHS plans also stress the use of antiviral drugsduring a pandemic, these are likely to be in very short supply as well. A similarproblem may arise with access to healthcare facilities and providers. A flu pandemiccould result in mass casualty situations, and while these may be isolated in time andplace, they may force what is referred to as degradation of care, the circumstance inwhich a standard of care is lowered in the face of overwhelming resource constraintsin order to maximize overall survival. Providers are concerned about theramifications on social order and liability, and have sought federal guidance on thismatter. The 2004 flu vaccine shortage demonstrates the concept of dual use in publichealth preparedness, in which plans, systems and protocols for one event areapplicable to others as well. CDC's flu vaccine reallocation plan, which coordinatedinformation about vaccine availability, unmet need, and circulating virus, is a usefulmodel for any number of natural or intentional public health emergencies, includingpandemic influenza. In addition, efforts to bolster bioterrorism preparedness haveyielded bonuses for pandemic preparedness, such as the development of communitymass-vaccination plans. Generally, advancements in the development of vaccinesfor pandemic influenza will benefit annual flu vaccine production, and vice versa. The response of the public to government recommendations during the 2004shortage is illustrative. According to CDC surveys (discussed in an earlier section"Shortage to Surplus?"), persons not in designated priority groups mostly deferredvaccination, while a small number of them reported that they sought vaccination butwere unsuccessful. Of particular concern were findings that significant numbers ofhigh-risk individuals did not seek vaccination because they doubted they could getit, and that willingness to be vaccinated dropped off when the vaccine wasinvestigational and required signing a consent form. These findings remind publicofficials of an important premise for public health preparedness: that imperfectcompliance with recommendations is expected and should be taken into account inplanning. Serious questions remain about the exercise of federal authority during aninfluenza pandemic. Many of these questions were raised in the face of the 2004 fluvaccine shortage. Should the federal government have, or exercise, authority toidentify and control doses of scarce flu vaccine? Should the federal governmenthave, or exercise, authority to control administration of vaccine by healthcareproviders? Is the current model, which leverages state authorities with federalassistance, adequate for the current shortage, or for pandemic influenza or otherpublic health emergencies? Given that the federal government has overarchingemergency authorities but has not used them, will federal officials know how toconduct themselves if such authorities were invoked in an emergency? The fluvaccine shortage presents a small study of these important questions. It is intuitively appealing to think that federal officials, when faced with apublic health emergency, could take charge of information and assets, and assure thatremedies and burdens were equitably and efficiently distributed. Actually, theshortage of flu vaccine illustrates two serious challenges that the federal governmentfaces in a public health emergency. Law and tradition place much of theresponsibility for preventing or managing the shortage either with the states, or withthe private sector, and the threshold over which the federal government would wrestcontrol from either appears high. The federal government does not dictate thepractice of medicine or compel companies to do business. As a result, in situationslike this one, free market forces operate, the public health system responds in adecentralized fashion, efforts may seem disorganized, and the federal governmentmay appear unresponsive. Since the terror attacks of 2001, some barriers have been overcome withoutsubstantial changes in the legal landscape. An example is state preparednessplanning with uniform guidance, so that states aim for the same targets in planningfor mass drug distribution, or in overhauling their emergency public healthauthorities. Decentralization of public health authority to states is less of a problemif all of them can respond capably and in a consistent fashion. Another example isthe government use of proprietary information, such as drug store sales, to conductsurveillance for unusual health events. The flu vaccine shortage has prompted furtherexamination of the coordination of these partners in response to a national challenge,posed another opportunity to explore creative solutions, and offered another chancefor lessons learned. Selected legislative proposals aimed at addressing flu vaccine production orshortages are listed. A number of bills were introduced before the 2004-2005 shortage was announced, some in response to flu vaccine problems during the2003-2004 season. Several proposals would subject flu vaccine to an excise tax, inorder to add it to the Vaccine Injury Compensation Program table. A version of thisprovision was passed in <108> P.L. 108-357 , the American Jobs Creation Actof 2004, which was signed by the President on October 22, 2004. Other proposalsin authorizing legislation listed below have not been considered in either chamber asof this writing. H.R. 3758 (Emanuel) The Flu Protection Act of 2004, to amend the Public Health Service Act to providefor an influenza vaccine awareness campaign, ensure a sufficient influenza vaccinesupply, and prepare for an influenza pandemic or epidemic, to amend the InternalRevenue Code of 1986 to encourage vaccine production capacity, and for otherpurposes. Introduced February 3, 2004. Related bill S. 2038. H.R. 4520 / S. 1637 (Thomas, Grassley) The American Jobs Creation Act of 2004, includes a provision to add any trivalentinfluenza vaccine as a taxable vaccine for purposes of the excise tax on certainvaccines. Became P.L. 108-357 on October 22, 2004. H.R. 5243 (DeFazio) The Influenza Vaccine Emergency Act, to amend the Public Health Service Act toprovide for emergency distributions of influenza vaccine. Introduced October 7, 2004. H.R. 5404 (Kucinich) The Fair Vaccine Price Act of 2004, to prohibit price-gouging during a shortage ofa covered vaccine. Introduced November 19, 2004. H.R. 5409 (Lowey) The Emergency Flu Response Act of 2004, to amend the Public Health Service Actto address the shortage of influenza vaccine, and for other purposes. Introduced November 19, 2004. S. 15 (Gregg) Project BioShield Act of 2004, to amend the Public Health Service Act to provideprotections and countermeasures against chemical, radiological, or nuclear agents bygiving the National Institutes of Health contracting flexibility, infrastructureimprovements, and expediting the scientific peer review process, and streamliningthe Food and Drug Administration approval process of countermeasures. IntroducedMarch 11, 2003. Became P.L. 108-276 on July 21, 2004. S. 666 (Lieberman) The Biological, Chemical, and Radiological Weapons Countermeasures ResearchAct, to provide incentives to increase research by private sector entities to developantivirals, antibiotics, vaccines and other products to prevent and treat illnessesassociated with a biological, chemical, or radiological weapons attack. Introduced March 19, 2003. S. 754 (Frist) The Improved Vaccine Affordability and Availability Act, to amend the PublicHealth Service Act to improve immunization rates by increasing the distribution ofvaccines (including flu vaccine) and improving and clarifying the vaccine injurycompensation program. Introduced April 1, 2003. S. 1817 (Santorum) To amend the Internal Revenue Code of 1986 to include influenza vaccines in theVaccine Injury Compensation Program. Introduced November 4, 2003. S. 1896 (Grassley) To add to the definition of taxable vaccines any vaccine against hepatitis A and anytrivalent vaccine against influenza. Introduced November 19, 2003. S. 2038 (Bayh) The Flu Protection Act of 2004, to amend the Public Health Service Act to providefor an influenza vaccine awareness campaign, ensure a sufficient influenza vaccinesupply, and prepare for an influenza pandemic or epidemic, to amend the InternalRevenue Code of 1986 to encourage vaccine production capacity, and for otherpurposes. Introduced January 28, 2004. Related bill H.R. 3758. S. 2959 (Dayton) The Influenza Preparation and Vaccination Act, to amend the Public Health ServiceAct to ensure an adequate supply and distribution of influenza vaccine. Introduced October 8, 2004. S. 2968 (Reed) The Emergency Flu Response Act of 2004, to amend the Public Health Service Actto address the shortage of influenza vaccine, and for other purposes. Introduced October 8, 2004. S. 2997 (Inhofe) The Flu Vaccine Incentive Act of 2004, to amend the Social Security Act toencourage the production of influenza vaccines by eliminating the price capapplicable to the purchase of such vaccines by HHS, to amend the Internal RevenueCode of 1986 to establish a tax credit to encourage vaccine production capacity, andfor other purposes. Introduced November 18, 2004. H.R. 2660 / S. 1356 (Regula / Specter) Making appropriations for Labor, Health and Human Services, Education andRelated Agencies for FY2004, includes funding for influenza vaccine research andstockpile purchase. Became Public Law No. 108-199, the Consolidated Appropriations Act, 2004, onJanuary 23, 2004. H.R. 5006 / S. 2810 (Regula / Specter) Making appropriations for Labor, Health and Human Services, Education andRelated Agencies for FY2005, includes funding for influenza vaccine research andvaccine purchase. Became Public Law No. 108-447, the FY2005 Consolidated Appropriations Act, onDecember 8, 2004. House Committee on Energy and Commerce, Subcommittee on Health andSubcommittee on Investigations, joint hearing on Flu Vaccine: ProtectingHigh-Risk Individuals and Strengthening the Market, November 18, 2004. House Committee on Government Reform, full committee hearing on The Nation'sFlu Shot Shortage , November 17, 2004. Senate Special Aging Committee, hearing on Liability, Licensing and the FluVaccine Market: Making Decisions Today to Prevent a Crisis Tomorrow, November 16, 2004. House Committee on Government Reform, full committee hearing on The Nation'sFlu Shot Shortage , October 8, 2004. Senate Committees on the Judiciary and Health, Education, Labor and Pensions,joint hearing on BioShield Legislation , October 6, 2004. House Appropriations Committee, Subcommittee on Labor, Health and HumanServices and Education, hearing on Influenza Vaccine , October 5, 2004. Senate Special Aging Committee, hearing on Influenza and the Elderly , September 28, 2004. House Committee on Government Reform, Subcommittee on Human Rights andWellness, hearing on Mercury and Autism , September 8, 2004. House Appropriations Committee, Subcommittee on Labor, Health and HumanServices and Education, hearing on Global Diseases ProgramsAppropriations , April 28, 2004. House Committee on Government Reform, hearing on Health System Preparednessto Handle Health Threats , focused on the 2003-2004 influenza season,February 12, 2004. The House Committee on Energy and Commerce is conducting an investigation intothe federal role in the flu vaccine shortage. The Committee Chairman and RankingMember sent letters to the Chiron Corporation, the Acting FDA Commissioner andthe Secretary of HHS, requesting information, on November 18, 2004, available at http://energycommerce.house.gov/108/News/11182004_1408.htm . The House Committee on Government Reform is conducting an investigation intoFDA's role in the shutdown of the Chiron plant. The Committee Chairman andRanking Member sent a letter to the Acting FDA Commissioner, requestinginformation, on October 13, 2004, available at http://reform.house.gov/UploadedFiles/101304fdaletterrelease.pdf . CRS Report RL31793 , Vaccine Policy Issues for the 108th Congress , by SusanThaul. CRS Report RS21507 , Project BioShield , by [author name scrubbed]. CRS Report RL32549 , Project BioShield: Legislative History and Side-by-SideComparison of H.R. 2122, S. 15, and S. 1504 ,by [author name scrubbed] and Eric Fischer. CRS Report RS21747, Avian Influenza: Multiple Strains Cause Different EffectsWorldwide , by [author name scrubbed]. CRS Report RL31333, Federal and State Isolation and Quarantine Authority , byAngie A. Welborn, (discusses state and federal authority for public healthemergencies). CRS Report RL31719 , An Overview of the U.S. Public Health System in the Contextof Bioterrorism , by [author name scrubbed] and Sarah Lister. GAO-05-177T, Flu Vaccine: Recent Supply Shortages Underscore OngoingChallenges, testimony, November 18, 2004. GAO-04-1100T, Infectious Disease Preparedness: Federal Challenges inResponding to Influenza Outbreaks , testimony, September 28, 2004. GAO-04-458T, Public Health Preparedness: Response Capacity Improving, butMuch Remains to Be Accomplished , testimony, February 12, 2004. GAO-02-987, Childhood Vaccines: Ensuring an Adequate Supply Poses ContinuingChallenges , report, September 13, 2002. GAO-01-786T, Flu Vaccine: Steps Are Needed to Better Prepare for Possible FutureShortages , testimony, May 30, 2001. GAO-01-624, Flu Vaccine: Supply Problems Heighten Need to Ensure Access forHigh-Risk People , report, May 15, 2001. IOM, The Threat of Pandemic Influenza: Are We Ready? A Workshop Summary November 16, 2004, at http://www.iom.edu/report.asp?id=23639 . IOM, Immunization Safety Review: Influenza Vaccines and NeurologicalComplications, October 6, 2003, at http://www.iom.edu/report.asp?id=15625 . IOM, Financing Vaccines in the 21st Century: Assuring Access and Availability, August 4, 2003, at http://www.iom.edu/report.asp?id=14451 . IOM, Board on Health Care Services, Calling the Shots: Immunization FinancePolicies and Practices, June 16, 2000, at http://www.iom.edu/report.asp?id=5508 . HHS National Vaccine Program Office Home Page: general information on vaccines,and the Draft Pandemic Influenza Preparedness and Response Plan. http://www.hhs.gov/nvpo/ . CDC Influenza Home Page: information for health professionals and the generalpublic, including guidelines related to the current vaccine shortage, http://www.cdc.gov/flu/ . CDC, Prevention and Control of Influenza, Recommendations of the AdvisoryCommittee on Immunization Practices (ACIP), MMWR Recommendationsand Reports , May 28, 2004, recommendations prior to announcement of thevaccine shortage for 2004-2005. CDC National Immunization Program Home Page: information about CDC-fundedvaccine purchases and related information, http://www.cdc.gov/nip/ . CDC Public Health Law Program Home Page: information on state authorities andactions taken to assure priority distribution of flu vaccine, http://www.phppo.cdc.gov/od/phlp/Influenza.asp . FDA Center for Biologics Evaluation and Research, Influenza Virus Vaccine2004-2005 Home Page: information about Chiron, Aventis, and MedImmunevaccine production, http://www.fda.gov/cber/flu/flu2004.htm . HRSA National Vaccine Injury Compensation Program (VICP) Home Page, http://www.hrsa.gov/osp/vicp/INDEX.HTM . NIH National Institute of Allergy and Infectious Diseases influenza Home Page: http://www.niaid.nih.gov/dmid/influenza/ . WHO Influenza Home Page at http://www.who.int/csr/disease/influenza/en/ . F.A. Sloan et al., "The Fragility of the U.S. Vaccine Supply," New England Journalof Medicine, 351:2443-2447, Dec. 2, 2004. J. Treanor, "Weathering the Influenza Vaccine Crisis," New England Journal ofMedicine , 351:2037-2040, Nov. 11, 2004. R. Giffin et al., "Childhood Vaccine Finance and Safety Issues," Health Affairs, 23(5): 98-111, Sept./Oct. 2004 (despite the title, a general overview offederal/state/private vaccine financing and distribution issues). National Vaccine Advisory Committee, "Strengthening the Supply of RoutinelyRecommended Vaccines in the United States: Recommendations from theNational Vaccine Advisory Committee," JAMA 290(23), Dec. 17, 2003, pp.3122-3128. | On October 5, 2004, Chiron (pronounced KÄ«Ì-ron), a California-based biotechnologycompany, notified U.S. health officials that British regulatory authorities had suspended productionof influenza ("flu") vaccine in its plant in Liverpool, England, due to vaccine safety concerns. Theplant was slated to provide between 46 million and 48 million doses of flu vaccine for the U.S.market for the imminent 2004-2005 flu season, almost half the expected nationwide supply. The announcement of Chiron's suspension prompted the Centers for Disease Control andPrevention (CDC) and its Advisory Committee on Immunization Practices (ACIP) to re-define thegroups most at risk, to be given priority for the available vaccine doses. CDC coordinatednationwide tracking of available vaccine, high-priority individuals who might need it, and infectionssignaling the start of the winter flu season. The Food and Drug Administration (FDA) sent a teamto the Liverpool plant to determine whether any of the Chiron vaccine lots could be salvaged (theylater determined that they could not) and sought additional sources of vaccine from othermanufacturers, domestically and abroad. States launched plans to locate and re-distribute or rationvaccine, and responded to reports of price-gouging. The response of local, state, and federalagencies was limited because most of the U.S. flu vaccine market is in private hands. Several bills were introduced in response to the shortage, and proposals introduced earlierin the 108th Congress, in response to flu vaccine supply problems during the 2003-2004 season,received renewed attention. Two hearings on influenza vaccine were held immediately prior toannouncement of the shortage, indicating Congress's ongoing interest in this issue. Additionalhearings were held after the shortage was announced. Congress also passed (in P.L. 108-357 , theAmerican Jobs Creation Act of 2004) a provision adding flu vaccine to the National Vaccine InjuryCompensation Program (VICP), and provided $100 million in FY2005 funding for influenzapreparedness, which could be used to purchase flu vaccine. The shortage illustrates the challenges that the federal government faces in responding topublic health threats. Much of the responsibility for preventing or managing the shortage rests withthe states or with the private sector, and the threshold over which the federal government wouldwrest control from either appears high. As a result, the federal government may appear disorganizedor unresponsive. The shortage also raises questions about the role and effectiveness of governmentin rationing a scarce health resource. As communities across the country saw long lines of sick and elderly citizens waiting in vainfor flu vaccine, and concerns about the supply for the 2005-2006 season emerged as well,policymakers asked why the system to provide this potentially life-saving product was so unreliable,and what could be done about it. Some have expressed concern that this situation bodes ill forpreparedness for an influenza pandemic or a large-scale bioterrorism event. This report will describethe system of flu vaccine production and delivery, the causes of supply problems, and options forimprovement. It will be updated as circumstances warrant. |
O n July 9, 2018, President Donald J. Trump announced the nomination of Judge Brett M. Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to fill the vacancy on the Supreme Court of the United States caused by Justice Anthony M. Kennedy's retirement on July 31, 2018. Nominated by President George W. Bush to the D.C. Circuit, a court once described by President Franklin Roosevelt as "the second most important court in the country," Judge Kavanaugh has served on the bench for more than twelve years. In his role as a Circuit Judge, the nominee has authored roughly three hundred opinions (including majority opinions, concurrences, and dissents) and adjudicated numerous high-profile cases concerning, among other things, the status of wartime detainees held by the United States at Guantanamo Bay, Cuba; the constitutionality of the current structure of the Consumer Financial Protection Bureau (CFPB); the validity of rules issued by the Environmental Protection Agency (EPA) under the Clean Air Act; and the legality of the Federal Communications Commission's (FCC's) net neutrality rule. Since joining the D.C. Circuit, Judge Kavanaugh has also taught courses on the separation of powers, national security law, and constitutional interpretation at Harvard Law School, Yale Law School, and the Georgetown University Law Center. Prior to his appointment to the federal bench in 2006, Judge Kavanaugh served in the George W. Bush White House, first as an associate and then senior associate counsel, before becoming an assistant and staff secretary to the President. Before his service in the Bush Administration, the nominee worked in private practice at the law firm of Kirkland & Ellis, LLP for three years and served in the Office of the Independent Counsel and the Office of the Solicitor General. Judge Kavanaugh began his legal career with three federal clerkships—two for judges on the federal courts of appeals and one for the jurist he is nominated to succeed, Justice Kennedy. Judge Kavanaugh is a graduate of Yale College and Yale Law School. This report provides an overview of Judge Kavanaugh's jurisprudence and discusses how the Supreme Court might be affected if he were to succeed Justice Kennedy. In attempting to ascertain how Judge Kavanaugh could influence the High Court, however, it is important to note that, for various reasons, it is difficult to predict accurately a nominee's likely contributions to the Court based on his or her prior experience. A section of this report titled Predicting Nominees' Future Decisions on the Court provides a broad context and framework for evaluating how determinative a judge's prior record may be in predicting future votes on the Supreme Court. Because Judge Kavanaugh would succeed Justice Kennedy on the High Court, the report then focuses on those areas of law where Justice Kennedy can be seen to have influenced the Court's approach, or provided a fifth and deciding vote, with a view toward how the nominee might approach those same issues. Justice Kennedy's retirement is likely to have significant implications for the Court, Congress, and the nation as a whole. Justice Kennedy, often described as the Roberts Court's median vote, was frequently at the center of legal debates on the High Court, casting decisive votes on issues ranging from the powers of the federal government vis-à-vis the states, to separation-of-powers disputes, to key civil liberties issues. Accordingly, a critical question now before the Senate as it considers providing its advice and consent to the President's nomination to the High Court is how Judge Kavanaugh may view the many legal issues in which Justice Kennedy's vote was often determinative. As a result, the report begins by discussing two cross-cutting issues—the nominee's general judicial philosophy and his approach to statutory interpretation. It then addresses thirteen separate areas of law, arranged in alphabetical order, from "administrative law" to "takings." Within each section, the report reviews whether and how Judge Kavanaugh has addressed particular issues in the opinions he authored. In some instances, the report also identifies other votes in which he participated (e.g., votes to join majority opinions authored by other D.C. Circuit judges, votes on whether the D.C. Circuit should grant en banc review to a decision of a three-judge panel, etc.). The report also analyzes, where relevant, Judge Kavanaugh's non-judicial work, including a number of speeches and academic articles, many of which address the role of the judiciary, separation of powers, and constitutional and statutory interpretation. While this report discusses many of Judge Kavanaugh's non-judicial writings, it does not address two types of written work. First, the report does not discuss anything written by the nominee in a representative capacity for another party, such as a brief submitted on behalf of a client to a court, as such materials may provide limited insight into the advocate's personal views on the law. For purposes of this report, this limitation also extends to writings related to Judge Kavanaugh's former government service, such as his work for the George W. Bush Administration, the Office of the Independent Counsel, and the Office of the Solicitor General. Second, the report does not discuss the nominee's writings that predate his graduation from law school, as such writings may be of limited import to gauging his educated views on the law. While the report discusses numerous cases and votes involving Judge Kavanaugh, it focuses particularly on cases in which the sitting panel was divided, as these cases arguably best showcase how he might approach a legal controversy whose resolution is a matter of dispute and is not necessarily clearly addressed by prior case law. In addition, the report highlights areas where the nominee has expressed views on the law that may contrast with those of some of his colleagues. To the extent that the nominee's votes in particular cases arguably reflect broader trends and tendencies in his decisionmaking that he might bring to the High Court, the report highlights such trends. Nonetheless, this report does not attempt to catalog every matter in which Judge Kavanaugh has participated during his service on the D.C. Circuit. A separate report, CRS Report R45269, Judicial Opinions of Judge Brett M. Kavanaugh , coordinated by [author name scrubbed], lists and briefly describes each opinion authored by the nominee during his tenure on the federal bench. Other CRS products discuss various issues related to the vacancy on the Court. For an overview of available products, see CRS Legal Sidebar LSB10160, Supreme Court Nomination: CRS Products , by [author name scrubbed]. At least as a historical matter, attempting to predict how Supreme Court nominees may approach their work on the High Court is a task fraught with uncertainty. For example, Justice Felix Frankfurter, who had a reputation as a "progressive" legal scholar prior to his appointment to the Court in 1939, disappointed some early supporters by subsequently becoming a voice for judicial restraint and caution when the Court reviewed laws that restricted civil liberties during World War II and the early Cold War era. Similarly, Justice Harry Blackmun, who served on the Eighth Circuit for a little over a decade prior to his appointment to the Court in 1970, was originally considered by President Richard Nixon to be a "strict constructionist" in the sense that he viewed the judge's role as interpreting the law, rather than making new law. In the years that followed, however, Justice Blackmun authored the majority opinion in Roe v. Wade , which recognized a constitutional right to terminate a pregnancy. He was generally considered one of the more liberal voices on the Court when he retired in 1994. The difficulty in attempting to predict how a nominee will approach the job of being a Justice remains even when the nominee has had a lengthy federal judicial career prior to nomination. Federal judges on the courts of appeals are bound by Supreme Court and circuit precedent and, therefore, are not normally in a position to espouse freely their views on particular legal issues in the context of their judicial opinions. Moreover, unlike the Supreme Court, which enjoys "almost complete discretion" in selecting its cases, the federal courts of appeals are required to hear many cases as a matter of law. As a result, the courts of appeals consider "many routine cases in which the legal rules are uncontroverted." Because lower court judges are often bound by Supreme Court and circuit precedent, moreover, the vast majority of federal appellate opinions are unanimous. Perhaps indicative of the nature of federal appellate work, the vast majority of cases decided by three-judge panels of federal courts of appeals are decided without dissent. While the D.C. Circuit, where Judge Kavanaugh serves, witnesses more dissents on average than its sister circuits, the overwhelming majority of opinions issued by the nominee's court are unanimous. Accordingly, while Judge Kavanaugh's work on the D.C. Circuit may provide some insight into his general approach to particular legal issues, the bulk of the opinions that the nominee has authored or joined may not be particularly insightful with regard to his views on specific areas of law, or how he would approach these issues if he were a Supreme Court Justice. When a federal appellate judge takes the step to write separately, however, such an opinion need not accommodate the views of other colleagues, and can therefore provide unique insight into a circuit judge's judicial approach. Even in closely contested cases where concurring or dissenting opinions are filed, however, it still may be difficult to determine the preferences of the nominated judge if the nominee did not actually write an opinion in the case. The act of joining an opinion authored by another judge does not necessarily reflect full agreement with the underlying opinion. For example, in an effort to promote consensus on a court, some judges will decline to dissent unless the underlying issue is particularly contentious. As one commentator notes, "the fact that a judge joins in a majority opinion may not be taken as indicating complete agreement. Rather, silent acquiescence may be understood to mean something more like 'I accept the outcome in this case, and I accept that the reasoning in the majority opinion reflects what a majority of my colleagues has agreed on.'" Using caution when interpreting a judge's vote isolated from a written opinion may be particularly important with votes on procedural matters. For example, a judge's vote to grant an extension of time for a party to submit a filing generally does not signal agreement with the substantive legal position proffered by that party. And while some observers have highlighted votes by Judge Kavanaugh in favor of having certain three-judge panel decisions reconsidered by the D.C. Circuit sitting en banc, these votes should be viewed with a degree of caution. A vote to rehear a case en banc could signal disagreement with the legal reasoning of the panel decision, and may suggest that a judge wants the entire court to have an opportunity to correct a perceived error by the panel. On the other hand, a vote to rehear a case en banc may be prompted by a judge's desire to resolve an intracircuit conflict between panel decisions, or may be indicative of the judge's view that the issue is of such importance as to merit consideration by the full court. Moreover, as one federal appellate judge noted in a dissent from a decision denying a petition for a rehearing en banc: Most of us vote against most such petitions . . . even when we think the panel decision is mistaken. We do so because federal courts of appeals decide cases in three judge panels. En banc review is extraordinary, and is generally reserved for conflicting precedent within the circuit which makes application of the law by district courts unduly difficult, and egregious errors in important cases. Consequently, a vote for or against rehearing a case en banc or on other procedural matters does not necessarily equate to an endorsement or repudiation of a particular legal position. Finally, it should be noted that, despite having served on the federal appellate bench for more than a decade, Judge Kavanaugh has said little about some areas of law because of the nature of the D.C. Circuit's docket and, as a consequence, it may be difficult to predict how he might rule on certain issues if he were elevated to the Supreme Court. Due to the D.C. Circuit's location in the nation's capital, and the number of statutes providing it with special or even exclusive jurisdiction to review certain agency actions, legal commentators generally agree that the D.C. Circuit's docket, relative to the dockets of other circuits, contains a greater percentage of nationally significant legal matters. For instance, the D.C. Circuit hears a large number of cases on administrative and environmental law matters. In contrast, cases at the D.C. Circuit rarely, if ever, involve "hot-button" social issues such as abortion, affirmative action, or the death penalty. Moreover, the D.C. Circuit docket has a lower percentage of cases involving criminal matters, prisoner petitions, or civil suits between private parties. As a result, this report focuses primarily on areas of law where Judge Kavanaugh has written extensively, and notes only in passing those areas where little can arguably be gleaned from his judicial record on account of his participation in few, if any, decisions directly addressing those particular areas of law. Notwithstanding the difficulty of predicting a nominee's future behavior, three overarching (and interrelated) considerations may inform an assessment of how a jurist is likely to approach the role of a Supreme Court Justice. First, the nominee's general approach to the craft of judging—a phrase that this report uses to refer to the process of how a judge approaches key aspects of the job, including writing legal opinions and resolving legal disputes on a multi-member court—may be an important consideration in predicting how a jurist would behave on the High Court. Second, the judge's overarching judicial philosophy, including how he evaluates legal questions as a substantive matter, is another central concern in gauging how a nominee may perform. Third, it may be helpful to reflect on a nominee's influences or judicial heroes, as those individuals may exhibit qualities that the nominee will aspire to emulate. On all three fronts, there are a host of clues on how President Trump's latest nominee to the High Court views the proper role of a Supreme Court Justice. Indeed, Judge Kavanaugh is a well-known jurist with a robust record, composed of both judicial opinions and non-judicial writings, in which he has made his views on the law and the role of the judge fairly clear. This section begins by discussing how the nominee has approached the craft of judging, including by examining how he prepares for a case, his writing style, his approach to working with his colleagues on the D.C. Circuit, and how his opinions have fared at the Supreme Court. The section then turns to more substantive questions about Judge Kavanaugh's judicial philosophy, noting two key aspects that have undergirded how the nominee has resolved legal disputes in the cases before him on the appellate bench. Finally, this section notes the jurists that Judge Kavanaugh has identified as judicial role models, either because of their general approach to the craft of judging or for their judicial philosophy. After his nomination to the Supreme Court, commentators noted Judge Kavanaugh's "reputation on both sides of the aisle as a solid and careful judge," highlighting his diligence throughout the process of authoring opinions for the D.C. Circuit. For instance, according to Time Magazine , the nominee requires his law clerks to create, even for routine cases, "thick black binders" "filled with memos and briefs . . . [and] every law-review article" that has been written on the relevant topic, resulting in "binders stack[ing] up in the kitchenette in [Judge] Kavanaugh's chambers." In this vein, Judge Kavanaugh's colleague, Judge Laurence Silberman, called the nominee "one of the most serious judges" he "ever encountered." Echoing these comments are anonymous evaluations in the Almanac of the Federal Judiciary from attorneys who practiced in front of the nominee, describing Judge Kavanaugh as "extremely well prepared," "careful[]," and "thorough" in his approach. Judge Kavanaugh's Writing Style . On a technical level, Judge Kavanaugh's writing has been widely praised for its clarity, including by the President, who described the nominee as "a brilliant jurist with a clear and effective writing style." And D.C. Circuit practitioners have likewise described Judge Kavanaugh's writing as "well reasoned," "thorough and clear," and "meticulous." As one commentator remarked, Judge Kavanaugh has "made a name for himself on the D.C. Circuit with clear, concise writing." It has also been observed that Judge Kavanaugh employs a number of mechanical techniques in crafting his judicial opinions, "includ[ing] strong lead-in sentences, lists, summaries, pointed questions, informal expressions and lots of repetition." Such techniques are evident throughout his written opinions wherein the nominee frequently employs bulleted lists, mathematical expressions and logical sequences —quite unusual in judicial writing—and regularly parses out the various components of his analysis through the use of introductory ordinals (i.e., first, second, third). Judge Kavanaugh also seemingly attempts to enhance the accessibility of his opinions through the occasional witticism or colloquialism. For instance, in one dissent, he equated the majority's decision to grant a writ of mandamus requiring a district court to enter a temporary stay to using a "chainsaw to carve your holiday turkey." On a more substantive level, the nominee frequently includes an extensive discussion on the background and history of a given issue or topic, particularly in his dissenting opinions. Throughout his judicial and non-judicial writings, moreover, Judge Kavanaugh relies heavily on academic scholarship, citing law review articles, treatises, and other materials, perhaps reflective of the depth of research for which the nominee is renowned. The nominee has commented: "I love looking at treatises, law review articles. The more I can read about how we got in this statute to where we are, in this constitutional provision and how it's been applied. So academic writing does matter to me." In a similar vein, he has advised his fellow jurists: [T]o be a good judge . . . we must keep learning. We do not know it all. . . . We have to constantly learn. We should draw from the law reviews and the treatises that professors have worked on for years to study a problem that we may have a couple of days to focus on. We should study the briefs and precedents carefully and challenge our instincts or prior inclinations. We are not the font of all wisdom. Working on a Multi-member Court . Given Judge Kavanaugh's industrious approach toward legal research and writing, it may be unsurprising that the nominee has been incredibly prolific both on and off the bench, perhaps providing one indication of the quality of the nominee's work. With regard to judicial opinion writing, the nominee frequently writes separately to express his particular views on the law, authoring more separate opinions than any of his colleagues on the D.C. Circuit during the 12 years he served on the appellate bench. Moreover, as Table A-1 indicates, during the nominee's tenure on the D.C. Circuit, Judge Kavanaugh also authored separate opinions at a greater rate than his colleagues who served as active judges on that court during that entire time period. While a judge's rate of concurrence or dissent in the abstract may reveal very little about the judge's ideological approach to a particular area of law, Judge Kavanaugh's tendency to write separately is somewhat probative in understanding his broad views on judging. As a general matter, some legal observers characterize a judge who tends to write separately as being more concerned with "getting the law right" than with countervailing interests that might otherwise lead a judge to join fully the opinion for the court. In a 2016 speech, Judge Kavanaugh noted that, while he "love[s] the idea of courts working together" and trying to "find common ground," he "dissent[s] a fair amount" and that "dissent is good" for a court. The frequency with which Judge Kavanaugh has authored majority opinions for divided judicial panels may also support the view that consensus is not necessarily a driving force in the nominee's approach to opinion writing. As Table A-2 demonstrates, while not as pronounced as his own propensity to author concurring or dissenting opinions, Judge Kavanaugh's majority opinions have tended to draw more separate opinions (and dissents specifically) relative to the majority opinions of his colleagues the D.C. Circuit. Jurists of various backgrounds have long debated the benefits and drawbacks of consensus on a multi-member court, and Judge Kavanaugh himself has claimed that a judge needs to "balance" various, competing interests when deciding whether to write separately. Regardless of the merits of that debate, the fact that the nominee tends to author separate opinions and prompts others to write separately may suggest that the nominee values independence and consistency in his judicial approach over consensus building, ideals the nominee has explicitly endorsed in his non-judicial writings. Moreover, Judge Kavanaugh's apparent propensity to eschew consensus in favor of candor may reflect his preference for clear rules in adjudication, as discussed in more detail below. There may be limits to the lessons that can be drawn from the frequency in which the nominee writes separately from other colleagues on the bench or prompts others to write separately. The choice to write separately is one that stems from various factors, and may simply depend on the personality and preferences of an individual judge, or the nature of the dispute before the court. More broadly, while the data contained in Table A-1 and Table A-2 may indicate Judge Kavanaugh's willingness to depart from the views of his colleagues, legal commentators have broadly noted his "very good reputation" for promoting collegiality on the D.C. Circuit and for "working with people across ideological lines." This reputation aligns with the nominee's public comments about how a judge should behave toward his colleagues. For instance, in a 2016 speech, Judge Kavanaugh described the "proper demeanor" for a judge as having empathy for one's colleagues, "demonstrat[ing] civility," and not "be[ing] a jerk." In his remarks during his Supreme Court nomination ceremony, Judge Kavanaugh described the seventeen other judges he worked with on the D.C. Circuit as "colleague[s]" and "friend[s]." While a judge's propensity to write on behalf of himself or a divided panel may suggest that the judge has idiosyncratic views on the law, Judge Kavanaugh's record on appeal to the Supreme Court appears to belie such a suggestion. As Table A-3 indicates, during the nominee's twelve years of service on the D.C. Circuit, the Supreme Court has reversed an opinion authored by Judge Kavanaugh only once, and reversed one additional opinion in which the nominee joined. Relative to his colleagues, the dearth of scrutiny by the Supreme Court of Judge Kavanaugh' s opinions is notable and could be a metric by which to gauge the nominee's work. Perhaps more telling of the strength of the nominee's record before the Court are several cases in which the Supreme Court adopted the reasoning in Judge Kavanaugh's opinions. As Table A-3 demonstrates, the Supreme Court has reversed a number of judgments from which the nominee dissented in the lower court. In at least five of these cases, the nominee's reasoning was adopted, at least in part, by the Supreme Court. Beyond the cases in which the Court directly reviewed a judgment in which Judge Kavanaugh authored a substantive opinion, in at least five other cases, the Supreme Court adopted, at least in part, reasoning from an earlier opinion of the nominee in a separate case (i.e., not the lower court opinion under review by the Supreme Court). More broadly, the Supreme Court has cited Judge Kavanaugh's opinions more frequently than it has cited other judges. As noted in Table A-4 , the Supreme Court has cited the nominee's separate opinions (i.e., dissents and concurrences), either in a majority or an individual Justice's separate opinion, eight times during the nominee's tenure on the D.C. Circuit. As Table A-5 indicates, no other D.C. Circuit judge who served on active status for Judge Kavanaugh's entire tenure on that court was cited by the Supreme Court as much during this same time period. And, as Table A-6 demonstrates, the Supreme Court cited only one other federal appellate judge who served on active duty during Judge Kavanaugh's entire tenure on the D.C. Circuit—Judge Jeffrey Sutton of the Sixth Circuit—more frequently than the nominee. While there may be limits as to what can reasonably be discerned by the sheer number of times the Supreme Court cites a particular jurist's separate opinions, these quantitative data suggest that the nominee is an influential lower court judge, and one the Justices on the Supreme Court hold in some esteem. This assessment also finds support in qualitative assessments of Judge Kavanaugh by legal commentators, who have described the nominee as one who approaches the craft of judging with "serious[ness]" and "commands wide and deep respect among scholars, lawyers and jurists." Turning to the question of judicial philosophy, while commentators have described Judge Kavanaugh's interpretative approach in various ways—including as "conservative" or "pragmatic" —the nominee's own writings have been fairly clear as to his judicial approach. Perhaps the best insights into Judge Kavanaugh's approach toward judging come from a speech he delivered in 2017 at Notre Dame Law School. Specifically, in themes that pervade both his judicial opinions and his non-judicial writing, Judge Kavanaugh focused on two central visions for adjudication in which he "believe[s] very deeply": (1) the "rule of law as a law of rules" and (2) the role of the judge as "umpire." The Rule of Law as a Law of Rules . Judge Kavanaugh's first vision for judging suggests that the nominee embraces a more formalist view of the law, favoring clarity to flexibility when rendering legal opinions. The phrase "rule of law as a law of rules" itself references Justice Antonin Scalia's famous speech from 1989 in which he argued for a more formalist approach that embraced clear rules and principles in lieu of balancing tests that, in the view of Justice Scalia, transformed the judge from a determiner of law to a finder of fact. Judge Kavanaugh has embraced legal formalism in a variety of contexts. For the nominee, critical questions for the judiciary include how "can we make the rule of law more stable, and how can we increase confidence in judges as impartial arbiters of the rule of law"? The answer to these questions for Judge Kavanaugh is to establish "stable rules of the road" for interpreting law "ahead of time," thereby enhancing the legitimacy of the judiciary by "prevent[ing] [courts] from allowing . . . personal feelings about a particular issue [to] dictate" how a case is resolved. As a result, Judge Kavanaugh has maintained that judicial decisionmaking that is not grounded in clear rules "threatens to undermine the stability of the law and the neutrality (actual and perceived) of the judiciary." With respect to statutory interpretation, the nominee has criticized binaries in which the invocation of a particular interpretive rule depends on a threshold question about whether the text being interpreted is ambiguous or clear. Ambiguity is often the threshold inquiry for determining whether a court should, for example, employ legislative history as an interpretive aid or defer to an administrative agency's legal interpretation. For Judge Kavanaugh, questioning whether text is ambiguous is problematic because "there is no objective or determinate way to figure out whether something is ambiguous." Because, in Judge Kavanaugh's view, "judgments about clarity versus ambiguity turn on little more than a judge's instincts," such an approach to interpretation threatens judicial legitimacy, as "it is hard for judges to ensure that they are separating their policy views from what the law requires of them." Instead, as discussed in more detail below, the nominee has argued that judges should "stop" using the "ambiguity trigger" in statutory interpretation and instead "strive to find the best reading of the statute" based on the text, context, and established rules of construction. Judge Kavanaugh's criticism of modern constitutional interpretation parallels his apprehensions about statutory interpretation, with the nominee expressing his broad concerns about "vague and amorphous" standards employed in constitutional interpretation, which he views as "antithetical to impartial judging." One of the nominee's primary criticisms concerns the use of tiers of scrutiny, such as strict scrutiny or rational basis review, to evaluate whether government action is permissible. Central to the nominee's criticism of the tiers of scrutiny is their requirement that a judge make a determination about whether a governmental interest is sufficiently "compelling" or "important," an inquiry that he views as lacking any objective measurement, and which puts the judge "in the position of making judgment calls that inevitably seem rooted in policy, not law." In this vein, Judge Kavanaugh's critique of the tiers of scrutiny echoes similar criticisms by Justice Clarence Thomas, who observed in a 2016 dissent that the "Constitution does not prescribe tiers of scrutiny," as well as Justice Scalia, who once described the tiers of scrutiny as adding an "element of randomness" to constitutional interpretation. While Judge Kavanaugh has been less specific as to how judges "should square up to the problem" of ambiguity in constitutional interpretation, his dissent in Heller v. District of Columbia (Heller II) suggests that he believes focusing on a constitutional provision's "text, history, and tradition" provides a more stable alternative. The "key threshold question" in Heller II concerned the constitutional test that a court should "employ to assess" whether a gun law comported with the Second Amendment. And while acknowledging that in its cases interpreting the Second Amendment, "the [Supreme] Court never said something as succinct as 'Courts should not apply strict or intermediate scrutiny but should instead look to text, history, and tradition to define the scope of the right and assess gun bans and regulations,'" Judge Kavanaugh concluded that the "clear message" to "take away from the Court's holdings and reasoning" is to eschew balancing tests "in favor of categoricalism—with the categories defined by text, history, and tradition." At the same time, there are limits to Judge Kavanaugh's formalism. As the nominee has acknowledged, "there are areas of the law that sometimes entail discretion. And it is important to acknowledge that sometimes judges must exercise reasoned decision-making within a law that gives judges some discretion over the decision." Accordingly, Judge Kavanaugh has cautioned against a vision of judging that could be "caricatured as being 'every case is simply mechanical and robotic for judges.'" To the nominee, there are certain cases where "[t]here is a body of precedent that helps inform" a decision, but nonetheless the judge must exercise some degree of discretion in reaching a decision. Judge Kavanaugh identifies a number of questions that he believes require such discretion, including, among others: "what is 'reasonable' under the Fourth Amendment?"; "[w]hat is a 'compelling government interest' under the Religious Freedom Restoration Act?"; and "what are 'unreasonable restraints of trade' for purposes of the Sherman Act." At the same time, the nominee has contended that ambiguity in the law exists in "far fewer places than one would think," and, to the extent possible, judges should avoid "injecting" ambiguity into the heart of interpretation. Judge as Umpire . The second, and closely related, pillar of Judge Kavanaugh's judicial philosophy—an embrace of the role of the judge as "umpire"—derives from an analogy Chief Justice John Roberts used during his Supreme Court confirmation hearing wherein he likened a judge's job to that of an umpire in baseball. During that hearing, the future Chief Justice described the umpire and judge as having "limited" roles in that a good judge, like an umpire, does not "make the rules," but instead "applies" them to ensure "everybody plays by the rules." Judge Kavanaugh has discussed "the notion of judges as umpires" extensively in his non-judicial writings, highlighting his "agree[ment] with that vision of the judiciary." According to the nominee: The American rule of law . . . depends on neutral, impartial judges who say what the law is , not what the law should be. Judges are umpires, or at least should always strive to be umpires. In a perfect world, at least as I envision it, the outcomes of cases would not often vary based solely on the backgrounds, political affiliations, or policy views of judges. In this vein, Judge Kavanaugh has defined "a neutral, impartial judiciary" as one "that decides cases based on settled principles without regard to policy preferences or political allegiances or which party is on which side in a particular case." This vision of a neutral, impartial judiciary is echoed throughout the nominee's non-judicial writings and speeches, as well as in his written opinions and during his confirmation hearing in 2006 as a nominee to the D.C. Circuit. For instance, Judge Kavanaugh emphasized at that hearing his view that "the worst moments in the Supreme Court's history have been moments of judicial activism . . . where the Court went outside its proper bounds . . . in interpreting clauses of the Constitution to impose its own policy views and to supplant the proper role of the legislative branch." As a result, the nominee has highlighted his belief "in judicial restraint, recognizing the primary policymaking role of the legislative branch in our constitutional democracy." These broad statements about the role of the judge as a neutral umpire may prompt the question as to how the nominee strives to achieve such neutrality. In accepting the nomination to the Supreme Court, Judge Kavanaugh articulated what he viewed as a "straightforward" means to ensure that a judge remains "independent" and "interpret[s] the law" but does "not make the law." Specifically, Judge Kavanaugh stated that a judge must interpret the Constitution "as written, informed by history and tradition and precedent." At a high level, this statement summarizes the three main aspects of the nominee's approach to ensuring that a judge remains an umpire, an approach that emphasizes (1) the primacy of the text of the law being interpreted, (2) an awareness of history and tradition, and (3) adherence to precedent. Each of these themes is examined below. Textualism. A foundational aspect of Judge Kavanaugh's judicial philosophy is his embrace of textualism, the doctrine that the words of a governing text are paramount to understanding the meaning of a law. As discussed in more detail below, Judge Kavanaugh has, like Justice Scalia, emphasized the "centrality of the words of the statute" and counseled against the use of certain "substantive principles of interpretation" that, in the nominee's view, pose risks to judges' roles as "neutral, impartial umpires in certain statutory interpretation cases." Thus, Judge Kavanaugh has advised that "[t]he judge's job is to interpret the law, not to make the law or make policy. So, read the words of the statute as written." In this vein, the nominee has described his embrace of textualism as intended to promote a neutral, impartial judiciary; in his words: "This tenet—adhere to the text—is neutral as a matter of politics and policy. The statutory text may be pro-business or pro-labor, pro-development or pro-environment, pro-bank or pro-consumer. Regardless, judges should follow clear text where it leads." In addition to figuring prominently in statutory interpretation, Judge Kavanaugh's textualist approach extends to constitutional interpretation. The nominee has remarked that the one factor that "matters above all in constitutional interpretation and in understanding the grand sweep of constitutional jurisprudence . . . is the precise wording of the constitutional text. It's not the only factor, but it's the anchor, the magnet, the most important factor that directs and explains much of constitutional law . . . ." Accordingly, Judge Kavanaugh has instructed that judges must "[r]ead the text of the Constitution as written . . . . Don't make up new constitutional rights that are not in the Constitution. Don't shy away from enforcing constitutional rights that are in the text of the Constitution. Changing the Constitution is for the amendment process. Changing policy within constitutional bounds is for the legislatures." Nonetheless, there are limits to Judge Kavanaugh's embrace of textualism. Specifically, the nominee has "emphasize[d] that the text is not the end-all of statutory interpretation," and has remarked that "on occasion the relevant constitutional or statutory provision may actually require the judge to consider policy and perform a common law-like function." Judge Kavanaugh suggests there are a variety of cases "where the judicial inquiry requires determination of what is reasonable or appropriate," and these "are less a matter of pure interpretation than of common law-like judging." Accordingly, while the nominee's writings demonstrate a clear subscription to textualism and a belief that "[m]any cases come down to interpretation of the text of the Constitution, a statute, a rule, or a contract," he also seems to leave room for a recognition that "not every case comes down to pure interpretation." History and Tradition. Beyond a reliance on a law's text to promote judicial neutrality, Judge Kavanaugh's judicial opinions are frequently guided by what he refers to as "history and tradition." The nominee, however, has not embraced a narrow view as to what particular "history" and "tradition" can inform legal interpretation, including constitutional interpretation. While some commentators have labeled Judge Kavanaugh an originalist in the Scalia tradition, others have observed that the nominee does not appear to "call himself an originalist, and his opinions on the appellate court suggest that he uses less originalist analysis than Justice Thomas or Justice Gorsuch." Indeed, in a 2017 speech, while suggesting that Justice Scalia's focus on "history and tradition" "might" be consistent with the vision of a judge as an impartial umpire, Judge Kavanaugh stated that he does not "[a]t the moment . . . have a solution" to his concerns about the indeterminacy of constitutional interpretation. In contrast to Justice Neil M. Gorsuch, who as a judge on the Tenth Circuit openly endorsed constitutional interpretations that relied on the Constitution's "original public meaning," Judge Kavanaugh has not been as explicit. In perhaps the nominee's closest embrace of originalism, Judge Kavanaugh contended in his dissenting opinion in Heller II that the "post-ratification adoption or acceptance of laws that are inconsistent with the original meaning of the constitutional text obviously cannot overcome or alter that text." Notably, the dissent continued: The Constitution is an enduring document, and its principles were designed to, and do, apply to modern conditions and developments. The constitutional principles do not change (absent amendment), but the relevant principles must be faithfully applied not only to circumstances as they existed in 1787, 1791, and 1868, for example, but also to modern situations that were unknown to the Constitution's Framers. To be sure, applying constitutional principles to novel modern conditions can be difficult and leave close questions at the margins. But that is hardly unique to the Second Amendment. It is an essential component of judicial decisionmaking under our enduring Constitution. Nonetheless, in his Heller II dissent and elsewhere, Judge Kavanaugh, when discussing history and tradition to "inform the interpretation of a constitutional provision," has looked to both pre- and post-ratification history and tradition. In a dissenting opinion in PHH Corp. v. CFPB , for instance, the nominee wrote that "in separation of powers cases not resolved by the constitutional text alone, historical practice helps define the constitutional limits on the Legislative and Executive Branches." In PHH Corp. , the majority of the D.C. Circuit sitting en banc held that the CFPB's structure of governance was constitutional under Article II. Judge Kavanaugh disagreed, canvassing the nation's historical post-ratification experience with the structure of independent agencies, and concluding that "the CFPB's departure from historical practice matters in this case because historical practice matters to separation of powers analysis." More broadly, Judge Kavanaugh's non-judicial writings might be read to suggest he elevates a textualist approach over an originalist philosophy. For instance, the nominee has suggested: When we think about the Constitution and we focus on the specific words of the Constitution, we ought to not be seduced into thinking that it was perfect and that it remains perfect. The Framers did not think that the Constitution was perfect. And they knew, moreover, that it might need to be changed as times and circumstances and policy views changed. The nominee has also cast some doubt on the reliability of some of the source materials frequently relied upon by originalists: [B]e careful about even The Federalist . . . That's not the authoritative interpretation of the words. You've got to be careful about some of the ratification debates. You've got to be careful about different people at the Convention itself. They had different views. So when there's compromise, all the more reason for me to stick as close as you can to what the text says. At the same time, while seemingly "not a dyed-in-the-wool originalist like Scalia," as one observer has put it, Judge "Kavanaugh has relied on originalist principles." In several speeches, for example, the nominee has endorsed the originalist concept of the "enduring constitution," albeit in connection with an overarching textualist approach to constitutional interpretation: "For those of us who believe that the judges are confined to interpreting and applying the Constitution and laws as they are written and not as we might wish they were written, we . . . believe in a Constitution that lives and endures." And the notion of an enduring Constitution has figured in Judge Kavanaugh's written opinions for the D.C. Circuit. Beyond his dissent in Heller II , in his dissent in Free Enterprise Fund v. Public Company Accounting Oversight Board (PCAOB), for instance, Judge Kavanaugh stressed the importance of original meaning in conjunction with a textualist approach, asserting that "it is always important in a case of this sort to begin with the constitutional text and the original understanding, which are essential to proper interpretation of our enduring Constitution." Precedent. Judge Kavanaugh's vision of a neutral, impartial judiciary—composed of judges strictly applying stable rules of law—perhaps suggests how the nominee might view the doctrine of stare decisis and the role of precedent in deciding cases. During his confirmation hearing in 2006 as a nominee to the D.C. Circuit, Judge Kavanaugh stated: "I believe very much . . . in following the Supreme Court precedent strictly and absolutely. . . . I think that is very important for the stability of our three-level system for lower courts to faithfully follow Supreme Court precedent . . . ." Indeed, in his non-judicial writings, the nominee has emphasized the importance of stare decisis: We operate in a system built on Supreme Court precedent. As lower court judges, we must adhere to absolute vertical stare decisis, meaning we follow what the Supreme Court says. And to be a good lower court judge, you must follow the Supreme Court precedent in letter and in spirit. We should not try to wriggle out of what the Supreme Court said, or to twist what the Supreme Court said, or to push the law in a particular direction . . . . That Judge Kavanaugh's judicial philosophy incorporates adherence to precedent is also evident in his written opinions issued in a number of high-profile cases over the last decade. Recently, in Garza v. Hargan , for instance, the nominee dissented from the court's en banc order in a case involving whether an alien minor without lawful immigration status in federal custody may obtain an abortion. In so doing, Judge Kavanaugh emphasized that "our job as lower court judges is to apply the precedents and principles articulated in Supreme Court decisions to the new situations." More generally, the nominee has warned that judges should follow Supreme Court cases both "in letter and in spirit," and has stated that even where the governing precedent is controversial or has engendered "vigorous dissents," the job of the lower court is not "to re-litigate or trim or expand Supreme Court decisions," but to follow those decisions "as closely and carefully and dispassionately as we can." In another dissenting opinion, Judge Kavanaugh more colorfully stated that lower courts must "follow both the words and the music of Supreme Court opinions." Notwithstanding these broad statements about the role of precedent for lower courts , it is difficult to state with certainty how Judge Kavanaugh would apply the doctrine of stare decisis in a particular case if he were elevated to the Supreme Court due to the unique nature of that position relative to his current role. The nominee's previous judicial writings were from the perspective of a D.C. Circuit judge—one bound to follow Supreme Court precedent and able to override existing circuit precedent only with the concurrence of a majority of the en banc court. Stare decisis applies quite differently, however, when the Supreme Court reconsiders its own cases. Nonetheless, Judge Kavanaugh's writings give some clues as to how he might approach the question of whether to overturn existing precedent. In one speech, the nominee stated that horizontal stare decisis—that is, the precedential effect that a court's own decisions have on that same court—"has some flexibility." In another talk, Judge Kavanaugh doubted whether existing Supreme Court case law on stare decisis provided a principled, restraining test for when to overrule prior cases. Responding to a question as to whether there is a single standard a court could use to determine whether to overturn a prior decision, the nominee noted that it is "hard to have a set formula for overruling that's going to work in all cases." Judge Kavanaugh described the Supreme Court's existing test as one that requires the Court to overrule when a case is "really wrong and has really significant practical effects, and there hasn't been reliance interests of the kind you would have with a property or contract decision." Nevertheless, the nominee criticized this test, remarking that it does "not really" "bind[ ]," or "tell[ ] you in advance with Justices of different stripes when" to overrule a case. In line with his general judicial philosophy that tends to emphasize stability and clear rules from the judiciary, Judge Kavanaugh expressed concern that the current formula does not give "much predictability or guidance." While the nominee has not further elaborated on his overarching theory for when to diverge from precedent, his general judicial philosophy, as noted, is based in part on the theory that judges should set clear rules in advance and then follow those rules. As Judge Kavanaugh has noted, "[e]ven in those cases where there is discretion . . . [and] judges are assigned what may be described as common-law-like authority," they must still adhere to certain principles: "we try to follow precedent and have a stable body of precedent"; "we try to write our decisions in reasoned and clear ways"; "we try to be consistent in how we go about deciding like cases alike"; and "we do so candidly." This emphasis on stability and predictability may suggest a reluctance to overturn well-established precedent. At the same time, Judge Kavanaugh's opinions reveal that he is less likely to follow Supreme Court case law or prior D.C. Circuit decisions when he believes a prior case has been significantly undermined by subsequent factual developments or is inconsistent with prevailing doctrine. For example, in United States v. Burwell , Judge Kavanaugh argued in dissent that the D.C. Circuit should not have followed its prior opinion that had "been undermined" by a subsequent Supreme Court decision. And, as discussed in more detail below, in a series of cases the nominee has questioned the continuing viability of the Supreme Court's decision in Turner Broadcasting System, Inc. v. FCC , most recently and most directly in a concurring opinion in Agape Church, Inc. v. FCC . In Agape Church , Judge Kavanaugh maintained that the factual foundation for Turner —the monopolistic nature of the cable television market—had been altered since the case was written in 1994, and, therefore, "the constitutional foundation . . . collapsed with it." The nominee suggested that future courts reviewing the constitutionality of the relevant provisions could reach a different result than the Supreme Court did in Turner , stating that stare decisis required courts to follow only the "constitutional principles that undergird Turner ," and that applying those principles to the modern market would "lead[] to an entirely different result." As a consequence, Judge Kavanaugh's Agape Church concurrence seems to express a belief that in certain circumstances, a court may depart from a prior decision's result so long as it remains true to its broader, underlying principles. Finally, it should be noted that the nominee has in several opinions criticized two Supreme Court decisions that declined to strike down statutes restricting the President's power to remove certain executive officers: Humphrey's Executor v. United States and Morrison v. Olson . While judges may be reluctant or unable to overrule prior cases, they frequently distinguish precedent with which they disagree from the disputes before them. As discussed below, Judge Kavanaugh has authored a number of opinions arguing that the courts should construe the scope of Humphrey's Executor and Morrison narrowly . Perhaps his most pointed remarks on Morrison came at an event in 2016 at the American Enterprise Institute: when asked whether he would give an example of "a case that deserves to be overturned," the nominee volunteered " Morrison v. Olson ," stating that the case had been "effectively overruled, but [he] would put the final nail in." While this comment was made in off-the-cuff remarks, when viewed together with his judicial opinions, it suggests that Judge Kavanaugh disagrees with the reasoning of Morrison , and may consider the case sufficiently "wrong" that it should be reconsidered. Finally, it may be instructive to note some of Judge Kavanaugh's judicial influences or contemporaries whose approach to judging the nominee has praised, as these jurists may provide insight into who he might model his judicial approach after if he were to be elevated to the High Court. As is perhaps evident in the importance the nominee places on judicial formalism and the concept of the judge as a neutral umpire, Justice Scalia and Chief Justice Roberts are two of the nominee's judicial role models. With regard to Justice Scalia, Judge Kavanaugh has stated that "Justice Scalia was and remains a judicial hero and role model to many throughout America," one who believed "that federal judges are not common-law judges and should not be making policy-laden judgments." Of particular note, the nominee credits Justice Scalia with bringing "about a massive and enduring change in statutory interpretation," one focused on "the centrality of the words of the statute." And with regard to Chief Justice Roberts, Judge Kavanaugh has described him as "lead[ing] the Court and the judiciary with [a] firm but humble touch." But Justice Scalia and Chief Justice Roberts are not the only jurists Judge Kavanaugh has commented on when describing who has influenced his view of judging. The nominee has lauded several jurists with varying judicial philosophies, including former Chief Justice William Rehnquist, as well as Justices Robert Jackson, Byron White, and Elena Kagan. In a speech dedicated to Chief Justice Rehnquist, the nominee described him as his "first judicial hero" and stated that "few justices in history have had as much impact as [Chief Justice] Rehnquist." The nominee remarked that as early as his law school days, he found frequent agreement with Chief Justice Rehnquist's opinions. Of particular significance to Judge Kavanaugh is the "importance of [Chief Justice] Rehnquist to modern constitutional law." Judge Kavanaugh has attributed to Chief Justice Rehnquist many of the principles that inform the nominee's judicial philosophy. According to the nominee, "[d]uring [Chief Justice] Rehnquist's tenure, the Supreme Court unquestionably changed and became more of an institution of law, where its power is to interpret and to apply the law as written, informed by historical practice, not by its own personal and policy predilections." As to Justices Jackson and White, Judge Kavanaugh identified both as "role models" during his confirmation hearing in 2006 as a nominee to the D.C. Circuit. Specifically, Judge Kavanaugh pointed to Justice Jackson's concurring opinion in Youngstown Sheet & Tube Co. v. Sawyer , a landmark separation-of-powers case wherein Justice Jackson established a three-part framework for assessing executive wartime powers. The nominee described the framework as "a work of genius . . . in terms of setting out the different categories of Presidential power and Congressional power in times of war and otherwise," and has cited it throughout his writings and speeches as influential on the nominee's view of the separation of powers. Judge Kavanaugh has also identified Justice Jackson as the "role model for all executive branch lawyers turned judges," such as Judge Kavanaugh himself. As to Justice White, Judge Kavanaugh has written less about his influence, but approved of Justice White's "approach to judging" characterized by "judicial restraint." Finally, Judge Kavanaugh has suggested an affinity with Justice Kagan based, in part, on their similar backgrounds in the executive branch. He has also cited Justice Kagan throughout his judicial and non-judicial writings, often alongside citations to Justice Scalia. While citations alone may not suggest more than respect for a colleague and agreement on discrete issues, as opposed to a wholesale endorsement of a jurist's judicial philosophy, at least one commentator has suggested that "[t]he Kavanaugh-Kagan relationship may be one to watch in particular, should they serve together. As her offer—and his acceptance—to teach at Harvard suggests, both have seen advantage in detente." One cross-cutting issue foundational to understanding Judge Kavanaugh's jurisprudence is his theory of statutory interpretation. The nominee has been quite clear about his own views on this subject, actively engaging in ongoing debates within the legal community over the proper theories and tools to employ when interpreting statutes. Judge Kavanaugh is an avowed textualist—that is, a jurist who will generally favor a statute's text over its purpose when interpreting the law's meaning, only crediting statutory purpose to the extent that it is evident from the text. As the nominee remarked in a 2016 book review: "The text of the law is the law." In this vein, Judge Kavanaugh has lauded Justice Scalia's textualist influence on the field of statutory interpretation —and has also praised Justice Kagan for her more textualist opinions. Because of his commitment to textualism, Judge Kavanaugh's approach to statutory interpretation potentially differs from Justice Kennedy's, as the retiring Justice did not necessarily adhere to one single theory of statutory interpretation. In practice, though, the two jurists appear to have more in common than their general approaches toward reading statutes might suggest. Similar to Judge Kavanaugh, and many other judges, Justice Kennedy would "begin with the text" of a statute and would give that text's ordinary meaning significant weight. Moreover, Justice Kennedy, at times, disclaimed attempts to discover Congress's original intent as divorced from the text. But Justice Kennedy would also sometimes go beyond the disputed text to consider the statutory scheme as a whole, looking to its operation and the practical consequences of various interpretations. In one concurring opinion, Justice Kennedy said: "Faced with a choice between two difficult readings of what all must admit is not optimal statutory text, the Court is correct to adopt the interpretation that makes the most sense." Though Judge Kavanaugh's textualist philosophy would on its face appear to be inconsistent with Justice Kennedy's more pragmatic approach, the nominee's opinions and other writings reveal that he also considers the legislative process and gives significant weight to the way a statute will be implemented. Accordingly, if confirmed, while Judge Kavanaugh could further tip the Court toward a more textualist approach to statutory interpretation, he might still invoke some of the more pragmatic considerations that Justice Kennedy sometimes relied on in his own analyses. This section first outlines Judge Kavanaugh's general theory of statutory interpretation, as announced in his non-judicial writings and in his opinions. It then explores in more detail how the nominee has applied this theory to resolve specific cases, examining the interpretive tools the nominee has used to determine a statute's meaning. Finally, it describes the nominee's views on severability, a doctrine closely related to statutory interpretation that may arise when courts consider the constitutionality of a provision situated within a larger statutory scheme. Judge Kavanaugh's theory of statutory interpretation is based on his broader views about separation of powers. As discussed, the nominee has argued that the Constitution requires judges to adhere to a specific role: to serve as "neutral, impartial . . . umpires" who "say what the law is, not what the law should be." In his view, focusing on a statute's text is the best way to fulfill this judicial role. Because it is "Congress and the President—not the courts" who "together possess the authority and responsibility to legislate," he believes that "clear statutes are to be followed." In one article, Judge Kavanaugh described his approach to "determin[ing] the 'best reading' of a statutory text" as follows: Courts should try to read statutes as ordinary users of the English language might read and understand them. That inquiry is informed by both the words of the statute and conventional understandings of how words are generally used by English speakers. Thus, the "best reading" of a statutory text depends on (1) the words themselves, (2) the context of the whole statute, and (3) any other . . . general rules by which we understand the English language. As this statement suggests, like other textualists, Judge Kavanaugh favors text-based tools of statutory interpretation and generally eschews the use of legislative history. The nominee has argued on textualist grounds that judges should be cautious not only of legislative history, but of any interpretive tools that rely on ambiguity as a trigger for application. Judges frequently agree that a court should turn only to certain tools—like legislative history—if the statutory text is ambiguous. Judge Kavanaugh has raised concerns about this approach, arguing that it is difficult to determine whether a particular statute is ambiguous "in a neutral, impartial, and predictable fashion." In line with his broader formalist views, he has expressed concern that the ambiguity determination "turns on little more than a judge's instincts," making it "harder for judges to ensure that they are separating their policy views from what the law requires of them." Accordingly, the nominee has called for judges to examine carefully their use of any doctrines that are dependent on an initial finding of ambiguity. Using his textualist philosophy to interpret a disputed statutory provision, Judge Kavanaugh often begins by looking to a word's "plain meaning," asking how the term would be understood in "common parlance." He sometimes relies on dictionaries as evidence of a word's ordinary meaning. The nominee also looks to the surrounding statutory text for interpretive context. Judge Kavanaugh's opinion in United States v. Papagno provides a clear example of this textualist approach. In that case, the D.C. Circuit was asked to interpret the Mandatory Victims Restitution Act (MVRA), which requires, in relevant part, that defendants reimburse victims of specified crimes for, among other things, "necessary . . . expenses incurred during participation in the investigation or prosecution of the offense." The defendant in Papagno had stolen computer equipment from his employer, the Naval Research Laboratory (NRL). At issue was whether the MVRA encompassed the costs of an internal investigation conducted by the NRL, where that investigation "was neither required nor requested by the criminal investigators or prosecutors," and the NRL stated that the investigation was conducted for its "own purposes." Writing the majority opinion for a unanimous panel, Judge Kavanaugh concluded that the MVRA did not authorize restitution for the internal investigation. He relied on dictionary definitions, "common parlance," and Supreme Court cases interpreting other federal statutes to decide that the NRL was not "participat[ing] in the investigation or prosecution of the offense" when it conducted the internal investigation. Judge Kavanaugh also reviewed the statutory context, situating the disputed provision of the MVRA within the "landscape" of other federal statutes governing restitution. He compared the disputed provision of the MVRA to a 2008 amendment of a different restitution statute, noting that in the other statute, Congress had "authorized restitution for 'an amount equal to the value of the time reasonably spent by the victim in an attempt to remediate the intended or actual harm incurred by the victim from the offense.'" In his view, this other statute would "authorize the restitution" that the NRL sought. He inferred that because "Congress did not add similar language to" the MVRA provision disputed in the case before the court, Congress did not intend to authorize such restitution in the MVRA. Thus, Judge Kavanaugh's opinion in Papagno relied on quintessential textualist tools like ordinary meaning and statutory context to resolve the interpretive question. Notably, the nominee acknowledged in the opinion that "several other courts of appeals have taken a broader view of the restitution provision," and ultimately, the courts of appeals in eight other circuits concluded that the MVRA did cover the costs of private investigations. This last term, the Supreme Court resolved the split in Lagos v. United States , ultimately adopting a more narrow view of the MVRA. Judge Kavanaugh sometimes invokes the canons of construction, which provide general presumptions about how courts should read statutes. There are two types of canons: semantic canons , which reflect the ways that people ordinarily use words, often mirroring ordinary rules of grammar; and substantive canons , which create presumptions favoring or disfavoring a particular substantive outcome. Textualists generally "favor the use of canons, particularly the traditional linguistic canons." Judge Kavanaugh uses these canons, especially the semantic canons, but has called for some reforms in their use. Notably, he advocates the use of semantic canons only to the extent that they actually reflect the way people "understand the English language," and, in line with his formalist views, has argued against both semantic and substantive canons that, in his view, cannot be applied in a consistent and principled way. First, Judge Kavanaugh has argued that judges should "shed" any semantic canons that do not actually "reflect the meaning that people, including Members of Congress, ordinarily intend to communicate with their choice of words." For instance, the nominee has questioned the rule against surplusage, which states that courts should generally presume that each word and clause of a statute has a distinct, non-redundant meaning, noting that "humans speak redundantly all the time, and it turns out that Congress may do so as well." Accordingly, in one dissenting opinion, Judge Kavanaugh concluded that the language of the disputed statute made "redundancy . . . inevitable," arguing that the court should "read the provisions according to their terms, recognizing that Congress often wants to make 'double sure'—a technique so common that it has spawned its own Latin canon, ex abundanti cautela ." The nominee has also argued against using any semantic canons that "require judges to make difficult policy judgments that they are ill-equipped to make." In contrast to the semantic canons, Judge Kavanaugh has more broadly questioned the use of the substantive canons, arguing that canons should be eliminated if they are not justified by "constitutional or quasi-constitutional values." But, for example, he has applied the presumption of mens rea—the presumption that crimes include a mental state requirement—noting that it "embodies deeply rooted principles of law and justice that the Supreme Court has emphasized time and again." Based on his broader concerns about the use of any tools that are only invoked in the case of textual ambiguity, he has suggested that judges should not turn to the substantive canons until after they have sought "the best reading of the statute by interpreting the words of the statute, taking account of the context of the whole statute, and applying the agreed-upon semantic canons." For this reason, Judge Kavanaugh has, as discussed, argued that courts generally should not use legislative history to interpret statutes: "the clarity versus ambiguity trigger for resorting to legislative history means that the decision whether to resort to legislative history is often indeterminate." Accordingly, he has declined to use legislative history to interpret a statute if the text is clear. The nominee has also echoed other textualist concerns regarding the use of legislative history. For example, in a dissenting opinion in Agri Processor Co. v. National Labor Relations Board , Judge Kavanaugh argued that the court should not rely on a committee report because it was "in no way anchored in the text" of the relevant statute. At issue in that case was whether "undocumented aliens" qualified as "'employees' protected by the National Labor Relations Act [(NLRA)]." Relying primarily on the statutory text and a substantive canon, the majority opinion concluded that the NLRA covered undocumented aliens. But the court also invoked legislative history to support its conclusion, in the form of two committee reports. Judge Kavanaugh rejected these committee reports, citing "the usual cautions": Committee reports are highly manipulable, often unknown by most Members of Congress and by the President, and thus ordinarily unreliable as an expression of statutory "intent." Committee reports are not passed by the House and Senate and presented to the President, as required by the Constitution in order to become law. Ultimately, the nominee concluded that, because "the term 'employee' in the NLRA must be interpreted in conjunction with the immigration laws," that term excluded "an illegal immigrant worker." Although Judge Kavanaugh has expressed concern about doctrines that invite judges to rely on personal assessments of meaning, he has also acknowledged that in some circumstances it is unavoidable that a judge will have to "consider policy and perform a common law-like function." In many cases, he relies on his own assessments of whether a particular interpretation aligns with "common" meaning or practice, adverting to his own understanding of what is "common." In this regard, the nominee invokes more pragmatic concerns that could be seen as extra-textual, asking how a statutory scheme functions and whether a particular interpretation makes sense within that scheme. In one case, for instance, writing for a majority of the court, Judge Kavanaugh rejected a reading of a statute that would have "tie[d] the system in knots and greatly hinder[ed] (if not prevent[ed]) the Department's exercise of any discretionary authority set forth by the regulations." To take another example, dissenting in White Stallion Energy Center v. EPA , Judge Kavanaugh interpreted a statutory term by reference to "common sense, common parlance, and common practice." In that case, the D.C. Circuit considered the EPA's decision to issue a rule governing emissions from electric utilities. The governing statute gave the EPA authority to issue "appropriate and necessary" regulations. The nominee argued that the EPA violated this statute when it "exclude[d] consideration of costs in determining whether it [was] 'appropriate'" to issue the regulation. To support this "common sense" understanding of the word "appropriate," Judge Kavanaugh drew from a variety of sources, including statements from administrative law experts and past practices of the executive branch. The nominee also used legislative history to support his understanding of "the congressional compromise" that was embodied in the relevant statute. In a similar vein, Judge Kavanaugh has invoked two different substantive canons that draw from general understandings about how Congress operates: the absurdity doctrine , which allows courts to depart from the text's plain meaning if it would produce an absurd result, and the "elephants in mouseholes" canon, which provides that courts should not presume that Congress "alter[ed] the fundamental details of a regulatory scheme in vague terms or ancillary provisions." Scholars and judges have argued these two canons may be inconsistent with textualism because they are focused on congressional intent and because the trigger for application is unclear, meaning that these canons cannot be applied consistently. The nominee has himself characterized the absurdity doctrine as an "off-ramp[ ] from the text" and suggested that courts should be wary of employing the canon in a way that allows them to "adopt what they conclude Congress meant rather than what Congress said ." Nonetheless, Judge Kavanaugh has cited the canon against absurd results to support his decision in multiple cases. And he has frequently employed the relatively new "elephants in mouseholes" canon. Finally, in an issue that has prompted significant commentary on the nominee, Judge Kavanaugh has criticized the modern approach to severability, a doctrine that is closely related to statutory interpretation. When a court concludes that a particular statute violates the Constitution, it will generally declare that the statute is void and strike down the unconstitutional provision. If a law is only partially unconstitutional, a court sometimes has to decide which provisions to "sever and excise as inconsistent with" the Constitution. Courts generally attempt to retain as much of the statutory scheme as possible. Under some circumstances, however, the Supreme Court has recognized that "it is not possible to separate that which is unconstitutional . . . from that which is not." In such a case, the statutory provision is inseverable, and the court will strike the whole statute. This issue may arise when courts are considering the constitutionality of one provision within a larger, and more complicated, statutory scheme—such as the Patient Protection and Affordable Care Act (ACA). To determine whether an unconstitutional provision is severable, courts consider whether Congress would have enacted the constitutional provisions independently of the unconstitutional portions, asking whether the remaining provisions are capable "of functioning independently." If "Congress has explicitly provided for severance by including a severability clause in the statute," this creates a strong presumption in favor of severability. Recently, Justice Thomas called for the Court to reconsider the modern severability inquiry, arguing that it "does not follow basic principles of statutory interpretation. Instead of requiring courts to determine what a statute means, the severability doctrine requires courts to make 'a nebulous inquiry into hypothetical congressional intent.'" Judge Kavanaugh has expressed similar concerns. He has described severability principles as a "mess" and questioned how a court can know what Congress would have wanted, characterizing this inquiry as an "inherently suspect exercise." The nominee suggested instead that "courts might institute a new default rule: sever an offending provision from the statute to the narrowest extent possible unless Congress has indicated otherwise in the text of the statute." Judge Kavanaugh seemed to echo these concerns about the inquiry into congressional intent in his dissenting opinion in PHH Corp. v. CFPB . After concluding that the statutory provision providing the Director of the CFPB with for-cause protection for removal from office was unconstitutional, he asked whether the entire statute authorizing the CFPB must be struck down, or whether the for-cause removal protection was severable from the rest of the statute. The nominee described the usual severability inquiry requiring courts to "speculate" as to Congress's intent, but concluded that no such speculation was required in the case before the court because the relevant statute contained a severability clause providing that if any provision in the statute were found unconstitutional, "the remainder . . . shall not be affected thereby." In Judge Kavanaugh's view, this express statutory provision controlled. It remains to be seen whether other Supreme Court Justices agree with Justice Thomas and Judge Kavanaugh's concerns about the severability doctrine, and so it is unclear whether the nominee's appointment to the Court would create a majority willing to reconsider the doctrine. In any event, the nominee's writings suggest that he takes a narrow view of a court's role in striking down unconstitutional legislation, (1) favoring severing unconstitutional provisions and striking down as little as possible and (2) giving conclusive effect to statutory provisions expressly providing either for severability or for inseverability. Administrative law is another critical area to consider when evaluating Judge Kavanaugh's judicial record, as the subject raises important questions about the scope of authority Congress has granted to federal agencies, as well as the Constitution's division of power among the three branches of government. While the jurist Judge Kavanaugh may replace, Justice Kennedy, was perhaps less influential in the area of administrative law than he was in other areas, he did often find himself as a decisive vote in important administrative law cases during the Roberts Court era. In the Supreme Court's most recent term, moreover, less than a week before announcing his retirement, Justice Kennedy authored an opinion in which he called for the Court to "reconsider" the doctrine of judicial deference to agency interpretations of their statutory authority under Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc. Because Justice Kennedy previously provided the fifth vote to defer to an agency's statutory interpretation under Chevron several times, this move signals to some that the Court may be on the verge of recrafting foundational administrative law doctrines, depending on who replaces the recently retired Justice. Given this context, it is notable that Judge Kavanaugh has a fairly robust record on administrative law matters. This is unsurprising, considering the D.C. Circuit's location in the nation's capital coupled with the composition of its docket, which is composed of a substantial number of administrative law cases as compared to its sister circuits, as a result of various statutes vesting the court with (sometimes exclusive) jurisdiction to hear challenges to agency actions. The nominee has accordingly ruled in numerous cases posing administrative law questions, including some in which the sitting panel was divided. In such cases, he authored a considerable number of concurring and dissenting opinions that articulate his understanding of the disputed legal issue. Perhaps most notably, Judge Kavanaugh wrote a number of separate opinions to explain his disagreement with other judges' views concerning the scope of a federal agency's statutory authority, reflecting a tendency to view agency attempts to expand their regulatory power with skepticism. In particular, echoing Justice Kennedy's recent concurrence, as well as similar opinions from other Justices, the nominee has signaled some discomfort with the Chevron framework, possibly indicating a willingness to cabin that doctrine to certain circumstances. To the extent his past opinions and scholarly work reflect how he would approach such matters if confirmed to the Supreme Court, he might be a vote to limit the circumstances in which courts defer under the Chevron doctrine to federal agencies. Before delving into the nominee's views on Chevron deference, however, this section first examines Judge Kavanaugh's writings on the threshold issue of when litigants may challenge agency actions in court. It then turns to the nominee's approach to agency interpretations of their statutory authority, including the Chevron framework, and concludes with an examination of the nominee's views with regard to discretionary and factual review of agency decisions. An important threshold issue in administrative law cases concerns whether an agency action is suitable for judicial review in a particular case. The nominee's views in this area contrast somewhat with that of one of his judicial heroes, Justice Scalia, who authored a number of opinions that interpreted Article III of the Constitution to prevent federal courts from hearing challenges to agency actions. In particular, Justice Scalia had relatively influential views on the constitutional requirements for individuals to establish standing to seek judicial relief from an Article III court, considering the standing doctrine to be an important limitation on the jurisdiction of federal courts and essential to preserving the broader principle of separation of powers. In contrast, while the nominee has certainly applied the Supreme Court's case law to dismiss a case on standing grounds, Judge Kavanaugh does not appear to take an especially restrictive view of standing under Article III, especially relative to his colleagues on the D.C. Circuit. In a number of cases that divided the D.C. Circuit, Judge Kavanaugh has departed from his colleagues to vote in favor of allowing individuals to challenge agency actions in court. In particular, Judge Kavanaugh has often found that plaintiffs established standing to sue federal agencies under Article III, even when his colleagues ruled to dismiss the suit. For instance, in Morgan Drexen, Inc. v. CFPB , a corporation subject to a CFPB enforcement action and an attorney who contracted with that corporation by hiring it to perform paralegal services, brought suit in federal court challenging the agency's structure as unconstitutional. The D.C. Circuit majority panel ruled that the attorney did not have Article III standing to sue because she failed to establish an injury—an enforcement action against the corporation she contracts with was insufficient to satisfy this requirement. The nominee wrote a dissenting opinion, arguing that courts have "a tendency to make standing law more complicated than it needs to be." To Judge Kavanaugh, because the CFPB was regulating a business that the attorney engaged in through the corporation, she had established Article III standing and her suit should not have been dismissed. Similarly, in Grocery Manufacturers Ass' n v. EPA , discussed in more detail below, the majority panel ultimately denied a food group's petition to review an EPA decision because it lacked prudential standing. The majority found the food group was not within the "zone of interests" protected by the relevant statute, although one judge on the panel noted he would also have held that the food group lacked Article III standing. In that case, the EPA issued a waiver with regard to ethanol use for entities that competed with the food groups in the market for the purchase of corn, the effect of which would increase the price of corn for the food group. Judge Kavanaugh dissented, arguing, among other things, that under the D.C. Circuit's "competitor standing cases," an entity does indeed have Article III standing to challenge agency regulations in situations where an agency regulates an entity's economic competitor in a manner that harms the entity's interests. Likewise, in Ege v. Department of Homeland Security , a plaintiff brought suit seeking removal of his name from the government's No-Fly List. The majority panel found the plaintiff lacked Article III standing because, while the court had statutory jurisdiction over the Transportation Security Administration (TSA), it did not possess jurisdiction to issue an order binding on the Terrorist Screening Center, the entity with responsibility for removing names from the List. Judge Kavanaugh wrote separately, arguing that the plaintiff established Article III standing and had followed the appeals process mandated by Congress and properly petitioned the D.C. Circuit for review of the TSA's final order. The nominee observed that the TSA, the agency that actually controls access to planes, conceded it would comply with a court order directing it to allow the plaintiff on a plane. For Judge Kavanaugh, this was sufficient to establish standing under Article III. Beyond constitutional standing issues, Judge Kavanaugh has written several opinions aiming to clarify what he considers the D.C. Circuit's muddled approach to prudential standing questions. For instance, as mentioned above, in Grocery Manufacturers Ass ' n v. EPA , the majority panel ultimately denied a food group's petition to review an EPA decision because it lacked prudential standing as it was not in the "zone of interests" protected by the relevant statute. In addition to his point concerning Article III standing, Judge Kavanaugh wrote separately to argue that the majority's conclusion that the zone of interests test is jurisdictional—meaning it concerns the power of a court to hear a case and requires the court to consider the issue even though the EPA did not raise it—was incorrect in light of recent Supreme Court decisions. According to the nominee, the zone of interests test simply asks whether a statute provides a cause of action to a party to bring suit. The following year, the Supreme Court in a unanimous decision favorably cited the nominee's opinion on this point. Similarly, in White Stallion Energy Center v. EPA , also discussed in more detail below, the majority panel denied petitions challenging an EPA regulation that set emission standards for certain air pollutants emitted by electric steam generating units. With respect to one plaintiff, the majority panel found that, although the party established standing under Article III to bring its challenge in federal court, it nevertheless was not within the zone of interests protected by the Clean Air Act because it was challenging the EPA's failure to more stringently regulate its competitors. Judge Kavanaugh wrote separately to again note his concern with the D.C. Circuit's application of the "zone of interests" test, case law he described as "in a state of disorder" that "needs to be cleaned up." The nominee noted that under the Supreme Court's zone of interests test, there is a "presumption in favor of allowing suit . . . unless the [relevant] statute evinces discernible congressional intent to preclude review." Further, under Supreme Court precedent, plaintiffs challenging an agency's alleged failure to regulate sufficiently its competitors are "presumptively within the zone of interests under the APA . . . absent discernible evidence of contrary congressional intent." Despite the Supreme Court's permissive application of the zone of interests test, Judge Kavanaugh noted, the D.C. Circuit has sometimes required evidence of an intent to benefit the plaintiff class within the relevant statute in order to fall with its zone of interests, essentially applying a presumption against allowing suit. Further, the nominee asserted, the D.C. Circuit at times barred competitors from suing as they were outside of the relevant statute's zone of interest, but at others permitted such suits "without any apparent distinguishing principle." Judge Kavanaugh thus urged the court to reconsider carefully its "crabbed approach to the zone of interests test" and align its cases with Supreme Court precedent. Another critical area of administrative law to consider when evaluating Judge Kavanaugh is his approach to when a court must review an administrative agency's legal interpretations. Under the Administrative Procedure Act (APA), courts must set aside agency action that is "not in accordance with law" or that is "in excess of statutory jurisdiction, authority, or limitations." Pursuant to the Supreme Court's framework from Chevron , courts generally apply a two-step analysis when reviewing an agency's interpretation of a statute it administers. At step one, a court must generally determine whether Congress "has spoken to the precise question at issue." If so, courts must enforce the clear meaning of the statute, notwithstanding an agency's contrary interpretation. If a statute is silent or ambiguous on the matter, however, Chevron 's second step requires a court to defer to an agency's interpretation if it is reasonable. Under a related, but distinct doctrine, the Supreme Court's opinions in Auer v. Robbins and Bowles v. Seminole Rock & Sand Co . instruct courts generally to defer to an agency's interpretation of its own regulations as long as that reading is reasonable. Applying Chevron. In his writings on and off the court, Judge Kavanaugh has questioned broader readings of both Chevron and Auer . In his non-judicial writings, the nominee has argued that the Chevron doctrine establishes improper incentives for federal agencies, encouraging regulators to push the boundaries of their statutory authority and take actions unless they are " clearly forbidden ." Further, the nominee has noted that the mechanics of applying the Chevron framework are imprecise. Chevron requires courts to enforce the clear meaning of a statute at step one, and only to move to step two when a statute is "ambiguous." To Judge Kavanaugh, however, the degree of clarity required in a statute to conclude that its terms are "clear" is uncertain, resulting in uneven application of this test by federal courts. For his part, Judge Kavanaugh has indicated that his threshold for finding ambiguity in a statute—thereby triggering deference under the Chevron framework—is likely higher compared to other judges. While Judge Kavanaugh has written opinions that apply the Chevron doctrine and defer at its second step to agencies' reasonable interpretations of statutory ambiguity, his separate opinions often reflected his larger concerns about the Chevron framework. For example, when the Chevron doctrine applies to an agency's interpretation of a statutory provision, Judge Kavanaugh may be more likely than other judges to find clarity, rather than ambiguity, in a statutory provision. The nominee wrote separately, for example, when the majority found a statute ambiguous and eligible for Chevron 's second step, while Judge Kavanaugh found the statute's meaning clear and would resolve the case at Chevron 's first step. For instance, in Northeast Hospital Corp. v. Sebelius , a panel of the D.C. Circuit examined whether the Medicare statute authorized certain patients to receive benefits under separate provisions of the law. The majority opinion first applied the Chevron doctrine and held that the law did not "clearly foreclose[]" the agency's interpretation as Congress had "left a statutory gap" that the agency was entrusted to fill. The court ultimately rejected the agency's position, however, because the agency improperly applied its interpretation retroactively. Judge Kavanaugh wrote a concurring opinion to express disagreement with the majority opinion's finding of ambiguity. The nominee concluded that the statute was sufficiently clear and the agency's interpretation contradicted the law. He observed that while the legal questions in the case were "embedded within a very complex legal scheme," the ultimate issue could be resolved by interpreting a specific provision of the law, not the entire Medicare statute. While it may take time and effort to determine the meaning of a statutory provision given a complex statutory backdrop, Judge Kavanaugh noted, that did not itself mean the statute was ambiguous. "What matters," he continued, "for the Chevron analysis is not how long it takes to climb the statutory mountain; what matters is whether the view is sufficiently clear at the top." Ultimately, because of Judge Kavanaugh's apparent penchant for finding clarity in statutory terms, he is more likely to resolve a case at Chevron 's first step, rather than at step two. In other words, when reviewing a federal agency's interpretation of a statute it administers, to the extent that the nominee finds congressional intent clear in a statutory provision, he is more likely to independently analyze an agency's assertion of authority at Chevron 's first step, rather than find a statute ambiguous and potentially defer to an agency's reasonable interpretation at Chevron 's second step. In this vein, the nominee's methodology echoes the approach of a majority of the Supreme Court in Wisconsin Central Ltd. v. United States , a case last term where a five-Justice majority applied a more rigorous inquiry at Chevron's first step than the dissenters to find a statutory provision unambiguous. Judge Kavanaugh's approach to such issues might also reflect agreement with an underlying tension commentators have observed with Chevron 's second step; namely, that a court's task at step two essentially elides any distinction between questions of law and questions of policy. In other words, according to this view, when a court defers under Chevron 's second step, it sometimes upholds an agency's legal interpretation of a statutory term, but at other times it is effectively affirming a reasonable policy choice made within the limits of congressionally delegated authority. Judge Kavanaugh arguably aims to distinguish more clearly between questions of law, on which courts should, in his view, retain interpretive authority, and policy, in which agencies exercise broader discretion to reach decisions according to their respective statutory delegations. Major Questions Doctrine. Perhaps in an effort to urge more clarity and certainty in statutory review cases, Judge Kavanaugh has stressed that agencies need clear authorization from Congress to pass regulations with major economic and political significance, a concept the Supreme Court first enunciated in FDA v. Brown & Williamson Tobacco Corp. For example, as explained in more detail below, in Coalition for Responsible Regulation, Inc. v. EPA , the nominee dissented from a denial of rehearing en banc, arguing that the EPA had exceeded its statutory authority in promulgating certain regulations to curb global warming. Judge Kavanaugh explained that the agency was faced with two competing interpretations of its authority under the Clean Air Act, the broader of which would create absurd results given other requirements in the statute. But rather than choose the narrow, more plausible interpretation of its power, the EPA nevertheless adopted the broader reading of its authority—which would impose permitting requirements on a far larger number of entities—and simply, in the nominee's view, "re-wrote" via regulation those aspects of the statute that triggered implausible results. Judge Kavanaugh rejected this reading of the statute, remarking that such an approach "could significantly enhance the Executive Branch's power at the expense of Congress's." After noting several reasons why he thought the EPA's broad interpretation was not supported by the statute, the nominee observed that the EPA's proffered reading would significantly increase the number of entities subject to regulation, which, in turn, "will impose enormous costs on" businesses, homeowners, and the economy-at-large. Judge Kavanaugh argued that there was no indication that Congress intended such a "dramatic expansion" of the requirements of the statute, pointing to the Supreme Court's admonition in Brown & Williamson that when Congress intends to delegate authority to regulate matters with major "economic and political significance," it does so clearly. Another case emblematic of this approach is Judge Kavanaugh's dissenting opinion in SeaWorld of Florida, LLC v. Perez . This case concerned a citation issued by the Secretary of Labor to SeaWorld of Florida, LLC (SeaWorld) for violating the Occupational Safety and Health Act's (OSHA's) "general duty" clause, which requires employers to provide employees with a workplace free of "recognized hazards" that may cause death or serious physical harm. SeaWorld violated the statute, according to the Secretary, when it exposed animal trainers who conducted performances with killer whales to recognized hazards of injury or drowning. The D.C Circuit panel majority denied a petition for review of the citation, concluding that the agency's decision was not arbitrary and capricious, and that it was supported by substantial evidence. Judge Kavanaugh dissented, concluding that, under current law, the Department of Labor (DOL) was not authorized to regulate these activities. The nominee noted that the DOL is charged with ensuring that employers provide a reasonably safe workplace for their employees, and OSHA requires employers to provide employees with employment free from "recognized hazards" likely to cause death or physical harm. But, according to Judge Kavanaugh, the DOL had "not traditionally tried to stretch its general authority under the Act" to regulate the normal activities of participants in sports events or entertainment shows. Nonetheless, the nominee found, the Department here "departed from tradition and stormed headlong into a new regulatory arena." Judge Kavanaugh explained that, under a prior decision from the Occupational Safety and Health Review Commission that binds the Department, hazards intrinsic to an industry's normal activities are not subject to penalties under OSHA because the alternative interpretation would potentially eliminate industries that are by nature dangerous. The DOL thus lacked, in the nominee's view, the authority to "regulate the normal activities of participants in sports events or entertainment shows" such as SeaWorld. Moreover, as he did in Coalition for Responsible Regulation , Judge Kavanaugh pointed to the Supreme Court's admonition in Brown & Williamson that when Congress delegates authority to regulate substantial areas of economic and political significance, it does so clearly. Thus, the nominee concluded, when passing OSHA Congress was well aware of the dangers of various popular sports and entertainment shows, and "it is simply not plausible" that Congress intended to authorize implicitly the Department, through the vague terms of OSHA, to regulate the sports and entertainment industry, including by eliminating familiar practices in those industries. Perhaps most prominently, Judge Kavanaugh returned to these considerations in a dissent from a denial of rehearing en banc in United States Telecom Ass ' n v. FCC , wherein he articulated a fairly stringent judicial framework for evaluating certain agency regulations that implicate so-called "major questions." This case concerned the FCC's net neutrality rule, which reclassified broadband Internet service providers (ISPs) as offering a telecommunications service, rather than an information service, thereby subjecting them to common carrier regulation under the Communications Act of 1934. The panel majority, applying Chevron , concluded the FCC's regulation was a reasonable interpretation of an ambiguous statute and thus upheld the rule at Chevron 's second step. Judge Kavanaugh, however, concluded that the agency lacked authority to issue the regulations. Drawing on various Supreme Court cases establishing what he referred to as the "major rules doctrine" (or "major questions doctrine"), including Brown & Williamson , he argued that when courts review agency rules, "two competing canons of statutory interpretation come into play." According to the nominee, on the one hand, the Chevron framework applies to "ordinary rules"; but, on the other, "Congress must clearly authorize" agencies to issue "major agency rules of great economic and political significance." If Congress only " ambiguously supplies authority for the major rule, the rule is unlawful." In other words, according to Judge Kavanaugh, while the Chevron doctrine permits agencies to issue ordinary rules based on statutory ambiguity, "the major rules doctrine prevents an agency from relying on statutory ambiguity to issue major rules." While acknowledging that the Supreme Court had not established a bright-line rule distinguishing major rules from non-major ones, the FCC net neutrality rule, in Judge Kavanaugh's view, clearly qualified as a major rule for purposes of the major rules doctrine. The nominee based this conclusion on several factors that mirrored situations in which the Supreme Court previously found a rule to be "major": the agency was basing its authority on a "long-extant statute"; the net neutrality rule affected a vast number of companies and consumers by "fundamentally transform[ing] the Internet," taking its control away from the people and giving it to the government; and the financial impact of the rule was "staggering." Because Congress did not clearly authorize the FCC to promulgate the net neutrality rule, Judge Kavanaugh ultimately concluded it was invalid. Judge Kavanaugh's approach to the major questions doctrine seems notable in at least two ways. First, at least relative to his colleagues on the D.C. Circuit, the nominee appears to have a lower threshold when considering whether regulatory actions constitute "major rules" that require clear congressional authorization. To the extent that the nominee takes an expansive view of what regulations fall into the "major rules doctrine" rubric, his approach would flatly deny application of the Chevron framework to a number of agency rules. Accordingly, if confirmed to the Supreme Court, Judge Kavanaugh might be a vote to further cabin the reach of the Chevron framework in certain circumstances. Second, in those cases that do raise the question whether a major rule is supported by statutory authority, his encapsulation of a "major rules doctrine" appears to also apply a more stringent analysis of whether an agency is authorized to promulgate a rule than the Supreme Court has in some of the cases the nominee cites for establishing the doctrine. For instance, in King v. Burwell , the Court initially decided that, due to its importance, the issue of whether the ACA established tax credits for states with a federal health care exchange was ineligible for the Chevron framework, but continued by simply independently examining the statute without a presumption either way. As Judge Kavanaugh explained in United States Telecom Ass ' n , the approach in King might be appropriate in typical, non-major-questions cases where Chevron does not apply, as the court "simply determine[s] the better reading of [a] statute" in order to determine if an agency's regulation is authorized. However, under the nominee's approach to major questions, a court places a "thumb on the scale" that requires clear statutory authorization to support a regulation, meaning that not only does Chevron not apply in such cases, but that the agency has a heavy burden to demonstrate that its underlying action is lawful. Auer Deference. Judge Kavanaugh's approach to the Chevron framework might also extend to other doctrines of deference to agency actions, such as Auer deference. In a 2016 speech, the nominee predicted that the dissenting opinion in Decker v. Northwest Environmental Defense Center , in which Justice Scalia objected to Auer deference because it violates separation of powers principles, will one day become the law. While Judge Kavanaugh does not appear to have made this argument in a judicial opinion, his approach to cases requiring review of an agency's interpretation of its own regulation appears somewhat analogous to his method in statutory review cases. In Howmet Corp. v. EPA , for instance, the D.C. Circuit panel's majority opinion upheld the EPA's interpretation of what constitutes "spent material" subject to its regulations, concluding that it was a reasonable interpretation of ambiguous language. Judge Kavanaugh wrote a dissenting opinion on the grounds that the EPA's proffered interpretation contradicted the text of its own regulation by expanding its reach. The nominee noted that agencies may not broadly interpret the scope of their own rules in order to "create de facto a new regulation." In Judge Kavanaugh's view, that was precisely what the EPA did, expanding the definition of "spent material" in order to "enlarge its regulatory authority" beyond the terms of the regulation. The nominee thus concluded that the regulations were clear and declined to defer to the agency. In contrast to his views on Chevron and Auer deference, Judge Kavanaugh does not appear to have objections to the deferential approach applied by courts when conducting discretionary and factual review of agency decisions, another major area of administrative law under which courts will invalidate "agency actions, findings, and conclusions found to be arbitrary, capricious, [or] an abuse of discretion." The nominee appears comfortable with upholding an agency's reasonable policy choice made within the scope of its own statutory authority, although he has invalidated agency decisions that he considered to be arbitrary and capricious. For instance, in American Radio Relay League, Inc. v. FCC , the D.C. Circuit examined a rule issued by the FCC concerning the use of electric power lines for broadband Internet access. The majority panel voted to remand the rule for further explanation because the agency had not sufficiently explained why it chose not to change the "extrapolation factor" used to measure the interference caused by broadband over power lines. Judge Kavanaugh wrote separately to dissent from this aspect of the panel's ruling, concluding that the agency's rule should be upheld as it had sufficiently explained its reasoning. The nominee noted that the FCC's choice of an extrapolation factor was "a highly technical determination committed to the Commission's expertise and policy discretion," and the agency's explanation that the evidence was not sufficiently conclusive to merit a change was sufficient. Judge Kavanaugh also noted that lower courts have transformed the "narrow" scope of review that the Supreme Court has applied pursuant to the arbitrary and capricious test into a "far more demanding test," with "inherently unpredictable" results for federal agencies. He reiterated that while courts must carefully police the boundaries of an agency's statutory authority, when Congress has delegated policymaking discretion to an agency, courts are not permitted to substitute their own judgment for that of the agency. Judge Kavanaugh has also written to signal disagreement with the judicial application of procedural requirements on federal agencies that are not expressly required by statute. In addition to remanding to the FCC to explain its reasoning regarding its rule concerning broadband access, the majority panel in American Radio also remanded the rule for the FCC to release redacted portions of internal staff studies relied on to issue the regulation. The nominee wrote separately to emphasize that, while the majority panel's decision was consistent with D.C. Circuit precedent—namely its 1973 decision in Portland Cement Ass ' n v. Ruckelshaus —that precedent was itself inconsistent with the text of the APA, which did not impose any such requirement on the rulemaking process. Further, Judge Kavanaugh noted that then-Justice Rehnquist's 1978 opinion for the Court in Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, Inc. required invalidatation of the D.C. Circuit's imposition of additional procedural requirements on agencies beyond those found in the APA generally, ruling that the APA established the maximum procedures Congress required for agency rulemaking. The D.C. Circuit's precedent from Portland Cement , Judge Kavanaugh argued, was thus inconsistent with the text of the APA and Vermont Yankee . Judge Kavanaugh's views on administrative law are a significant consideration for his nomination, as the Court may consider issues relating to Article III standing and deference to federal agencies under the Chevron and Auer frameworks in the near future. The nominee's scholarly writings and opinions in administrative law cases at the D.C. Circuit reveal several trends that may reflect how he would approach such matters if confirmed to the Supreme Court. The nominee has not articulated particularly stringent views on establishing standing under Article III to bring suit in federal court; likewise, Judge Kavanaugh appears comfortable with the relatively deferential review applied by courts when reviewing the discretionary decisions of an agency delegated to it by statute. At the same time, the nominee has voiced concern as to the deference accorded to agencies on questions of statutory and regulatory interpretation. Specifically, Judge Kavanaugh may be a vote to cabin the reach of Chevron deference by finding that regulations pose major questions; and even when applying the doctrine, Judge Kavanaugh may more frequently find clarity in statutory language, thus resolving disputes independently at Chevron 's first step, rather than deferring to reasonable agency interpretations at Chevron step two. Judge Kavanaugh is likely to represent a key vote in the Supreme Court's business law cases. Last term, the Roberts Court issued a number of business-related decisions in which Justice Kennedy sided with bare majorities of the Court to conclude, for example, that arbitration agreements providing for the individualized resolution of disputes between employers and employees must be enforced; that federal antitrust law does not prohibit contractual provisions barring merchants from expressing a preference that customers use certain credit cards; and that foreign corporations may not be sued under the Alien Tort Statute (ATS). Decisions like these have prompted a debate among legal commentators as to whether the Roberts Court can be fairly described as overly "pro-business." Regardless of one's assessment of the Roberts Court's approach to business issues, Judge Kavanaugh would have the opportunity to influence the Court's business law jurisprudence if confirmed. However, Judge Kavanaugh's views on a range of business law issues—including class action litigation, the reach of the Federal Arbitration Act, and federal preemption of state tort law —remain unclear, as the nominee has no significant writings on these issues as the D.C. Circuit confronts "relatively few explicit business cases." Nonetheless, the nominee's rulings provide some clues as to how he might address business law issues if elevated to the Supreme Court. Many of Judge Kavanaugh's most important decisions, which are discussed in more detail elsewhere in this report, have had potentially significant implications for business regulation. In PHH Corp. v. CFPB , for example, the nominee dissented from a decision affirming the constitutionality of the CFPB's structure, reasoning that for-cause tenure protections for the CFPB's Director unconstitutionally infringed on the President's removal power in light of, among other things, the Director's "enormous power over American businesses, American consumers, and the overall U.S. economy." And in Doe v. Exxon Mobil Corp. , Judge Kavanaugh dissented in part from a D.C. Circuit decision concerning corporate liability under the ATS, concluding that certain ATS claims against a corporation for its overseas conduct should be dismissed because, among other reasons, the executive branch had "reasonably explained that adjudicating those ATS claims would harm U.S. foreign policy interests." Whether these opinions reflect Judge Kavanaugh's approach to business-related cases more generally is open to debate, as they arguably reflect broader concerns about the separation of powers and national security, rather than any specific views of business regulation. However, the nominee's decisions concerning matters of substantive business law—specifically, antitrust law, labor law, and securities law—offer some insight into his views of certain federal statutes that regulate key aspects of the nation's economy. In these decisions, Judge Kavanaugh has expressed skepticism toward broad views of administrative power over business entities, evinced hesitance to find that federal statutes establish rights and remedies that are not textually explicit, and adopted a narrower view of federal antitrust law than some of his colleagues. This section of the report discusses how the nominee might approach business law cases by examining his prominent decisions concerning antitrust law, labor law, and securities law. Among the cases the Supreme Court confronts, antitrust disputes are unique in affording economic analysis a central role in the Court's decisionmaking. As the Supreme Court has explained, "[i]n antitrust, the federal courts . . . act more as common-law courts than in other areas governed by federal statute," as judicial interpretations of general statutory terms "evolve to meet the dynamics of present economic conditions." A number of commentators have accordingly observed that the evolution of antitrust doctrine in the 20th century can be viewed largely as a story of the evolution of economic thought during that period. A judge's views on antitrust law can therefore offer insight into his broader approach to questions of federal economic regulation. While the Court has over the past forty years interpreted the antitrust laws as being principally concerned with maximizing economic efficiency, some commentators have argued for a return to an era in which courts considered other goals in antitrust cases—including promoting consumer choice and product diversity, ensuring open markets in which new businesses have a reasonable opportunity for entry, and limiting the political power of large firms. Although Judge Kavanaugh has not been involved in a large number of antitrust cases, he has authored two critical opinions in the field that suggest he is unlikely to be receptive to these attempts to reorient the Court's antitrust jurisprudence toward an emphasis on social and political goals beyond the maximization of economic efficiency, measured through short-term effects on prices and output. In United States v. Anthem, Inc. , for example, Judge Kavanaugh dissented from a panel majority opinion affirming a permanent injunction blocking the merger of Anthem and Cigna, two of the nation's four largest health insurers. In that case, the federal government, along with eleven states and the District of Columbia, sought to enjoin the Anthem-Cigna merger under Section 7 of the Clayton Act on the grounds that it would substantially lessen competition in the market for the sale of health insurance to "national accounts"—that is, employers purchasing health insurance for more than 5,000 employees across more than one state. The U.S. District Court for the District of Columbia agreed with the plaintiffs and permanently enjoined the merger after concluding that its overall effect on the relevant market would be anticompetitive in light of the market share that the merged firm would possess, and a three-judge panel of the D.C. Circuit affirmed. Judge Kavanaugh, however, dissented from the panel's decision, arguing that the merger would likely generate efficiencies that would benefit the companies' customers. Specifically, Judge Kavanaugh concluded that because the merged company would have greater bargaining power, it would be able to negotiate lower rates with healthcare providers (e.g., hospitals and doctors) and pass savings along to its customers. In his dissent, Judge Kavanaugh sharply criticized a portion of the majority opinion suggesting that "it is not at all clear" that efficiencies likely to result from a merger "offer a viable legal defense to illegality under Section 7." While the D.C. Circuit majority ultimately assumed for purposes of the case that such efficiencies are relevant in assessing a merger's impact on competition, it also observed that the Supreme Court held in a 1967 decision that efficiencies are not relevant in Section 7 cases, and that the Court had neither explicitly nor implicitly overturned that decision. The nominee criticized this portion of the majority opinion as "ahistorical drive-by dicta," reasoning that in the 1970s, the Court "shifted away from the strict anti-merger approach [it] . . . had employed in the 1960s." Judge Kavanaugh concluded that under "the modern approach" to antitrust law reflected in subsequent Supreme Court decisions, courts "must take account of the efficiencies and consumer benefits that would result from [mergers]," and not limit their analysis to an assessment of how concentrated the relevant market would become as a result of a merger. Judge Kavanaugh also expressed his preference for "the modern approach" to antitrust law over the approach taken by the 1960s Court in his dissent in F ederal Trade Commission (FTC) v. Whole Foods Market . In that case, the FTC sought a preliminary injunction to block the merger of Whole Foods and another grocery store chain, Wild Oats. The key issue in the case was the scope of the relevant "product market" in which Whole Foods and Wild Oats competed. The scope of the product market in which a firm competes is often a critical question in merger cases, because mergers are less likely to harm competition in markets with many competitors than in markets with few competitors. In Whole Foods Market , the FTC contended that the relevant market involved what it called "premium, natural, and organic supermarkets" (PNOS)—that is, supermarkets that focus on high-quality perishables and specialty organic produce, target affluent and well-educated customers, and emphasize social and environmental responsibility. Because Whole Foods and Wild Oats were the only PNOS in eighteen cities, the FTC contended that the merger violated Section 7 because it would substantially decrease competition in the PNOS market in those cities. By contrast, Whole Foods argued that because it competed with a wide range of non-PNOS grocery stores, the relevant market for purposes of Section 7 was far broader than PNOS. Whole Foods contended that because the merged company would not possess a large share of the relevant market (which included non-PNOS grocery stores), the merger would not substantially lessen competition in that broader market. While the district court sided with Whole Foods and denied the FTC's motion for a preliminary injunction, the D.C. Circuit reversed that decision on appeal. Writing separately, Judge Janice Rogers Brown and Judge David S. Tatel both concluded that the district court erred. Relying in part on the Supreme Court's 1962 decision in Brown Shoe Co. v. United States , which identified seven non-exhaustive "practical indicia" to guide courts' market definition inquiry, Judge Brown concluded that the FTC had presented strong evidence showing that PNOS constituted a distinct "submarket" that catered to a "core group" of customers who would continue to shop at the merged firm over non-PNOS grocery stores even if the merged firm raised its prices. In an opinion concurring in the judgment, Judge Tatel likewise concluded that the district court erred by rejecting the FTC's evidence suggesting that PNOS constituted a distinct product market. The court accordingly remanded the case to the district court for a determination of whether the equities favored granting the FTC's motion for a preliminary injunction. In his dissent, Judge Kavanaugh rejected his colleagues' market definition analysis, arguing that it "call[ed] to mind the bad old days when mergers were viewed with suspicion regardless of their economic benefits." Judge Kavanaugh reasoned that because the FTC had not presented evidence showing that Whole Foods was able to set higher prices in areas where Wild Oats stores were absent, the district court correctly concluded that Whole Foods competed with a range of non-PNOS grocery stores. Echoing his broader views on the importance of formal rules, the nominee also noted his "strong[ ]" disagreement with what he described as his colleagues' effort to "resuscitate[ ] the loose antitrust standards of Brown Shoe Co. v. United States ." According to Judge Kavanaugh, Brown Shoe 's malleable "practical indicia" approach to market definition "ha[d] not stood the test of time," and had been rightly abandoned in favor of more rigorous approaches that emphasize quantitative assessments of market concentration and price elasticities. While the evidence is limited, Judge Kavanaugh's general approach to antitrust law appears to be broadly similar to the approach reflected in Justice Kennedy's prominent antitrust opinions. Justice Kennedy's tenure on the Court included several rulings limiting the scope of the antitrust laws based in part on insights from what has been called the "Chicago School" of antitrust analysis—an approach to antitrust that heavily emphasizes the use of economic reasoning, rejects reliance on values other than economic efficiency, and is generally confident that markets are efficient and self-correcting even in the absence of government interventions aimed at addressing anti-competitive behavior. Notably, Justice Kennedy's key antitrust decisions and Judge Kavanaugh's antitrust dissents all cite Judge Robert Bork's seminal book The Antitrust Paradox in support of their analyses. The Antitrust Paradox , which criticized the Supreme Court's broad interpretations of the antitrust laws in the 1960s and its reliance on non-efficiency values in many antitrust cases, was instrumental in the development of the Chicago School of antitrust analysis and has been described as the scholarly work that has exerted the "great[est] influence . . . on the direction of antitrust policy" since the adoption of the Sherman Act in 1890. While the Chicago School's influence on antitrust law has recently attracted criticism from some commentators seeking to reinvigorate antitrust enforcement, Judge Kavanaugh's opinions suggest that, like Justice Kennedy, he is generally sympathetic to the School's core principles and likely to resist efforts to shift the Court's antitrust jurisprudence. Although the nominee may not alter the direction of the Court's antitrust decisions in light of this apparent similarity between his views and those of Justice Kennedy, his vote may be key in maintaining the Court's current balance in antitrust cases, the most recent of which divided the Court by a 5-4 margin. Judge Kavanaugh has been involved in a number of cases involving labor law, another area in which some commentators have argued that the Roberts Court has evinced "pro-business" tendencies. While many of these cases have involved discrete legal issues that do not lend themselves to generalizations about the nominee's business law jurisprudence, two themes emerge from his labor law decisions. First, although Judge Kavanaugh has not disagreed with his D.C. Circuit colleagues on the legal standards governing the review of decisions rendered by labor arbitrators, he has applied those standards in a more deferential fashion than some of his colleagues. Second, perhaps reflecting his broader textualist approach to statutory interpretation, Judge Kavanaugh has been hesitant to find that federal labor and workplace safety statutes provide legal rights and remedies that are not textually explicit. Under the NLRA, the National Labor Relations Board (NLRB) has the authority to review labor arbitration proceedings in cases where such review is necessary to determine whether an employer committed an "unfair labor practice." The NLRA affords the NLRB discretion over the extent to which it will defer to arbitration decisions, and the NLRB has adopted a standard pursuant to which it defers to such decisions as long as the arbitrator's decision is, in relevant part, not "clearly repugnant" to the NLRA. The NLRB has further explained that an arbitrator's decision is not "clearly repugnant" to the NLRA unless it is "palpably wrong, i.e., unless the arbitrator's decision is not susceptible to an interpretation consistent with the [NLRA]." In Verizon New England Inc. v. NLRB , Judge Kavanaugh, writing for a divided court, applied these standards in reversing an NLRB order overturning an arbitration panel's decision. In that case, an arbitration panel determined that by waiving employees' rights to engage in "picketing" in its collective bargaining agreement with Verizon, a union had waived employees' rights to display pro-union signs in cars parked at Verizon facilities. The NLRB overturned the arbitration panel's decision, concluding that the union's waiver of the right to engage in "picketing" did not amount to waiver of the right to display pro-union signs in cars—a right protected by the NLRA in the absence of waiver. However, in an opinion by Judge Kavanaugh, the D.C. Circuit reversed the NLRB's decision. Over the dissent of Judge Sri Srinivasan, Judge Kavanaugh explained that under the deferential standard of review governing labor arbitration, the NLRB should have upheld the arbitrator's decision because it was not "palpably wrong." Specifically, Judge Kavanaugh reasoned that the arbitration panel's decision was not "palpably wrong" because "[n]o hard-and-fast definition of the term 'picketing' excludes the visible display of pro-union signs in employees' cars rather than in employees' hands, especially when the cars are lined up in the employer's parking lot and thus visible to passers-by in the same way as a picket line." Judge Kavanaugh similarly deferred to a labor arbitrator's decision in National Postal Mail Handlers Union v. American Postal Workers Union . In that case, two unions of postal workers disputed which union was entitled to perform certain work at a U.S. Postal Service facility under a 1979 Postal Service directive. One union brought the matter to arbitration and prevailed, prompting the other union to sue in federal court to overturn the arbitrator's decision. Over the dissent of Chief Judge David B. Sentelle, the nominee affirmed the arbitrator's decision that the dispute was arbitrable, explaining that although the arbitrator had incorrectly interpreted a 1992 agreement between the unions and the Postal Service governing the arbitration of disputes, the court was bound by Supreme Court precedent to affirm his decision as long as he was "even arguably construing or applying the contract and acting within the scope of his authority." Because the arbitrator's interpretation of the 1992 agreement "was not outside traditional juridical and interpretive bounds," Judge Kavanaugh concluded that the arbitrator was indeed "arguably construing or applying the contract," even if his interpretation "may have been badly mistaken." Judge Kavanaugh's labor law decisions also evince hesitance to find that federal labor and workplace safety statutes provide legal rights and remedies that are not textually explicit. For example, in International Union, Security, Police & Fire Professionals of America v. Faye , the nominee dissented from a D.C. Circuit decision holding that the Labor-Management Reporting and Disclosure Act (LMRDA) provides unions with an implied cause of action for breach of a fiduciary duty owed to them. In rejecting the court's conclusion that the LMRDA established such a cause of action, Judge Kavanaugh relied principally on the statute's text, which indicates that any "member" of a union may sue a union officer for breach of a fiduciary duty owed to their union. The nominee reasoned that because the statute by its terms created a cause of action only for union "members," it did not also contain an implied cause of action for unions themselves. Judge Kavanaugh rejected the argument that Congress intended to create an implied cause of action for unions in the LMRDA based on the Act's requirement that union members bring lawsuits only after their union refused or failed to do so, reasoning that this provision in the Act referred to a union's refusal or failure to bring lawsuits under state law and not the LMRDA. Similarly, in SeaWorld of Florida v. Perez , a decision mentioned above in the discussion on administrative law, Judge Kavanaugh dissented from a decision affirming the DOL's citation of SeaWorld for violating OSHA by exposing animal trainers to the hazards of drowning or injury when working with killer whales during performances. The decision concerned the scope of OSHA's "General Duty Clause," which imposes a general duty on employers to "furnish to each of his employees employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees." In dissent, Judge Kavanaugh reasoned that the DOL lacked the authority under the General Duty Clause to issue the citation because (1) DOL precedent provided that the Department lacked the authority to proscribe or penalize dangerous activities intrinsic to an industry, and (2) SeaWorld determined that close contact between trainers and whales was an important aspect of its shows and thus intrinsic to its business. Judge Kavanaugh also criticized what he characterized as the Department's "irrational[ ] and arbitrar[y]" distinction between close contact among trainers and whales and contact in other forms of sport and entertainment, such as football and NASCAR races, which the Department had denied it had the authority to regulate. The nominee reasoned that, despite the Department's claim that it lacked the authority to regulate such activities, the majority's decision affirming the citation would permit the Department "to regulate sports and entertainment activities in a way that Congress could not conceivably have intended in 1970 when giving the agency general authority to ensure safer workplaces." In the coming years, the Supreme Court is likely to confront a variety of important labor law cases. Given the close division evident in the Court's recent decisions in the field, it is likely that Judge Kavanaugh, if confirmed, would represent a critical vote in these cases. Whether the nominee's textualist approach to statutory interpretation or skepticism toward administrative authority would affect their ultimate disposition remains to be seen and would likely depend on the specific laws at issue in individual cases. Federal securities law is another significant area of business regulation that Judge Kavanaugh would likely be called upon to address if elevated to the Supreme Court. The federal securities laws impose a variety of disclosure and anti-fraud requirements on issuers and sellers of securities in order to promote the accurate pricing of securities and the efficient allocation of capital. Enforcement of the securities laws raises a variety of important questions, including issues concerning the substantive reach of individual securities law provisions and procedural issues involving the authority of administrative agencies and the certification of securities class actions. The Roberts Court has confronted a range of securities law issues, many of which Judge Kavanaugh has not addressed on the D.C. Circuit. However, the Court has also issued a series of opinions concerning one topic on which Judge Kavanaugh has expressed clear views: the scope of anti-fraud liability under Section 10(b) of the Securities Exchange Act of 1934 (Exchange Act) and its corresponding rule. Section 10(b) of the Exchange Act makes it unlawful "[t]o use or employ, in connection with the purchase or sale of any security . . . any manipulative or deceptive device or contrivance in contravention of such rules and regulations as the [Securities and Exchange Commission (SEC)] may prescribe." SEC Rule 10b-5, which implements Section 10(b), in turn makes it unlawful to, "in connection with the purchase or sale of any security": (1) "employ any device, scheme, or artifice to defraud"; (2) "make any untrue statement of material fact or . . . omit to state a material fact necessary in order to make the statements made . . . not misleading"; or (3) "engage in any act, practice, or course of business which operates or would operate as a fraud or deceit upon any person." In 1994, the Supreme Court held in a 5-4 opinion by Justice Kennedy that private plaintiffs cannot bring Section 10(b) claims against persons who aid and abet Section 10(b) violations but do not themselves personally engage in the conduct prohibited by Section 10(b). Justice Kennedy reasoned that because Section 10(b) by its terms prohibits "only the making of a material misstatement (or omission) or the commission of a manipulative act," private plaintiffs cannot sue those who merely aid and abet such conduct. The Court expanded on this decision fourteen years later in Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc. , another Justice Kennedy opinion. In that case—which one commentator has described as "easily the most controversial of the Roberts Court's securities decisions" —the Court held by a 5-3 vote that a corporation's vendors and customers who had allegedly facilitated accounting fraud by preparing false documentation and backdated contracts for the corporation were not liable to the corporation's investors under Rule 10b-5 for participating in a "scheme to defraud." The Court reasoned that the corporation's vendors and customers were not liable because the corporation's investors relied only upon the corporation's financial statements, and not on conduct by these "secondary" actors. Finally, in 2011, the Court held in Janus Capital Group v. First Derivative Traders by a 5-4 vote that an investment adviser who had helped an associated mutual fund prepare prospectuses containing false statements had not violated Rule 10b-5(b), which makes it unlawful to " make any untrue statement of material fact" in connection with the purchase or sale of a security. The Court concluded that the investment adviser had not violated Rule 10b-5(b) because it was not the "maker" of the relevant false statements. The Court explained that the "maker" of a statement within the meaning of Rule 10b-5(b) is "the person or entity with ultimate authority over the statement, including its content and whether and how to communicate it," and that the investment adviser was not the "maker" of the statements because it did not have such authority. Judge Kavanaugh's dissent in Lorenzo v. SEC offers insight into his views on the scope of "secondary" liability under the federal securities laws. Lorenzo involved an investment banker the SEC charged with sending email messages to investors containing misrepresentations about key features of a securities offering. The SEC found that the banker violated three separate anti-fraud provisions of the federal securities laws by sending the emails: (1) Section 17(a)(1) of the Securities Act of 1933 (Securities Act), which makes it unlawful "for any person in the offer or sale of any securities . . . to employ any device, scheme, or artifice to defraud"; (2) Section 10(b) of the Exchange Act; and (3) Rule 10b-5. While a panel of the D.C. Circuit held that the banker was not the "maker" of the relevant statements and accordingly reversed the SEC's determination that he violated Rule 10b-5(b) based on Janus Capital Group , it affirmed the SEC's determination that the banker violated the other relevant anti-fraud provisions. The court rejected the banker's argument that he did not violate the remaining anti-fraud provisions because he was not the "maker" of the misleading statements, reasoning that the text of the remaining provisions did not require that a defendant "make" the misleading statements. Instead, the court concluded that the banker violated the remaining anti-fraud provisions by knowingly sending the misleading statements from his email account to prospective investors. Judge Kavanaugh authored a pointed dissent from the court's decision, offering two independent disagreements with the majority's reasoning. First, the nominee disagreed with the majority's conclusion that substantial evidence supported the SEC's determination that the banker sent the emails with the requisite intent to deceive, manipulate, or defraud. Judge Kavanaugh argued that while the administrative law judge (ALJ) who initially adjudicated the case had concluded that the banker acted with the required mental state (i.e., mens rea), the ALJ's factual findings—that the banker had not read the emails, which his boss drafted—did not support the ALJ's legal conclusion. In a passage that arguably reflects his broader approaches toward both administrative law and criminal law, Judge Kavanaugh argued that in reviewing the ALJ's decision, the SEC had "[i]n a Houdini-like move, . . . rewrote the [ALJ's] factual findings to make [them] . . . correspond to the legal conclusion that [the banker] was guilty." Reasoning that the ALJ's legal conclusions did not heed "bedrock mens rea principles" that are "essential to preserving individual liberty," Judge Kavanaugh concluded that the court should have examined whether the ALJ's factual findings supported those conclusions, rather than deferring to the SEC's creation of "an alternative factual record." Second, Judge Kavanaugh disagreed with the majority's conclusion that sending misstatements related to a sale of securities qualifies as a violation of the relevant anti-fraud provisions if the defendant was not a "maker" of the misstatements. The nominee argued that this interpretation of the anti-fraud provisions would allow the SEC "to evade the important statutory distinction between primary liability and secondary (aiding and abetting) liability," because it would imply that those who aid and abet a misstatement are themselves primary violators engaged in a scheme to defraud. Noting that the Supreme Court had "pushed back hard against the SEC's attempts to unilaterally rewrite the law" and expand the scope of primary anti-fraud liability in Central Bank of Denver , Stoneridge Investment Partners , and Janus Capital Group , Judge Kavanaugh rejected the conclusion that the banker was liable for participating in a fraudulent scheme by forwarding the misstatements after receiving them from his boss. Judge Kavanaugh's Lorenzo dissent not only evinces a narrow view of the scope of secondary "scheme" liability under the anti-fraud provisions of the Securities Act and the Exchange Act—a view that seems to be consistent with that of Justice Kennedy—it also reflects skepticism concerning the legitimacy of judicial deference to SEC administrative adjudications. Notably, in June, the Supreme Court granted a petition for certiorari in Lorenzo on the question of "whether a misstatement claim that does not meet the elements set forth in Janus [ Capital Group ] can be repackaged and pursued as a fraudulent scheme claim." While Judge Kavanaugh's view may accordingly be vindicated, he would likely be disqualified from participating in the case if confirmed. If confirmed, Judge Kavanaugh would likely have the opportunity to shape the Supreme Court's business-related decisions, as the Court has already granted certiorari to hear cases involving arbitration, products liability, federal preemption, class actions, and antitrust law during the October 2018 Term. While the nominee has not participated in cases involving the full range of business law issues that come before the Supreme Court, his decisions concerning antitrust law, labor law, and securities law offer some insight into his views on key aspects of federal economic regulation. Consistent with his general views on the separation of powers and statutory interpretation, Judge Kavanaugh has expressed skepticism toward broad views of the powers of administrative agencies to regulate businesses and evinced hesitance to find that federal statutes regulating economic activity establish rights and remedies that are not textually explicit. The nominee has also adopted a narrower view of federal merger regulation than some of his colleagues and, in the process, expressed a preference for modern approaches to antitrust law over the more flexible approach taken by the Court in the 1960s. Ultimately, this view of antitrust law, and Judge Kavanaugh's view of the scope of the anti-fraud provisions of the federal securities laws, suggest that the nominee's approach to business law matters may be quite similar to that of Justice Kennedy. Justice Kennedy was a critical vote in civil rights cases involving matters including voting rights, affirmative action, housing and employment discrimination, and sexual orientation discrimination. While Judge Kavanaugh, if confirmed to succeed Justice Kennedy, could be influential in shaping the Court's civil rights jurisprudence, the nominee's fairly limited record with respect to civil rights law makes it difficult to assess how he might vote on a broad range of civil rights matters. Judge Kavanaugh's approach to analyzing constitutional civil rights claims is particularly difficult to discern given his limited participation in cases involving equal protection challenges based on the Fifth or Fourteenth Amendments. For example, the nominee's only brush with the issue of affirmative action came in the form of a vote—without a written opinion—in favor of rehearing a panel decision that upheld an affirmative action program against a constitutional challenge raised by a non-minority plaintiff. The panel decision at issue rejected the plaintiff's arguments that a business development program denied him equal footing to compete with minority-owned businesses in violation of the Fifth Amendment. As noted above, however, a vote to rehear a case before the en banc court can be motivated by many factors beyond mere disagreement with the panel decision. The nominee's most significant cases addressing civil rights matters have involved claims brought under Title VII of the Civil Rights Act of 1964 (Title VII), the Americans with Disabilities Act (ADA), and other employment discrimination statutes. Here, Judge Kavanaugh's record is still relatively limited, as the nominee has not addressed a number of issues that have divided the lower courts with respect to statutory civil rights law, such as whether and to what extent Title VII prohibits discrimination based on sexual orientation. Similarly, Judge Kavanaugh has written one decision, discussed below, assessing the legality of a voter identification law under the Voting Rights Act in a fact-intensive analysis that granted preclearance of that law on behalf of a unanimous three-judge panel. This section provides an overview of the limited civil rights cases that Judge Kavanaugh has adjudicated, beginning with statutory civil rights matters and concluding with his one voting rights case. With respect to statutory civil rights claims, a closer look at Judge Kavanaugh's authored opinions provides some noteworthy reference points. Of particular note are two concurrences in which he urged a legal position that would have altered circuit precedent with respect to certain Title VII racial discrimination claims, as well as several dissenting opinions involving federal employers that concerned a potential conflict between an antidiscrimination protection and another statute or countervailing interest, such as national security. For example, in Ayissi-Etoh v. Fannie Mae , a Title VII case, Judge Kavanaugh concurred in the judgment in favor of the plaintiff, who had alleged, among other claims, a racially hostile work environment based on evidence that included the company's vice president allegedly shouting at the plaintiff "to get out of my office nigger." The panel issued a per curiam decision holding that the evidence, in its totality, was sufficient to establish the plaintiff's claims. The nominee wrote separately to "underscore an important point"—that the alleged statement by the vice president to the plaintiff " by itself would establish a hostile work environment for purposes of federal anti-discrimination laws." Judge Kavanaugh emphasized that a supervisor made this statement, and "[n]o other word in the English language so powerfully or instantly calls to mind our country's long and brutal struggle to overcome racism and discrimination against African-Americans." While other federal courts of appeals have held that similar evidence supports a racially hostile work environment claim, the nominee's position would notably go further than such precedent by expressly creating a clear rule that a supervisor's one-time use of a particular racial slur can, as a matter of law, establish the Title VII violation. Judge Kavanaugh concurred in another Title VII race discrimination case, Ortiz-Diaz v. Department of Housing & Urban Development . At issue in Ortiz was whether the denial of a Latino employee's request for a lateral transfer was actionable under Title VII, where the denial was allegedly based on his race and national origin, but the transfer itself would have been to a position of the same pay and benefits. Ordinarily, such a transfer would not have constituted a Title VII violation under D.C. Circuit precedent because it did not effect a change in the terms, conditions, or privileges of the plaintiff's employment. In a reissued decision, however, the panel held that the transfer denial at issue could be a Title VII violation, as it would have removed the plaintiff from a race-biased supervisor, and offered potential career advancement. Thus, the panel concluded, the evidence created a triable issue that the transfer denial was based on the plaintiff's race. Concurring, Judge Kavanaugh stated that he was "comfortable with the narrowing of our precedents" so that some lateral transfers—rather than none—could be actionable under Title VII. Notably, he added that in a future case, the en banc court "should go further" by establishing that, as a rule, all discriminatory transfers and denials of transfers based on an employee's race "plainly constitute[ ]" discrimination in violation of Title VII. Here, as in Ortiz-Diaz , Judge Kavanaugh construed the protections afforded under Title VII more broadly than the interpretation taken by some other federal appellate courts. While Judge Kavanaugh has construed Title VII in a manner that has been favorable to some claims raised by plaintiffs, he has also ruled against plaintiffs on occasion. In particular, in the context of certain antidiscrimination claims raised against federal employers, the nominee has differed—at times markedly so—from some of his colleagues in finding that certain legal doctrines or governmental interests bar antidiscrimination claims from proceeding. In Rattigan v. Holder ( Rattigan I ), for example, and a subsequent decision issued after the panel granted rehearing of the case ( Rattigan II ), Judge Kavanaugh filed dissenting opinions disagreeing with the majority's decision to allow a plaintiff's Title VII retaliation claim to proceed. In Rattigan I and II , the plaintiff, a Federal Bureau of Investigation (FBI) agent based in Saudi Arabia, alleged that his supervisor retaliated against him for filing a race and national origin discrimination complaint by referring him to the FBI's Security Division for possible investigation into whether his security clearance should be withdrawn. Central to the disposition of that case—and the basis for disagreement between the majority opinion and Judge Kavanaugh's dissents in Rattigan I and II —was how to interpret and apply the Supreme Court's 1988 decision in Department of Navy v. Egan to an allegedly retaliatory referral. In Egan , the Supreme Court addressed the "narrow question" of whether the Merit Systems Protection Board (MSPB) had statutory authority to review the basis for a security clearance decision, the denial of which resulted in the plaintiff's termination from a laborer's job at a Navy facility. Holding that the MSPB lacked such authority, the Court in Egan discussed the statutory text relating to MSPB review and procedures, emphasizing: (1) the President's authority as Commander in Chief in matters of national security and foreign affairs; (2) the broad discretion committed to executive branch agencies to protect classified information and determine access to it; and (3) the lack of expertise agencies like the MSPB have in matters of national security to review a security clearance decision. The majority in Rattigan I —in a matter of "first impression" —held that the FBI's decisionmaking process and clearance decision were not reviewable under Egan , but that the plaintiff's retaliation claim could nonetheless proceed because he challenged his supervisor's referral as retaliatory, not the clearance decision itself. Concluding that the plaintiff's retaliation claim could possibly be adjudicated without reviewing the agency's security clearance process, the panel instructed the district court on remand to determine whether the plaintiff had presented sufficient evidence for this claim to proceed "without running into Egan ." That application of Egan, the majority stated, "preserv[es] to the maximum extent possible Title VII's important protections against workplace discrimination and retaliation." While the majority viewed Egan as a "narrow" ruling cabined to the nonreviewability of the substance of the security clearance process and clearance decision, Judge Kavanaugh interpreted Egan more broadly to preclude categorically a court's review of any such referrals. Reading Egan as "an insurmountable bar" to the claim, the nominee criticized the majority for "slicing and dicing" the security clearance process in order to sustain the plaintiff's Title VII claim. In Judge Kavanaugh's view, the President's issuance of executive orders requiring employees to report their doubts as to another employee's continued eligibility to access classified information provided a "powerful indication" that those referrals fell within Egan 's bar to reviewability. While the nominee noted that he "share[d] the majority's concern about deterring false or wrongful reports that in fact stem from a discriminatory motive," Judge Kavanaugh stated that "there are a host of sanctions that deter" behavior, such as that alleged by the plaintiff, citing Department of Justice (DOJ) regulations. In its subsequent panel decision in Rattigan II , the majority further narrowed the type of Title VII claims that could go forward in connection with a security referral to only claims alleging that the reporting individual knowingly made the referral based on false information. Judge Kavanaugh again dissented, stating that the majority's conclusion could not "be squared" with Egan because it would still allow courts to review security clearance decisions that, in his view, are unreviewable under that precedent. In another dissent, Judge Kavanaugh took a similar approach when presented with the issue of whether privileges emanating from the Constitution's Speech or Debate Clause barred discrimination claims from proceeding against a congressional employer. In Howard v. Office of Chief Admin istrative Officer of the U.S. House of Representatives , a majority held that the Speech or Debate Clause did not require dismissal of the plaintiff's race discrimination claims brought pursuant to the Congressional Accountability Act because—based on the alleged facts specific to her claims—it was possible she could prove unlawful discrimination without necessarily inquiring into communications or legislative acts shielded by that Clause. The nominee, however, would have dismissed the claim as barred by the Clause, emphasizing the practical difficulty of challenging a congressional employer's personnel decisions without ultimately requiring it to produce evidence relating to legislative activities that the Clause protects from compelled disclosure. Describing the majority as "[t]rying to thread the needle and avoid dismissal" of the plaintiff's claims, Judge Kavanaugh stated that the majority's approach was "inconsistent with Speech or Debate Clause principles" and pointed to, as recourse for resolving allegations of discrimination, the availability of internal administrative procedures. Meanwhile, in Miller v. Clinton , the nominee, in dissent, construed general language in the Basic Authorities Act authorizing the State Department to contract with American workers in foreign locations "without regard" to "statutory provisions" concerning the "performance of contracts and performance of work in the United States" to shield the agency from a federal antidiscrimination lawsuit. In Miller , though it was uncontested that the State Department had fired an employee solely based on age (65), the agency argued that language in the Basic Authorities Act exempted it from complying with the antidiscrimination requirements of the Age Discrimination in Employment Act with respect to the plaintiff. The majority opinion rejected that argument, concluding the statute contained no express exemption to the Age Discrimination in Employment Act's broad proscription against discrimination based on age, contrasting the Basic Authorities Act to other instances in which Congress expressly authorized mandatory retirement clauses. The majority also expressed concern that accepting the State Department's argument would require reading the Basic Authorities Act to create exemptions to Title VII and the ADA, emphasizing its skepticism that Congress "would have authorized the State Department to ignore statutory proscriptions against discrimination on the basis of age, disability, race, religion, or sex through the use of ambiguous language." Judge Kavanaugh dissented, stating that as a matter of statutory interpretation, the case was "not a close call." The "plain language" of the Basic Authorities Act, as he viewed it, gave the State Department discretion to negotiate employment contracts without regard to statutes relating to the performance of work in the United States, and the Age Discrimination in Employment Act, in Judge Kavanaugh's view, was such a covered statute. Thus, he stated, "[t]he statute is not remotely ambiguous or difficult to apply in this case." In response to the majority's concern over the consequences that could result from exempting the State Department from the Age Discrimination in Employment Act and other workplace discrimination statutes, the nominee pointed to antidiscrimination protections provided for under the First and Fifth Amendments of the Constitution, calling the majority's concerns a "red herring" in light of those constitutional protections. Moreover, Judge Kavanaugh further declared that even if he agreed with the majority's concerns with respect to exempting the agency from the Age Discrimination in Employment Act, it was not for the court to "re-draw" the lines of the statute as it might prefer. Rather, he stated, "our job is to apply and enforce the law as it is written." As a general matter, Judge Kavanaugh's positions in these statutory civil rights cases suggest that his decisions in this area of law are centrally animated by his broader judicial philosophy that embraces legal formalism, textualism and, in the case of claims involving federal employers, the separation of powers. For instance, the nominee appears to prefer the articulation and application of clear rules to govern his analyses of civil rights matters, such as those he urged in Ayissi-Etoh and Ortiz-Diaz (that would establish per se liability for race discrimination based on certain evidence) and Rattigan and Howard (that would bar certain discrimination claims altogether). Meanwhile, his dissents in Rattigan , Howard , and Miller could be read to indicate a reluctance to expose the executive or legislative branches to liability under antidiscrimination laws unless binding precedent or statutory language dictate otherwise. Nonetheless, as noted, the statutory civil rights cases in which the nominee has participated are relatively limited, making it difficult to arrive at firm conclusions as to how he might approach other civil rights matters that may arrive at the Court. In the voting rights context, Judge Kavanaugh, sitting by designation, authored one notable decision, South Carolina v. United States , on behalf of a unanimous three-judge panel of the U.S. District Court for the District of Columbia. South Carolina predated the Supreme Court's 2013 decision in Shelby County v. Holder , which invalidated Section 4(b) of the Voting Rights Act (VRA), a provision containing a coverage formula for determining which states were required to obtain "preclearance" of their proposed voting laws under Section 5 of the VRA —from the DOJ or a three-judge district court panel—before such laws could take effect. Though Shelby County rendered the VRA's Section 5 preclearance requirement inoperable, Section 5 was still in effect at the time of South Carolina . At issue in South Carolina was whether that state's new voter identification (ID) law, Act R54, was valid under Section 5 of the VRA, which prohibits granting preclearance to state laws that either have the (1) "purpose" or the (2) "effect" of denying or abridging the right to vote on account of race. The DOJ previously denied prior approval of the South Carolina law, and the state sued to challenge that determination and seek a declaration that the law did not have the purpose or effect of denying or abridging the right to vote. Describing the VRA as "among the most significant and effective pieces of legislation in American history," Judge Kavanaugh, writing for a unanimous panel, ultimately granted preclearance of Act R54 for the election following 2012 under Section 5. The nominee's determination turned significantly on the facts of the case, a specific feature of the law at issue, and the deference he afforded to the state's reasons for and interpretation of the law. Specifically, R54, which generally required a voter to provide photo ID in order to vote in person, consisted of, as Judge Kavanaugh explained it, "several important components." The first would have expanded the type of photo IDs that could be used to vote, while a second provision would have created a new type of photo voter ID card and DMV photo ID card that could be obtained for free. A third provision—critical to the disposition of the case—would have continued to allow voters to cast ballots without a photo ID, provided that the voter produce a non-photo voter registration card and, pursuant to the new law, complete an affidavit at the polling site stating the reason for not obtaining a photo ID. The DOJ denied preclearance in part because that affidavit requirement—mandating that the voter identify "a reasonable impediment" that prevented him or her from obtaining a photo ID—was ambiguous and unclear in its application. Starting the analysis by evaluating the potential discriminatory effects of R54, Judge Kavanaugh focused on this "reasonable impediment" provision. The nominee explained that as the litigation unfolded, South Carolina officials responsible for interpreting and implementing the law began to solidify and provide more information—"often in real time"—as to how they would apply the provision. Those officials, the nominee stated, "have confirmed repeatedly" that they would accept any reason asserted by the voter on the reasonable impediment affidavit, including reasons such as having to work, lacking transportation to the county office, and being unemployed and looking for work. Judge Kavanaugh concluded that this official interpretation of the "reasonable impediment" provision was definitive, and he repeatedly emphasized that the state's expansive interpretation of the provision was central to the court's preclearance of the law. Indeed, the nominee noted the court may not have precleared South Carolina's proposed law without confirmation of the state's broad interpretation of the reasonable impediment provision because the law without it "could have discriminatory effects and impose material burdens on African-American voters, who in South Carolina disproportionately lack one of the R54-listed photo IDs" and "would have raised difficult questions under the strict effects test of Section 5." Judge Kavanaugh further advised that, if the state were to alter its interpretation of the reasonable impediment provision, it would have had to obtain preclearance of that change before applying it. The nominee thus concluded that R54 would not have discriminatory retrogressive effect within the meaning of Section 5 because, among other reasons, the state's broad interpretation of the "reasonable impediment" provision would mean that every voter who had a non-photo voter registration card under pre-existing law could still use that card to vote under the new law. Separately, Judge Kavanaugh's opinion also concluded that the state did not have a discriminatory purpose in enacting R54. The nominee rejected the argument that the introduction of the law in proximity to the election of the country's first African-American President, among other evidence, was indicative of a discriminatory purpose. South Carolina justified the law on the grounds that it was necessary to deter voter fraud. Judge Kavanaugh concluded that such a purpose was legitimate and could not be deemed pretextual "merely because of an absence of recorded incidents of in-person voter fraud in South Carolina." Pointing to the Supreme Court's 2008 decision in Crawford v. Marion County Election Board , the nominee stated that the Court had "specifically recognized" deterring voter fraud and enhancing public confidence in elections as legitimate interests, deeming "those interests valid despite the fact that the 'record contain[ed] no evidence of any such fraud actually occurring in Indiana at any time in its history.'" In addition, though the state legislature "no doubt" was aware that photo ID possession rates varied by race in the state, Judge Kavanaugh noted that the legislators, faced with those data, "did not just plow ahead," but instead provided for the addition "of the sweeping reasonable impediment provision," among other changes. While ongoing legislative action with the knowledge of racially disproportionate impact could be evidence of a law's discriminatory purpose, such facts and circumstances, the nominee concluded, were not present in South Carolina . In another section of the opinion, Judge Kavanaugh also compared the features of R54 to other state voter ID laws that had been recently upheld or invalidated, stating that "if those laws were to be placed on a spectrum of stringency, South Carolina's clearly would fall on the less stringent end." Two voter ID laws that had been precleared by the Justice Department—laws in Georgia and New Hampshire—were more restrictive than South Carolina's, in the nominee's view. Meanwhile, a Texas voter ID law, which had recently been denied preclearance by another three-judge panel, had "stringent" features distinguishable from the requirements of South Carolina's law. This comparison, Judge Kavanaugh stated, supported the panel's conclusion that R54 did not have discriminatory effects or purposes under Section 5. Set against the backdrop of more recent legal challenges to voter laws—a legal area that continues to evolve following the Supreme Court's Shelby County decision —Judge Kavanaugh's opinion in South Carolina does not necessarily appear to be an outlier, nor a ruling in conflict with other courts that have adjudicated voter ID disputes. In one recent challenge to a voter ID law in North Carolina, for example, the Fourth Circuit invalidated that state's law under Section 2 (not Section 5) of the VRA and the Equal Protection Clause of the 14th Amendment. The panel concluded that the law was enacted with discriminatory intent based on evidence, including that the state legislature analyzed data on voting mechanisms disproportionately used by African-American voters and then selectively introduced provisions to eliminate or reduce those very mechanisms, thereby "target[ing] African Americans with almost surgical precision." Such legislative action was not presented in South Carolina . Meanwhile, in an ongoing legal challenge to a Wisconsin law requiring photo ID to vote, the Seventh Circuit stayed a district court's preliminary injunction that would have required the state to allow registered voters to cast a ballot with an affidavit that "reasonable effort would not produce a photo ID," and would have prohibited officials from disputing any reason provided by the voter, similar to the provision in South Carolina . That litigation, brought pursuant to Section 2 of the VRA and the Equal Protection Clause of the 14th Amendment, is ongoing. The limited number of judicial opinions written by Judge Kavanaugh in the area of civil rights provides a correspondingly limited basis for drawing definitive conclusions about his judicial approach to these legal issues. South Carolina , the only voting rights decision in which the nominee participated, was itself a fact-bound determination that provides little insight into his judicial philosophy regarding voting rights cases generally. As discussed, the nominee's few opinions in statutory civil rights cases appears to be less of a product of his views on civil rights matters, and more a result of his general judicial philosophy. What is clear, nonetheless, is that Judge Kavanaugh, if confirmed, could be consequential in addressing civil rights questions that are likely to come before the Supreme Court on a range of areas in the foreseeable future. These include percolating and ongoing legal disputes relating to affirmative action in higher education and statutory civil rights protections based on sexual orientation or transgender status. Although Justice Kennedy may have exerted less influence over criminal law and procedure doctrine than other areas of the law, he did cast decisive votes in numerous criminal procedure cases. In particular, in cases implicating the Eighth Amendment's prohibition on cruel and unusual punishments, Justice Kennedy's voting record shaped much of recent Supreme Court doctrine. If confirmed, Judge Kavanaugh could therefore have a considerable impact on the Court's jurisprudence in this broad area of law. The nominee has written relatively little on criminal law and procedure, however, which makes it difficult to assess how he might influence the doctrine. The D.C. Circuit decides fewer criminal cases than other federal circuit courts. As a result, Judge Kavanaugh has written notable separate opinions on some areas of criminal law and procedure (e.g., Fourth Amendment search and seizure, the constitutional aspects of criminal sentencing, and substantive criminal law), but not others (e.g., cruel and unusual punishments under the Eighth Amendment, Fifth Amendment Miranda rights, and the Sixth Amendment right to counsel). Even on those issues that Judge Kavanaugh has addressed in multiple separate opinions—such as the Fourth Amendment—the record is too limited to support definitive conclusions about his judicial approach in such cases. The limited set of Judge Kavanaugh's writings on criminal law and procedure that does exist, however, reveals discrete strains of strongly held views, rather than one overarching philosophy susceptible to summary as "pro-defendant" or "pro-government." On Fourth Amendment issues, he has espoused a circumscribed view of the constitutional protection against unreasonable searches and seizures—arguably more circumscribed than that of Justice Kennedy, who himself generally (but not always) favored the government position in search and seizure cases. On constitutional sentencing issues, by contrast, Judge Kavanaugh has shown skepticism of advisory sentencing schemes that make use of facts not encompassed by the offense of conviction to increase a defendant's advisory sentencing range. On substantive criminal law, he has strenuously voiced the opinion, also favorable to criminal defendants, that courts generally must read mental state requirements into criminal law statutes that do not establish such requirements expressly. Accordingly, this section addresses these various aspects of Judge Kavanaugh's criminal law jurisprudence. In his separate opinions on the Fourth Amendment, Judge Kavanaugh has generally taken a more restrictive view than most of his D.C. Circuit colleagues on the reach of the constitutional right to be free of unreasonable searches and seizures. In Klayman v. Obama , for instance, he concluded that the National Security Agency's (NSA's) metadata collection program under Section 215 of the USA Patriot Act was "entirely consistent with the Fourth Amendment." A majority of the D.C. Circuit appeared to agree that the program was constitutional: a three-judge panel decided without opinion to stay a preliminary injunction against the program, and no judge dissented from the denial of a petition for a rehearing en banc. But Judge Kavanaugh, in a brief opinion concurring in the denial of the en banc petition, which no other judge joined, concluded that the collection did not constitute a search under Supreme Court precedent and that the national security needs underlying the program rendered it reasonable in any event. Moreover, the opinion reached beyond the threshold search analysis that would have sufficed to uphold the metadata collection program to express the additional view that national security needs outweighed the privacy interests implicated by the program. Judge Kavanaugh has authored other notable separate opinions on Fourth Amendment issues. He dissented from a panel decision in National Federation of Federal Employees -IAM v. Vilsack , holding that a U.S. Forest Service policy of conducting random drug testing on employees who worked with at-risk youth violated the Fourth Amendment. Judge Kavanaugh concluded that the drug testing program was "eminently sensible" and therefore reasonable under the Fourth Amendment even in the absence of individualized suspicion of drug use. In another case, Judge Kavanaugh wrote a dissent from an en banc opinion, concluding that during a Terry stop—an investigatory stop premised on reasonable suspicion of criminal activity but made without probable cause—police may manipulate or unzip the suspect's outer clothing to facilitate identification by a witness. In at least two Fourth Amendment cases— Wesby v. District of Columbia and United States v. Jones —the Supreme Court ultimately adopted an analysis substantially similar to that set forth in dissenting opinions by Judge Kavanaugh. In Wesby , Judge Kavanaugh sharply criticized a panel decision that affirmed a $1 million false arrest judgment against D.C. police officers who had arrested partygoers for trespassing in a vacant house. Judge Kavanaugh concluded that the panel decision contravened Supreme Court doctrine barring such damages liability unless police officers are "plainly incompetent" and "knowingly violate" the law. In particular, Judge Kavanaugh criticized the panel for failing to appreciate that police officers often must base arrest decisions on "credibility assessments [made] on the spot, sometimes in difficult circumstances." The Supreme Court later reversed the panel decision, agreeing with Judge Kavanaugh's conclusions that the arrests were lawful and that, even if the arrests had not been lawful, the officers had not knowingly violated the partygoers' clearly established Fourth Amendment rights. In Jones , Judge Kavanaugh's dissent from the denial of rehearing en banc endorsed the conclusion that the FBI's use of a GPS device without a warrant to track a suspect's vehicle for four weeks did not impinge upon the suspect's reasonable expectation of privacy. Specifically, Judge Kavanaugh joined a dissent by Chief Judge Sentelle that rejected the panel decision's aggregation or "mosaic" theory, pursuant to which a suspect may have a reasonable expectation of privacy in the totality of his public movements over a prolonged period even though he has no reasonable expectation of privacy in his location in public at any particular moment. Rejecting this theory, Chief Judge Sentelle (joined by Judge Kavanaugh and two other judges) concluded that "[t]he sum of an infinite number of zero-value parts is also zero." But Judge Kavanaugh, in his own dissent, also argued that the FBI's act of installing the GPS device on the suspect's vehicle without a warrant may have constituted an impermissible physical invasion of a constitutionally protected space and violated the Fourth Amendment for that reason. In other words, even though Judge Kavanaugh did not think that the warrantless GPS tracking violated the Fourth Amendment on a reasonable expectation of privacy theory, he suggested (without reaching a definitive conclusion) that the warrantless installation of the device may have violated the Fourth Amendment on a property-based theory of Fourth Amendment interpretation. A majority of the Supreme Court ultimately followed the latter analytical approach, holding that the attachment of the device to the vehicle was a Fourth Amendment search because the FBI physically intruded upon the suspect's private property (his car) for an investigative purpose. Judge Kavanaugh's dissent in Jones may indicate that he, like Justice Kennedy and an apparent minority of other Justices, favors a predominately property-based approach to determining what constitutes a "search" under the Fourth Amendment. The distinction between such a property-based approach, on the one hand, and an approach that recognizes Fourth Amendment privacy interests even over materials in which an individual does not have property rights, on the other hand, may be significant to the Supreme Court's developing doctrine on law enforcement access to information generated by digital-age technologies. In the 2018 case Carpenter v. United States , a five-Justice majority deviated from the property-based approach in holding that cell phone users have a reasonable expectation of privacy in the record of their physical movements contained in the historical cell phone location information maintained by their wireless carriers. The case broke new ground by holding that, at least in some circumstances, the Fourth Amendment protects sensitive information held by an individual's third-party service provider. Dissenting opinions by Justices Kennedy, Thomas, Alito, and Gorsuch all argued to varying degrees that cell phone users' lack of property interests in location information held by third parties undermined their assertion of Fourth Amendment interests in the information. Carpenter likely will generate substantial follow-on jurisprudence about its applicability to other types of sensitive information commonly held by third-party technology companies, such as IP addresses, browsing history, or biometric data. Although Judge Kavanaugh's Jones dissent suggests that he may favor the minority approach toward Fourth Amendment rights as being largely coterminous with property interests—a view that, if it were to gain the support of a majority of Justices, would tend to limit Carpenter 's eventual reach—Judge Kavanaugh's Jones dissent was relatively brief and may well have been influenced by Supreme Court precedent as it existed in 2012. In at least one instance, Judge Kavanaugh has made remarks off the bench that echo the more circumscribed view of Fourth Amendment protections that emerges from his jurisprudence. In a 2017 speech at the American Enterprise Institute that generally praised the jurisprudence of Chief Justice Rehnquist, Judge Kavanaugh noted Chief Justice Rehnquist's view that the Fourth Amendment exclusionary rule "was beyond the four corners of the Fourth Amendment's text and imposed tremendous costs on society." Judge Kavanaugh did not argue overtly for overruling the exclusionary rule, which he described as "firmly entrenched in American law." He nonetheless posited that Chief Justice Rehnquist successfully led the Supreme Court in "creat[ing] many needed exceptions to the exclusionary rule," including "most notabl[y]" the good faith exception to the exclusionary rule established in United States v. Leon . Judge Kavanaugh also highlighted a series of Rehnquist opinions that expanded the special needs doctrine, which allows some searches without probable cause or individualized suspicion if special needs "beyond the normal need for law enforcement . . . make the warrant and probable cause requirement impracticable." These points from the 2017 speech resonate in Judge Kavanaugh's Fourth Amendment opinions, where he has (1) argued that the NSA metadata collection program and the U.S. Forest Service randomized drug testing policy were permissible as special needs searches, and (2) rejected challenges to the permissibility of certain law enforcement activity. In sentencing cases, Judge Kavanaugh has suggested that he considers it unfair for a court to increase a defendant's advisory sentencing guidelines range based on acquitted conduct or conduct falling outside the elements of the offense of conviction. Nonetheless, Judge Kavanaugh has acknowledged that this sentencing practice does not violate the Fifth or Sixth Amendment under current Supreme Court precedent and that it would "require a significant revamp of criminal sentencing jurisprudence" to hold to the contrary. His opinions do not make clear how he would rule on the constitutional question in the absence of controlling Supreme Court case law. Some passages seem to suggest (but not clearly or uniformly) that he interprets the Sixth Amendment jury trial right to prohibit judicial determination of "key sentencing facts" even under sentencing guidelines that are advisory rather than mandatory in nature. Judge Kavanaugh's opinions make clear that he disagrees with the consideration of acquitted or uncharged conduct at sentencing, and he has encouraged federal district judges to exercise their discretion in declining to rely on such conduct when imposing sentences. To the extent that Judge Kavanaugh would view the Constitution to require such a result, it would be in tension with how Justice Kennedy tended to view sentencing issues, as he generally voted with a minority of Justices who deferred to legislative judgments about proper sentencing considerations and rejected Sixth Amendment challenges to the use of judicial fact-finding to increase binding sentencing thresholds. Judge Kavanaugh has authored few separate opinions or non-judicial publications about other major areas of constitutional criminal procedure, such as the warnings prior to custodial interrogations required under Miranda v. Arizona or the right to counsel under the Sixth Amendment. While he has not participated in any meaningful cases addressing custodial interrogations, in his 2017 speech to the American Enterprise Institute, Judge Kavanaugh praised Chief Justice Rehnquist for his opinions limiting Miranda 's application, suggesting that the nominee may take a restrictive view of that case. On the Sixth Amendment right to counsel, Judge Kavanaugh took a more expansive view of the rights of criminal defendants in what appears to be his only significant opinion on the subject. Specifically, in United States v. Nwoye , over the dissent of Judge Sentelle, he wrote a majority opinion holding that an attorney's failure to present expert testimony about Battered Woman Syndrome to support the duress defense of a criminal defendant who had been abused by her co-conspirator boyfriend was prejudicial to her case and supported her claim of ineffective assistance of counsel. In the few opinions he has written in criminal cases concerning the right to due process, Judge Kavanaugh has sided with the government position and concluded that challenged procedures do not violate due process. For example, in dissent in United States v. Martinez-Cruz , he concluded that it does not violate due process to assign the defendant the burden of proof "when challenging the constitutionality of a prior conviction that is being used to enhance or determine the current sentence." Judge Kavanaugh criticized the panel majority, which held that the government must bear the burden in some circumstances to persuade the sentencing court that the prior conviction was valid, for "carv[ing] out novel exceptions to the minimum burden of proof baseline" under the Due Process Clause. In two recent cases that produced divided panel decisions, Judge Kavanaugh authored opinions concluding that waivers of the right to appeal contained in guilty plea agreements were enforceable against criminal defendants despite flaws in the plea hearings. In rejecting the defendants' objections to enforcement of the appeal waivers, Judge Kavanaugh emphasized that such waivers play an important role in the efficient resolution of criminal cases. Justice Alito raised a somewhat similar point in a dissent last term (joined by Justices Kennedy and Thomas) in Class v. United States , where the majority held that a guilty plea does not "by itself bar[] a federal criminal defendant from challenging the constitutionality of the statute of conviction on direct appeal." Justice Alito criticized the majority for making a "muddle" of the doctrine on the appellate consequences of guilty pleas, calling it "critically important" to the proper functioning of the criminal justice system that those consequences be clearly understood. Judge Kavanaugh has argued in multiple separate opinions that courts must prevent unjust criminal punishment by interpreting criminal statutes to require high levels of proof of the defendant's mens rea (i.e., intent). Perhaps the most notable of these opinions came in an en banc case concerning the mens rea presumption, a canon of statutory interpretation pursuant to which criminal statutes that do not contain an express mental state requirement are interpreted to require purpose or knowledge for each offense element. In United States v. Burwell , the en banc majority upheld a district court determination that a defendant convicted of robbery was subject to a mandatory consecutive 30-year sentence for using an automatic weapon to commit a robbery, even though the government had not been required to prove that the defendant knew that the weapon was automatic. Judge Kavanaugh argued in a lengthy dissent that the majority should have applied the mens rea presumption to interpret the relevant statute (which did not contain an express mens rea element) to require the government to prove that the defendant knew the weapon was automatic. In another case, Judge Kavanaugh suggested in a concurring opinion that a conviction for making false statements to federal officials under 18 U.S.C. § 1001 should require "proof that the defendant knew his conduct was a crime," so as to mitigate the "risk of abuse and injustice" posed by prosecutions under the statute. Judge Kavanaugh's other opinions and publications have likewise stressed the "critical importance of accurate instructions to the jury on mens rea requirements." Judge Kavanaugh does not appear to have authored an opinion in an Eighth Amendment case during his time on the D.C. Circuit. Nominated to replace a Justice who often cast decisive votes in Eighth Amendment cases, Judge Kavanaugh's judicial record reveals little about his views regarding the scope of the constitutional ban on cruel and unusual punishments or his views on related issues like the death penalty or conditions of confinement. His 2017 speech to the American Enterprise Institute contains a brief discussion of the Supreme Court's case law regarding the constitutionality of capital punishment. That brief discussion can reasonably be interpreted as praising Chief Justice Rehnquist for taking the position that the Supreme Court overstepped its judicial function in the 1972 case Furman v. Georgia , which imposed a moratorium on capital punishment, and for his role in the jurisprudence that began upholding many revised capital punishment statutes four years later. The nominee suggested that Chief Justice Rehnquist's approach to death penalty cases aligned with the Supreme Court's "proper and limited role in the constitutional scheme." Questioning during the confirmation hearing may facilitate a better understanding of Judge Kavanaugh's views on Eighth Amendment issues. If confirmed, Judge Kavanaugh would join the Supreme Court at a significant moment for the future of its criminal procedure jurisprudence. Aspects of the Court's criminal procedure doctrine appear to be in the midst of transformation, while other aspects face potential reconsideration. Carpenter v. United States , decided last term, could prove to be a watershed precedent in the extension of Fourth Amendment protections to sensitive information held by third-party technology companies, but the decision's reach will depend on how the Court applies it in future cases. Next term, the Court is poised to reconsider the long-standing "separate sovereign" exception to the Fifth Amendment Double Jeopardy Clause, pursuant to which a state prosecution does not bar a subsequent federal prosecution for the same offense (and vice versa). The Court will also hear important Eighth Amendment cases next term, including two cases that concern the extent to which the prohibition on cruel and unusual punishments limits the execution of prisoners with mental or physical disabilities. From Judge Kavanaugh's record in Fourth Amendment cases, it seems likely that his views align with those of an apparent minority of Justices on the current Court that generally resists expanding Fourth Amendment protections beyond the scope of recognized property interests. His record offers limited insight, however, into his approach to other major issues of criminal law and procedure. Over the last decade the Supreme Court has been closely divided on various aspects of environmental law—that is, the broad range of laws that addresses human impacts on the natural environment. As was the case in other areas of law, the deciding vote in several important environmental law cases tended to be Justice Kennedy. As a consequence, Judge Kavanaugh, if elevated to the High Court to replace Justice Kennedy, could serve as a critical vote on such matters going forward. During his tenure on the D.C. Circuit, Judge Kavanaugh has authored opinions and participated in dozens of environmental cases. His opinions have addressed a wide range of environmental issues including climate change, air quality, water quality, nuclear energy and waste, chemical bans, endangered species, migratory birds, and other issues arising under federal environmental statutes. The nominee's record on environmental law is relatively robust, as a large volume of the D.C. Circuit's docket tends to be environmental law cases, in part, because several major environmental statutes require challenges to certain types of agency actions to be brought exclusively in that court. Often, environmental cases address the scope of agency authority under an environmental statute or the legality of a specific agency action. Environmental law statutes and cases can also prompt broader questions of administrative law, such as standing to sue and standards for judicial review. Accordingly, this section begins by discussing Judge Kavanaugh's record on environmental justiciability issues, before addressing the nominee's views on substantive aspects of environmental law. The outcome of an environmental case often depends on the court's resolution of threshold procedural issues, such as whether a plaintiff or petitioner has the right to bring a lawsuit in the first place. To proceed to the merits of a lawsuit, a plaintiff or petitioner will need to establish standing, a procedural threshold that has, at times, impeded environmental litigation. To establish standing under Article III of the Constitution, a plaintiff or petitioner must have suffered or will imminently suffer an injury-in-fact caused by the defendant or respondent and can be redressed by the court. Judge Kavanaugh has authored opinions in various cases that addressed whether a plaintiff or petitioner had the right to bring a lawsuit challenging an environmental regulation or federal agency action. As noted in the discussion on his administrative law rulings, some of Judge Kavanaugh's opinions reflect a willingness to conclude that regulated entities such as business industry groups have standing to challenge environmental regulations based on alleged economic harm. For example, in 2012 case, Grocery Manufacturers Ass ' n v. EPA , Judge Kavanaugh dissented from the majority opinion that held that petroleum industry and food industry associations lacked standing to challenge the EPA's Clean Air Act waivers that allowed the sale of a specific corn-based ethanol biofuel because their claims of damages were too conjectural. In his dissent, Judge Kavanaugh argued that the food industry petitioners had standing to challenge the waiver because the demand for ethanol to produce the biofuel would increase prices for corn used in food products, demonstrating injury-in-fact and causation for Article III standing. Likewise, the petroleum industry petitioners had, in Judge Kavanaugh's view, standing because the waiver would cause its members to incur "considerable" economic costs to refine, sell, transport, or store the ethanol-based fuel. Judge Kavanaugh expressed similar views on the extent that economic harm may support Article III standing in the 2015 case, Energy Future Coalition v. EPA . Judge Kavanaugh found that petitioners that produced ethanol biofuel had standing to challenge the EPA's regulation that allows only "commercially available" fuels to be used to test emissions of new vehicles. The petitioners argued that the EPA's actions to limit test fuels to only "commercially available" fuels effectively prohibited the use of E30, a fuel containing 30% ethanol. In claiming that the biofuel producers lacked standing, the EPA argued that the biofuel producers were not harmed because the test fuel regulation was directed at vehicle manufacturers and not biofuel producers. In rejecting the EPA's arguments, Judge Kavanaugh concluded in his opinion for the panel that the EPA's "direct regulatory impediment" prevented the petitioners' ethanol product from being used as test fuel, qualifying as an injury-in-fact to support their standing to challenge the EPA's regulation. The nominee also determined that the petitioners demonstrated causation and redressability because the EPA's regulation denied the petitioners "an opportunity to compete in the marketplace" and removing the "commercial available" requirement would allow their products to be used as a test fuel. Among his opinions related to environmental law, Judge Kavanaugh has seldom addressed the standing of public interest or nongovernmental organizations (NGOs), an issue at the heart of several of the Supreme Court's environmental standing cases. Some commentators have argued that, in at least non-environmental contexts, Judge Kavanaugh imposes a high bar for public interest groups to show "harm" from a government action to satisfy standing requirements. Even assuming this observation to be correct, it is unclear, however, if this perceived trend is apparent in the context of environmental litigation. For example, in Natural Resources Defense Council v. EPA , Judge Kavanaugh concluded that the environmental NGO-petitioner had standing to challenge the EPA's adoption of an affirmative defense that would limit civil penalties in a suit alleging air pollutant emissions violations because its members would suffer harm from higher emissions that could be prevented or alleviated by a ruling to vacate the defense. Nonetheless, the limited number of cases on standing in the environmental context makes it difficult to discern any broad tendencies of Judge Kavanaugh on the subject. In cases involving substantive review of federal agency action, Judge Kavanaugh has expressed broad skepticism when an agency interprets an environmental statute that would enlarge the scope of its authority, most notably in the climate change context. Near the beginning of the nominee's tenure on the D.C. Circuit, the Supreme Court issued its 2007 decision, Massachusetts v. EPA , which held in a 5-4 ruling that the agency had the authority under the Clean Air Act to regulate greenhouse gas (GHG) emissions to address climate change. Subsequently, the EPA's GHG regulations were subject to various challenges in the D.C. Circuit where Judge Kavanaugh, most often in separate opinions, expressed his views on the scope of the EPA's authority to address climate change. For example, in his dissent from the court's refusal to rehear en banc the 2012 decision in Coalition for Responsible Regulation v. EPA , Judge Kavanaugh argued that the EPA "exceeded its statutory authority" in regulating GHGs, including carbon dioxide (CO 2 ), under the Clean Air Act's Prevention of Significant Deterioration (PSD) permitting program. In Coalition for Responsible Regulation , the three-judge panel of the D.C. Circuit upheld the EPA's "tailoring" rule that raised and "tailored" the statutory emissions thresholds to avoid the "absurd result" of subjecting numerous smaller sources to the PSD permitting program for the first time because of their GHG emissions. However, Judge Kavanaugh in dissent interpreted the EPA's authority more narrowly, grounding his views on the doctrine of separation of powers. He reasoned that the EPA's "strange" and broad interpretation of the term "any air pollutant" to include GHGs was "legally impermissible" because a more narrow interpretation would have avoided the "absurd results" that necessitated the EPA's tailoring rule to raise the statutory emissions threshold. In Judge Kavanaugh's view, the EPA's interpretation of the Clean Air Act would "greatly" expand its authority and serve as precedent for other agencies to "adopt absurd or otherwise unreasonable interpretations of statutory provisions and then edit other statutory provisions to mitigate the unreasonableness." Judge Kavanaugh cautioned that "undue deference or abdication to an agency carries its own systemic costs. If a court mistakenly allows an agency's transgression of statutory limits, then we green-light a significant shift of power from the Legislative Branch to the Executive Branch." In going "well beyond what Congress authorized," the EPA's interpretation, in Judge Kavanaugh's opinion, threatened the "bedrock underpinnings of our system of separation of powers." His dissent in Coalition for Responsible Regulation v. EPA was one of several cases where Judge Kavanaugh invoked separation-of-powers principles in reviewing the EPA's authority to regulate GHGs to address climate change. In these cases, he acknowledged that climate change is an "urgent," "important," and "pressing policy issue," but argued that the EPA must act within the statutory bounds set by Congress or judicial precedent in the agency's attempts to address climate change. For instance, the nominee issued a concurring opinion in a 2013 case, Center for Biological Diversity v. EPA , which vacated the EPA's rule postponing for three years the regulation of biogenic CO 2 sources—that is, sources whose emissions directly result from the combustion or decomposition of biologically based materials —from the Clean Air Act permitting programs. Judge Kavanaugh concurred that the rule should be vacated because the EPA lacked statutory authority to distinguish biogenic CO 2 from other forms of CO 2 for purposes of the Clean Air Act permitting programs even though the agency may have "very good [policy] reasons" to do so. Although the EPA's "task of dealing with global warming is urgent and important at the national and international level," Judge Kavanaugh cautioned that "[a]llowing an agency to substitute its own policy choices for Congress's policy choices in this manner would undermine core separation of powers principles." Bound by the earlier D.C. Circuit majority ruling in Coalition for Responsible Regulation , from which he had dissented, the nominee concluded that "EPA has no such statutory discretion here. Under the statute as this Court has interpreted it, the EPA must regulate carbon dioxide" under the Clean Air Act permitting programs and had no authority to delay regulating biogenic CO 2 . In concurring with the majority to vacate the EPA's biogenic CO 2 deferral rule in Center for Biological Diversity , Judge Kavanaugh expressed his "mixed feelings" about this case because of the broader concerns he raised in his dissent in Coalition for Responsible Regulation —that is, that "contrary to this Circuit's precedent, [the Clean Air Act] does not cover [CO 2 ], whether biogenic or not." The Supreme Court in 2014 validated some of his concerns when it reviewed the earlier case. In Utility Air Regulatory Group v. EPA , a 5-4 opinion authored by Justice Scalia, the Court relied in part on Judge Kavanaugh's dissent to hold that the Clean Air Act did not authorize the EPA to require stationary sources to obtain Clean Air Act permits solely based on GHG emissions. Judge Kavanaugh has also voiced concerns regarding the EPA's statutory authority to address climate change in more recent litigation. In 2016, Judge Kavanaugh sat on an en banc panel in the case challenging the Obama Administration's Clean Power Plan (CPP), which limits GHG emissions from existing power plants under the Clean Air Act. During the oral argument, Judge Kavanaugh suggested that the EPA overstepped its authority with a rule that is "fundamentally transforming an industry," stating that "[g]lobal warming isn't a blank check" for the President to regulate GHG emissions. While sympathizing with "the frustration with Congress" in addressing climate change, he emphasized that "under our system of separation of powers, . . . Congress is supposed to make the decision" and is best tasked to devise a "balanced" and "well-rounded" policy approach to regulate GHG emissions from power plants. The D.C. Circuit has not issued a decision in the CPP litigation because the court continues to hold the case in abeyance while the EPA proposes to repeal the CPP or issue a replacement rule. Outside the climate change context, Judge Kavanaugh has likewise scrutinized federal agency efforts to interpret a statute that enlarges the scope of an agency's authority without clear congressional authorization. In EME Homer City Generation, L.P. v. EPA , Judge Kavanaugh wrote the majority decision in a 2012 case that challenged the EPA's rule requiring control of interstate transport of air pollution that impedes neighboring states from meeting air quality standards. Over the dissent of Judge Judith W. Rogers, Judge Kavanaugh's majority opinion concluded that the EPA's method to allocate emission reductions among upwind states that contribute to downwind air pollution had "transgressed statutory boundaries." He claimed it was "inconceivable" that Congress intended the EPA to "transform the narrow good neighbor provision into a 'broad and unusual authority'" under the Clean Air Act. He stressed that "'Congress could not have intended to delegate a decision of such economic and political significance to an agency in so cryptic a fashion.'" In 2013, in Judge Kavanaugh's only majority decision to be reversed by the Supreme Court, Justice Ruth Bader Ginsburg, in a 6-2 ruling, held that Congress delegated authority to the EPA to fill the "gap left open" to determine how to allocate emission reduction requirements among neighboring upwind states. In comparing the case to Chevron U.S.A. Inc. v. National Resources Defense Council , the Court deferred to the EPA's allocation method as "reasonable," "permissible, workable, and equitable." In his environmental cases challenging an agency's statutory interpretation, Judge Kavanaugh, in line with his textualist views, often determined that an agency's interpretation lacked support from the plain language of the statute. This approach obviated the need to address the extent to which judges should defer to an agency's interpretation of silent or ambiguous statutory language under the Chevron doctrine. As Judge Kavanaugh remarked in dissent in Sierra Club v. EPA , "the plain meaning of the text controls; courts should not strain to find ambiguity in clarity; courts must ensure that agencies comply with the plain statutory text and not bypass Chevron step 1." This analytical approach was illustrated in his 2017 majority opinion in Mexichem Fluor, Inc. v. EPA . There, the D.C. Circuit vacated part of a rule that would have prohibited manufacturers from using hydrofluorocarbons (HFCs), a class of GHGs, as substitutes for ozone-depleting substances (ODSs) that are commonly used in refrigerators and air conditioners. In a 2-1 decision written by Judge Kavanaugh, the majority held that the EPA's "novel" interpretation of the Clean Air Act was "inconsistent" with the plain statutory text and exceeded its statutory authority because Congress did not intend for the EPA to regulate non-ODSs that contribute to climate change under a statutory provision with a "focus" on ODSs. Similar to previous opinions he authored on the EPA's authority to regulate GHGs under the Clean Air Act, Judge Kavanaugh reiterated that "Congress's failure to enact general climate change legislation does not authorize the EPA to act. Under the Constitution, congressional inaction does not license an agency to take matters into its own hands, even to solve a pressing policy issue such as climate change." He concluded that the EPA's "strained reading" of the statutory terms "contravenes the statute and thus fails at Chevron step 1. And even if we reach Chevron step 2, the EPA's interpretation is unreasonable." The reasonableness of the EPA's statutory interpretation was the focus of several of Judge Kavanaugh's dissents to cases that challenged the agency's exclusion of cost considerations under the Clean Air Act. In 2014, he dissented in part from the majority ruling in White Stallion Energy Center v. EPA , which upheld the EPA's decision to not consider cost when determining whether it is "appropriate and necessary" to regulate mercury emissions from power plants under the Clean Air Act. In his dissent, Judge Kavanaugh argued that it was "unreasonable" for the EPA to exclude consideration of costs because "the key statutory term is 'appropriate'—the classic broad and all-encompassing term that naturally and traditionally includes consideration of all the relevant factors, health and safety benefits on the one hand and costs on the other." He explained: whether one calls it an impermissible interpretation of the term 'appropriate' at Chevron step one, or an unreasonable interpretation or application of the term 'appropriate' at Chevron step two, or an unreasonable exercise of agency discretion under State Farm ,[ ] the key point is the same: It is entirely unreasonable for EPA to exclude consideration of costs in determining whether it is 'appropriate' to regulate electric utilities . . . . On appeal, the Supreme Court in Michigan v. EPA reversed the D.C. Circuit's majority decision in a 5-4 opinion authored by Justice Scalia that quoted from Judge Kavanaugh's dissent. The Court held that the EPA's refusal to consider costs (including the cost of compliance) before deciding whether it was "appropriate and necessary" to regulate was unreasonable. Similarly, in 2016, Judge Kavanaugh's dissent in Mingo Logan Coal Co. v. EPA criticized the agency for failing to account for cost and economic impacts in determining whether to revoke previously approved and permitted waste sites for mountain-surface mining operations. The EPA had revoked specific mining waste discharge sites that were approved four years prior in a Clean Water Act permit because new information led the EPA to conclude that the discharges would have an "unacceptable adverse effect" on water supplies and aquatic life. In dissent, Judge Kavanaugh argued that the EPA should have examined the cost of its actions because the term "unacceptable" was "capacious and necessarily encompasses consideration of costs. Like the word 'appropriate' at issue in Michigan v. EPA , the words 'acceptable' and 'unacceptable' are commonly understood to necessitate a balancing of costs and benefits." In criticizing the agency's "utterly one-sided analysis" of the "benefits to animals of revoking the permit," Judge Kavanaugh argued that the EPA failed to consider the costs to "humans—coal miners, [] shareholders, local businesses" resulting from revoking the previously approved and permitted discharge sites. Echoing his dissent in White Stallion Energy Center , he explained that "whether EPA's interpretation . . . is analyzed under Chevron step one or Chevron step two or State Farm , the conclusion is the same: In order to act reasonably, the EPA must consider costs before exercising its [Clean Water Act] authority to veto or revoke a permit." In environmental cases reviewing agencies' interpretations of their own regulations, Judge Kavanaugh has broadly expressed skepticism regarding the extent to which judges should defer to agencies' interpretations of their own environmental regulations. For example, Judge Kavanaugh issued a dissent in 2010's Howmet Corp. v. EPA , which challenged the EPA's interpretation of its Resource Conservation and Recovery Act (RCRA) regulations that a particular chemical was "spent material" after it had been used in an industrial cleaning process and transported to be reused by a different company. The majority decision held that the regulation in question was ambiguous and deferred to the agency's interpretation that the "spent material" was subject to RCRA. Kavanaugh disagreed, arguing that "EPA's current interpretation is flatly inconsistent with the text of its 1985 regulations." He concluded that the EPA "enlarge[d] its regulatory authority" "by distorting the terms of the 1985 [RCRA] regulations" in "seeking to expand the definition of 'spent material'." In reviewing Judge Kavanaugh's significant body of environmental jurisprudence, most commentators note that Judge Kavanaugh tends to narrowly construe an agency's authority or sharply question an agency's statutory interpretation as a means to preserve the separation of powers among the three branches of government. Some commentary has maintained that his judicial approach would limit federal agencies' ability to regulate activities that would negatively impact the environment. However, Judge Kavanaugh's scrutiny of agency's actions has led him to uphold agency actions or side with environmental groups when he feels Congress has granted the agency discretion to do so. For example, in 2-1 opinion in American Trucking Ass'ns , Inc. v. EPA , Judge Kavanaugh upheld the EPA's approval of California's rule limiting emissions from in-use non-road engines under the Clean Air Act's "expansive" statutory language. But overall, his general formalist approach toward separation-of-power issues and his commitment to textualism have often led him to limit an agency's authority to address environmental concerns. Much of the debate over Judge Kavanaugh and environmental law is in the eye of the beholder. For example, some legal commentary has raised fears about what the nominee, if confirmed, may mean for environmental law, suggesting that the nominee would be skeptical of an agency's attempts to broaden its authority under existing environmental statutes to address new types of environmental concerns, such as climate change, that Congress may not have contemplated when the statutes were originally enacted. In contrast, other commentators have viewed the nominee's skepticism toward the authority of administrative agencies like the EPA as a blessing, arguing that Judge Kavanaugh, if confirmed, "will help reverse the trend" of "federal overreach" by "ensuring that all branches of our government act within their constitutionally assigned roles." Regardless of the merits of this debate, there are limits to any predictions that can be made regarding what the latest nomination to the High Court would mean for environmental law. After all, although his jurisprudence provides a robust picture of his environmental views, Judge Kavanaugh, during his tenure on the D.C. Circuit, has not addressed a number of issues in environmental law that could arise if he were elevated to the Supreme Court. If confirmed, Judge Kavanaugh could soon consider several potentially important environmental cases, including an Endangered Species Act (ESA) case that is scheduled for oral argument before the Supreme Court on October 1, 2018. In Weyerhaeuser Co. v. U.S. Fish and Wildlife Service , the Court is to address, among other things, whether the ESA prohibits the government from designating private land as "unoccupied" critical habitat essential for the conservation of the endangered dusky gopher frog based solely on the multiple uninhabited breeding sites on the land. Judge Kavanaugh has previously addressed the designation of private lands as critical habitat for the endangered San Diego fairy shrimp in the 2011 case, Otay Mesa Prop., L.P. v. Department of the Interior . Private property owners challenged the Fish and Wildlife Service's (FWS's) designation of the plaintiffs' property as "occupied" critical habitat under the ESA based on observing four fairy shrimp in a tire rut on a dirt road on the plaintiffs' property. In his opinion for the panel, Judge Kavanaugh concluded that a single observation of a species with no subsequent observations of the species four years later did not provide sufficient evidence that the area was "occupied" habitat for the fairy shrimp. He explained that the "thin" record could not support FWS's designation, "even acknowledging the deference due to the agency's expertise." Although the Otay Mesa case concerned "occupied" habitat as opposed to the "unoccupied" habit at issue in Weyerhauser , Judge Kavanaugh's opinion suggests that he may view FWS's record with some skepticism. The Supreme Court's ruling in the Weyerhaeuser case could provide some key guidance and potential limits on FWS's authority to designate as critical habitat areas that are not actually occupied by the listed species. The past twenty-five years have witnessed what some commentators have described as a "federalism revolution" in the Supreme Court's jurisprudence —a "revolution" in which Justice Kennedy was a key participant. This shift in the Court's federalism case law began with the Rehnquist Court, which issued a series of significant opinions resuscitating the Court's role in policing limitations on federal power. Specifically, the Rehnquist Court issued opinions (1) restricting the scope of Congress's powers under the Commerce Clause, (2) reviving the Tenth Amendment as a limit on Congress's authority, and (3) expanding the scope of state sovereign immunity. This "federalism revolution" has not ended with the Roberts Court, which has extended a number of the Rehnquist Court's federalism decisions. The Roberts Court's 2012 decision in National Federation of Independent Businesses ( NFIB ) v. Sebelius , which involved a constitutional challenge to the ACA, was perhaps its most notable federalism case. While the NFIB Court ultimately concluded that the ACA's "individual mandate"—which required individuals to maintain a minimum level of health insurance or pay a penalty—was a permissible exercise of Congress's taxing power, a majority of the Justices concluded that the mandate exceeded the scope of Congress's Commerce Clause authority because it compelled individuals to engage in commerce rather than regulating pre-existing commercial activity. Perhaps more importantly, the NFIB Court extended the Rehnquist Court's Tenth Amendment cases—which held that Congress may not coerce state and local governments into implementing federal regulatory programs—to strike down a provision of the ACA that granted the Secretary of Health and Human Services (HHS) the authority to withhold all Medicaid payments from states that did not participate in an expansion of Medicaid, marking the first time the Court invalidated a condition attached to federal spending as unconstitutionally coercive. Justice Kennedy was a key participant in this "federalism revolution," authoring or joining nearly all of the Court's key decisions. Justice Kennedy's successor will accordingly play a critical role in shaping the Court's federalism jurisprudence. Judge Kavanaugh's record on the D.C. Circuit contains limited information about his views on the various federalism issues that have confronted the Supreme Court. The nominee has not authored or joined any significant opinions concerning the Tenth Amendment or state sovereign immunity. Judge Kavanaugh's most prominent federalism case, Seven-Sky v. Holder , involved a pre- NFIB Commerce Clause challenge to the ACA. In that case, Judge Kavanaugh ultimately declined to consider the merits of the case after concluding that the court lacked jurisdiction to hear the dispute. In Seven-Sky , plaintiffs brought a constitutional challenge to the ACA's individual mandate, arguing that the mandate exceeded the scope of Congress's authority under the Commerce Clause. A majority of a three-judge D.C. Circuit panel upheld the mandate, concluding that it did not exceed the scope of Congress's power under the Commerce Clause because it addressed a national problem that had "substantial effects" on interstate commerce. However, Judge Kavanaugh dissented from the court's decision, concluding that the court lacked jurisdiction to decide the merits of the challenge because of the Anti-Injunction Act, which denies courts jurisdiction over pre-enforcement lawsuits challenging "the assessment or collection of any tax." The nominee reasoned that although Congress had labeled the exaction imposed on individuals who failed to comply with the individual mandate a "penalty" and not a "tax," the Anti-Injunction Act nevertheless deprived the court of jurisdiction because the ACA provided for the penalty to be assessed and collected "in the same manner as taxes." The nominee concluded that, because the penalty could not be assessed and collected "in the same manner as taxes" unless the Anti-Injunction Act applied to the penalty in the same manner that it applied to "taxes," the Act deprived the court of jurisdiction over the plaintiffs' pre-enforcement lawsuit challenging the penalty, just as it would deprive the court of jurisdiction over a pre-enforcement lawsuit challenging a tax. Although Judge Kavanaugh declined to take a position on whether the individual mandate was constitutional based on Congress's powers under the Commerce Clause, he noted in his dissent that the question was "extremely difficult and rife with significant and potentially unforeseen implications for the Nation and the Judiciary"—a consideration that he viewed as militating in favor of avoiding a "premature" decision on the issue. Judge Kavanaugh also argued that the importance of the constitutional questions presented by the case counseled in favor of proceeding cautiously. In developing this argument, he noted that the government's defense of the mandate as falling within Congress's Commerce Clause powers "carrie[d] broad implications" for the scope of those powers. Specifically, Judge Kavanaugh reasoned that under the government's view of the Commerce Clause, Congress could not only impose criminal penalties on individuals who failed to purchase health insurance, but also require that individuals purchase a range of other financial products, including retirement accounts, disaster insurance, and life insurance. While Judge Kavanaugh acknowledged that Congress's Commerce Clause authority may be effectively cabined by the political process, he concluded that such political checks did not "absolve the Judiciary of its duty to safeguard the constitutional structure and individual liberty" by policing the limits of federal power. At the same time, Judge Kavanaugh argued that the court should be equally cautious about prematurely rejecting the government's defense of the mandate, noting that "[s]triking down a federal law as beyond Congress's Commerce Clause authority is a rare, extraordinary, and momentous act for a federal court." The nominee also reasoned that, because the individual mandate marked "a shift in how the Federal Government goes about furnishing a social safety net for those who are old, poor, sick, or disabled and need help"—specifically, by providing such benefits via privatized social services and a mandatory-purchase requirement rather than a traditional "tax-and-government-benefit" program—courts "should be very careful before interfering with the elected Branches' determination to update how the National Government provides such assistance." Finally, Judge Kavanaugh concluded that because Congress may respond to the constitutional challenges to the individual mandate by altering the ACA's language to provide that the mandate's penalty was in fact a "tax" (thus bringing the mandate within Congress's taxing power), or by eliminating the penalty altogether, the court should not strain to sidestep the Anti-Injunction Act and prematurely decide a difficult constitutional question. Although Judge Kavanaugh declined to address squarely the merits of the Commerce Clause question presented in Seven-Sky , he delivered a speech in 2017 on Chief Justice Rehnquist's legacy that offers some clues about his general views on the Commerce Clause. In the speech, the nominee voiced general agreement with the Rehnquist Court's Commerce Clause decisions, outlining Chief Justice Rehnquist's reasoning in Lopez and Morrison and describing those cases as "critically important in putting the brakes on the Commerce Clause and in preventing Congress from assuming a general police power." Accordingly, there is a limited record from which to gauge Judge Kavanaugh's views on federalism issues. Because the nominee has not adjudicated or commented on subjects like state sovereign immunity or the Tenth Amendment's limitations on Congress's authority, it is difficult to draw firm conclusions about his views on those topics. However, Judge Kavanaugh has indicated general agreement with the Commerce Clause decisions that served as the vanguard of the "federalism revolution" of the Rehnquist and Roberts Courts, and has expressed support for the position that the judiciary has an "important role" in policing the boundaries of federal authority. If confirmed to the Supreme Court, Judge Kavanaugh could play a significant role in the Court's decisions concerning freedom of religion, an area of law encompassing the Constitution's Religion Clauses—the Free Exercise Clause and the Establishment Clause —as well as statutes like the Religious Freedom Restoration Act (RFRA). After all, Justice Kennedy, who the nominee may succeed, provided deciding votes and drafted the majority opinions in a number of significant cases concerning religious liberty. While serving on the D.C. Circuit, Judge Kavanaugh has authored or joined relatively few opinions on religious liberty. Nonetheless, three significant opinions he has written, along with his comments outside of the courtroom, suggest that Judge Kavanaugh's views on religious liberty are fairly similar to those of Justice Kennedy. Judge Kavanaugh's writings on religious freedom issues have most frequently concerned the Establishment Clause. One significant threshold issue in Establishment Clause cases is whether the plaintiffs can show that they have standing to bring their suit. The concept of standing ensures that federal courts hear only cases that qualify as "cases" or "controversies" under Article III of the Constitution, by requiring plaintiffs to demonstrate "personal injury fairly traceable to the defendant's allegedly unlawful conduct and likely to be redressed by the requested relief." The Supreme Court, however, sometimes appears to treat standing differently in the context of the Establishment Clause, allowing certain suits to proceed even where the injury alleged would not suffice to create standing to raise other types of legal challenges. In recent years, the Court has narrowed the scope of one of the primary cases that seemed to carve out a special Establishment Clause exception to ordinary standing principles. However, the Court has not repudiated this older case law, and, more broadly, the Court has continued to hear Establishment Clause challenges to religious displays on government property and prayers at government-sponsored events, notwithstanding the fact that, as some have argued, the plaintiffs' injuries in these cases—viewing a display or listening to a prayer—seem akin to the type of "generalized grievance" that generally would not qualify as a constitutionally sufficient injury for purposes of standing. Judge Kavanaugh has authored two significant opinions ruling on whether litigants have standing to raise Establishment Clause claims. First, the nominee rejected an Establishment Clause claim on standing grounds in In re Navy Chaplaincy . In that case, a group of Protestant Navy chaplains argued that the Navy had discriminated "in favor of Catholic chaplains in certain aspects of its retirement system." Writing the majority opinion, Judge Kavanaugh held that the plaintiffs lacked standing because they had not demonstrated an injury-in-fact, where "they themselves did not suffer employment discrimination on account of their religion." He rejected the claim—one that was accepted by Judge Rogers' dissent —that "being subjected to the 'message' of religious preference conveyed by the Navy's allegedly preferential retirement program for Catholic chaplains" created standing. In contrast to cases where the Supreme Court found that being subject to a religious message caused a cognizable injury—"the religious display and prayer cases"—in this case, the government was not "actively and directly communicating a religious message through religious words or religious symbols." In Judge Kavanaugh's view, "[w]hen plaintiffs are not themselves affected by a government action except through their abstract offense at the message allegedly conveyed by that action, they have not shown injury-in-fact to bring an Establishment Clause claim." By contrast, in Newdow v. Roberts , Judge Kavanaugh concluded that a litigant had established standing under these religious display and prayer cases. The plaintiffs in Newdow argued that certain aspects of the presidential inaugural ceremony violated the Establishment Clause. Specifically, the plaintiffs challenged the prayers at the beginning of the ceremony and the use of the phrase "so help me God" in the presidential oath of office. A majority of the court rejected the suit on standing grounds. Judge Kavanaugh concurred in the judgment of the court, contending that while the plaintiffs had standing, their claims failed on the merits. First, the nominee concluded that the plaintiffs' allegations that they would "witness . . . government-sponsored religious expression to which they object . . . suffice under the Supreme Court's precedents to demonstrate plaintiffs' concrete and particularized injury." He noted that in its cases involving "government-sponsored religious display[s] or speech[es]," the Court had not "expressly" addressed standing. "But," in his view, "the Supreme Court's consistent adjudication of religious display and speech cases over a span of decades suggests that the Court has thought it obvious that the plaintiffs in those matters had standing." Judge Kavanaugh disagreed with the majority's analysis of the "causation and redressability elements of standing." In relevant part, the nominee noted that while it was "theoretically possible that Congress or the President could completely change the nature of the Inaugural ceremonies before the next Inauguration," that was, in his view, unlikely. For this point, Judge Kavanaugh cited Lee v. Weisman , a Supreme Court opinion written by Justice Kennedy that considered the constitutionality of prayers at a public school graduation ceremony. The Supreme Court concluded in Lee that the case presented "a live and justiciable controversy" because one of the plaintiffs was a high school student and it appeared "likely, if not certain, that an invocation and benediction will be conducted at her high school graduation." Judge Kavanaugh concluded that just as it was likely that "the high school's next graduation prayer likely would resemble past graduation prayers," so was it likely that the "next Inaugural ceremony likely will resemble past Inaugurals." Because Judge Kavanaugh concluded that the plaintiffs had standing in Newdow , he went on to consider the merits of their claim, offering some insight into his substantive views on the Establishment Clause. Judge Kavanaugh paused at the outset to note the importance of the sincerely held beliefs on both sides of the issue, noting that the plaintiffs, "as atheists," "have no lesser rights or status as Americans or under the United States Constitution than Protestants, Jews, Mormons, Muslims, Hindus, Buddhists, Catholics, or members of any religious group." Nonetheless, the nominee stated that he would have held that the inaugural prayers and the use of the words "so help me God" in the presidential oath did not violate the Establishment Clause. Judge Kavanaugh noted that both the prayers and the oath were "deeply rooted" in "history and tradition." His analysis invoked the Supreme Court's decision in Marsh v. Chambers , which upheld a state legislature's practice of opening its sessions with a prayer after noting that such a practice "is deeply embedded in the history and tradition of this country." This emphasis on history and tradition would later be echoed in Justice Kennedy's opinion for the Court in Town of Greece v. Galloway , which similarly upheld prayers before a town's monthly board meetings. While acknowledging that Supreme Court precedent prohibits public prayers that amount to proselytization, Judge Kavanaugh did not believe that these cases necessarily prohibited sectarian prayers, which he defined as "prayers associated only with particular faiths, or references to deities, persons, precepts, or words associated only with particular faiths." The nominee cited the following standard from the Tenth Circuit as "instructive": "the kind of [ ] prayer that will run afoul of the Constitution is one that proselytizes a particular religious tenet or belief, or that aggressively advocates a specific religious creed, or that derogates another religious faith or doctrine." Ultimately, he held that the inaugural prayers' "many references to God, Lord, and the like" "are considered non-sectarian for these purposes," and that the prayers' "limited" "sectarian references" did not impermissibly proselytize. Judge Kavanaugh's opinion in Newdow took place against the backdrop of considerable legal debate that has occurred over the past half century regarding the meaning of the Establishment Clause. For example, the Establishment Clause is often characterized as establishing "a wall of separation between church and State" —although the appropriateness of this characterization has long been contested. The Supreme Court does not always embrace a separationist view of the Establishment Clause, as suggested by its cases approving of certain government-sponsored religious practices due to their historical pedigree. Justice Kennedy, for his part, warned that the Court's statements about government neutrality toward religion should "not give the impression of a formalism that does not exist." Instead, he argued that "[g]overnment policies of accommodation, acknowledgment, and support for religion are an accepted part of our political and cultural heritage." In his work off the court, Judge Kavanaugh has similarly questioned the "wall" metaphor, along with the related principle that the First Amendment "requires the state to be a neutral in its relations with groups of religious believers and non-believers." In a speech discussing the influence of Chief Justice Rehnquist, Judge Kavanaugh stated that the Chief Justice had "persuasively criticized the wall metaphor as 'based on bad history' and 'useless as a guide to judging.'" In another speech, the nominee praised as "well said" the following statement from former Attorney General Ed Meese: "[T]o have argued . . . that the [First Amendment] demands a strict neutrality between religion and irreligion would have struck the founding generation as bizarre. The purpose was to prohibit religious tyranny, not to undermine religion generally." Judge Kavanaugh's writings on and off the bench thus suggest that he, like Justice Kennedy, while not wholly unsympathetic to those who raise challenges under the Establishment Clause, would largely oppose a strict separationist view of the Clause. Judge Kavanaugh has not authored any notable opinions on the Free Exercise Clause, but he did write a significant dissenting opinion on RFRA: Priests for Life v. HHS . As background, RFRA provides that the federal government may not "substantially burden a person's exercise of religion" unless it demonstrates that its action "is in furtherance of a compelling governmental interest" and "is the least restrictive means of furthering that compelling governmental interest." RFRA has become central to a number of controversies involving the ACA, most notably the Supreme Court's decision in Burwell v. Hobby Lobby Stores . In that case, three closely held corporations challenged the ACA's requirement that they provide their employees with health insurance covering certain contraceptive methods. The Supreme Court concluded that the mandate, as applied to these closely held corporations, violated RFRA. The Court explained that these companies "sincerely believe[d] that providing the insurance coverage demanded" was immoral because it had the "effect of enabling or facilitating the commission of an immoral act by another," and it was not for the Court "to say that their religious beliefs are mistaken or insubstantial." Because the regulatory scheme imposed "an enormous" penalty if the corporations chose not to comply with the contraceptive mandate, the Court held that it imposed a substantial burden on their beliefs. The Court further concluded that, assuming the government had demonstrated a compelling interest, the government had not shown that the mandate was the least restrictive means of achieving that interest. Following Hobby Lobby , in Priests for Life , a group of nonprofit organizations that were opposed on religious grounds to providing their employees with certain types of contraceptives again challenged the ACA's contraceptive requirement. The regulatory scheme allowed religious nonprofit organizations to opt out of this requirement by submitting certain documents to insurers to exclude contraception from the health insurance coverage they provided. Under this scheme, if employers opted out, insurers were required "to offer separate coverage for contraceptive services directly to insured women." The plaintiffs argued that the opt-out procedure itself burdened their religious beliefs by triggering the substitution of alternative coverage that would provide contraceptives, thus "facilitating contraceptive coverage." A three-judge panel of the D.C. Circuit rejected the plaintiffs' RFRA claim, concluding that the opt-out requirements did not impose a substantial burden on the challengers' religious exercise. The plaintiffs sought en banc review of this decision, but the D.C. Circuit rejected their petition. In a dissent from the denial of the petition, Judge Kavanaugh opined that the plaintiffs "should ultimately prevail on their RFRA claim, but not to the full extent that they seek." First, the nominee concluded that the plaintiffs demonstrated a substantial burden: "When the Government forces someone to take an action contrary to his or her sincere religious belief (here, submitting the form) or else suffer a financial penalty (which here is huge), the Government has substantially burdened the individual's exercise of religion." In finding a substantial burden, Judge Kavanaugh relied heavily on Hobby Lobby . He accepted the plaintiffs' view that the opt-out procedure "makes them complicit in facilitating contraception or abortion," burdening their religious beliefs. In his view, it was not the court's "call to make," because in Hobby Lobby , the Supreme Court established that "judges in RFRA cases may question only the sincerity of a plaintiff's religious belief, not the correctness or reasonableness of that religious belief." Judge Kavanaugh next concluded that the various opinions in Hobby Lobby "strongly suggest[] that the Government has a compelling interest in facilitating access to contraception for the employees of these religious organizations." Although the majority opinion in Hobby Lobby avoided the issue, the nominee noted that Justice Kennedy and the four dissenting Justices had suggested that the government's interest was compelling—and he said that this conclusion was "not difficult to comprehend," noting the "significant social and economic costs" that result from unintended pregnancies. Finally, the nominee decided that the opt-out requirements violated RFRA because they were not "the Government's least restrictive means of furthering its interest in facilitating access to contraception for the organizations' employees." But this last conclusion was based on the fact that the government could require the organizations to submit a different, "less restrictive notice" that prior Supreme Court cases suggested "should be good enough to satisfy the Government's interest." In this vein, this aspect of Judge Kavanaugh's Priests for Life dissent largely mirrored Justice Kennedy's approach in Hobby Lobby. The plaintiffs in Priest for Life sought review in the Supreme Court. The Court granted their petition for certiorari, consolidating it with similar cases from other federal courts of appeal under the caption Zubik v. Burwell , but ultimately vacated the opinion of the D.C. Circuit without reaching the merits of the claim. After oral argument, the Court "requested supplemental briefing from the parties addressing 'whether contraceptive coverage could be provided to petitioners' employees, through petitioners' insurance companies, without any such notice from petitioners.'" Both parties "confirm[ed] that such an option [was] feasible," and the Court remanded the combined cases to the lower courts to afford the parties "an opportunity to arrive at an approach going forward that accommodates" the positions of both sides. Some commentators speculated that the Court, which was then "functioning with eight Justices, was having difficulty composing a majority in support of a definite decision on the legal questions." Zubik may suggest, therefore, that the Court is closely divided with respect to religious liberty issues, demonstrating that a new Justice could be influential on these matters as the Court considers whether to hear other cases on religious liberty in the near future. First Amendment cases, particularly those involving the freedom of speech, have featured prominently on the Roberts Court. In recent years, a majority of the Court has looked with increasing skepticism on laws or government actions that restrict political speech or commercial speech, compel speech either directly or through mandatory subsidization of private speech, or regulate speech based on its content. Justice Kennedy played a pivotal role in many of these cases, including by authoring the Court's 2010 opinion in Citizens United v. F ederal E lection C ommission ( FEC ), which invalidated a federal ban on certain corporate political expenditures. In addition, in his last term, Justice Kennedy joined five-member majorities to invalidate compulsory public-sector union agency fees and hold that a state's disclosure requirements for certain pregnancy centers were likely unconstitutional. However, he has also recognized limitations on the First Amendment's reach, particularly in the context of a government employee's speech on an employment matter. For his part, Judge Kavanaugh has a relatively robust free speech record, having encountered several strands of First Amendment law as an appellate judge, and his opinions in these cases provide some limited insight into how he might approach free speech cases on the Court. Some of Judge Kavanaugh's cases required him to decide whether the reasoning undergirding a key First Amendment precedent applied to a new factual scenario. In other cases, Judge Kavanaugh offered alternative analytical frameworks to tackle First Amendment issues confronting lower courts, including on evolving areas of First Amendment law such as commercial speech regulations. This section of the report addresses Judge Kavanaugh's freedom-of-speech jurisprudence, beginning with his decisions on campaign finance law before turning to his opinions on the regulation of various types of media and commercial speech. The section concludes by noting where the nominee has recognized key limitations on the First Amendment's reach. As a circuit court judge, Judge Kavanaugh has witnessed the evolution of the Supreme Court's campaign finance jurisprudence and has applied several of its key decisions in this area in cases concerning political spending. Although these cases largely involved the application of binding Supreme Court precedent, some required the judge to reconcile what he viewed as potential incongruities in the law or to consider how the underlying First Amendment principles squared with the federal government's interests in preserving the integrity of the democratic process. Perhaps most notably, Judge Kavanaugh has openly endorsed the view—consistent with long-established Supreme Court precedent —that political spending represents speech and that limits on such speech deserve strict scrutiny under the First Amendment. During a 2016 event at the American Enterprise Institute, Judge Kavanaugh remarked that "political speech is at the core of the First Amendment, and to make your voice heard, you need to raise money to be able to communicate to others in any kind of effective way." The first notable case on political speech for which Judge Kavanaugh authored an opinion arose in 2009 in Emily ' s List v. FEC . That case, which preceded Citizen ' s United , was brought by a nonprofit group seeking to make both contributions to and expenditures in support of "pro-choice Democratic women candidates," and involved a First Amendment challenge to FEC regulations that required "covered non-profits [to] pay for a large percentage of election-related activities out of their hard-money accounts," which were "capped at $5000 annually for individual contributors." Judge Kavanaugh authored the panel opinion in the case. He began by reviewing "several overarching principles of relevance" from the Supreme Court's First Amendment cases involving campaign finance laws: (1) that campaign contributions and expenditures are "speech" within the meaning of the First Amendment; (2) that "equalization"—or restricting the speech of some speakers "so that others might have an equal voice or influence in the electoral process"—is not a permissible basis for the government to restrict speech; (3) that the government has a strong interest in combating corruption and the appearance of corruption; (4) that based on that anti-corruption interest, the Court has allowed greater regulation of contributions to candidates or political parties than of expenditures by citizens and groups on electioneering activities such as advertisements, get-out-the-vote efforts, and voter registration drives; and (5) that the Court—at least up until that point—had been "somewhat more tolerant of regulation of for-profit corporations and labor unions." Judge Kavanaugh analyzed the applicability of these First Amendment principles and holdings to EMILY's List, which sought to make both contributions and expenditures . He held that although limits on a nonprofit's direct contributions to federal candidates and parties are constitutional under relevant Supreme Court precedent, limits on their expenditures are not. In other words, Judge Kavanaugh concluded, nonprofits "are entitled to make their expenditures . . . out of a soft-money or general treasury account that is not subject to source and amount limits." In so doing, the nominee distinguished the Supreme Court's decision in McConnell v. FEC , which had upheld statutory limits on soft-money contributions to and expenditures by political parties , reasoning that the anti-corruption justification for those limits did not apply in the case of nonprofits. He explained that if the different treatment under the First Amendment of political parties and nonprofits seemed "incongruous," it was up to Congress to eliminate the "asymmetry" by raising or removing limits on contributions to political parties or candidates. Elsewhere, Judge Kavanaugh has upheld restrictions on campaign spending. A year after Emily ' s List and two months after the Court's decision in Citizens United , in Republican National Committee (RNC) v. FEC , Judge Kavanaugh rejected the RNC's challenge to the statutory "soft-money ban" that prohibited it from raising and spending unlimited contributions to support state candidates, state parties' redistricting efforts, and various "grassroots lobbying efforts." Writing on behalf of a three-judge district court panel, Judge Kavanaugh reasoned that McConnell , which had upheld the soft-money ban notwithstanding its applicability to state election activities, foreclosed the RNC's challenge. Unlike in Emily ' s List —which, as previously noted, concerned a nonprofit—Judge Kavanaugh found McConnell 's anti-corruption justification sufficiently applicable to the RNC. The nominee noted the law's differential treatment of outside groups versus candidates and political parties, but stated that "the RNC's concern about this disparity" is "an argument for the Supreme Court or Congress." The following year, in Bluman v. FEC , Judge Kavanaugh—once again on behalf of a three-judge district court panel—rejected a First Amendment challenge to a statute barring political contributions by foreign nationals temporarily living in the United States. In doing so, Judge Kavanaugh cited the U.S. government's compelling interest in "limiting the participation of foreign citizens in activities of American democratic self-government, and in thereby preventing foreign influence over the U.S. political process." He noted, however, that the court's holding addressed only political contributions and certain expenditures by foreign nationals, not their right to engage in " issue advocacy and speaking out on issues of public policy," and that its decision "should not be read to support such bans." As noted, Judge Kavanaugh has publicly endorsed the view that political spending is a form of political speech, which suggests that, if confirmed, he may be an unlikely vote to walk back the First Amendment lines that the Court has drawn to date in order to allow the government greater leeway to regulate political contributions and expenditures. If anything, Judge Kavanaugh has seemed to voice some discomfort at certain aspects of the scope and nature of government regulation in this area, particularly with respect to how the law still treats certain speakers differently in the campaign finance realm (e.g., political candidates and parties versus outside groups). His view that the consideration of whether to level the field for these speakers is one for Congress or the Supreme Court raises the question of what position the nominee would take if elevated to the Court. While stressing the importance of historical context in some First Amendment cases, Judge Kavanaugh has looked to more recent developments when evaluating the constitutionality of telecommunications and Internet regulations, citing the significance of a speaker's "market power" under the Supreme Court's "landmark decisions" in Turner Broadcasting I and Turner Broadcasting II —both authored by Justice Kennedy. In Turner Broadcasting I , the Court considered whether the so-called "must-carry provisions" in a 1992 law that "require[d] cable television systems to devote a portion of their channels to the transmission of local broadcast television stations" violated the First Amendment. In his opinion for the Court, Justice Kennedy reasoned that the First Amendment protects cable programmers and operators, who "engage in and transmit speech," and that the must-carry provisions regulate speech by "reduc[ing] the number of channels over which cable operators exercise unfettered control" and "render[ing] it more difficult for cable programmers to compete for carriage on the limited channels remaining." Reviewing the must-carry provisions under "the intermediate level of scrutiny applicable to content-neutral restrictions that impose an incidental burden on speech," Justice Kennedy reasoned that the must-carry provisions were "justified by special characteristics of the cable medium: the bottleneck monopoly power exercised by cable operators and the dangers this power pose[d] to the viability of broadcast television." However, the Court remanded the case for additional fact-finding to determine whether the provisions burdened more speech than necessary to address the threat Congress perceived to broadcast television. Three years later, following remand, the case again reached the Court in Turner Broadcasting II , where Justice Kennedy's majority opinion concluded that the must-carry provisions "do not burden substantially more speech than necessary to further [Congress's] interests," and therefore, did not violate the First Amendment. Thirteen years later, a D.C. Circuit panel that included Judge Kavanaugh considered the applicability of the Turner Broadcasting cases in Cablevision Systems Corp. v. FCC . In that case, two cable companies challenged an FCC decision to temporarily extend a statutory "exclusivity provision" barring exclusive contracts between "multichannel video programming distributors" such as cable operators and cable-affiliated programming networks. Two members of the panel rejected the companies' First Amendment argument, in large part based on the D.C. Circuit's 1996 decision in Time Warner Entertainment Co. v. FCC , which relied on Turner Broadcasting to uphold the underlying exclusivity statute against a similar First Amendment challenge. Judge Kavanaugh dissented, reasoning that the Turner Broadcasting and Time Warner courts had upheld restrictions on the "editorial and speech rights of cable operators and programmers . . . only because of the 'bottleneck monopoly power exercised by cable operators.'" In Judge Kavanaugh's view, the relevant market had "changed dramatically" since "those mid-1990s cases" to the point where cable operators "no longer possess bottleneck monopoly power." In particular, Judge Kavanaugh noted the range of video programming options available to consumers, not only through traditional cable networks, but also through cell phone companies and the Internet. The legal import of all these developments, Judge Kavanaugh concluded, is that "the FCC's exclusivity ban . . . is no longer necessary to further competition—and no longer satisfies the intermediate scrutiny standard set forth by the Supreme Court for content-neutral restrictions on editorial and speech rights." Judge Kavanaugh reasoned that in addition to the lack of market power to justify the restriction, the exclusivity rule raised special First Amendment concerns because it did not regulate evenhandedly, applying to cable operators like Cablevision but not "similarly situated video programming distributors and video programming networks" like DIRECTV, DISH, Verizon, or AT&T. Of potential significance, Judge Kavanaugh proceeded to "offer a few additional observations" about the First Amendment's applicability in the telecommunications sphere; among the various points raised in this section of the opinion, Judge Kavanaugh reasoned that Congress and regulatory agencies have more leeway to adjust to the "realities of a changing market" in "ordinary economic regulation cases," such as those involving "energy, labor relations, the environment, or securities transactions." In contrast, he posited, the First Amendment requires "a more 'laissez-faire' [regulatory] regime" when the restriction concerns "communication markets." Judge Kavanaugh further reasoned that the First Amendment may permit the government to regulate in a content-neutral manner in a noncompetitive market, but "when a market is competitive, direct interference with First Amendment free speech rights in the name of competition is typically unnecessary and constitutionally inappropriate." Judge Kavanaugh offered similar observations in another case involving the FCC's "Viewability Rule," which "requir[ed] 'hybrid' cable companies—that is, those that provide both analog and digital cable service—to 'downconvert' from digital to analog broadcast signals from must-carry stations for subscribers with analog television sets." The FCC had allowed the Viewability Rule to lapse and replaced it with a new rule, in part because of constitutional concerns. Judge Kavanaugh, in a concurring opinion, reasoned that the FCC "was right to perceive a serious First Amendment problem with the Viewability Rule," echoing many of the arguments he made in Cablevision regarding the "dramatically changed marketplace" against which the Court must evaluate the constitutionality of the "broader must-carry regime." In Judge Kavanaugh's view, "cable regulations adopted in the era of Cheers and The Cosby Show are ill-suited to a marketplace populated by Homeland and House of Cards "; furthermore, "[b]ecause cable operators no longer wield market power," Judge Kavanaugh reasoned that "the Government can no more tell a cable operator today which video programming networks it must carry than it can tell a bookstore what books to sell or tell a newspaper what columnists to publish." The significance of market power also featured prominently in Judge Kavanaugh's dissent from an en banc circuit decision not to review a panel order upholding the FCC's 2015 net neutrality rule. The rule prohibited ISPs from blocking or throttling (i.e., slowing down) legal content and from agreeing to favor the delivery of certain content for a fee or to benefit an affiliated entity. Judge Kavanaugh described the rule as "one of the most consequential regulations ever issued by any executive or independent agency in the history of the United States." In Judge Kavanaugh's view, the rule "transform[ed] the Internet by imposing common-carrier obligations on [ISPs] and thereby prohibiting [them] from exercising editorial control over the content they transmit to consumers." He reasoned that imposing such obligations on ISPs without demonstrating that they possess "market power" violates the First Amendment under the Turner Broadcasting cases. While acknowledging that the net neutrality rule pertained to ISPs, not cable television operators, Judge Kavanaugh reasoned that these businesses "perform the same kind of functions," suggesting, by way of example, that "[d]eciding whether and how to transmit ESPN and deciding whether and how to transmit ESPN.com are not meaningfully different for First Amendment purposes." Judge Kavanaugh also rejected the FCC's attempt to distinguish ISPs from cable television operators on the basis that ISPs do not exercise editorial control, reasoning that even if ISPs "have not been aggressively exercising their editorial discretion," they do not forfeit their right to do so. In view of the foregoing opinions, Judge Kavanaugh, if confirmed, could be a key voice on the Supreme Court as it continues to refine the contours of First Amendment law in the Internet age. Judge Kavanaugh's opinions suggest that he believes that, barring some sort of market irregularity, the First Amendment should apply with the same rigor to restrictions on Internet speakers and content providers as to other purveyors of speech in the communications industry, and that technological developments and increased competition could lessen the need for government regulation in the communications marketplace. Some First Amendment contexts implicate more than one of the Supreme Court's tests for evaluating the constitutionality of a speech regulation. In these circumstances, the court may not reach agreement on the governing doctrine, and, as Judge Kavanaugh has argued, the outcome of the case may depend on which test the court applies and the factors that the court considers in applying it. Debates over the appropriate First Amendment test to apply have often arisen in the context of commercial speech and commercial disclosures. In its 1980 decision in Central Hudson Gas & Electric Corp. v. Public Service Commission of New York , the Supreme Court developed an "intermediate" standard of scrutiny for evaluating commercial regulations that implicate speech. This test requires the government to articulate more than a rational basis for its regulatory decision, but does not necessitate that the law be the "least restrictive means" of achieving the government's interest (a key feature of strict scrutiny). However, since Central Hudson , the Court has, at times, departed from using the test articulated in the 1980 decision, with some members of the Court going so far as to question the basis for treating commercial speech differently from core political speech, which receives strict scrutiny—at least in certain circumstances. The debate over the proper test for evaluating commercial speech restrictions also calls into question the scope of doctrines created for purposes of evaluating commercial disclosure requirements, which some courts have likened to rational basis review. In American Meat Institute v. Department of Agriculture , Judge Kavanaugh offered a path to reconciling the Court's current tests for commercial speech and commercial disclosures. In American Meat Institute , the full circuit considered the constitutionality of a federal regulation requiring the disclosure of certain country-of-origin information for meat products. As a threshold matter, the court considered which of two First Amendment standards developed by the Supreme Court applied to the regulation. The first standard was the "general test for commercial speech restrictions" set forth in Central Hudson : whether the regulation directly advances a substantial governmental interest and is narrowly drawn to achieve that end. The second standard involved the Court's decision in Zauderer v. Office of Disciplinary Counsel , which concerned government-mandated disclosures aimed at preventing consumer deception. Under the Zauderer standard, a "purely factual and uncontroversial" disclosure requirement comports with the First Amendment when it is "reasonably related to the [government's] interest in preventing deception of consumers." The en banc court in American Meat Institute interpreted Zauderer to apply outside the context of consumer deception and concluded that the country-of-origin labeling requirements passed muster under Zauderer . Although he agreed with the majority's conclusion that the First Amendment does not bar the country-of-origin labeling requirements, Judge Kavanaugh wrote separately to explain how the "two basic Central Hudson requirements apply to this case." With respect to Central Hudson 's first prong requiring a substantial governmental interest, Judge Kavanaugh reasoned that the need to prevent consumer deception and to ensure consumer health or safety are "historical" and "traditional" interests justifying commercial disclosures. However, Judge Kavanaugh reasoned that the "the Government cannot advance a traditional anti-deception, health, or safety interest in this case because a country-of-origin disclosure requirement obviously does not serve those interests." Moreover, Judge Kavanaugh found that the interest that the government had asserted —providing consumers with information—was insufficient for First Amendment purposes. Nevertheless, Judge Kavanaugh reasoned that "country-of-origin labeling is justified by the Government's historically rooted interest in supporting American manufacturers, farmers, and ranchers as they compete with foreign" counterparts. Judge Kavanaugh then concluded that the labeling requirement satisfied Central Hudson 's second prong "concern[ing] the fit between the disclosure requirement and the Government's interest." In doing so, he characterized the debate over the Central Hudson versus Zauderer tests as presenting a "false choice," reasoning that " Zauderer is best read simply as an application of Central Hudson , not a different test altogether." Under Judge Kavanaugh's interpretation, " Zauderer tells us what Central Hudson 's [second prong] means in the context of compelled commercial disclosures: The disclosure must be purely factual, uncontroversial, not unduly burdensome, and reasonably related to the Government's interest." Judge Kavanaugh's concurrence in American Meat Institute is potentially notable in several respects. First, while rejecting the view that the public's right to know in and of itself can justify compelled commercial disclosures, Judge Kavanaugh seemed to implicitly accept that cases like Zauderer may justify government-compelled disclosure for reasons other than preventing consumer deception —which is an open question for the Supreme Court. He did note, however, that "the compelled disclosure must be a disclosure about the product or service in question to be justified under Central Hudson and Zauderer "—a qualification that the Supreme Court recently confirmed, at least with respect to Zauderer 's application, in NIFLA v. Becerra . Second, Judge Kavanaugh interpreted the Supreme Court's precedents to require a substantial governmental interest, even under Zauderer . In doing so, he looked to "history and tradition" to discern what interests outside the context of preventing consumer deception might be "substantial." This approach raises a question as to whether Judge Kavanaugh, if confirmed, would invalidate compelled disclosures that lack a "historical pedigree." Finally, Judge Kavanaugh seemed to interpret Zauderer 's test to be as rigorous as Central Hudson 's intermediate scrutiny standard, notwithstanding contrary views of Zauderer from other courts. Although the foregoing observations could be viewed simply as the judge's attempts to interpret and reconcile existing Supreme Court precedent, they could also signal his potential alignment with the wing of the Court that has advocated for a more rigorous form of review for commercial speech and compelled speech. Like Justice Kennedy, Judge Kavanaugh's view of the First Amendment's protection of free speech is not unbounded. In cases where the challenged governmental action implicated national security or concerned government speech or a regulation directed at conduct, Judge Kavanaugh upheld the government's action. al Bahlul v. United States involved a First Amendment challenge by an assistant to Osama bin Laden who complained that "he was unconstitutionally prosecuted [by a U.S. military commission] for his political speech," which included his production of "propaganda videos for al Qaeda." In an opinion concurring in part and dissenting in part from the judgment, Judge Kavanaugh reasoned that the government based the appellant's conspiracy conviction on the appellant's conduct, not his speech, but that in any event, appellant "had no First Amendment rights as a non-U.S. citizen in Afghanistan when he led bin Laden's media operation." Judge Kavanaugh further reasoned that even if the First Amendment did apply to the appellant's production of videos in Afghanistan, it did not protect the videos described in the appellant's indictment because they were aimed at inciting imminent lawless action and thus unprotected speech under relevant Supreme Court precedent. He noted that the Supreme Court has been even less willing to recognize protections for such speech when the government seeks to prevent imminent harms as a matter of international affairs and national security. Invoking the words of Justice Jackson, Judge Kavanaugh stated that the Constitution "is not a suicide pact." In Bryant v. Gates , a former civilian employee with the military sought to publish in Department of Defense (DOD) newspapers distributed on military installations a series of advertisements soliciting readers to "blow the whistle" on alleged military cover-ups. The military denied his requests on the basis of a DOD rule prohibiting the newspapers from including partisan discussions and political commentary. The former employee challenged the rule and the DOD's application of the rule to his proposed advertisements on First Amendment grounds. Applying the test for non-public forums, the court concluded that the restriction on political advertising was reasonable "on its face and as applied to [the advertisements in question]." Although Judge Kavanaugh joined the court's opinion, he authored a separate concurrence "lest this precedent be misinterpreted." In Judge Kavanaugh's view, the "government speech" doctrine—rather than a public forum analysis—best applied to speech restrictions concerning the DOD newspapers. Pursuant to that doctrine, he explained, because the publication constitutes the government's own speech, the military "may exercise viewpoint-based editorial control in running [it]," and could reject not only political advertisements as a category, but also political advertisements conveying a particular message that the military opposes. Judge Kavanaugh also suggested an alternative analytical approach in a case involving a First Amendment challenge to a D.C. law prohibiting the defacement of public and private property. The panel rejected an anti-abortion protester's argument that the law unconstitutionally prohibited him from writing messages in sidewalk chalk on the street in front of the White House. Although Judge Kavanaugh agreed with the majority's analysis and resolution of the First Amendment issue under the public forum doctrine, he authored a separate concurrence "simply because [he did] not want the fog of First Amendment doctrine to make this case seem harder than it is." In his view, "[n]o one has a First Amendment right to deface government property." Although by no means unfailing indicators of how Judge Kavanaugh will approach future cases, some broad observations emerge from his free speech jurisprudence. First, Judge Kavanaugh has generally recognized political spending as a form of protected speech and has noted where the Court's election law jurisprudence has resulted in speaker-based distinctions, raising questions as to whether he would maintain those dividing lines. Second, Judge Kavanaugh has applied bedrock First Amendment principles to new forms of media and appears to have viewed regulations of the communications industry—where speech is the product offering—as particularly suspect under the First Amendment. Third, in a case concerning "country-of-origin" labeling requirements, Judge Kavanaugh staked a middle ground in the ongoing debate over the proper test to apply to commercial disclosures. Fourth, like Justice Kennedy, Judge Kavanaugh has recognized limitations on the First Amendment's reach. In particular, he has upheld government actions in cases that he deemed to involve unprotected speech or government speech. Because of the unique docket at the D.C. Circuit, which has exclusive jurisdiction over certain matters related to military commissions and law of war detention, Judge Kavanaugh has authored or joined a large body of opinions related to national security. Like the themes echoed in several of Justice Kennedy's opinions, the nominee has frequently argued for courts to defer to the authority of the political branches on national security matters. To Judge Kavanaugh, this deference arises from concerns that the judicial branch lacks the institutional competency to address national security and foreign policy debates in the absence of a statutory directive. At the same time, the nominee's deference has limits, as he holds the view that deference is not warranted when a governing statute or constitutional provision calls for a judicial role. Judge Kavanaugh appears less likely than Justice Kennedy to look to international law principles to inform his interpretation of a particular statute or constitutional provision in the absence of an express directive to do so. In addition to his judicial rulings on national security matters, Judge Kavanaugh's non-judicial writings express a special interest in analyzing the constitutional limits on the Executive's power to take the United States to war abroad without congressional authorization, a matter that has not received significant attention from the Supreme Court in the modern era. Parallels between Justice Kennedy's and Judge Kavanaugh's deference to the political branches are evident in their approach to cases concerning implied constitutional causes of action in the national security realm. In his opinion for the Supreme Court in Ziglar v. Abbasi , Justice Kennedy reasoned that judicial recognition of an implied cause of action—allowing certain individuals who had been detained in the aftermath of the September 11, 2001 attacks to sue the government for monetary damages—would raise separation-of-powers concerns by requiring "judicial inquiry into the national-security realm." In Meshal v. Higgenbotham , Judge Kavanaugh similarly declined to recognize an implied constitutional cause of action for monetary damages arising out of the alleged torture and detention of an American citizen during U.S. anti-terrorism operations in Africa. In a passage echoing Ziglar , the nominee wrote in an opinion concurring in dismissal of the suit that it is Congress, not the judicial branch, that "decides whether to recognize a cause of action against U.S. officials for torts they allegedly committed abroad in connection with the war against al Qaeda and other radical Islamic terrorist organizations." Judge Kavanaugh has been vocally deferential to the political branches when evaluating national security-related matters that he considered to concern policy choices rather than legal disputes. In al Bahlul v. United States —an en banc case concerning the scope of military commissions' jurisdiction—three dissenting judges argued that the government did not demonstrate that military exigency required the United States to try a defendant in a military commission, rather than in a court convened pursuant to the judicial authority established under Article III. Judge Kavanaugh responded, stating that the dissenting judges had "no business" evaluating military exigency because they had "no relevant expertise on the question of wartime strategy." The nominee has also opined that courts should not second-guess the judgment of the executive branch in other national security-related matters, such as security clearance decisions or when evaluating how a foreign country is likely to treat a U.S. detainee slated for transfer overseas. Similarly, in a dissenting opinion in an Alien Tort Statute suit against Exxon Mobil involving the Indonesian army, Judge Kavanaugh argued, among other reasons, that because the Department of State submitted a letter explaining that the case could adversely affect U.S. foreign relations and joint terrorism efforts, the suit should be dismissed. Klayman v. Obama serves as another example that Judge Kavanaugh may be deferential to national security concerns when evaluating challenges to government action. In an opinion concurring in the denial of rehearing en banc, Judge Kavanaugh wrote that the intelligence community's "bulk collection of telephony metadata serves a critically important special need—preventing terrorist attacks on the United States." In Judge Kavanaugh's view, this national security need outweighed competing privacy concerns. And, in a passage echoing his deference toward the political branches, the nominee concluded that those with concerns about the metadata program should focus their efforts on Congress and the Executive. But Judge Kavanaugh also has expressed the view that federal courts should play a role in some national security-related cases, particularly when the Executive purports to possess the power to deviate from a statutory or express constitutional restriction. "[P]residents must and do follow the statutes regulating the war effort[,]" Judge Kavanaugh wrote in 2016 article in the Marquette Lawyer . And, the nominee noted in the same article, that "in cases where someone has standing—a detainee, a torture victim, [or] someone who has been surveilled—the courts will be involved in policing the executive's use of wartime authority." Although federal courts should not create new rules to regulate the Executive's war powers, Judge Kavanaugh similarly wrote in a 2014 law review article, courts also should not "relax the constitutional principles or statutes that regulate the executive," even during the high stakes of military conflict. For example, in a 2016 speech following the death of Justice Scalia, Judge Kavanaugh expressed support for Justice Scalia's dissenting opinion in Hamdi v. Rumsf el d , which argued that courts should strictly enforce the Suspension Clause in cases challenging military detention of American citizens. The case of El-Shifa Pharmaceutical Industries Co. v. United States may illustrate how Judge Kavanaugh's views expressed outside the courtroom concerning the role of the judicial branch in national security cases apply in practice. In El-Shifa , Judge Kavanaugh disagreed with the en banc D.C. Circuit's reliance on the political question doctrine as a basis to dismiss claims against the United States arising from the 1998 U.S. bombing of a Sudanese pharmaceutical factory believed to be associated with Al-Qaeda. While Judge Kavanaugh concluded that the case should be dismissed for failure to state an actionable claim, he argued that the court's reliance on the political question doctrine amounted to de facto approval of the Executive's assertion of military authority in a case in which it was the court's responsibility to address the substance of the claims. Presaging the Supreme Court's later ruling in Zivotofsky v. Clinton , Judge Kavanaugh reasoned that the political question doctrine does not require federal courts to decline to resolve a case "simply because the dispute involves or would affect national security or foreign relations." Accordingly, as a jurisdictional matter, Judge Kavanaugh appears skeptical of the view that courts do not have a role in cases solely based on the fact that the dispute raises national security concerns. One of Judge Kavanaugh's most comprehensive bodies of national security-related jurisprudence, and one that may provide contrast between him and the jurist he may succeed, concerns the detention of enemy belligerents. Whereas Justice Kennedy was instrumental in the Supreme Court's ruling that the constitutional writ of habeas extended to foreign nationals held at Guantanamo Bay, Judge Kavanaugh ruled against detainees in a number of cases concerning the evidentiary rules that apply when adjudicating such habeas cases. Judge Kavanaugh frequently authored or joined panel opinions that concluded the government had presented sufficient evidence that a Guantanamo detainee was "part of" Al-Qaeda and its associated forces, and therefore subject to military detention. In Ali v. Obama , for example, Judge Kavanaugh's opinion for the court explained that the standard of proof to uphold military detention may be less rigorous than the standard in criminal prosecutions because—even in "a long war with no end in sight"—military detention "comes to an end with the end of hostilities." One issue in which Justice Kennedy and Judge Kavanaugh appear likely to diverge is the extent that international law may inform judicial decisionmaking. In 2004, Justice Kennedy joined a four-Justice plurality concluding that "longstanding law-of-war principles" that arise under international law informed the interpretation of the phrase "necessary and appropriate force" in the 2001 Authorization for the Use of Military Force (2001 AUMF) . And in a concurring opinion in Hamdan v. Rumsfeld , Justice Kennedy wrote that, under the Uniform Code of Military Justice, Common Article 3 of the 1949 Geneva Conventions was "applicable to our Nation's armed conflict with al Qaeda in Afghanistan and, as a result, to the use of a military commission." Justice Kennedy also occasionally considered international law in his opinions outside the national security context. Judge Kavanaugh, by contrast, at times has been critical of arguments that international legal principles should influence judicial analysis in the absence of a clear statutory reference. In a 2010 concurring opinion in Al-Bihani v. Obama , Judge Kavanaugh expressed the view that the 2001 AUMF did not incorporate judicially enforceable international law limits on the President's wartime authority. "Many international-law norms are vague, contested or still evolving[,]" Judge Kavanaugh wrote in Al-Bihani . While federal courts historically have construed federal statutes to avoid conflicts with international law, Judge Kavanaugh argued that constitutional principles and 20th century judicial developments make such a rule of construction inappropriate in some cases. Judge Kavanaugh expressed similar views in his 2016 concurring opinion in a l Bahlul where he stated that federal courts are not "roving enforcers of international law[,]" and they are not permitted to "smuggle international law into the U.S. Constitution and then wield it as a club against Congress and the President in wartime." At the same time, Judge Kavanaugh has not been exclusively critical of international law. In his 2016 a l Bahlul opinion, he described international law as "important" and stated that "the political branches have good reason to adhere" to it. Moreover, when governing statutes or regulations expressly incorporated international law into U.S. domestic law, Judge Kavanaugh interpreted and enforced international legal principles. For example, Judge Kavanaugh joined an opinion concluding that an applicable U.S. Army Regulation incorporated international legal protections afforded to medical personnel on the battlefield —although the court ultimately concluded that those protections did not apply under the facts of the case. And in a 2012 decision, Judge Kavanaugh analyzed whether international law recognized certain criminal offenses for which a defendant was convicted in a military commission because, in that case, Congress " explicitly incorporated international norms into domestic U.S. law." Finally, in several academic publications, Judge Kavanaugh explored what he believes to be one of the most important questions in American constitutional law: whether the president has the power to take the United States into war overseas without congressional authorization. Judge Kavanaugh described the Constitution's war-making power as shared between the legislative and executive branches. In the realm of congressional power, according to Judge Kavanaugh, the legislative branch has broad authority to control whether the United States wages war and to regulate some aspects of how the Executive conducts military operations, such as surveillance, detention, interrogation, and military commissions. In the field of executive power, Judge Kavanaugh noted that Article II makes the President Commander in Chief of the Armed Forces. But, according to the nominee, it is difficult to determine the extent to which the President's war powers are "exclusive and preclusive"—meaning they cannot be regulated by Congress. Other than the power to command troops on the battlefield during a congressionally authorized war, Judge Kavanaugh has stated that the scope of the President's preclusive war powers are unsettled —although he did suggest in dicta that a statute regulating the President's "short-term bombing of foreign targets in the Nation's self-defense" may not survive constitutional scrutiny. Ultimately, Judge Kavanaugh appears to believe that constitutional questions concerning war and national security will continue to be the subject of "heated debate," and that all three branches of government will play a role in resolving them. The Roberts Court has been closely divided when interpreting the Second Amendment, and Justice Kennedy's replacement will likely play an important role going forward in shaping the jurisprudence governing the scope of the Second Amendment's right to keep and bear arms. Justice Kennedy provided key deciding votes in the two landmark Second Amendment rulings of the Roberts Court. First, in 2008, he joined the five-Justice majority in District of Columbia v. Heller ( Heller I ), which held for the first time that the Second Amendment protects an individual's right to possess a firearm. Then in 2010, he joined another 5-4 majority in McDonald v. City of Chicago , which held that the Second Amendment is applicable to the states via the Fourteenth Amendment. Neither Heller I nor McDonald purported to define the full scope of the right protected by the Second Amendment, although the Court cautioned that "the right secured by the Second Amendment is not unlimited." And the Court has issued virtually no opinions meaningfully interpreting the Second Amendment since McDonald . Accordingly, in the wake of Heller I , the various federal circuit courts have examined the contours of the Second Amendment with little guidance from the High Court, requiring the lower courts to identify the appropriate standard of review for federal and state firearm restrictions. And Judge Kavanaugh undertook this task a year after McDonald was decided in Heller II , in which he authored a notable dissent construing and applying Heller I differently from the prevailing method that other federal district and circuit courts use. Heller II assessed whether the District of Columbia's Firearms Registration Amendment Act (FRA) comported with the Second Amendment. In particular, Heller II evaluated three of the FRA's provisions: (1) its firearm registration requirement; (2) its prohibition on the possession of certain semi-automatic rifles that fell within the FRA's definition of "assault weapons"; and (3) its prohibition on the possession of large-capacity magazines with a capacity for more than ten rounds of ammunition. In a 2-1 ruling over Judge Kavanaugh's dissent, the D.C. Circuit largely upheld the challenged FRA provisions. The majority began by applying the two-step framework that has been employed by nearly all federal circuit courts that have considered Second Amendment challenges post- Heller I , first asking whether the provisions implicate a right protected by the Second Amendment, and, if so, second, analyzing the provisions under the appropriate level of judicial scrutiny (e.g., rational basis review, intermediate scrutiny, or strict scrutiny). Ultimately, the D.C. Circuit generally upheld the challenged requirements. While remanding the case to review several specific registration requirements, the court concluded that the general requirement that a gun be registered with the government fell within the category of "longstanding prohibitions" on the possession and use of firearms that the Supreme Court considered to be "presumptively lawful regulatory measures" that do not garner Second Amendment protection. Further, the court concluded that the ban on semi-automatic rifles and large-capacity magazines withstood intermediate scrutiny and, thus, were lawful because the government had shown a reasonable fit between the prohibitions and its interests in protecting police officers and controlling crime. In his dissent, Judge Kavanaugh wrote at length about the meaning and import of the High Court's decision in Heller I , opining that: Heller , while enormously significant jurisprudentially, was not revolutionary in terms of its immediate real-world effects on American gun regulation. Indeed, Heller largely preserved the status quo of gun regulation in the United States. Heller established that traditional and common gun laws in the United States remain constitutionally permissible. The Supreme Court simply pushed back against an outlier local law—D.C's handgun ban—that went far beyond the traditional line of gun regulation. And, in Judge Kavanaugh's view, the FRA—like the District of Columbia's handgun ban that came before it—is an "outlier" and thus unconstitutional under Heller I . He reasoned that the FRA provisions are outliers because they are not common or traditional firearm laws: "As with D.C.'s handgun ban [struck down in Heller I ], . . . holding these D.C. laws unconstitutional would not lead to nationwide tumult. Rather, such a holding would maintain the balance historically and traditionally struck in the United States between public safety and the individual right to keep arms . . . ." Notably, unlike the Heller II majority and several other federal circuit courts, Judge Kavanaugh proposed, in line with his general skepticism of balancing tests, that firearm laws should be evaluated not according to a particular level of scrutiny but, rather, "based on the Second Amendment's text, history, and tradition (as well as by appropriate analogues thereto when dealing with modern weapons and new circumstances)." While the nominee acknowledged that Heller I did not direct lower courts as to the appropriate analytical framework for analyzing Second Amendment claims, he concluded that "look[ing] to text, history, and tradition to define the scope of the right and assess gun bans and regulations" is the "clear message" from Heller I because the Supreme Court had gauged firearms laws according to "historical tradition," including whether a measure is "longstanding" or regulates weapons that "citizens typically possess" and that are "in common use." Further, he contended that the Heller I majority rejected "judicial interest balancing," which, in his view, includes strict or intermediate scrutiny, to assess whether a government restriction on firearms is permissible. Applying this analysis in his Heller II dissent, Judge Kavanaugh would have invalidated two of the three challenged FRA provisions. With respect to the FRA's gun registration law, the nominee maintained that the "fundamental problem" with the law was that—in contrast to gun licensing and recordkeeping laws—gun registration requirements were "not 'longstanding,'" in that registration of lawfully possessed guns "has not been traditionally required in the United States and, indeed, remains highly unusual today." In arguing for striking down the District of Columbia's ban on semi-automatic rifles that fell within the FRA's definition of "assault weapons," the nominee maintained that semi-automatic rifles are "traditionally and widely accepted as lawful possessions." And with respect to the FRA's prohibition on the possession of large-capacity magazines, the nominee would have remanded the case to the lower court to determine whether large-capacity magazines have traditionally been banned and are not in common use. As the nominee's writings on the Second Amendment reveal, adding Judge Kavanaugh to the Supreme Court's bench could shape the way that Second Amendment claims are evaluated, which, in turn, could potentially affect the legality of firearm legislation at the federal, state, and local levels. For instance, were the Supreme Court to adopt Judge Kavanaugh's history and tradition test for evaluating the scope of the Second Amendment—an approach that differs from the prevailing two-step approach adopted by nearly all federal circuit courts —it is possible that renewed challenges will be raised to some firearms laws that were upheld under the previous two-step approach. That said, it is still possible that a court would reach the same result regarding a firearm law's permissibility under Judge Kavanaugh's suggested methodology as under the earlier approach. Moreover, as the nominee noted in Heller II , government bodies may have more flexibility under his proposed method of analysis than under the strict scrutiny test used at times by some circuit courts because "history and tradition show that a variety of gun regulations have co-existed with the Second Amendment right and are consistent with that right, as the Court said in Heller [I] ." Judge Kavanaugh's disagreement with how the lower courts have generally interpreted the Second Amendment has prompted some commentators to argue that the nominee would necessarily vote in favor of granting a petition for certiorari in a case involving the Second Amendment. While the decision to grant certiorari generally does not hinge on a Justice's mere agreement or disagreement with a lower court's opinion, it is certainly possible that a new Justice could result in changes to the Court's docket, including with respect to Second Amendment cases. Since Heller I , the Supreme Court has reviewed two Second Amendment challenges: first, two years after Heller I in McDonald v. City of Chicago , and then six years after that in Caetano v. Massachusetts . In Caetano , the Court, without ordering merits briefing or oral argument, issued a short per curiam opinion vacating the decision of the Massachusetts Supreme Court that had upheld a state law prohibiting the possession of stun guns. However, the two-page Caetano opinion principally opined that the state court opinion directly conflicted with Heller I , without engaging in a comprehensive analysis and offering little clarification on the Court's Second Amendment jurisprudence. Since Caetano , the Supreme Court has not granted a petition for certiorari in any Second Amendment matter. During this period, though, Justices Thomas and Gorsuch have dissented from the denial of certiorari in cases raising Second Amendment claims. Because only four Justices are needed for the Court to grant certiorari, and with a number of potentially important Second Amendment cases percolating in the lower courts, Judge Kavanaugh, if confirmed, could play an important role in deciding whether the Supreme Court adds another Second Amendment case to its docket. Separation of powers—that is, the law governing the allocation of power among the three branches of the federal government—is perhaps the most critical area of law in understanding Judge Kavanaugh's jurisprudence. Indeed, the nominee views the doctrine of separation of powers as fundamental to every aspect of adjudication, having noted that, from his perspective, "every case is a separation of powers case." Separation of powers was also an important issue for the Justice whom Judge Kavanaugh may succeed, Justice Kennedy. Like most of his fellow Justices, Justice Kennedy viewed the separation of powers as a fundamental aspect of the American constitutional system. Nonetheless, Justice Kennedy did not adopt one particular approach in separation-of-powers cases. As he was on so many other issues, Justice Kennedy was seen as a centrist of separation of powers, embracing in different cases both functional and formal analyses when providing the deciding vote in the Court's most recent decisions on the Constitution's allocation of powers among the federal branches. Like Justice Kennedy, Judge Kavanaugh views the separation of powers as "not simply [a] matter[] of etiquette or architecture," but as an essential and foundational aspect of the American constitutional system that serves primarily to protect the public from governmental abuse. His general approach is arguably formalist, placing significant emphasis on the text and history of those provisions of the Constitution that establish the "blueprint" for the fundamental design of the federal government and readily implementing the boundaries that he interprets to flow from those provisions. As such, Judge Kavanaugh stresses both the importance of the separation of powers itself and the necessity of the judiciary's role in enforcing the Framers' clear structural choices. Perhaps because of the significance he attaches to the doctrine, for Judge Kavanaugh, the separation of powers is the lens through which he approaches a wide variety of controversies, including cases relating to standing, administrative law, appropriations law, national security law, war powers, and others. Many of these aspects of Judge Kavanaugh's jurisprudence are addressed in other parts of this report and will not be discussed here. Instead, this section focuses on his general theory of the domestic separation of powers and how it shapes his views on specific topics such as the judiciary's role in checking violations of the doctrine; the President's obligation to comply with and enforce the law; legislative and executive immunity; executive privilege; requiring the President to comply with a subpoena; and the structural design of administrative agencies. As opposed to Justice Kennedy, who did not necessarily adhere to a uniform approach in separation-of-powers cases, Judge Kavanaugh appears to have a distinct doctrinal approach to implementing and enforcing the Constitution's balance of power between Congress, the courts, and the President. While some commentators have described Judge Kavanaugh's general separation-of-powers theory as one that is generally predisposed to a strong Executive, especially in cases that pit the executive branch against the legislative branch, it is does not appear that a desire for a powerful Executive necessarily drives the nominee's views. To be sure, Judge Kavanaugh has acknowledged that his views of the separation of powers, and executive power specifically, have been informed by his various experiences as an executive branch lawyer. And there are certainly areas, discussed in more detail below, in which Judge Kavanaugh has written separately to articulate a position that favors executive power, at times at the expense of congressional authority. In other instances, however, Judge Kavanaugh has written separately in order to express a position that would tend to favor Congress, at times at the expense of executive power. Instead of being solely guided by a preference toward the power of a particular branch, Judge Kavanaugh's views on the separation of powers appear to be more complex and nuanced. The nominee's opinions suggest a basic mode of interpretation in separation-of-powers cases that focuses primarily on the constitutional text and its original understanding. If the text is ambiguous, as it is in most aspects of the separation of powers, Judge Kavanaugh regularly turns to historical practice to inform the meaning of the Constitution's structural provisions. Because of this "history-focused approach," Judge Kavanaugh has generally viewed laws and actions that have few or no historical analogues as suspect. Beyond this initial interpretive framework, there appears to be a trio of conceptual principles that not only influence, but define Judge Kavanaugh's approach to the separation of powers: liberty, accountability, and governmental effectiveness. As discussed in more detail below, these three principles have consistently acted as a frame for his analyses and guided him in his ultimate conclusion in separation-of-powers cases. Liberty. Judge Kavanaugh's enforcement of separation-of-powers boundaries does not appear to be grounded in preserving a specific allocation of authority among the branches. Instead, his emphasis on policing transgressions from the constitutional scheme is a product of his concern over the protection of individual rights. The Framers made specific structural choices out of fear that an accumulation of power in any single branch would pose a threat to individual freedoms through governmental abuse. Accordingly, the starting and ending point of Judge Kavanaugh's view of separation-of-powers analysis is consistently focused on enforcing the structural provisions of the Constitution in order to protect individual liberty. Moreover, he has described "the liberty protected by the separation of powers" as "primarily freedom from government oppression, in particular from the effects of legislation that would unfairly prohibit or mandate certain action by individual citizens, backed by punishment." As a result of his focus on coercive action, his separation-of-powers concerns are most acute in cases involving governmental imposition and enforcement of law or regulations upon private entities. Accountability. Liberty, in Judge Kavanaugh's view, goes hand in hand with accountability. "Our constitutional structure is premised," Judge Kavanaugh has written, "on the notion that . . . unaccountable power is inconsistent with individual liberty." This accountability rationale is most apparent in Judge Kavanaugh's discussion of the executive branch structure, where the Constitution ensures, in the nominee's view, that the executive power be wielded by the President, and the President alone, because he is accountable to the voters. This accountability-rationale forms the foundation for Judge Kavanaugh's conclusion that the President must be able to supervise and direct those subordinate officials who exercise executive power. As a result, the nominee has viewed laws that seek to excessively insulate a government official from presidential control as a threat to democratic accountability and inconsistent with the structural separation of powers. For instance, he concluded that a "single-Director independent agency," such as the CFPB, lies "outside" of constitutional norms in part because such an agency head "is not elected by the people and is . . . not remotely comparable to the President in terms of accountability." Effectiveness. Judge Kavanaugh's view of the separation of powers does not necessarily appear to seek to preserve liberty and ensure accountability at the expense of a workable government. Instead, Judge Kavanaugh has reasoned that the Constitution's structural provisions were intended to preserve "effective" government. For example, the Founders choice of a single, unitary head of the Executive was intended, in the nominee's view, to "enhance[] efficiency and energy in the administration of the government." The legislative branch, on the other hand, was intended, according to Judge Kavanaugh, to be effective, but not necessarily efficient, as the legislative process was "designed to be difficult" in order to "protect individual liberty and guard against the whim of majority rule." For example, it is the principle of effectiveness that appears to animate Judge Kavanaugh's view that legal immunity for government officials protects effectiveness by limiting the distractions of litigation. Judge Kavanaugh's opinions and academic writings appear to support a robust role for judges in enforcing the separation of powers. As noted elsewhere in this report, Judge Kavanaugh has suggested that judges should, and indeed are required as part of their judicial duty, to take an active role in interpreting statutory delegations of authority to federal agencies, rather than deferring to the agency's view. That conception of the role of the judge extends to enforcing the structural separation of powers, where the nominee has said that deferring to Congress's or the President's views of the Constitution would be to "abdicate to the political branches" a "constitutional responsibility assigned to the judiciary." Judge Kavanaugh's view of the judiciary's role in the separation of powers is reflected in his concurring opinion in El-Shifa Pharmaceutical Industries v. United States . The en banc majority opinion in El-Shifa affirmed a district court opinion holding that the political question doctrine barred a claim under the Federal Tort Claims Act by a Sudanese pharmaceutical company whose plant had been destroyed by an American missile strike. Judge Kavanaugh wrote separately to establish his position that the political question doctrine has never, and should not be, applied to avoid judicial review when the claim is for violation of a statute, rather than violation of the Constitution. In reaching that decision, Judge Kavanaugh relied on the practical effect of an extension of the political question doctrine to statutes that regulate executive conduct, noting that dismissal in such cases would amount to an implicit holding "that the statute intrudes impermissibly on the Executive's prerogatives." Such an approach, he wrote, would "systematically favor the Executive branch over the Legislative Branch." Instead, Judge Kavanaugh concluded that such "[w]eighty" separation-of-powers questions "must be confronted directly through careful analysis of Article II—not answered by backdoor use of the political question doctrine, which may sub silentio expand executive power in an indirect, haphazard, and unprincipled manner." Judge Kavanaugh's separate opinion in Sissel v. HHS is instructive for both his general approach to the separation of powers and his views on the judicial role in enforcing the doctrine. In Sissel , Judge Kavanaugh dissented from a denial of rehearing en banc in a case asserting that certain ACA provisions requiring individuals lacking health insurance coverage to pay a penalty were grounded in an amendment introduced in the Senate and therefore violated the Origination Clause, which provides that "All Bills for raising revenue shall originate in the House of Representatives." The panel opinion concluded that whether a law is subject to the Origination Clause depends on the primary purpose of that bill. According to the panel, the ACA was not a revenue raising bill because its purpose was to "spur conduct, not to raise revenue" and, therefore, did not have to originate in the House. Judge Kavanaugh agreed with the panel's ultimate holding that the law did not violate the Origination Clause, but not its rationale. In an analysis that reflects his traditional separation-of-powers analysis—namely a focus on text, history, and personal liberty—Judge Kavanaugh instead concluded that the ACA was, in fact, a revenue raising bill that originated in the House. While it was true that the Senate had replaced the original House language, Judge Kavanaugh reasoned that such Senate alterations to House language were "permissible" under the Clause's text and history. Judge Kavanaugh took exception to the panel's purpose-focused, functionalist approach, arguing that it threatened the efficacy of a constitutional provision that was an "integral part of the Framers' blueprint for protecting people from excessive federal taxation." The Framers, Judge Kavanaugh argued, had deliberately divided power among the House and Senate, much as they had divided power among the branches, in order to "avoid the dangers of concentrated power and thereby protect individual liberty." By providing the House with the "exclusive" power to originate tax bills, the Framers adopted a structural safeguard designed to protect against the "dangers inherent in the power to tax." The panel decision, Judge Kavanaugh opined, had adopted a mode of reasoning that would "blow" open a "giant new exemption from the Origination Clause" that would functionally eliminate the judiciary's role in policing adherence to that Clause. In justifying judicial intervention, Judge Kavanaugh wrote that "the Judiciary has long played a critical role in preserving the structural compromises and choices embedded in the constitutional text." That role is the same whether a court is asked to enforce structural separation among the branches, or wholly within a branch. "It is not acceptable," argued Judge Kavanaugh, "for courts to outsource preservation of the constitutional structure to the political branches." The opinion that perhaps sheds some of the greatest light on Judge Kavanaugh's view of the scope of executive power vis-à-vis Congress is an opinion involving appropriations for nuclear waste disposal. In a portion of a 2013 ruling, In re Aiken County , Judge Kavanaugh staked out a position on a relatively unsettled area of the law: namely, the nature of the obligation the Take Care Clause imposes on the executive branch to follow and enforce federal law. The Take Care Clause, and its relationship to the President's general Article II powers, has been the subject of significant legal debate. Judge Kavanaugh's position in that case, which is generally consistent with the position expressed by the executive branch, would appear to provide the President with some, but not complete flexibility in how he approaches the execution of federal statutes. In re Aiken County concerned whether the Nuclear Regulatory Commission (NRC) was required to act on the Department of Energy's license application for a nuclear waste depository at Yucca Mountain, despite the fact that adequate appropriations were not available to complete that review. Writing for the court, Judge Kavanaugh determined that the NRC had a statutory obligation to review the license, could not simply disregard the law, and, therefore, must expend available, if insufficient, funds on that task. However, having found that the NRC's inaction violated the agency's general obligation to comply with the law, Judge Kavanaugh nevertheless addressed a pair of tangential constitutional principles that—when applicable—could permit the executive branch to "decline to act in the face of a clear statute." His opinion acknowledged at the outset that neither principle applied to the case at hand, and indeed a concurring judge found the discussion to be "unnecessary." Judge Kavanaugh nevertheless proceeded to address what he viewed as "settled, bedrock principles of constitutional law." First, Judge Kavanaugh addressed the President's authority to disregard a statutory provision the President views as unconstitutional. While each branch may independently interpret the Constitution, and Presidents have long claimed the authority to disregard laws they determine to be unconstitutional, the Supreme Court has not established clear principles to govern whether the President may unilaterally declare that a statute may be disregarded. Judge Kavanaugh's opinion concluded that the President has such authority, writing that "[i]f the President has a constitutional objection to a statutory mandate or prohibition, the President may decline to follow the law unless and until a final Court order dictates otherwise." Consistent with his history-focused approach to the separation of powers, Judge Kavanaugh claimed that Presidents have "routinely exercise[d]" such a power. The President may, he reasoned, implement a determination of unconstitutionality by directing his subordinates not to follow the law "unless and until a final Court decision in a justiciable case says that a statutory mandate or prohibition on the executive branch is constitutional." This view would appear to set a default position that favors the President's determinations over the constitutionality of a law over those of Congress, given that the President's determination controls until an explicit court ruling rejects that position. It could be taken to imply that even when existing Supreme Court precedent suggests a conclusion that runs counter to the President's determination, the President may still be authorized to disregard a law he views as unconstitutional until a court directly rules on his claim. Because, by not implementing a law, a President may make it less likely that a "case or controversy" will arise upon which a court could ultimately rule, this view of nonenforcement may necessarily enhance the executive's constitutional views. Second, Judge Kavanaugh addressed the "very controversial" topic of prosecutorial discretion. The doctrine of prosecutorial discretion provides the President and executive branch officials with leeway in deciding when, and at times whether, to enforce federal laws that place obligations on the general public. Kavanaugh's Aiken County opinion views this discretion as arising from the President's authority under Article II, and perhaps primarily, from the power to pardon. His opinion articulated broad presidential discretion in determining whether to initiate the enforcement of specific laws, noting that enforcement decisions can be based "on the President's own constitutional concerns about a law or because of policy objections to the law, among other reasons." Judge Kavanaugh's view on prosecutorial discretion appears to have also been informed by his fidelity to individual liberty principles. "One of the greatest unilateral powers a president possesses," wrote Judge Kavanaugh, "is the power to protect individual liberty by essentially under-enforcing federal statutes regulating prior behavior… ." Judge Kavanaugh maintained, however, that prosecutorial discretion has its limits, especially with regard to laws that do not require the executive branch to enforce legal mandates on the public. The doctrine does not, for example, "encompass the discretion not to follow a law imposing a mandate or prohibition on the Executive Branch," for example a statutory requirement that an agency issue a rule or administer a program. Such mandates, as a general rule, must be followed unless, in Judge Kavanaugh's view, the President has a constitutional objection. Judge Kavanaugh's views on prosecutorial discretion appear to have evolved between his 2013 Aiken County opinion and a 2016 article in the Marquette Lawyer . In discussing prosecutorial discretion in 2015, he again relied on the scope of the pardon power as informative, questioning "What sense does it make to force the executive to prosecute someone, only then to be able to turn around and pardon everyone?" However, he went on to evidently backtrack from his 2013 statement that the President's discretion in the enforcement of law was a "settled, bedrock principle of constitutional law" and instead described experiences over recent years as showing that the appropriate scope of prosecutorial discretion "is far from settled, either legally or politically." He then wrote: I will admit that I used to think that I had a good answer to this issue of prosecutorial discretion: that the president's power of prosecutorial discretion was broad and matched the power to pardon. But I will confess that I'm not certain about the entire issue as I sit here today. And I know I'm not alone in my uncertainty. As such, it would appear that Judge Kavanaugh's views on the scope of the President's power of prosecutorial discretion may not be fully settled. Judge Kavanaugh's views on maintaining an effective government, both in the legislative and executive branches, appear to have informed his views on when Members of Congress and the President may be subject to civil and criminal litigation. Congress's immunity stems from the Speech or Debate Clause, which provides that "for any Speech or Debate in either House" a Member "shall not be questioned in any other Place." The Speech or Debate Clause has generally been interpreted as providing Members with both civil and criminal immunity for "legislative acts." The Supreme Court has described the privilege as being essential to the separation of powers as it ensures that Members have "wide freedom of speech, debate, and deliberation without intimidation or threats from the Executive Branch." Presidential immunity, on the other hand, is not explicitly provided for in the Constitution. Instead, it has been asserted by some to be implicit in Article II and consistent with the separation of powers. For example, the DOJ Office of Legal Counsel has previously concluded that the criminal indictment or prosecution of a sitting President would "impermissibly interfere with the President's ability to carry out his constitutionally assigned functions." That conclusion was based on a variety of factors, including the "burdens" and "stigma" that would be associated with criminal proceedings against a President. While the Supreme Court has previously held that a sitting President enjoys immunity from civil claims for damages predicated on an official act, but is not immune while in office from civil suits for unofficial misconduct, it has not addressed the question of whether a sitting President can be investigated, indicted, or prosecuted for criminal wrongdoing. Legislative Immunity. Judge Kavanaugh has twice written separately in order to offer a broader conception of legislative immunity under the Speech or Debate Clause than supported by existing D.C. Circuit precedent. In In re Grand Jury Subpoena , the panel held that the Clause prevents a Member from being required to respond to a grand jury subpoena relating to testimony the Member provided during a disciplinary investigation by a congressional ethics committee, so long as that testimony related to official conduct. Judge Kavanaugh filed a concurring opinion in which he articulated his concerns that the panel, and previous D.C. Circuit precedent, had effectively "watered down" Speech or Debate Clause protections for Members by drawing an ambiguous distinction between statements relating to official and personal conduct. The nominee maintained that any statement made by a Member "to a congressional ethics committee is speech in an official congressional proceeding and thus falls within the protection of the clause." In so doing, Judge Kavanaugh relied principally on the plain text of the Speech or Debate Clause, writing that the panel opinion "does not square with the text of the Constitution, which gives absolute protection to 'any speech' by a Member in an official congressional proceeding." Judge Kavanaugh has also stressed that the Clause protects not only legislative independence from the executive branch, but also from the courts in the form of court ordered disclosures. For example, in Howard v. Office of the Chief Administrative Officer of the House of Representatives , Judge Kavanaugh dissented from a holding that the Speech or Debate Clause did not prevent a congressional employee from pursuing an employment discrimination claim against a congressional office under the Congressional Accountability Act, even when the congressional employer asserts that the reason for the employee's termination or demotion related to "legislative activity." Under the majority's reasoning in Howard , an employee may still proceed with his or her claim and attempt to prove that the employer's stated reason was actually pretext by "using evidence that does not implicate protected legislative matters." Judge Kavanaugh disagreed, again adopting a broader view of the protections afforded by the Speech or Debate Clause by reasoning that the majority's holding would "necessarily [] require congressional employers to either produce evidence of legislative activities or risk liability." The Speech or Debate Clause, he articulated, prevents Members and congressional employers from being "put to this kind of choice by an Article III federal court." Presidential Immunity . Judge Kavanaugh has not heard any case or written any opinion on the extent to which the Constitution provides a sitting President with immunity from criminal investigation, indictment, or prosecution. He has however, addressed the topic in his academic writings, where he has acknowledged that his views on the topic are informed by his unique personal experiences both investigating a President in Independent Counsel Kenneth Starr's office and advising a President as a White House attorney. Two academic articles—one published in 1998 and the other from 2009—suggest that Judge Kavanaugh believes that a sitting President should, as a policy matter, be accorded both civil and criminal immunity by Congress, and perhaps, that the criminal prosecution of a sitting President is prohibited by the Constitution. The more recent publication, a 2009 Minnesota Law Review article, made a series of legislative proposals to create a "more effective and efficient federal government." One of those proposals recommended that Congress enact a law providing that all civil suits, criminal prosecutions, and criminal investigations involving a sitting President be deferred until the President has left office. His rationale for the proposal was based principally on governmental effectiveness. "The indictment and trial of a sitting President" Judge Kavanaugh asserted, "would cripple the federal government, rendering it unable to function with credibility." Judge Kavanaugh also noted the unwanted burdens and distractions associated with mere investigations of the President, writing that the "lesser burdens of a criminal investigation—including preparing for questioning by criminal investigators—are time-consuming and distracting." Importantly, the article does not address the legal question of what protections may be afforded the President by the Constitution directly, but only notes that "even in the absence of congressionally conferred immunity, a serious constitutional question exists regarding whether a President can be criminally indicted and tried while in office." Judge Kavanaugh's 1998 article in the Georgetown Law Journal provided a more robust discussion of the nominee's constitutional views on the question of presidential immunity—at least as they existed at that time and in the context of an independent counsel investigation. Like his 2009 piece, the 1998 article was framed in the context of a series of legislative proposals, one of which would have provided that Congress enact a statute establishing that a sitting President not be "subject to indictment." In considering the question of presidential immunity, Judge Kavanaugh again opined that a "serious question exists as to whether the Constitution permits the indictment of a sitting President." However, his subsequent analysis may suggest that he believed indictment of a sitting President to be constitutionally impermissible on the grounds that the appropriate constitutional remedy for serious presidential misconduct, as guided by history and original understanding, is investigation, impeachment, and removal by Congress, and only then prosecution. The Framers, he argued, warned against the "ill wisdom of entrusting the power to judge the President of the United States to a single person or body such as an independent counsel." Instead, Judge Kavanaugh wrote that the original intent of the Framers and "the Constitution itself seem[] to dictate . . . that congressional investigation must take place in lieu of criminal investigation when the President is the subject of investigation, and that criminal prosecution can occur only after the President has left office." Although he framed his discussion as "what should happen," and never explicitly stated that the Constitution outright forbids indictment of the President, Judge Kavanaugh nevertheless seemed to suggest, in the context of discussing this legislative proposal, that "[i]f Congress declines to investigate, or to impeach and remove the President, there can be no criminal prosecution of the President at least until his term of office expires." This conclusion would not, however, mean that the President or other executive branch officials are "above the law" or otherwise not subject to federal criminal provisions. Instead, Judge Kavanaugh's envisioned immunity applies only to the President—and only temporarily—as a President would generally be subject to prosecution for wrongdoing after being removed from office. Related to the question of whether the President may be indicted is the role executive privilege—that is, the constitutionally based privilege that protects executive communications that relate to presidential decisionmaking—may play in an investigation of the President or executive branch officials. The Supreme Court has only rarely addressed executive privilege, but its clearest explanation of the doctrine came in the unanimous opinion issued in United States v. Nixon . That case involved President Nixon's assertion that executive privilege protected him from complying with a criminal trial subpoena—issued at the request of the Watergate Special Prosecutor—for electronic recordings of conversations he had in the Oval Office with White House advisers. The Court rejected both President Nixon's threshold argument, that the Court lacked jurisdiction over what he viewed to be essentially an "intra-branch dispute" between the President and a subordinate executive branch official, and his substantive argument that the Constitution accorded the President an absolute privilege from compliance with a subpoena. In rebuffing the President, the Nixon opinion recognized executive privilege as an implied constitutional principle, holding that the "privilege of confidentiality of presidential communications" is "fundamental to the operation of Government and inextricably rooted in the separation of powers." However, the Court determined that the President's "generalized interest" in the confidentiality of his communications was outweighed by the "demonstrated, specific need for evidence in a pending criminal trial" and ordered the tapes turned over to the district court for in camera review. The Court suggested two caveats to its holding. First, it acknowledged that the "degree of deference" accorded to a President's executive privilege claim may be higher when the privilege claim relates to "military or diplomatic secrets." And second, the Court clarified that "we are not here concerned with the balance between the President's generalized interest in confidentiality . . . and congressional demands for information." Judge Kavanaugh has expressed mixed views on the Nixon decision. During a 1999 roundtable discussion, Judge Kavanaugh expressed some skepticism as to Nixon 's rejection of the threshold issue of justiciability, suggesting that "maybe Nixon was wrongly decided—heresy though it is to say." The nominee's concern with the Nixon holding appears to have been based on his views of the separation of powers and the President's authority to control both executive branch information and subordinate executive branch officials, a view more fully articulated in Judge Kavanaugh's opinions on agency structure and the presidential removal power discussed below. As the future nominee explained: Nixon took away the power of the president to control information in the executive branch by holding that the courts had power and jurisdiction to order the president to disclose information in response to a subpoena sought by a subordinate executive branch official. That was a huge step with implications to this day that most people do not appreciate sufficiently. … Maybe the tension of the time led to an erroneous decision. In that same discussion, Judge Kavanaugh later stated: "Should United States v. Nixon be overruled on the ground that the case was a nonjusticiable intrabranch dispute? Maybe so." Legal commentators have debated the significance of these apparently off-the-cuff remarks, with some arguing that the statement was simply rhetoric used to underscore inconsistencies with a fellow panelist's arguments, while others interpreted the statement as a "radical critique of Nixon. " More recently however, Judge Kavanaugh has characterized Nixon as one of "the most significant cases in which the Judiciary stood up to the President" and one of the "greatest moments in American judicial history." Additionally, in his 1998 article, in which he engaged in a significant discussion of Watergate and the Nixon case, he never questioned the Court's holding, instead acknowledging that Nixon had "essentially defined the boundaries of executive privilege." In some ways, Judge Kavanaugh's view of Nixon is less favorable to presidential power than others who have viewed the 1974 decision as requiring an ad hoc balancing test in all cases. For example, the 1998 article reflected Judge Kavanaugh's interpretation of Nixon as establishing a strict, bright-line rule that "the courts may not enforce a President's [executive] privilege claim (other than one based on national security) in response to a grand jury subpoena or criminal trial subpoena." In line with his broader views on judicial balancing tests, Judge Kavanaugh rejected the assertion that Nixon required the courts to balance, on a case-by-case basis, the President's interest in confidentiality against the need for evidence in a particular criminal investigation or prosecution. So long as the basic requirements of relevance (with respect to a grand jury subpoena) or relevance and admissibility (with respect to a trial subpoena) are met, any claim of executive privilege not based on national security or foreign affairs must, in Judge Kavanaugh's view, fail under the principles recognized in Nixon . However, Judge Kavanaugh observed that a President could act outside the courts to protect confidential information by asserting his control over executive law enforcement in order to prevent a judicial dispute over presidential communications from ever getting to the Court. "To do so," wrote Judge Kavanaugh, "a President must order the federal prosecutor not to seek the information and must fire the prosecutor if he refuses (as President Nixon fired [special prosecutor] Archibald Cox)." Such an action would "focus substantial public attention" on the President and force him to take "political responsibility for his privilege claim," suggesting that the nominee's view of the role of executive privilege would impose significant costs on the President if he wished to shield his communications from a criminal investigation. While there is inadequate evidence to determine precisely how Judge Kavanaugh views the Nixon opinion, in light of the nominee's apparent acceptance of Nixon ' s delineation of executive privilege, it is possible that Judge Kavanaugh's statement that "maybe Nixon was wrongly decided," to the extent that the comment was intended to provide a substantive legal opinion, related primarily to the justiciability question of whether the Court should have mediated a dispute between the President and another executive branch official. A hesitancy to have a court give effect to a subordinate executive branch official's imposition on the President would appear to be consistent with Judge Kavanaugh's general view that executive officials should be accountable to, and under the supervision and control of the President, as well as his view that it should be Congress—and not the courts or an independent prosecutor—that provides the initial remedy to presidential misconduct. Judge Kavanaugh further opined on the underlying justiciability issues that were at play in Nixon in a 2009 concurring opinion he filed in another case involving a dispute between two executive branch agencies, SEC v. Federal Labor Relations Authority . In his opinion, Judge Kavanaugh articulated the general proposition that "judicial resolution of intra-Executive disputes is questionable under both Article II and Article III." Article II is violated, Judge Kavanaugh asserted, because such an internal dispute should be resolved by the President in the exercise of his executive powers, while Article III is violated because executive branch agencies are not sufficiently "adverse" so as to create the type of "case or controversy" that is necessary for Article III jurisdiction. However, Judge Kavanaugh—citing to, among other cases, Nixon— acknowledged that Supreme Court and lower court precedent have established that courts may hear an intra-branch dispute when one party to the case is an independent agency. In that scenario, "an independent agency can [] be sufficiently adverse to a traditional executive agency to create a justiciable case" because "Presidents cannot (or at least do not) fully control independent agencies." Independent agencies, as Judge Kavanaugh described them, are "agencies whose heads cannot be removed by the President except for cause and that therefore typically operate with some (undefined) degree of substantive autonomy from the President." As a result, Judge Kavanaugh's concurrence appeared to view existing precedent to allow for the adjudication of disputes involving agencies that have been afforded independence under a statute. At the same time, it is unclear whether the nominee would consider it appropriate for a court to resolve an executive branch dispute with an entity that has "substantive autonomy from the President," but is not directly endowed with statutory independence. Judge Kavanaugh's conception of presidential immunity and executive privilege may also give rise to questions about his views on whether the President may be made to comply with a subpoena for testimony in a criminal proceeding. While the courts will not "proceed against the [P]resident as against an ordinary individual," it is clear under existing jurisprudence that the President is nonetheless not immune from all compulsory judicial process. In Nixon , the Court established that a President may be ordered to comply with a judicial subpoena for documents in a criminal matter, but the opinion did not address compelled testimony . Similarly, in Clinton v. Jones , the Court held that the President is not immune from civil suits for damages arising from unofficial acts, but avoided the question of compelled presidential testimony , noting only that the case did not require the Court "to confront the question whether a court may compel the attendance of the President at any specific time or place." Instead the Court assumed that "the testimony of the President, both for discovery and for use at trial, may be taken at the White House at a time that will accommodate his busy schedule, and that, if a trial is held, there would be no necessity for the President to attend in person, though he could elect to do so." The executive branch, on the other hand, has taken a clear position on compelled presidential testimony, concluding that "sitting Presidents are not required to testify in person at criminal trials." Judge Kavanaugh has written little on the precise question of whether a President can be compelled to provide testimony in a criminal proceeding. As previously noted, his 2009 article suggested that as a policy matter, Congress should provide the sitting President with immunity from "[e]ven the lesser burdens" of "depositions or questioning in civil litigation or criminal investigations." And although arguably concluding that the Constitution does not permit indictment or prosecution of the President, his 1998 article did not explicitly extend that constitutional analysis to presidential testimony at the investigative stage. However, Judge Kavanaugh's general separation-of-powers views may raise some question of whether he would be willing to enforce a subpoena requiring the President to testify. First, assuming that the subpoena is issued by another executive branch official, the dispute raises questions on how the nominee views the justiciability holding in Nixon . And second, Judge Kavanaugh's academic writings on immunity—in which he has expressed concern over the "burdens" and "distractions" of litigation and investigations involving the President —may suggest some sympathy toward the historical executive branch argument that compelling the President's "personal attendance" would infringe upon the President's ability to carry out his "official functions." One area of the Court's separation-of-powers jurisprudence where Judge Kavanaugh's views have already proven quite influential concerns Congress's authority to provide officers and agencies with independence from the President through the use of removal restrictions and other statutory aspects of agency design. Judge Kavanaugh has played a significant role in what appears to be an ongoing revitalization of the judiciary's recognition of the President's removal power, and the corollary principle that the President, in order to maintain accountability within the executive branch, must maintain some degree of effective supervision and control over subordinate executive officers. This recognition, Judge Kavanaugh asserts, does not necessarily expand the scope of executive power, but instead only ensures that what executive power exists is exercised by the President. Some historical context is necessary to understand Judge Kavanaugh's positions in this area. Although not explicitly provided for in the Constitution, the President's authority to remove subordinate executive branch officials has historically played a central role in the President's ability to carry out his Article II powers. Removal, the Supreme Court has reasoned, is a "powerful tool for control" because "[o]nce an officer is appointed, it is only the authority that can remove him . . . that he must fear and . . . obey." The precise scope of the removal power, however, as well as Congress's authority to restrict that power through statute in order to insulate an agency or individual official from presidential influence, has been the subject of several Supreme Court opinions. In the 1926 decision of Myers v. United States , the Court invalidated a law that required Senate consent for the removal of certain executive officials, holding that the Constitution conferred the removal power "exclusive[ly]" to the President so as to ensure he maintained "general administrative control of those executing the laws." However, the Court limited the breadth of Myers in the 1935 case Humphrey ' s Executor v. United States , holding that Congress could limit the President's authority to remove members of independent agencies engaged in "quasi-judicial or quasi-legislative" functions by requiring that such officials may only be removed for "inefficiency, neglect of duty, or malfeasance in office." The use of these "for-cause" removal protections to insulate an agency official from the President's control was again upheld in 1988 in Morrison v. Olson , but this time as applied to the Independent Counsel, a single independent official with limited tenure and relatively narrow jurisdiction, rather than a member of an independent commission. Judge Kavanaugh entered the judicial fray regarding the President's removal power with an influential dissent in the 2008 case Free Enterprise Fund v. PCAOB . In Free Enterprise Fund , the D.C. Circuit panel majority upheld provisions of the Sarbanes-Oxley Act of 2002, which had created a new PCAOB and insulated its members from presidential control through dual layers of "for-cause" removal protections. Board members could be removed only "for cause" by the Securities and Exchange Commission (SEC), who in turn, could themselves be removed by the President, but only for cause. Thus, the President had no direct ability to order the removal of Board members. The panel majority upheld the law, relying primarily on Humphrey ' s Executor and Morrison and their approval of Congress's use of "for-cause" removal restrictions, while holding that the structure did "not strip the President of sufficient power to influence the Board and thus [did] not contravene separation of powers." Judge Kavanaugh dissented, calling the imposition of dual layers of for-cause removal protections between the President and Board members inconsistent with the original understanding of Article II and historical practice. The Framers, Judge Kavanaugh reasoned, established a unitary head of the executive branch to ensure accountability "by making one person responsible for all decisions made by and in the Executive Branch." The structure of the PCAOB, on the other hand, unduly limited the President's ability to exercise that control, resulting in a "fragmented, inefficient, and unaccountable Executive Branch" that the President could not "fully direct and supervise." With regard to historical practice, Judge Kavanaugh described the dual layers of removal protections as "uniquely structured," "novel," lacking any "historical analogues," and "a previously unheard-of restriction on and attenuation of the President's authority over executive officers" Judge Kavanaugh also argued that because the Sarbanes-Oxley Act "completely" stripped the President of any direct removal authority over the members of the PCAOB, upholding that structure would require an impermissible extension of Humphrey ' s Executor and Morrison . His reasoning was likely informed by his general position "that Humphrey ' s [ Executor ] and Morrison authorize a significant intrusion on the President's Article II authority to exercise the executive power and take care that the laws be faithfully executed." Viewing those rulings as narrow exceptions to the general rule of Myers , Judge Kavanaugh argued the two cases represent the "outermost constitutional limits of permissible congressional restrictions on the President's removal power." Finally, Judge Kavanaugh warned that upholding this law would "green-light Congress to create a host of similar entities," which would "splinter executive power to a degree not previously permitted." On appeal, the Supreme Court in a 5-4 ruling authored by Chief Justice Roberts embraced Judge Kavanaugh's dissent, and invalidated the PCAOB's structure. Citing Judge Kavanaugh's dissent, the Court's decision invalidated the "novel" dual for-cause removal scheme on the grounds that it "impaired" the President's "ability to execute the laws . . . by holding his subordinates accountable for their conduct." Judge Kavanaugh's general skepticism of unique structural schemes that attempt to insulate executive branch officials from presidential control was again evident in PHH Corporation v. C FPB . PHH involved a challenge to the structural design of the CFPB, an independent agency headed not by a multi-member commission, but by a single Director. Judge Kavanaugh issued two substantially similar opinions in the case, both concluding—much like his earlier dissenting opinion in Free Enterprise Fund —that the novel scheme violated the separation of powers and the President's powers under Article II. His first opinion represented an initial panel majority striking down the CFPB's current structure. That decision, however, was vacated when the D.C. Circuit granted en banc review. Upon review, Judge Kavanaugh reaffirmed his views, however this time dissenting from the en banc majority opinion that concluded the CFPB's structure was constitutionally permissible under Humphrey ' s Executor and Morrison . Judge Kavanaugh's PHH opinions focused on three primary factors, all of which relate directly to his established approach to separation of powers. First, he emphasized the novelty of the CFPB's structure—most independent agencies are headed by multiple members, rather than a single director. "Never before," wrote Judge Kavanaugh, "has an independent agency exercising substantial executive authority been headed by just one person." In his view, this departure from historical practice indicated a potentially serious constitutional defect. Second, Judge Kavanaugh concluded that the concentration of power in a single, unaccountable Director posed a serious threat to liberty. While other independent agency heads may have removal protections, Judge Kavanaugh argued that the multi-member structure demands consensus and acts as a check on the whims of an independent, individual agency head. Third, Judge Kavanaugh argued that removal protections for a unitary agency head diminished the President's Article II power to control the executive branch beyond what has been judicially approved for multi-member independent agencies. In multi-member commissions with statutory removal protections, the President may at least appoint and remove the chair of the agency, ensuring some influence over the agency's direction. With the CFPB, however, Judge Kavanaugh noted that the President may not alter the head of the agency until the end of the five-year term, which means, at least in some cases, the President might not ever be permitted to align the agency with his own policy goals. Perhaps one of the most important questions arising from Judge Kavanaugh's opinions in Free Enterprise Fund and PHH is what they suggest about his views on the constitutional permissibility of more traditional independent agencies, for example, those that operate with only one layer of for-cause protections and in the form of a multi-member commission. Judge Kavanaugh has previously signaled his discomfort with traditional independent agencies, questioning both their general effectiveness and their underlying legal foundations. For example, in PHH , Judge Kavanaugh noted that Humphrey ' s Executor was "inconsistent" with Myers , has "received significant criticism," and is "in tension with" the Supreme Court's holding in Free Enterprise Fund . On Morrison , Judge Kavanaugh has written that "the independent counsel experiment ended with nearly universal consensus that the experiment had been a mistake and that Justice Scalia had been right back in 1988 to view the independent counsel system as an unconstitutional departure from historical practice and a serious threat to individual liberty." Moreover, the very notion of a subordinate executive branch official operating with independence from the President appears to at least arguably be inconsistent with Judge Kavanaugh's interpretation of the President's constitutional authority to supervise and control " all decisions made by and in the Executive Branch." However, he has not expressly called for overturning Humphrey ' s Executor , nor for the invalidation of all independent agencies. The nominee has explicitly stated that " Humphrey ' s Executor is an entrenched Supreme Court precedent, protected by stare decisis." Ultimately, it is clear that Judge Kavanaugh has concerns about the Court's holdings in Humphrey ' s Executor and Morrison . However, there is some question whether, if confirmed to the Supreme Court, he would view the cases as establishing the "outermost" limits of a constitutional framework that he would be willing to work within, or, whether, if provided with the opportunity, he would be a vote to overturn Humphrey ' s Executor , Morrison , or both. If confirmed, a Justice Kavanaugh would likely be presented with the opportunity to present his views, as additional questions of Congress's authority to insulate executive branch officials and agencies from presidential control are likely to come before the court in the near future. In Obergefell v. Hodges , the Justice that Judge Kavanaugh might succeed, Justice Kennedy, wrote that the "identification and protection of fundamental rights is an enduring part of the judicial duty to interpret the Constitution." Many fundamental rights that the Court has identified as warranting constitutional protection stem from the Fifth and Fourteenth Amendments, which prohibit the federal government and the states from depriving any person of "life, liberty, or property, without due process of law." The Court has interpreted these Amendments not only to accord procedural protections against such deprivations, but also to contain a substantive component that prohibits the government from infringing certain fundamental rights unless the government's law or action is narrowly tailored to serve a compelling state interest. These fundamental rights include "most of the rights enumerated in the Bill of Rights," as well as additional, unenumerated rights that the Court has recognized over the years, such as the right to marry or the right to privacy in making certain intimate decisions. Justice Kennedy's legacy on the bench is closely tied to the issue of substantive due process, having authored or joined the controlling opinions in a number of closely divided cases recognizing unenumerated rights. These cases include his joint opinion in Planned Parent hood of Southeastern Pennsylvania v. Casey , which reaffirmed Roe v. Wade 's recognition of a woman's right to an abortion before fetal viability; his opinion for the Court in Lawrence v. Texas , which recognized the right of consenting adults to engage in private, sexual conduct without governmental interference; and his opinion for the Court in Obergefell , which recognized the right of same-sex couples to marry. However, Justice Kennedy has also declined to recognize due process protections in other cases, such as when he joined the Court's refusal to recognize a fundamental right to physician-assisted suicide in Washington v. Glucksberg . Justice Kennedy's central role in the development of the Court's substantive due process jurisprudence has cast Judge Kavanaugh's decisions in this area and the nominee's broader judicial philosophy on the subject into the spotlight. In particular, commentators have focused on Judge Kavanaugh's opinions in a case that reached the Supreme Court involving an unaccompanied alien minor who sought an abortion while in U.S. immigration custody, and the judge's scholarly commentary on the Glucksberg decision. These sources and certain other opinions and commentary by Judge Kavanaugh provide very limited insight into his approach to analyzing substantive due process questions, and are unlikely to serve as reliable predictors of the outcome in any given case. Of the relatively few substantive due process cases that Judge Kavanaugh encountered during his tenure on the D.C. Circuit, he authored opinions in only a handful of those cases, some of which presented unique factual and procedural scenarios or directly implicated controlling Supreme Court precedent. Nevertheless, his apparent endorsement of an approach to due process grounded in history and tradition suggests that if confirmed, Judge Kavanaugh may deploy a more narrow view of substantive due process than Justice Kennedy in defining the contours of future rights and protections. This section begins by discussing the nominee's sole opinion on the right to an abortion, before turning to his other writings and comments on substantive due process. Perhaps more than any other issue, considerable attention has been given to how Judge Kavanaugh might adjudicate cases concerning abortion. As previously noted, Justice Kennedy co-wrote the Court's 1992 opinion in Planned Parenthood of Southeastern Pennsylvania v. Casey , which, by a vote of five Justices, reaffirmed "the essential holding of Roe v. Wade " recognizing: (1) a woman's right, as a matter of substantive due process, to choose to have an abortion before fetal viability and to obtain it without undue interference from the government; (2) a state's power to restrict abortions after viability with exceptions in circumstances where the pregnant woman's life or health is in danger; and (3) a state's legitimate interests throughout the course of a pregnancy in protecting the woman's health and the fetus's life. In a separate portion of the Casey opinion authored and adopted by only three Justices—Justices Kennedy, O'Connor, and Souter—the Court replaced Roe 's "rigid trimester framework" for evaluating abortion regulations with an "undue burden standard" under which a law is invalid "if its purpose or effect is to place a substantial obstacle in the path of a woman seeking an abortion before the fetus attains viability." The Court has applied these principles and standards from Casey in subsequent cases. Twenty-five years after Casey , in Garza v. Hargan , Judge Kavanaugh was asked to consider on an emergency basis how—if at all—to apply Casey 's undue burden standard in a case involving an unaccompanied alien minor (referred to in court opinions as Jane Doe or J.D.) who entered the United States illegally and sought to terminate her pregnancy while living under U.S. custody. J.D., through her guardian ad litem, challenged the government's refusal to transport her or allow her to be transported to obtain state-mandated pre-abortion counseling and the abortion procedure itself. On October 18, 2017, the U.S. District Court for the District of Columbia issued a temporary restraining order (TRO), requiring the government to transport J.D., or to make her available for transport, "promptly and without delay to the abortion provider closest to J.D.'s [detention] shelter in order to obtain the [pre-abortion] counseling required by state law on October 19, 2017, and to obtain the abortion procedure on October 20, 2017 and/or October 21, 2017." The TRO further restrained the government, for a period of fourteen days, from "interfering with or obstructing J.D.'s access to abortion counseling or an abortion." The government immediately appealed the district court's ruling, arguing that it was not imposing an undue burden on J.D.'s purported right to an abortion under Casey , because (1) the government did not prohibit J.D. from obtaining an abortion, but rather refused to "facilitate" the abortion; (2) J.D. was free to leave the United States and return to her home country; and (3) J.D. could obtain an abortion in the United States after the government has transferred custody of J.D. to an immigration sponsor. On October 20, 2017, the assigned panel composed of Judge Kavanaugh, Judge Karen L. Henderson, and Judge Patricia Millett issued a non-precedential, per curiam (i.e., unsigned) order from which Judge Millett dissented. The order vacated the TRO insofar as it required the government to release J.D. for purposes of obtaining pre-abortion counseling or an abortion. The order also expressed apparent agreement with the government's third argument that transferring J.D. to an immigration sponsor would "not unduly burden the minor's right under Supreme Court precedent to an abortion"—at least so long as "the process of securing a sponsor to whom the minor is released occurs expeditiously." The order authorized the district court to allow the government eleven days (i.e., until October 31, 2017) to secure a sponsor for J.D. and to release her into the sponsor's custody, noting the government's agreement that, upon release, J.D. then would be "lawfully able, if she chooses, to obtain an abortion on her own pursuant to the relevant state law." In the event the government did not meet its deadline, the order permitted the district court to "re-enter" a TRO "or other appropriate order." The order concluded by noting that the government had "assumed, for purposes of this case, that J.D.—an unlawful immigrant who apparently was detained shortly after unlawfully crossing the border into the United States—possesses a constitutional right to obtain an abortion in the United States." In her dissenting statement, Judge Millett addressed all three of the government's arguments. She rejected the view that merely releasing J.D. for the abortion procedure would constitute facilitating an abortion, as well as the government's position that J.D. could leave the country, reasoning that conditioning J.D.'s right to an abortion on voluntary departure imposed an undue burden because it would require J.D. to relinquish her legal claims to stay in the United States. While acknowledging the government's "understandable" desire to find J.D. a sponsor, she argued that the sponsorship process could proceed simultaneously with the abortion and "is not a reason for forcing J.D. to continue the pregnancy." Judge Millett posited that further delay would make it more difficult for J.D. to find a local abortion provider and increase the health risks associated with the abortion procedure. Following the panel's order, on October 24, 2017, the full circuit granted J.D.'s petition for rehearing en banc, reinstated the district court's TRO, and denied the government's motion to stay the TRO pending appeal "substantially for the reasons set forth" in Judge Millett's dissenting statement. The en banc court then remanded the case to the district court to revise the dates for the government's compliance with the TRO (which had already passed). Three judges—Judges Henderson, Kavanaugh, and Thomas B. Griffith—dissented from the en banc order. Writing for herself, Judge Henderson argued that the en banc court should have addressed the "antecedent" question of whether J.D., as a minor detained after attempting to enter the United States unlawfully, had a constitutional right to an abortion, which she ultimately answered in the negative. Judge Kavanaugh, in a dissent which Judges Henderson and Griffith also joined, did not opine on whether J.D. had a constitutional right to obtain an abortion in the United States, noting that "[a]ll parties have assumed [such a right] for purposes of this case." Nor did he discuss the merits of the government's arguments about facilitating abortion or J.D.'s ability to leave the country. Instead, he argued a more narrow point: that the panel decision, rendered in emergency proceedings, "prudently accommodated the competing interests of the parties" by providing the government with a limited time period in which to find a sponsor for J.D. In Judge Kavanaugh's view, the panel order fully comported with the Supreme Court's abortion cases, which "repeatedly" recognized the government's "permissible interests in favoring fetal life, protecting the best interests of the minor, and not facilitating abortion, so long as the Government does not impose an undue burden on the abortion decision." First, Judge Kavanaugh found it "reasonable for the United States to think that transfer to a sponsor would be better than forcing the minor to make the decision [to continue or terminate her pregnancy] in an isolated detention camp with no support network available." Second, he argued that requiring the government to complete the sponsorship process expeditiously imposed no undue burden, reasoning that "[t]he Supreme Court has repeatedly upheld a wide variety of abortion regulations that entail some delay in the abortion but that serve permissible Government purposes," including "parental consent laws, parental notice laws, informed consent laws, and waiting periods, among other regulations." Although he acknowledged that "many Americans—including many Justices and judges—disagree with one or another aspect of the Supreme Court's abortion jurisprudence," the nominee explained that "[a]s a lower court, our job is to follow the law as it is, not as we might wish it to be" and argued that the "three-judge panel here did that to the best of its ability, holding true to the balance struck by the Supreme Court." Judge Kavanaugh viewed the en banc court's decision, in contrast, as "a radical extension of the Supreme Court's abortion jurisprudence" amounting to "a new right for unlawful immigrant minors in U.S. Government detention to obtain immediate abortion on demand." On June 4, 2018, the Supreme Court unanimously vacated the D.C. Circuit's en banc order, because J.D. had obtained an abortion before the case reached the Supreme Court, thus rendering her claim for injunctive relief moot. Apart from his dissent in Garza , Judge Kavanaugh has authored at least two other potentially notable substantive due process opinions. These cases involved the threshold question of how to determine whether an unenumerated right is fundamental and thus protected under the substantive component of the Due Process Clauses, an issue the Court has debated in recent years. Under the standards set forth in 1997 in Washington v. Glucksberg , in order for a right to be fundamental, it must be "deeply rooted in this Nation's history and tradition." However, in 2015, in Obergefell v. Hodges , the Court indicated that the process of identifying and protecting fundamental rights is not susceptible to one formula and that "[h]istory and tradition guide and discipline this inquiry but do not set its outer boundaries." In Doe v. District of Columbia , Judge Kavanaugh considered a pre- Obergefell due process challenge to a 2003 District of Columbia policy authorizing surgeries under certain circumstances for intellectually disabled persons in the District's care. The plaintiffs, representing a class of "intellectually disabled persons who live in District of Columbia facilities and receive medical services from the District of Columbia," argued that the 2003 policy violated the procedural due process rights of the class members because it did not require the D.C. agency responsible for their medical care to consider their wishes in the process of deciding whether to authorize surgery. They also raised a substantive due process claim, presumably based on what the district court called their "liberty interest to accept or refuse medical treatment." With respect to the procedural due process claim, Judge Kavanaugh wrote that "accepting the wishes of patients who lack (and have always lacked) the mental capacity to make medical decisions does not make logical sense and would cause erroneous medical decisions—with harmful or even deadly consequences to intellectually disabled persons." While expressing skepticism as to whether the plaintiffs' "complaint about procedures used by [the agency] can be properly shoehorned into a substantive due process claim," Judge Kavanaugh proceeded to reject that argument as well. Quoting Glucksberg , Judge Kavanaugh reasoned that the "plaintiffs have not shown that consideration of the wishes of a never-competent patient is 'deeply rooted in this Nation's history and tradition' and 'implicit in the concept of ordered liberty,' such that 'neither liberty nor justice would exist if [the asserted right] were sacrificed.'" Although he emphasized the plaintiffs' lack of evidence to support the historical foundations for recognizing a right to consultation under the circumstances, Judge Kavanaugh added an observation regarding the current legislative environment in which the plaintiffs advanced their due process arguments. Specifically, he remarked that "the breadth of plaintiffs' constitutional claims is extraordinary because no state of which we are aware applies the rule suggested by plaintiffs," intimating the unlikelihood that "all states' laws and practices" regarding medical treatment for intellectually disabled persons who have never attained competence are unconstitutional. In another case that predated Obergefell, Judge Kavanaugh applied the Glucksberg decision again in Empresa Cubana Exportadora de Alimentos y Productos Varios v. Department of the Treasury . The case concerned a 1998 law that modified an exception to a Cuban asset regulation that had allowed a company called Cubaexport to register and renew the trademark HAVANA CLUB with the U.S. Patent and Trademark Office. The 1998 law prohibited Cubaexport from renewing its trademark when it came due for renewal in 2006. Cubaexport argued, inter alia, that the 1998 law violated the substantive due process doctrine. Writing for two members of a three-judge panel, Judge Kavanaugh rejected Cubaexport's "inflated conception of substantive due process," and cited Glucksberg for the proposition that "[u]nless legislation infringes a fundamental right, judicial scrutiny under the substantive due process doctrine is highly deferential." The nominee concluded that the case did not involve a fundamental right—which Cubaexport apparently did not contest—so the court needed to consider only whether the legislation, including its retroactive application to Cubaexport's previously registered trademark, was rationally related to a legitimate government interest. Judge Kavanaugh held that the 1998 law "easily satisfied" that standard because it was "rationally related to the legitimate government goals of isolating Cuba's Communist government and hastening a transition to democracy in Cuba." In addition, "any unfairness" resulting from retroactive application of the renewal bar to previously registered trademarks was "mitigated—indeed eliminated—by the fact that [the government] has clearly warned that exceptions from trademarks were revocable at any time." Perhaps the most pointed remarks Judge Kavanaugh has made on substantive due process came in a 2017 lecture at the American Enterprise Institute, where Judge Kavanaugh offered some limited commentary on the Glucksberg decision and its place in substantive due process jurisprudence. He began by noting that the Glucksberg opinion reflected the view of its author, Chief Justice Rehnquist, that "unenumerated rights"—that is, those not specifically listed in the Bill of Rights—"could be recognized by the courts only if the asserted right was rooted in the nation's history and tradition." Judge Kavanaugh then remarked that "even a first-year law student could tell you that the Glucksberg approach to unenumerated rights was not consistent with the [earlier] approach of the abortion cases such as Roe v. Wade in 1973—as well as the 1992 decision reaffirming Roe , known as Planned Parenthood v. Casey ." Judge Kavanaugh did not explicitly question the legal reasoning underpinning the Roe and Casey decisions—though he noted that Chief Justice Rehnquist's views may not have prevailed in Casey due to stare decisis, the judicial doctrine, discussed in more detail above, that emphasizes the importance of adhering to precedent. However, his remarks do suggest that Judge Kavanaugh views the Court's pre- Glucksberg due process decisions as part of a "general tide of freewheeling judicial creation of unenumerated rights that were not rooted in the nation's history and tradition." In this regard, Judge Kavanaugh sees Glucksberg as "an important precedent, limiting the Court's role in the realm of social policy and helping to ensure that the Court operates more as a court of law and less as an institution of social policy." Judge Kavanaugh's statements about Glucksberg and judicial restraint echo remarks he made the year before concerning the recognition of unenumerated rights: I don't think . . . there's some new font [of authority] for courts to go around . . . and create a bunch of new rights that we think ourselves are important. I think we need to stick to what the Supreme Court has articulated is the test for unenumerated rights, which is deeply rooted in history and tradition. Otherwise, courts really will become politicians or political policymaking bodies. Commentators have questioned whether Judge Kavanaugh's judicial philosophy and practice in the realm of substantive due process may translate into a decision that dramatically reshapes the Court's abortion jurisprudence. The dearth of abortion cases in Judge Kavanaugh's judicial portfolio, as well as the unique posture of the Garza case—in particular, the emergency nature of the proceedings, the government's choice to assume that J.D. could avail herself of constitutional protections, and the narrow issue on which Judge Kavanaugh wrote—provide little basis to discern the nominee's position on whether Roe or Casey was wrongly decided. Even if Judge Kavanaugh would have decided Roe or Casey differently as a matter of first impression, any assessment of his willingness to overrule these decisions if nominated to the Court would need to include an evaluation of the judge's position on the role of stare decisis, including which of the stare decisis factors Judge Kavanaugh might weigh more heavily in assessing whether to uphold or overrule a constitutional decision. Nonetheless, the nominee has been skeptical of a court discovering new rights within the substantive component of the Due Process Clauses. While he may not have foreclosed Justice Kennedy's vision in Obergefell of a court guided by history and tradition but open to "new insight[s]" into the meaning of liberty, Judge Kavanaugh appears to share Chief Justice Rehnquist's more circumscribed approach to defining the contours of due process rights and protections. More so than Judge Kavanaugh's opinions applying Glucksberg— which could be viewed more narrowly as adherence to binding precedent—the Judge's statements during his 2017 lecture on Chief Justice Rehnquist, combined with his overarching judicial philosophy, suggest that the nominee might endorse Glucksberg 's emphasis on consulting history and tradition before extending constitutional protections to an asserted right. As a result, it appears that Judge Kavanaugh likely views substantive due process more skeptically than the Justice he may succeed. Relative to Justice Kennedy, who, during his tenure on the Supreme Court, cast several significant votes in eminent domain cases that decided whether and when federal and state governments may take private property for public use, Judge Kavanaugh does not appear to have significantly addressed the merits of a takings claim in a judicial opinion. This is unsurprising, as the D.C. Circuit does not hear many takings claims because the Tucker Act vests the U.S. Court of Federal Claims (CFC) with jurisdiction over such claims when the plaintiff seeks more than $10,000 in compensation from the federal government. With limited exceptions, the CFC's jurisdiction over such claims is exclusive, and appeals from the CFC are to the Federal Circuit, not the D.C. Circuit. While the Fifth Amendment applies to the District of Columbia, there are few takings cases that have arisen against the District during Judge Kavanaugh's time on the court. Of the takings cases that he adjudicated, Judge Kavanaugh has either joined the majority opinion or summarily disposed of the takings issues. As a result, there is currently an insufficient basis to evaluate Judge Kavanaugh's views regarding the scope of the Takings Clause or the extent to which the Takings Clause protects private property rights. Nonetheless, with takings cases presently pending before the Supreme Court, Judge Kavanaugh, if confirmed, will likely have the opportunity to consider the issue. Accordingly, questions concerning his views on the issue could be explored in a confirmation hearing. | On July 9, 2018, President Donald J. Trump announced the nomination of Judge Brett M. Kavanaugh of the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) to fill retiring Justice Anthony M. Kennedy's seat on the Supreme Court of the United States. Nominated to the D.C. Circuit by President George W. Bush, Judge Kavanaugh has served on that court for more than twelve years. In his role as a Circuit Judge, the nominee has authored roughly three hundred opinions (including majority opinions, concurrences, and dissents) and adjudicated numerous high-profile cases concerning, among other things, the status of wartime detainees held by the United States at Guantanamo Bay, Cuba; the constitutionality of the current structure of the Consumer Financial Protection Bureau; the validity of rules issued by the Environmental Protection Agency under the Clean Air Act; and the legality of the Federal Communications Commission's net neutrality rule. Since joining the D.C. Circuit, Judge Kavanaugh has also taught courses on the separation of powers, national security law, and constitutional interpretation at Harvard Law School, Yale Law School, and the Georgetown University Law Center. Prior to his appointment to the federal bench in 2006, Judge Kavanaugh served in the George W. Bush White House, first as associate and then senior associate counsel, before becoming assistant and staff secretary to the President. Before his service in the Bush Administration, the nominee worked in private practice at the law firm of Kirkland & Ellis, LLP for three years and served in the Office of the Independent Counsel and the Office of the Solicitor General. Judge Kavanaugh began his legal career with three federal clerkships—two for judges on the federal courts of appeals and one for the jurist he is nominated to succeed, Justice Kennedy. Judge Kavanaugh is a graduate of Yale College and Yale Law School. Judge Kavanaugh's nomination to the High Court is particularly significant as he would be replacing Justice Kennedy, who was widely recognized as the Roberts Court's median vote. Justice Kennedy was often at the center of legal debates on the Supreme Court, casting decisive votes on issues ranging from the powers of the federal government vis-à-vis the states, to separation-of-powers disputes, to key civil liberties issues. Accordingly, a critical question now before the Senate as it considers providing its advice and consent to the President's nomination to the High Court is how Judge Kavanaugh may view the many legal issues in which Justice Kennedy's vote was often determinative. In this vein, understanding Judge Kavanaugh's views on the law is one method to gauge how the Supreme Court might be affected by his appointment. In attempting to ascertain how Judge Kavanaugh could influence the High Court, however, it is important to note at the onset that, for various reasons, it often is difficult to predict accurately a nominee's likely contributions to the Court based on his or her prior experience. That said, the nominee is a well-known jurist with a robust record, composed of both judicial opinions and non-judicial writings, in which he has made his views on the law and the role of the judge fairly clear. Central to the nominee's judicial philosophy is the concept of judicial formalism and a belief that the "rule of law" must be governed by a "law of rules." In addition, Judge Kavanaugh has endorsed the concept of the judge as a neutral "umpire." In order to achieve this vision of neutrality, the nominee's legal writings have emphasized (1) the primacy of the text of the law being interpreted, (2) an awareness of history and tradition, and (3) adherence to precedent. Applying these principles, Judge Kavanaugh's views on several discrete legal issues are readily apparent, including administrative law, environmental law, freedom of speech, national security, the Second Amendment, and separation of powers. At the same time, perhaps because of the nature of the D.C. Circuit's docket, less is known about the nominee's views on other legal issues, including business law, civil rights, substantive due process, and takings law. This report provides an overview of Judge Kavanaugh's jurisprudence and discusses his potential impact on the Court if he were to be confirmed to succeed Justice Kennedy. In particular, the report focuses upon those areas of law where Justice Kennedy can be seen to have influenced the High Court's approach to certain issues or served as a fifth and deciding vote on the Court, with a view toward how Judge Kavanaugh might approach these same issues if he were to be elevated to the High Court. Of particular note, the report includes an Appendix with several tables that summarize the nominee's rate of authoring concurring and dissenting opinions relative to his colleagues on the D.C. Circuit, and how Judge Kavanaugh's opinions as an appellate judge have fared upon review by the Supreme Court. |
The defense acquisition workforce consists of civilian and uniformed personnel at the Department of Defense (DOD) who manage the planning, design, development, testing, contracting production, introduction, acquisition logistics support, and disposal of systems, equipment, facilities, supplies, or services that are intended for use in, or support of, military missions. The defense acquisition workforce plays a key role to ensure that DOD's contract dollars are properly spent on goods and services. As part of this role, the workforce is responsible for ensuring that acquisition programs—including major weapons and information technology (IT) systems—remain within their estimated cost and delivery schedules and produce the desired capabilities. In FY2015, DOD obligated roughly $438 billion on federal contracts, which comprised 62% of contract obligations government-wide. To fulfill its duties, the workforce must have an adequate number of acquisition professionals with an appropriate mix of technical skills (such as cost estimating, program management, and systems engineering). There are concerns, however, that the workforce may not be adequately sized or equipped with the skills necessary to support DOD's acquisition workload. According to a 2014 compilation of expert views published by the Senate Committee on Homeland Security and Governmental Affairs (Permanent Subcommittee on Investigations), two-thirds of contributors felt that improved recruiting, training, and incentives for the acquisition workforce are necessary for comprehensive acquisition reform. As of March 31, 2016, the defense acquisition workforce consisted of 158,212 employees, roughly 90% (142,728) employees) of which were civilians. Between FY2008 and FY2015, the workforce grew by 24.2%, or 30,343 employees ( Figure 1 ). The workforce experienced the largest increase between FY2009 and FY2010, growing by 11%, or 14,602 employees. In April 2009, the Secretary of Defense launched an acquisition workforce growth initiative that aimed to add 20,000 uniformed and civilian employees to FY2008 workforce levels through 2015. The initiative was launched, in part, to address reported workforce size and skill imbalances resulting from past downsizing, particularly the congressionally mandated cuts to the acquisition workforce in the 1990s. DOD has utilized several tools to help rebuild the size and capability of the acquisition workforce, one of which is hiring flexibilities. Hiring flexibilities are a suite of tools that are intended to simplify, and often accelerate, the federal hiring process. The way in which they do so, however, can vary by flexibility. Hiring flexibilities vary in structure and function in order to help agencies best meet their evolving recruitment needs. For example, some flexibilities provide hiring exemptions—waivers from competitive hiring requirements in Title 5 of the United States Code . Other flexibilities provide no hiring exemptions, but grant agencies more control in administering the hiring process. Flexibilities can also vary in terms of their Scope: Agency-specific or government-wide Coverage: One position or a group of positions Length: Temporary or permanent Authorization: Congress, the President, or the Office of Personnel Management (OPM) Service: Competitive or excepted service At least 38 hiring flexibilities are currently applicable to the civilian defense acquisition workforce—24 government-wide, 11 DOD-specific, and 3 acquisition-specific. A description of each of these flexibilities can be found in Appendix A . The subsections below describe six hiring flexibilities that, according to DOD, were used most frequently for external hires to the civilian acquisition workforce between FY2008 and FY2014 (during the acquisition workforce growth initiative): Direct-hire authority (DHA) Expedited hiring authority for civilian defense acquisition workforce positions (EHA) Pathways Recent Graduates program (established in December 2010) Pathways Internship program (established in December 2010) Federal Career Intern Program (eliminated in March 2011) Delegated examining authority DHA and EHA—a type of DHA—allow agencies to appoint individuals directly to a position or group of positions without regard for certain competitive hiring requirements in Title 5 of the United States Code . The specific hiring exemptions granted and applicability vary depending on the type of DHA. There are two different types of DHAs: OPM direct-hire and direct-hire authorized by statute . Regardless of type, the authorities are intended to accelerate job offers, though the level of acceleration may vary depending on an agency's interpretation of the authority. Appendix A provides examples of DHAs that are applicable to defense acquisition positions. The OPM direct-hire authorizes agencies to, upon OPM approval, waive competitive hiring requirements in 5 U.S.C. §§3309-3318—veterans' preference, competitive rating and ranking, and the rule of three —when filling positions for which OPM determines there is a severe shortage of candidates or a critical hiring need. DHAs can be established independently by OPM or upon request from an agency, though OPM ultimately determines the application and duration of the authority. Agencies must present evidence of a severe shortage of candidates or critical hiring need in order to receive the DHA. DHAs authorized by statute operate similarly to OPM direct-hire, but often differ in three primary ways: 1. Agencies generally do not need OPM approval to use DHAs authorized by statute and thus do not have to demonstrate the existence of a severe shortage of candidates or critical hiring need. 2. The authorities can exempt agencies from a broader set of competitive hiring requirements compared with the OPM direct-hire. 3. The authorities often apply to a specific department or agency and rarely apply government-wide. For example, the National Defense Authorization Act (NDAA) for FY2016 authorized a DHA that allows each military department to appoint a certain number of individuals with scientific and engineering degrees to scientific and engineering positions within the defense acquisition workforce without regard to competitive hiring requirements in 5 U.S.C. §§3301-3330. Expedited hiring authority (EHA) for certain defense acquisition workforce positions is a type of DHA that was first authorized by the NDAA for FY2009. The EHA authorizes DOD to use the OPM-direct hire to fill defense acquisition positions facing a severe shortage of candidates or critical hiring need, as identified by the Secretary of Defense rather than OPM. The EHA is the broadest of existing DHAs established exclusively for defense acquisition positions. Congress has expanded the scope and applicability of the EHA over time to include (1) all qualified individuals rather than those who are highly qualified, and (2) positions facing a critical hiring need in addition to those facing a severe shortage of candidates . Congress changed the EHA from a temporary to a permanent authority in 2015. The Pathways Recent Graduates and Pathways Internship programs are training and development programs designed to recruit high-performing individuals into the federal government and create a pipeline of talent for agencies. Under the programs, qualified individuals are temporarily appointed to agency positions and receive job-related training. The appointment length, eligibility requirements, and covered positions vary by program ( Table 1 ). Upon program completion, participants can be noncompetitively converted to permanent federal positions in the competitive service. The two Pathways programs were based on the Federal Career Intern Program (FCIP)—a structurally distinct training and development program that was terminated on March 1, 2011, under Executive Order 13562. The Merit Systems Protection Board (MSPB) found that the FCIP violated veterans' preference and public notice laws in November 2010. Positions under the Pathways programs are filled using an excepted service hiring authority, which places positions in the excepted service rather than the competitive service or Senior Executive Service. In so doing, the authority provides DOD with more flexibility and control over hiring for Pathways-covered acquisition positions. Namely, DOD can (1) restrict position eligibility to qualified students and recent graduates, (2) evaluate qualifications solely based on a candidate's education rather than work experience, and (3) use non-Title 5 recruitment, assessment and selection procedures, which may be more streamlined compared to procedures used for the competitive service. For example, DOD can post an abbreviated job announcement on USAJOBS for Pathways-covered acquisition positions. The table below provides a summary of different services within the federal civilian workforce. Delegated examining authority is arguably the standard for modern-day competitive federal hiring and can be considered the baseline for non-flexibility hiring. Delegated examining authority does not provide any hiring exemptions—agencies must comply with all competitive hiring requirements in Title 5 of the United States Code when filling positions under the authority. Delegated examining authority is considered a flexibility because it allows agencies, rather than OPM, to administer the federal hiring process for all competitive service positions (except Administrative Law Judge positions). Prior to delegated examining, federal hiring was centrally managed by OPM. Delegated examining is available to any agency that enters into an agreement with OPM. OPM can terminate, suspend, or revoke the agreement at any time. This section analyzes DOD's use of the six hiring flexibilities described above for some, but not all, civilian acquisition hires between FY2008 and FY2014 ( Table 2 ). According to DOD, the data in Table 2 include external civilian acquisition hires (i.e., applicants from outside the federal government), but do not include internal civilian acquisition hires (i.e., current or former federal employees). Internal hires may represent a sizeable portion of total civilian acquisition hires each year. Two of six flexibilities were available throughout the six-year period, while one was discontinued and three were established during that period. Regardless, the flexibilities were identified by DOD as the top six used to fill civilian defense acquisition positions between FY2008 and FY2014. Approximately 66% of total external civilian defense acquisition hires were made under the six flexibilities described above between FY2008 and FY2014 ( Table 2 ). The remaining 34% of external civilian hires were made through a mix of other hiring mechanisms that use competitive and noncompetitive procedures. The EHA flexibility was used most frequently, accounting for 17,699 external civilian acquisition hires over the six-year period. In FY2010, the EHA accounted for the largest amount of external civilian hires in a single year among the six flexibilities—5,393 hires. A 2016 GAO report found that the EHA was one of the top 20 hiring flexibilities used for all new hires government-wide in FY2014. The FCIP was the second most frequently used flexibility, accounting for 13,574 of total external acquisition hires over the six-year period. The FCIP was the only flexibility used more than the EHA in a single year, in raw numbers, accounting for 3,266 more external civilian acquisition hires than the EHA in FY2009. The FCIP was the second most frequently used flexibility over the six-year period despite being eliminated on March 1, 2011, and replaced by the Pathways Recent Graduate and Internship programs. DHAs and the two Pathways programs were among the least used flexibilities during the six-year period. DHAs accounted for the fewest external civilian hires across the entire six-year period—1,429 hires. The two Pathways programs accounted for the fewest external civilian hires during the time they were in effect —878 external civilian hires between FY2012 and FY2014. The Pathways programs were first implemented by DOD in FY2012, which may partially explain their relatively low use. Delegated examining authority, which features no hiring exemptions, accounted for a larger number of external civilian acquisition hires (3,040 hires) than DHAs and the Pathways programs combined (1,761 hires) between FY2012 and FY2014—the time period in which all four flexibilities were simultaneously in effect. Figure 2 , below, depicts trends in the aggregate use of the six most frequently used flexibilities for civilian external acquisition hiring from FY2008 to FY2014. Data from DOD show a rise in external civilian hires under the six flexibilities between FY2008 and FY2010, from 4,607 hires to 10,928 hires. External civilian hires then declined to 3,391 hires in FY2013, but experienced a slight uptick to 3,848 hires in FY2014. The following external events may have contributed to trends in aggregate flexibility use over the six-year period: The acquisition workforce growth initiative: As mentioned previously, in April 2009, DOD established a goal to add 20,000 personnel to FY2008 acquisition workforce levels through 2015. DOD exceeded this goal in FY2010, adding 21,826 employees to the workforce ( Figure 1 ). Thus, flexibility use—and overall external civilian acquisition hiring—may have surged through FY2010 to meet the growth initiative goal and declined through FY2013 after reaching it. Sequestration: The across-the-board budget cuts in FY2013, known as sequestration, might explain the slight uptick in flexibility use from FY2013 to FY2014. Flexibility hiring may have dipped in FY2013 due to civilian hiring freezes instituted by DOD in response to sequestration and then increased in FY2014, at which point sequestration was no longer in effect and certain hiring freezes were lifted. Civilian a cquisition workforce losses: The flexibility hiring uptick from FY2013 to FY2014 might also reflect DOD efforts to combat overall workforce losses and preserve growth achieved in previous years. The size of the overall civilian defense acquisition workforce decreased by 1,906 employees between FY2012 and FY2014, from 136,714 to 134,808 employees ( Figure 1 ). Workforce losses outpaced growth in FY2013 and FY2014. Shortfalls in certain acquisition career fields: The flexibility hiring uptick from FY2013 to FY2014 might also reflect DOD efforts to address staffing shortfalls in certain acquisition career fields. While DOD accomplished its overall acquisition workforce growth goal, a 2015 GAO report found that DOD did not meet growth targets for six acquisition career fields. The report further asserted that three of these fields that are considered as critical to reshaping the acquisition workforce—contracting, business, and engineering—experienced high attrition rates and difficulty recruiting qualified personnel. Data from DOD also show notable patterns in individual flexibility use during the six-year period, which might have resulted from a mix of structural changes and external events. Some notable patterns include the following: EHA: EHA use surged between FY2009 and FY2010, from 1,184 to 5,080 external civilian acquisition hires. In contrast, use of two of the remaining three most frequently used flexibilities in place during that time decreased. The EHA was expanded to cover a broader range of acquisition positions at the beginning of FY2009, which may have reduced the use of other flexibilities. FCIP: FCIP use consistently decreased between FY2009 and FY2014, with the largest decreases occurring between FY2010 and FY2011—from 3,875 to 1,104 external civilian acquisition hires. These decreases were likely in response to the November 2010 ruling that the FCIP violated certain hiring laws and the December 2010 announcement that the program would be terminated on March 1, 2011. DHA s: Although among the least-used identified flexibilities, use of DHAs generally increased between FY2008 and FY2014. The largest increase in DHA use occurred between FY2013 and FY2014, from 233 to 406 external civilian acquisition hires. These increases may reflect a rising number of DHAs available for the civilian defense acquisition workforce. For example, Congress authorized two new DHAs for DOD Science and Technology Reinvention Laboratories (STRLs) in 2013 that are applicable to certain scientific and engineering acquisition positions. While the previous section discussed the use of flexibilities over time to fill civilian defense acquisition positions, this section discusses time to hire under the flexibilities. Table 3 presents data from DOD on average time to hire between FY2008 and FY2014 for five of the six hiring flexibilities described above—the flexibilities that are still currently available. Time to hire is presented for the years that flexibilities were available during the six-year period. DOD defines time to hire as the number of days from the date of the Request for Personnel Action (SF-52) to the appointment date. As shown in Table 3 , there are no discernible time to hire trends across all five flexibilities—time to hire fluctuates within and between flexibilities from year to year. However, some flexibility-specific trends exist in relation to OPM's 80-day hiring model. Specifically: Delegated examining authority—the only flexibility in Table 3 that provides no hiring exemptions and can be used as a baseline for standard competitive hiring—did not meet the 80-day hiring timeline in any year between FY2008 and FY2014. The EHA met the 80-day timeline in FY2009 (65 days). Average hiring speed under the EHA then slowed between FY2009-FY2013. The number of civilian external hires made under the EHA also declined each year between FY2009 and FY2013. The Pathways Internship program consistently met the 80-day hiring timeline between FY2012 – FY2014. In contrast, the Pathways Recent Graduates program consistently missed the 80-day timeline between FY2013-FY2014. As mentioned previously, DOD began implementing these programs in 2012, but only made hires under the Internship program in FY2012. DHAs did not meet the 80-day timeline, but was the only flexibility to be within five days of the timeline for three consecutive years—FY2009 to FY2011. Several factors may contribute to fluctuations in time to hire within and between the flexibilities listed in Table 3 . Some of these factors are discussed in the sections below. The presence of hiring exemptions may contribute to faster hiring. For instance, DOD data in Table 3 show that hiring under DHAs and EHA was faster than delegated examining authority for certain fiscal years. Certain Title 5 hiring requirements—such as competitive rating and ranking and veterans' preference—do not apply under the EHA and DHAs, while they do under delegated examining. According to a 2001 MSPB report, agency supervisors estimated that rating and ranking took an average of 21 days to complete under merit promotion—the second most time consuming hiring procedure identified in the report. The type of hiring exemptions may also affect time to hire. For example, hiring was faster under the Pathways Internship program compared to the EHA and DHA between FY2012 and FY2014. The Pathways Internship program does not waive veterans' preference or competitive rating and ranking like the EHA and DHAs. However, Pathways Internship allows for simplified job announcements that do not have to be posted on USAJOBS.gov and the use of agency-developed, rather than OPM-developed, qualification standards. These exemptions may have contributed to faster hiring under the Pathways Internship program. As mentioned previously, the two Pathways programs were first implemented in FY2012, which may affect their time to hire. Some hiring flexibilities are not designed to accelerate hiring. For example, delegated examining authority is designed to ensure that all candidates are given a fair and equal chance to obtain a position, specifically by having them compete with one another based on their knowledge, skills, and abilities. These flexibilities, however, may still accelerate the hiring process. According to a 1999 MSPB report, agencies believed that delegated examining resulted in faster and more effective hiring compared to OPM's centralized hiring system. Time to hire for individual flexibilities can vary by DOD component based on their interpretation of the flexibilities' governing laws. The laws provide broad discretion for implementation procedures and application of hiring exemptions. For example, DOD officials stated that the Departments of the Navy and Air Force have a broad interpretation of laws governing the DHA and EHA, while the Department of the Army "takes a very risk adverse [sic] approach." This might partially explain component-level time to hire differences for the two flexibilities ( Figure 3 ). More broadly, DOD components may have different internal hiring procedures that affect time to hire. While the components must abide by the applicable Title 5 hiring requirements, they have wide discretion to develop unique internal hiring policies and procedures within those requirements. For example, some components may hold a series of interviews for each best qualified candidate, whereas others may only hold one interview per candidate. In addition, components may have different approval and vetting processes for selecting final candidates. As Congress continues to consider reforms to the defense acquisition system, the following policy questions regarding hiring flexibilities for the civilian defense acquisition workforce may be of interest: Are flexibilities improving the civilian defense acquisition workforce? Does DOD have the appropriate number and type of flexibilities? What factors may impact effective use of available flexibilities to improve the civilian defense acquisition workforce? A fundamental question is whether available hiring flexibilities are improving the acquisition workforce, or effectively recruiting high-quality acquisition professionals with the right skills to the workforce and placing them in appropriate positions in a timely manner. Accurate and comprehensive data on the use of flexibilities is an integral first step in determining their effectiveness. Such data could identify, among other things, which flexibilities are used most frequently and the specific features that are most useful in recruiting high-quality acquisition personnel. As mentioned previously, however, the flexibility usage data provided by DOD is limited—it only reflects a subset of civilian acquisition hires (external hires) and may contain some counting discrepancies. These limitations might be partially attributable to the lack of hiring codes for individual flexibilities. According to a 2016 GAO report, OPM's hiring codes do not always link to individual hiring flexibilities and sometimes "represent an unknown number" of flexibilities. Some analysts may argue that the current number and structure of flexibilities is sufficient, based on several arguments: DOD exceeded its acquisition workforce growth goal and should focus on retention of acquisition talent through other tools. Flexibilities have been expanded over time to cover a broad range of acquisition positions. For example, the EHA has been made permanent and expanded to cover an increasing number of positions in the majority of acquisition career fields. Some flexibilities are not used effectively, and if used more effectively, would preclude the need for more flexibilities. DOD officials have acknowledged that two flexibilities currently available to fill certain acquisition positions—the Intergovernmental Personnel Act (IPA) and Highly Qualified Expert (HQE) authority—are underutilized. More broadly, a 2016 GAO report found that a "relatively small number" of hiring flexibilities (20) accounted for 91% of new hires government-wide in FY2014. In contrast, other analysts may argue that continued recruitment problems indicate the need for expanded or additional flexibilities, such as reported staffing shortfalls in six acquisition career fields, three of which are considered as critical to reshaping the acquisition workforce and whose shortfalls were partly driven by difficulty in hiring qualified personnel—contracting, engineering, and business; and reported difficulty recruiting acquisition talent from certain populations in the labor market, such as students and recent graduates. For example, although the Pathways programs allow for targeted recruitment of students and recent graduates, DOD acquisition officials asserted that the lack of a direct hire authority for those populations creates hiring challenges at campus recruiting events. Section 1106 of the NDAA for FY2017 ( S. 2943 ), as passed by the Senate, would create a DHA for post-secondary students and recent college graduates. The provision was not included in the subsequently House-passed version of S. 2943 . Several factors may impact the use of flexibilities for the defense acquisition workforce, and by extension, their effectiveness in improving the workforce. These factors include, but are not limited to, the following: Flexibility structure: As mentioned previously, 35 of 38 identified flexibilities are applicable to, but not explicitly targeted at, defense acquisition positions. In addition, some of these flexibilities have arguably narrow eligibility criteria, which may affect their use for acquisition positions. For example, DHAs for scientific and engineering positions at DOD STRLs include degree requirements and usage caps. The NDAA for FY2016 authorized acquisition-specific DHAs nearly identical to those for STRLs. Budgetary constraints: Flexibility use may be affected by cost-cutting initiatives—such as workforce reductions and hiring freezes—instituted by DOD in response to congressional mandates to reduce the size and cost of its civilian workforce and discretionary spending limits in place through 2021 by the Budget Control Act of 2011. For example, in March 2011, the Secretary of Defense announced the elimination of 33 HQEs as part of a department-wide initiative to reduce overhead costs. Recruitment needs: Use of individual flexibilities may have fluctuated over time to meet DOD's evolving acquisition workforce needs and goals. For instance, as mentioned previously, increased use of the EHA in FY2010 may have occurred to help reach the acquisition workforce growth goal established in FY2009. Establishment of new flexibilities: Some hiring flexibilities may be used less or no longer needed due to the establishment of new flexibilities. For example, DOD officials reported that some flexibilities available under the Civilian Defense Acquisition Personnel Demonstration Project (AcqDemo)—such as modified rating and ranking and scholastic achievement appointment —have been largely superseded by the EHA and Pathways programs. Some Interviewees for a 2011 RAND report also asserted that some of AcqDemo's flexibilities have been superseded by the EHA. Limited knowledge of flexibilities: Given the amount and complex structure of flexibilities, some DOD staff might be unfamiliar with (1) the full range of flexibilities that are available for the defense acquisition workforce, (2) the positions they cover, or (3) how to implement their individual requirements. For example, DOD officials noted that hiring managers have the "impression" that using the HQE authority is too difficult and recommended identifying strategies to address this "misconception." Unclear/inconsistent implementation guidance: Unclear or inconsistent implementing guidance on flexibilities—at the department or component-level—may lead to improper or inefficient use. Some DOD acquisition officials reported difficulty using certain flexibilities due to unclear guidance on the application of veterans' preference. For example, some DOD components appear to apply veterans' preference under the EHA, though the flexibility appears to waive it. This may stem from confusion over applicable department-level EHA guidance, which directed components to "make offers to qualified candidates with veterans' preference whenever practicable " (italics added). Balancing hiring speed and equity: As recommended by OPM and MSPB, DOD may be balancing the use of hiring flexibilities with traditional competitive hiring to achieve efficient, high-quality hiring. During a congressional hearing, one DOD official noted the efficiency of the EHA, but also acknowledged the importance of traditional competitive hiring to ensure fair and equal consideration of all qualified candidates. The oversight options presented in this section may help Congress gauge whether the current number and type of hiring flexibilities are appropriate and are improving the civilian acquisition workforce. Doing so may enable Congress to consider (1) expanding or authorizing new flexibilities, (2) consolidating or removing flexibilities, (3) otherwise restructuring flexibilities, and/or (4) using other tools to achieve workforce reforms. As stated above, comprehensive and accurate data on the use of flexibilities is integral to determining their effectiveness in improving the civilian acquisition workforce. However, such data is not publicly available and may be difficult to produce. As such, Congress might consider directing DOD to report, to the extent possible, the total number of all civilian acquisition hires—internal and external—made under all available hiring flexibilities. If such data cannot be reported, DOD could be further directed to identify barriers to providing such data, including any issues with assigning hiring codes to individual flexibilities. develop an internal system to identify and track the use of all individual hiring flexibilities for civilian acquisition positions. The system could take many forms, such as an internal coding structure that is cross-walked with OPM's existing hiring codes. In addition to gathering usage data, Congress might also consider requiring DOD to report on four additional metrics to help determine the effectiveness of flexibilities in improving the acquisition workforce. The metrics could serve as proxy measures for flexibilities' recruitment power and the quality of acquisition personnel hired under flexibilities. Four examples of additional metrics are discussed below. This measure might help determine whether flexibilities accelerate the hiring process from the view of the candidate rather than the agency. Specifically, measuring the days from closing a vacancy announcement to a conditional offer would isolate the impact of a flexibility on hiring procedures that directly affect a candidate's waiting time in the hiring process (such as rating and ranking, interviews, and selection). DOD currently measures time to hire from the perspective of the agency—from the request for personnel action to the candidate's appointment date —thus capturing days dedicated to procedures that do not affect a candidate's waiting time (such as reviewing a position description and conducting a job analysis). As such, it is difficult to determine how effective flexibilities are in expediting job offers from the candidate's view. Formally tracking the number of first choice candidates who accept a job offer for an acquisition position may help determine whether and which flexibilities minimize the loss of top talent to other entities. For example, suppose that 20% of first choice candidates decline job offers for contracting positions filled under the EHA, compared to 50% under traditional competitive hiring. This, in tandem with the aforementioned time to hire data, might indicate that the EHA's hiring exemptions affected candidates' decisions to accept job offers. In contrast, similar or lower acceptance rates under the EHA might indicate little to no impact of the flexibility on recruiting first choice candidates. DOD components are generally not required, statutorily or by internal guidance, to routinely report on job acceptances or declinations under flexibilities. Pursuant to the Defense Acquisition Workforce Improvement Act (DAWIA), DOD established certifications for defense acquisition workforce positions that include education, training, and experience requirements. Acquisition personnel must earn the DAWIA certifications associated with their respective positions within two years of their appointment. The following metrics related to DAWIA certifications might shed light on which flexibilities are most effective in recruiting high-quality acquisition personnel: the number of employees hired under flexibilities who are eligible to earn the appropriate DAWIA certification at the time of appointment, the number of employees hired under flexibilities who earn the appropriate DAWIA certification within the required 24-month timeframe, and the amount of time taken to earn the DAWIA certification. Tracking retention rates and career progression rates under flexibilities might help determine whether flexibilities attract acquisition professionals who stay longer and gain position-specific expertise faster relative to professionals recruited through standard competitive hiring. Consistent with GAO's recommendations on hiring authorities, Congress might consider directing the DOD inspector general or a special task force—such as the Advisory Panel on Streamlining and Codifying Acquisition Regulations —to conduct a study on the overall effectiveness of flexibilities in improving the civilian acquisition workforce. Results from the study could help determine whether flexibilities should be expanded or created, consolidated or removed, or otherwise restructured. The study could, among other things, evaluate the use of all available flexibilities to fill civilian acquisition positions (as described above), including the extent to which flexibilities are targeted at critical or understaffed acquisition career fields. As mentioned previously, a 2015 GAO report found that six of 13 acquisition career fields fell below their planned growth levels, three of which are deemed as critical to reshaping the acquisition workforce—contracting, business, and engineering. implement the proxy measures described above for determining flexibilities' recruitment power and quality of acquisition personnel hired under flexibilities; identify the factors that affect the effective use of flexibilities for the workforce, including those previously described; and determine whether personnel hired under flexibilities have improved defense acquisition outcomes, such as delivering acquisition programs with the desired capabilities within the projected costs and timeline. Congress could direct DOD to undertake specific activities, such as the ones listed below, to clarify and align department- and component-level implementing guidance for hiring flexibilities. Such clarification might improve their use and effectiveness in improving the workforce: Mandatory training: DOD staff for the Office of the Undersecretary for Personnel and Readiness (USD(P&R)), in coordination with USD(AT&L) staff, could provide training to DOD component and sub-component human resources staff on proper interpretation of department-level implementing guidance for flexibilities. Training could occur whenever revised guidance is issued, or on a more frequent cycle. Periodic reviews: USD(P&R) staff, in coordination with USD(AT&L) staff, could periodically review component and sub-component level implementing guidance to ensure alignment with department-level guidance. As part of this requirement, DOD components and sub-components could be directed to notify P&R staff when revised guidance is issued and submit a copy of the guidance. Technical assistance: Prior to issuing final implementing guidance, DOD components and sub-components could involve USD(P&R) and USD(AT&L) staff, in an advisory capacity, during the drafting phase to help mitigate any potential discrepancies with department-level guidance. DOD has taken steps to encourage better use of hiring flexibilities department-wide. The USD(AT&L) and USD(P&R) offices began holding joint summits on acquisition workforce recruitment and retention issues in 2015, which have resulted in several recommendations to use flexibilities more effectively. As a result of one summit, DOD updated its department-level EHA guidance in December 2015, which aimed to clarify the application of certain hiring exemptions, such as veterans' preference and competitive rating and ranking. While this report has focused on enhancing recruitment through hiring flexibilities for the civilian defense acquisition workforce, Congress may also want to consider other workforce improvement efforts, such as retaining acquisition personnel that have been hired. As mentioned previously, a 2016 GAO report found that high attrition rates contributed to shortfalls in certain acquisition career fields. While hiring flexibilities aim to enhance the recruitment of qualified individuals, they are not necessarily structured to retain them. The subsections below describe two efforts undertaken by Congress and DOD in recent years to increase the retention of acquisition personnel: pay flexibilities and AcqDemo. Pay flexibilities aim to increase retention by providing additional or higher compensation that is not typically available to federal employees. DOD officials asserted that the department is exploring ways to better use OPM-issued retention incentives, such as targeting incentives to acquisition career fields experiencing high attrition. DOD officials further noted that use of retention incentives is restricted to employees who are likely to leave federal service and "needs to" be expanded to those likely to leave the current organization. Congress has also authorized pay flexibilities for the defense acquisition workforce. For instance, the FY2016 NDAA authorized DOD to pay certain acquisition personnel up to 150% above the basic pay rate for level I of the Executive Schedule, which exceeds GS-15, step 10 pay rates. AcqDemo is an alternative personnel system that operates outside the GS and waives certain personnel laws and regulations. AcqDemo features, among other things, consolidated pay bands and a contribution-based performance management system. These structures are intended to provide a stronger link between pay and performance, particularly by basing pay increases on contribution to the agency. A 2014 RAND report found higher retention rates among AcqDemo employees compared to those covered by the GS and other alternative personnel systems. Congress and DOD have taken steps to expand the scope and use of AcqDemo, including (1) expanding the participation cap to 120,000 employees, (2) extending operation to December 31, 2020, and (3) streamlining the application process to join the project. Section 1104 of the NDAA for FY2017 ( S. 2943 ), as passed by the Senate, would establish a new personnel system for defense acquisition personnel and support staff. According to the Senate Committee on Armed Services report accompanying S. 2943 , the provision would, among other things, change AcqDemo from a temporary, OPM/DOD-controlled system to a permanent, DOD-controlled system. The provision was not included in the subsequently House-passed version of S. 2943 . Appendix A. Hiring Flexibilities Available for the Civilian Defense Acquisition Workforce | Policymakers and defense acquisition experts have asserted that improved recruitment for the defense acquisition workforce is a necessary component for comprehensive acquisition reform. To help rebuild the workforce and enhance recruitment, DOD has used several hiring flexibilities authorized by Congress, the President, and OPM in recent years. Hiring flexibilities are a suite of tools that are intended to simplify, and sometimes accelerate, the hiring process. The impact of hiring flexibilities on recruitment and workforce quality, however, remains unclear. Congress may consider three high-level questions regarding hiring flexibilities for the workforce: Are flexibilities effectively improving the workforce? Are the current number and type of flexibilities appropriate? What factors may impact effective use of flexibilities to improve the workforce? Congress could consider several oversight options to help gauge and improve the effectiveness of flexibilities in improving the civilian defense acquisition workforce. Such options might help Congress determine whether flexibilities should be expanded or newly created, consolidated or removed, or otherwise restructured. Congress could direct DOD to provide data on the use of all available flexibilities to fill the full range of civilian defense acquisition positions, including any barriers to producing such data; establish proxy measures for effectiveness related to employee quality (such as employee timeliness in earning required certifications and retention and career progression rates) and recruitment (such as time to hire from the perspective of the candidate and job acceptance rates); conduct a study that evaluates the effectiveness of flexibilities; and improve the quality, clarity, and use of implementing guidance for flexibilities. At least 38 hiring flexibilities are currently available for the civilian defense acquisition workforce. According to DOD, the following six flexibilities were used most frequently to fill external civilian acquisition positions between FY2008 and FY2014: 1. Direct-hire authority (DHA) 2. Expedited hiring authority (EHA) for certain civilian acquisition positions 3. Pathways Recent Graduates program 4. Pathways Internship program 5. Federal Career Intern Program 6. Delegated examining authority The six flexibilities accounted for roughly 66% of total external civilian acquisition hires between FY2008 and FY2014 (i.e., hires from outside the government). Some of the flexibilities were available throughout the six-year period, while others were discontinued or established during that period. Potential factors affecting the use of flexibilities include their structure, clarity of implementing guidance, establishment of new flexibilities, staff knowledge of appropriate use, budgetary constraints, and efforts to balance hiring speed with equity. |
Despite defeats in wars in Croatia, Bosnia and Kosovo, international isolation and theimpoverishment of his people, Serbian strongman Slobodan Milosevic remained in power for morethan a decade. He did this by maintaining tight control over key institutions (such as the police,army, judiciary and most of the media) as well as much of the economy. He retained a reservoir ofsupport among some sectors of the population, such as the elderly and those living in rural areas, inpart by appealing to Serbian nationalism. His reign came to an end on October 5, 2000, when he wasdeposed from power by a popular revolt after he refused to concede defeat in an election for the postof President of the Federal Republic of Yugoslavia (FRY) won by his opponent, Vojislav Kostunicaon September 24, 2000. (1) Milosevic's party, the Socialist Party of Serbia (SPS) was also trounced in simultaneous electionsto the federal parliament and local governments. The victor in the election was a coalition of often-feuding opposition parties called theDemocratic Opposition of Serbia (DOS). The DOS agreed on a joint slate of candidates for thefederal parliament and local elections. They named Vojislav Kostunica as their joint candidate to runagainst Milosevic for the federal Presidency. Kostunica's main advantages, according to manyobservers, were a reputation for honesty and his long-standing, unwavering opposition to Milosevic. Kostunica, a former law professor, sharply criticized the Milosevic regime's cynical manipulationof the law and legal system, as well as the often lawless behavior of those close to the regime. Kostunica holds strongly nationalist views. He has been a fierce critic of United States and NATOpolicy in Kosovo and Bosnia. This may also have made him popular with many Serbs. After theirvictory in federal and local levels, the DOS swept to further victories in elections for the Serbianparliament on December 23, 2000. On January 25, 2001, the parliament approved a DOSgovernment led by Prime Minister Zoran Djindjic. However, soon after the DOS took power, tensions arose between supporters of FRYPresident Kostunica and Serbian Prime Minister Djindjic. These conflicts slowed reforms anddisillusioned many Serbs, who once had high hopes that Milosevic's overthrow would lead to adramatic improvement in their living standards. One key subject of dispute was cooperation withthe International Criminal Tribunal for the former Yugoslavia (ICTY). On June 28, 2001, theSerbian government transferred Milosevic to the ICTY to face war crimes charges. Serbian PrimeMinister Zoran Djindjic defended the transfer of Slobodan Milosevic and other indictees, saying theywere needed so that the FRY could receive vitally-needed international aid. Kostunica condemnedthe transfer of Milosevic as illegal and claimed that he had not been informed of the movebeforehand. The DSS left the Serbian government in August 2001, causing the effectivebreakup of the DOS. The DOS government received another blow on March 12, 2003, when Djindjic wasassassinated by two gunmen as he got out of his car in front of the Serbian cabinet office. MiloradUlemek (also known as "Legija"), a Serbian organized crime figure who once served in the Serbiansecurity apparatus, is on trial for ordering the murder. He has already been convicted of the 2000murder of an opposition leader on the order of the Milosevic regime and the attempted murder ofanother. Organized crime, extremists within the Serbian military and security apparatus, and thelinks between them continue to post a threat to Serbia's democratic development and Euro-Atlanticintegration. The instability of the ruling DOS coalition led the Serbian government to call earlyparliamentary elections on December 28, 2003. The results reflected public disillusionment with theperformance of the previous government and resurgent nationalism in Serbia. By far the largestparty in the 250-seat parliament is the Serbian Radical Party, which won 82 seats. Milosevic'sSocialist Party of Serbia won 22 seats. Democratically-oriented parties won the remaining seats. Kostunica's Democratic Party of Serbia (DSS) won 53 seats, the Democratic Party won 37 seats, andthe G-17 Plus party won 34 seats. The monarchist and moderate nationalist Serbian RenewalMovement, in coalition with the New Serbia party, won 22 seats. Kostunica assembled a minority government of democratic parties, consisting of the DSS,G17 Plus, and the SPO/NS. The DSS received the interior and justice ministry posts, which are keyin the fight against organized crime and corruption. G17 Plus plays an important role in economicaffairs. The parliament approved the new Serbian government on March 3, 2004. The mostcontroversial aspect of the Serbian government is its dependence on support from the SPS, whichdoes not have ministers in the government but provides it with a majority in parliament. In justifyinghis overtures to the Socialists, Kostunica asserted that they have reformed themselves since theywere in power under Milosevic, a claim that many analysts would dispute. Critics have charged thatthe government has had to make concessions to the Socialists on several issues in order to remainin power. On June 13, 2004, Serbia held a presidential election. Although the Serbian presidency is nota powerful post, analysts viewed the election as a key indication of Serbia's democratic developmentand orientation toward Euro-Atlantic institutions. A victory for the candidate of the extremenationalist Radical Party, Tomislav Nikolic, would have been viewed as a serious setback forSerbia's path toward integration with Western institutions. Nikolic was opposed by DemocraticParty leader Boris Tadic and Dragan Marsicanin of the DSS. In the first round of the vote, Nikolicwon 30.6% of the vote. Tadic took second place with 27.37%. In a surprise result, wealthybusinessman Dragoljub Karic won 18.23%. Karic, a prominent business figure in the Milosevic era,ran on a populist program. In a blow to the DSS and the government, their candidate, DraganMarsicanin, received a mere 13.3% of the vote. In the June 27 runoff between the two topfirst-round finishers, Tadic beat Nikolic 53.53% to 45.1%. Tadic's victory was greeted with reliefby Western governments. These results confirmed the growing strength of Tadic's pro-WesternDemocratic Party but also continued strong support for the Radicals. New parliamentary elections must be held by the end of 2007, but many observers believeearly elections could take place this year. The current government is weak but continues to hang on,partly because smaller parties in it know that they may lose all of their seats in parliament when newelections are held. The weakness of the government also appears to suit the Radicals and Socialists,who have not yet sought to overturn it. However, events that may occur later this year maydestabilize the government. These could include a Kosovo settlement that results in Kosovo'sindependence; the transfer of indicted war criminal Ratko Mladic to the International CriminalTribunal for the Former Yugoslavia; or scandals over privatization or other issues. Experts disagree on their predictions for the outcome of possible early elections. Accordingto public opinion polls, the Radicals remain the most popular single party in Serbia by a widemargin. However, they may not be able to form a majority on their own or with the Socialists. Onthe other hand, a nationalist backlash over Kosovo or other issues could put the Radicals andSocialists over the top. The international community would likely strongly disapprove of theparticipation of the Radicals in a Serbian government. An alternative could be for the DS, DSS, andother democratic parties to form a government, but continuing animosities among their leaders couldmake this difficult. Since 1997, Montenegro has been controlled by an anti-Milosevic faction of the localSocialist Party led by Milo Djukanovic. In October 1997, Djukanovic was elected President ofMontenegro. As Djukanovic consolidated his grip on power in Montenegro, a cold war developedbetween Montenegrin leaders and the Milosevic regime. Milosevic did not allow Montenegro toparticipate in setting federal policies. For his part, Djukanovic moved to seize control of virtuallyall of the levers of power in Montenegro. Djukanovic successfully sought relief from Westernsanctions against the FRY and received Western aid to boost Montenegro's economy. After Milosevic's fall, efforts by Montenegrin leaders to push forward with independencefrom Yugoslavia were stalled by international opposition, particularly from the European Union. In addition to their concerns about the impact Montenegrin independence might have on the situationin Serbia and Montenegro, EU officials were also worried that the collapse of Yugoslavia could hurtthe chances of keeping Kosovo as part of the Serbia and Montenegro union. On March 14, 2002, EU foreign policy chief Javier Solana brokered an agreement betweenSerbia and Montenegro on restructuring the relationship between the two republics. The FRY wasformally abolished and the country was renamed "Serbia and Montenegro." The "union of states"would have a popularly elected parliament, a president chosen by the parliament, and a government. It would deal with foreign affairs, defense, international economic relations, economic relationsbetween the republics, and the protection of human and minority rights. The two republics wouldattempt to reform and harmonize their economies in line with EU standards. The agreement allowedeither state to declare independence after three years. The agreement asserts that Serbia wouldinherit the FRY's sovereignty over Kosovo as laid out in U.N. Security Council 1244. In February2003, the Federal Republic of Yugoslavia was formally dissolved and "Serbia and Montenegro"came into being as the new joint state. (2) On October 20, 2002, Montenegro held parliamentary elections. A DPS-led coalition wonan absolute majority of 39 of the 75 seats in the parliament. An SNP-led bloc won 30 seats, and theLiberals won 4. Presidential elections were scheduled for December 22, 2002. Fearing anopposition boycott which could depress turnout and therefore invalidate the vote, Djukanovic resigned as President on November 26, 2002 and was elected to the post of Prime Minister by theparliament. Djukanovic's concerns about the presidential vote proved correct when the results of theDecember 22 vote were invalidated due to low turnout. After a repeat presidential election failedfor the same reason in February 2003, former Prime Minister and Djukanovic supporter FilipVujanovic was elected as President when a third election was held in May 2003. Observers have noted that Montenegro is a small republic with few industries and resources,it is highly dependent on tourism, trade and, allegedly, crime. Since coming to power, Djukanovicand other Montenegrin leaders been accused of complicity with smuggling operations, traffickingin persons, and other organized crime activities, sometimes in cooperation with the Italian Mafiafigures. Italian police investigated Djukanovic's possible role in a long-standing cigarette-smugglingoperation. Montenegrin leaders claim these charges of criminal conduct by top-ranking Europeanofficials have been fabricated by domestic opponents and some European countries to undermineMontenegrin efforts to secure independence. On May 21, 2006, Montenegro held a referendum on independence from the Serbia andMontenegro union. Voters opted by a majority of 55.5% for independence, just above the 55%threshold set by the government and the European Union for the referendum's success. Turnout forthe vote was 87%. International election observers from Organization for Security and Cooperationin Europe (OSCE) said that the vote was held in compliance with OSCE and other internationaldemocratic standards. In response, Serbia declared itself an independent state on June 5 and formallyrecognized Montenegro's independence on June 15. The two countries will now have to agree ona division of joint debts and property. Serbia inherits the union's membership in internationalorganizations, while Montenegro will have to apply for membership to them as a new country. Kosovo was an autonomous province within Serbia until 1990, when its autonomy waseliminated by Milosevic. The move provoked the province's ethnic Albanian majority to non-violentresistance then, by 1998, armed revolt. In order to put a halt to the conflict (including atrocities bySerbian forces) and restore the province's autonomy, the United States and other NATO countrieslaunched an campaign of air strikes against Serbia between March and June 1999. In June 1999,Milosevic agreed to withdraw his forces from Kosovo, permitting a NATO-led peacekeeping forceto be deployed. Under the terms of U.N. Security Council Resolution 1244, Kosovo is governed bya U.N. Mission in Kosovo (UNMIK), until an autonomous Kosovo government can run the provinceitself. UNSC 1244 does not say what Kosovo's final status should be, but supports the territorialintegrity of the FRY (which was replaced by the Serbia and Montenegro union in 2003). (3) U.N-brokered talks between the Kosovo and Serbian governments on the future status of theprovince began in early 2006, and the United States is strongly pushing for the talks to be concludedat the end of 2006. The largely ethnic Albanian Kosovo government is seeking independence for theprovince, which the Serbian government strongly rejects. This view is backed by an all-partyconsensus in the Serbian parliament. Serbian leaders have encapsulated their current position onstatus with the phrase "more than autonomy, but less than independence." Serbia has also putforward a decentralization plan for Kosovo. The plan would set up autonomous Serb regions innorthern Kosovo and other Serbian-majority enclaves. Serbian-majority areas in Kosovo would becontrolled by local Serb authorities, with their own police, and would be linked with each other andwith Serbia. Ethnic Albanian authorities would control the rest of the province. Such a plan wouldhave the benefit, from Belgrade's point of view, of consolidating its control over northern Kosovo,where most Serbs in the province now live, and where important economic assets, such as the Trepcamining complex, are found. Ethnic Albanian leaders strongly oppose the idea for these very reasons. To a certain extent, the Serbian plan seeks to strengthen and ratify the existing situation innorthern Kosovo. International officials and ethnic Albanians have criticized Serbia for supporting"parallel structures" that cement its control over Serb-majority areas at the expense of UNMIK'sauthority. International officials have also criticized the Serbian government for (successfully)calling on Kosovo Serbs to boycott Kosovo government institutions. They have noted that such amove isolates Kosovo Serbs at a time when UNMIK is devolving many of its powers to the Kosovogovernment and Kosovo's future status is being determined. Some observers have speculated that Serbia's hard-line stance may be a negotiating tactic,with a possible fall-back position that would try to secure a partition of Kosovo, with northernKosovo formally becoming part of Serbia and the rest becoming independent. However, the UnitedStates and other members of the Contact Group have ruled out a partition of Kosovo. Serbianleaders may also seek or be offered other forms of compensation, such as easier terms for NATO andEU membership, or at least increased aid from these institutions and their member countries. Serbian experts realize that such concessions, even if offered by the international community, maylack credibility due to "enlargement fatigue" in many European Union countries, among otherfactors. (4) Moreover,Serbian experts warn that the current political situation in Serbia may make any public concessionson its part difficult, given the weakness of the Serbian government and continued strength of theRadicals. There are concerns among Western observers that if the international communityrecognizes Kosovo's independence at the end of this year, Serbia, acting overtly or covertly, couldassist Serbs in northern Kosovo in breaking away from the new state, perhaps resulting in violence. With the help of the international community, Serbia had success in defusing an insurgencyin ethnic-Albanian inhabited areas of southern Serbia comprising the of municipalities of Presevo,Medvedja and Bujanovac. In March-May 2001, NATO troops in Kosovo permitted the phasedreintroduction of Yugoslav forces into a demilitarized zone bordering Kosovo that ethnic Albanianguerrillas had used as a springboard for attacks on Serbian territory. Under pressure from theinternational community, the guerrillas disbanded in May 2001. Western countries pressed Serbiato seek a peaceful settlement to the conflict by dealing with some of its underlying causes, includingthe ethnic balance of local police and the economic situation in the area. In February 2001, Serbian put forward a peace plan for the region. The plan called forboosting the participation of ethnic Albanians in local government and police, with help from theOrganization for Security and Cooperation in Europe. Local elections were held in July 2002 in theregion. Ethnic Albanian parties now control the local governments of Presevo and Bujanovac, whileSerb groups control Medvedja. However, the problems in the area are not completely solved. Someethnic Albanians complain of discrimination, and occasional violence continues. In response to aboycott call by local ethnic Albanian leaders, almost no ethnic Albanians voted in the Serbianparliamentary elections in December 2003. Local leaders said that the Serbian election law madeno provision for setting aside seats for ethnic minorities who cannot meet the requirement of winning5% of the vote to enter the parliament. Final status talks in Kosovo could have an impact on thestability of southern Serbia. Some local ethnic Albanian leaders have called for their region to bejoined to Kosovo, if Kosovo becomes an independent state. The democratic leadership in Belgrade faced daunting economic challenges when it took overfrom the Milosevic regime in 2000. The FRY's economy suffered from years of economicmismanagement, economic isolation and the lingering effects of NATO air strikes in 1999. Manykey enterprises and banks were controlled by regime cronies who managed them poorly and stolelarge sums from them. According to FRY officials, Serbia's Gross Domestic Product (GDP) in 1999was only 45% of its 1990 level. Unemployment was about 35% in 2000. Conflicts in the formerYugoslavia left the FRY with over 800,000 refugees and displaced persons to care for, or about 10%of the country's population. In the final year of his rule, Milosevic increased the money supply inorder to fund reconstruction projects after the Kosovo war, fueling inflation and the depreciation ofthe dinar, Serbia's currency. The inflation rate for 2000 was 70%. The country suffered from highlevels of internal and external indebtedness. Budget deficits at all levels of government, includingpension and other social welfare arrears, amounted to 8-10% of GDP. There was a tangle of bad bankdebts and interenterprise arrears, amounting to 80% of GDP. There was also an external debt of$11.6 billion, or about 140% of GDP. (5) Since 2001, the Serbian government embarked on a comprehensive economic reformprogram. They have conducted prudent fiscal and monetary policies that reduced inflation. Thefiscal and budgetary systems are being overhauled to make them fairer and more transparent. Thegovernment ran a consolidated budget surplus of 1.6% of GDP in 2005. The country's foreign traderegime has been liberalized. Reform of the banking sector has begun, and foreign investment inSerbian banks is growing rapidly. Serbia has moved to privatize some "socially-owned" firms, butmany still need to be restructured and sold off. A particularly important and difficult example is theSerbian state oil firm NIS. A series of corruption scandals have marred privatization efforts. Nevertheless, foreign direct investment (FDI) has increased rapidly. Serbia and Montenegro tookin $1.48 billion in net FDI in 2005, a 50% increase when compared to the previous year. Serbia and Montenegro has experienced rapid economic growth in recent years. GrossDomestic Product rose by 6.2% in 2005 and is expected to grow by 5.0% in 2006. Real monthlywages increased 11.5% year-on-year in February 2006. On the other hand, consumer price inflationremains substantial, at 16.6% year-on-year at the end of 2005. Unemployment remains very high,at 32.6% of the workforce in 2005. As large companies are restructured, more people are losing theirjobs, although the government has made progress in decreasing regulatory red tape and simplifyinglabor laws in order to stimulate job growth among small and medium-sized businesses. Povertyremains a problem. In 2003, the World Bank estimated that 10% of the population of Serbia andMontenegro was under the poverty line, defined as 60 Euros (about $73) a month. Serbia and Montenegro's economic policies have been supported by the InternationalMonetary Fund and other international financial institutions. In May 2002, the IMF extended athree-year, $889 million loan to Serbia and Montenegro, after disbursing the final part of a $249million standby loan offered in 2001. The IMF has urged Serbia and Montenegro to push forwardwith the restructuring and privatization of "socially-owned" firms, cut public spending, and reversethe recent spike in inflation. The loan program was completed in early 2006. It is unclear whetherSerbia will seek another IMF loan, given the improved state of its external finances, although it maydo so to secure an international imprimatur for its reforms so as to encourage foreign investment. Serbia and Montenegro has made substantial progress in reducing its foreign debt, due in part to debtforgiveness deals with the Paris Club in 2002 and the London Club in 2004. Under Djukanovic, Montenegro pursued a separate economic policy from Serbia during theMilosevic period. Its switch to the Deutschmark (and later the Euro) as its currency limited thedamage of Milosevic's lax monetary policies. It has pursued sound fiscal and monetary policies. Inflation remains lower than in Serbia, at 1.8% in 2005. Montenegro's real GDP grew by 4.1% in2005. However, the republic's few industries need extensive restructuring, and its economy isheavily dependent on tourism and on trade with Serbia and foreign countries. Privatization hasaccelerated in the past year, spurring large inflows of foreign direct investment. Nevertheless, a fewbig firms remain to be sold off. Some have complained about corruption in the privatizationprocess. (6) Eventual membership in the European Union is a key objective of the foreign policies ofSerbia and Montenegro. The EU has committed itself to admitting Serbia and Montenegro whenthey are ready. However, the path to membership may be a long and difficult one. In October 2005,the EU announced that it would begin negotiations with Serbia and Montenegro on a Stabilizationand Association Agreement (SAA). The agreement would provide a framework for enhancedcooperation between the EU and Serbia and Montenegro in a variety of fields, including theharmonization of local laws with EU standards, with the perspective of EU membership. Although the European Union has not conditioned its aid to Serbia on war crimescooperation, EU officials have made clear to Serbian leaders that a closer relationship with the EU,including concluding an SAA, requires Serbian cooperation with the ICTY. Other conditionsinclude progress in political and economic reforms, especially rule of law and reform of the militaryand security sector. Although it is not a formal condition for an SAA, the talks could be stalled ifSerbia strongly opposes a possible EU-supported solution to the Kosovo status issue. In May 2006,the EU suspended SAA talks because of Serbia's failure to turn indicted war criminal Ratko Mladicover to the ICTY. Serbia and Montenegro have enjoyed preferential trading status with the EU since 2001. For2005 and 2006 combined, the EU has budgeted 89 million Euro in aid for Serbia, 100 million forMontenegro, and 90 million for the Serbia and Montenegro union government. (7) EU foreign policy chief Javier Solana brokered the March 2002 agreement to set up the union of Serbia and Montenegro. Although the agreement permits either republic to leave the unionwithin three years, EU officials at first pressed the two republics to stay together and to more closelyalign their economic policies, warning that such integration would be necessary if Serbia andMontenegro wished to secure an SAA in the near future or join the European Union in the longerterm. When Montenegrin leaders remained firm in their intention to hold a referendum onindependence, the EU pushed for the threshold for the success of the referendum to be higher thana simple majority. Montenegro agreed to a 55% threshold, and when the referendum was approvedon May 21, 2006, the EU pledged to respect the result. EU officials say they will open separate SAAtalks with Montenegro, which they say could be concluded by the end of 2006. In June 2003, Serbia and Montenegro made a formal request to join NATO's Partnership forPeace (PFP) program. The United States and NATO have set the arrest of Ratko Mladic as theremaining obstacle to PFP membership for Serbia and Montenegro. Leaders in Serbia andMontenegro say they want to join PFP in order to secure Western aid and advice in reforming theirarmed forces, including the establishment of full civilian control. Since 2003, Serbia and Montenegro has taken steps to reform its armed forces, including byputting the General Staff and intelligence and security agencies under the control of the civilianMinister of Defense. Hundreds of high-ranking officers from the Milosevic era were retired ordismissed. Other needed changes include redrafting defense and national security strategies, andrestructuring and reducing the size of the armed forces along lines suggested for NATO candidatestates. Efforts must also be made to reform the country's intelligence agencies. Serbia andMontenegro does not have troops deployed to Iraq as part of the U.S.-led coalition there or inAfghanistan. As a result of Montenegro's independence in May 2006, Serbia and Montenegro'sarmed forces will be divided between the two republics, and each will seek to join PFPindependently. In its policy toward Serbia and Montenegro, the Administration has supported the country'sdemocratic transition and integration into Euro-Atlantic institutions. However, the United States hascontinued to insist that Belgrade meet its international obligations, including to the InternationalCriminal Tribunal for the Former Yugoslavia (ICTY). The Administration has advocated Serbia andMontenegro's membership in NATO's Partnership for Peace, if it delivers ICTY indictee RatkoMladic to the Tribunal. On May 7, 2003, President Bush signed a presidential determination thatpermits Serbia and Montenegro to receive U.S. defense articles, services, and assistance. The United States backed EU efforts that produced the Serbia and Montenegro union in 2003that replaced the Federal Republic of Yugoslavia. In testimony before the Senate Foreign RelationsCommittee on November 8, 2005, Undersecretary of State Nicholas Burns said that the United Statesdid not oppose the Montenegrin government's efforts to hold an independence referendum butwarned that the referendum must be held peacefully and as the result of a process that "all sides"accept as legitimate. He added that the main U.S. goal in the region is "reform and progress towardEurope for both Serbia and Montenegro, in or outside the state union." On May 23, a StateDepartment spokesman said the United States applauded "the peaceful, democratic and transparentmanner"in which the May 21 independence referendum was conducted. On June 13, 2006, theUnited States recognized Montenegro as an independent country. The fate of Milosevic and other persons indicted by ICTY has been a controversial issue inSerbia's relations with the United States. In each of the past six fiscal years (FY2001-FY2006),Congress has conditioned U.S. aid to Serbia after a certain date in the Spring of that year on apresidential certification that Serbia has met certain conditions, especially cooperation with theICTY. The provisions also recommended that U.S. support for loans to the FRY be conditioned onthe certification. U.S. conditions on aid to Serbia may have had a significant impact on Serbiancooperation with the Tribunal. Since the coming to power of Serbian democrats in late 2000,Serbian cooperation with the ICTY has followed a similar pattern each year: Serbia delivers severalindictees to the Tribunal just before or, at most, a few weeks after the certification deadline. TheAdministration makes the certification as required by the legislation, and urges Serbia to do more. However, Serbian cooperation then slows, with Serbian leaders claiming that political and legalobstacles preclude greater efforts. Nevertheless, more indictees are delivered as the next deadlinefor certification approaches, and so on. Of the six remaining fugitives sought by the ICTY, Tribunal chief prosecutor Del Ponte hassaid that Mladic and three others are in Serbia. Del Ponte added that Serbia also has mainresponsibility to transfer Karadzic, whose current whereabouts are unknown, and another indicteewho has fled to Russia, due to Serbia's links with both persons. (8) In January 2006, the Serbiangovernment admitted that Mladic had been drawing a Serbian Army pension as late asmid-November 2005. Due to U.S. and international sanctions on the FRY, the United States provided little aid toSerbia and Montenegro before FY1999. From FY1999 through FY2001, the United States obligated$136.8 million in aid to Serbia and $137.9 million in aid to Montenegro. An addition $133.5 millionwas allocated to the FRY as a whole for the same period. (9) The Administration provided $106.7 million in SEED funding forSerbia in FY2002 and $60 million for Montenegro. The Administration allocated $110 million forSerbia for FY2003 and $25 million for Montenegro. It budgeted $95 million in aid for Serbia inFY2004 and $18 million for Montenegro. The FY2005 foreign aid measure ( P.L. 108-447 ) provided$73.6 million for Serbia and $20 million for Montenegro. The FY2006 foreign aid bill contains $70million in aid for Serbia and $15 million for Montenegro. The committee report for theHouse-passed version of the FY2007 foreign aid bill ( H.R. 5522 ) recommended $60million in funding for Serbia and $10 million for Montenegro. SEED aid is being used to help Serbia and Montenegro establish a free market economy. U.S. aid provides advice on restructuring the banking sector, privatization, tax reform, WTOaccession, fighting financial crime, and providing credit facilities to help small business and developa mortgage market. Other SEED aid is aimed at strengthening democratic institutions and civilsociety in the two republics, including by supporting the development of effective localgovernments. (10) OtherU.S. aid is targeted at strengthening Serbia and Montenegro's exports and border controls. During Milosevic's reign, congressional action on the FRY focused on codifying andtightening sanctions against Serbia and denying it most aid, while providing significant assistanceto Montenegro and some democratization assistance for Serbia. As in previous years, the House andSenate-passed versions of the FY2001 foreign operations appropriations bills included provisionsthat would have implemented these objectives. However, Milosevic's removal from powerintervened during conference deliberations on the bill ( H.R. 4811 ). The measure,signed by the President on November 6, 2000 ( P.L. 106-429 ), provided $600 million for central andeastern Europe in Support for East European Democracy Act (SEED) funds. An additional $75.825million in emergency supplemental funding was earmarked for Serbia, Montenegro and Croatiacombined. From the funds in the bill, the Administration was permitted to provide up to $100 millionfor Serbia. The bill did not include an earmark for Montenegro, but the conference report says thatMontenegro "should" receive $89 million. Section 594 of the measure added the condition that nofunds from the bill can be made available for Serbia after March 31, 2001 unless the Presidentcertifies that Serbia is "(1) cooperating with the International Criminal Tribunal for Yugoslaviaincluding access for investigators, the provision of documents, and the surrender and transfer ofindictees or assistance in their apprehension; (2) taking steps that are consistent with the DaytonAccords to end Serbian financial, political, security and other support which has served to maintainseparate Republika Srpska institutions; and (3) taking steps to implement policies which reflect arespect for minority rights and the rule of law." The law said that the United States should support the membership of the FRY to regionaland international organizations subject to a certification by the President that the FRY has appliedfor membership on the same basis of other former Yugoslav republics, and has taken steps to settleissues related to state liabilities, assets and property. It also said that after March 31, 2001, theUnited States should instruct its representatives to international financial institutions to support loansto the FRY subject to the conditions in the Presidential certification on aid to outlined above (Section594). The section did not apply to Kosovo, Montenegro, humanitarian aid or assistance to promotedemocracy in municipalities. Another section of the law also prohibited any aid to countries that harbor war criminals,although this provision could be waived by the Secretary of State if he provides a determination toCongress that such aid supports the implementation of the Bosnian peace accords (Section 563). Members of Congress hailed the transfer of Milosevic to the ICTY on June 28, 2001. OnJune 29, Senators McConnell and Leahy introduced S.Res. 122 . The resolution praisedPrime Minister Djindjic and other Serbian leaders for their "courage" in transferring Milosevic andcalled on them to continue to transfer indictees to the ICTY and to release all political prisoners fromSerbian jails. It expressed the sense of the Senate that the United States should continue to provideaid to the FRY to support economic, political and legal reforms there. The resolution was adoptedby unanimous consent on July 18, 2001. FY2002 foreign appropriations legislation ( P.L. 107-115 ) contained the same conditions onaid to Serbia as in FY2001. The Administration made the certification on May 21, 2002. Secretaryof State Colin Powell pointed to the passage of the war crimes cooperation law and the surrender ofseveral indictees over the previous few weeks, as well as the release of ethnic Albanian prisonersfrom Serbia in March 2002 as justification for the move. Secretary Powell also said that, in the wakeof the certification, the Administration favored working with Congress to restore Normal TradeRelations (NTR) status for the FRY. The FY2003 foreign aid appropriations measure was included as part of the ConsolidatedAppropriations Resolution for FY2003 ( P.L. 108-7 ). The bill contained certification provisions onaid to Serbia similar to the FY2001 and FY2002 bills, and required the President to make thecertification by June 15, 2003. Secretary of State Powell made the certification on June 15, but notedthat Serbia and Montenegro still need to give their full cooperation to the ICTY, including thetransfer of Mladic and Karadzic. On March 5, 2003, the House passed H.R. 1047 , which, among other provisions,would permit the President to restore Normal Trade Relations (NTR) status to Serbia andMontenegro, notwithstanding the provisions of P.L. 102-420 . P.L. 102-420 imposed conditions onrestoring NTR to the FRY, including a Presidential certification that the FRY had ceased armedconflict with other peoples of the former Yugoslavia, agreed to respect the borders of the formerYugoslav states, and ended support to Bosnian Serb forces. In 2002, the House passed a similarmeasure in H.R. 5385 , but the Senate did not consider a companion version before theadjournment of the 107th Congress. The House passed H.Res. 149 on April 9, 2003. The resolution offeredcondolences to the people of Serbia and the family of Zoran Djindjic; noted that implementing reforms and cooperating with the International Criminal Tribunal for the former Yugoslavia mustcontinue despite the "significant risks" they pose for the leadership of Serbia and Montenegro; andthat the United States should continue to support the reforms started by Djindjic, including the fightagainst organized crime and corruption. On November 4, 2003, the Administration restored Serbia and Montenegro's Normal TradeRelations (NTR) with the United States. The FRY's NTR status was suspended in 1992, in responseto its role in the war in Bosnia, according to the terms of P.L. 102-420 (106 Stat. 2149). Thelegislation permits the Administration to restore NTR to Serbia and Montenegro if the Presidentcertifies that the FRY had ceased armed conflict with other peoples of the former Yugoslavia, agreedto respect the borders of the former Yugoslav states, and ended support to Bosnian Serb forces. Administration officials say the move was made in response to the improved situation in Serbia,especially in defense reform and cutting links between the Serbian and Bosnian Serb armed forces. In June 2005, the Administration granted duty-free treatment to some products from Serbia andMontenegro under the Generalized System of Preferences (GSP). The FY2004 foreign aid appropriations bill was added to an omnibus appropriations bill( H.R. 2673 ). The bill contains the certification process as in FY2001-FY2003, buttightens the provisions by specifically naming the transfer of Ratko Mladic as one of the steps Serbiamust take to cooperate with the ICTY. The deadline for the certification was March 31, 2004. TheAdministration declined to make the certification, resulting in the suspension of about $16 millionin U.S. aid to Serbia. The FY2005 foreign aid appropriations were incorporated into an omnibusspending bill ( P.L. 107-447 ). It contains the same certification process as the FY2004 bill, but witha certification deadline of May 31, 2005. The conference report deleted a Senate provision to deductfrom U.S. aid to Serbia an amount equal to Serbian government aid to indicted war criminals. The FY2006 foreign operations appropriations bill ( H.R. 3057 ) was approvedby the House on November 4 and the Senate on November 10. It was signed by the President onNovember 14, 2006 ( P.L. 109-102 ). Section 563 contains the Serbian aid conditions. The provisionconditioned U.S. aid to Serbia after May 31, 2006, on "(1) cooperating with the InternationalCriminal Tribunal for Yugoslavia, including access for investigators, the provision of documents,and the surrender and transfer of indictees or assistance in their apprehension, including making allpracticable efforts to apprehend and transfer Ratko Mladic and Radovan Karadzic, unless theSecretary of State determines and reports to the Committees on Appropriations that these individualsare no longer residing in Serbia; (2) taking steps that are consistent with the Dayton Accords to endSerbian financial, political, security and other support which has served to maintain separateRepublika Srpska institutions; and (3) taking steps to implement policies which reflect a respect forminority rights and the rule of law." It says the Administration "should" vote for loans and aid forSerbia and Montenegro from international financial institutions after May 31, 2006, if thecertification is made. The aid conditions do not apply to Montenegro, Kosovo, humanitarian aid,or assistance to promote democracy. The provision specifically names Karadzic as well as Mladic as persons Serbia shoulddetain. Second, it allows the Administration to issue a certification even if the two men are nottransferred, if it determines that the two are not living in Serbia. (The exact whereabouts of the twomen are uncertain. The Serbian government has admitted that Mladic was living in Serbia until veryrecently, but claims it does not know where he is now. Most observers believe that Mladic has beenassisted in hiding by former and serving military and security officials. Most speculation onKaradzic's location, at least in the past, placed him in Bosnia.) On May 31, 2006, the Administration, in compliance with the certification provision in theFY2006 foreign operations appropriations bill, suspended $7 million in U.S. aid to Serbia, due toits failure to cooperate with the ICTY. On June 9, 2006, the House passed H.R. 5522 , the FY2007 foreign operationsappropriations bill. The bill contains the same certification provisions as the FY2006 bill. However,it no longer specifically names Karadzic as a person Serbia should detain but retains the mention ofMladic. Figure 1. Map of Region | Serbian strongman Slobodan Milosevic's long reign came to an end in October 2000, whenhe was deposed from power by a popular revolt after he refused to concede defeat in an election forthe post of President of the Federal Republic of Yugoslavia (FRY) won by his opponent, VojislavKostunica. The new government suffered a great blow in March 2003, when Serbian Prime MinisterZoran Djindjic was murdered by organized crime figures linked to the Serbian security apparatus. Organized crime, extremists within the Serbian military and security apparatus, and the linksbetween them continue to pose a threat to Serbia's democratic development. On December 28, 2003, the extreme nationalist Serbian Radical Party won a stunning victoryin early Serbian parliamentary elections, but fell short of a majority. In March 2004, a minoritygovernment of democratic parties formed a government without the Radicals. However, thegovernment depends on the parliamentary support of the Socialists (Milosevic's former party), whoare not in the government but are in a position to extract concessions from it. Democratic forces inSerbia received a boost from Serbian presidential elections in June 2004, which resulted in a victoryfor Boris Tadic, a pro-Western, pro-reform figure over a Radical Party candidate. In a years-long confrontation with Milosevic, Montenegrin leader Milo Djukanovic seizedcontrol of virtually all levers of federal power on the republic's territory. He sought to rapidlyachieve an independent Montenegro, but opposition from the United States, European Union andRussia stymied these efforts. After a largely unsuccessful three-year decentralized union with Serbia,Montenegro voted for independence in a referendum held on May 21, 2006. Montenegro'sindependence has been recognized by Serbia, the United States, the European Union, and othercountries. The United States and other Western countries have sought to encourage Serbia andMontenegro's integration into Euro-Atlantic institutions. However, these efforts have been hamperedby controversy over the future status of Serbia's Kosovo province, Serbia's failure to fully cooperatewith the Yugoslavia war crimes tribunal (in particular its failure to arrest former Bosnian Serb armychief Ratko Mladic), and Serbia's fitful progress in such areas as rule of law and military and securitysector reform. Since Milosevic's downfall, Congress has appropriated significant amounts of aid to Serbiaand Montenegro to promote reforms. In each fiscal year from FY2001 through FY2006, Congressconditioned U.S. aid to Serbia on a certification by the President that a series of conditions had beenmet by Serbia, above all cooperation with the Yugoslav war crimes tribunal. The House has passedsuch a certification provision in its version of the FY2007 foreign aid bill ( H.R. 5522 ).This report will be updated as events warrant. |
The 111 th Congress enacted the Patient Protection and Affordable Care Act ( P.L. 111-148 , PPACA) and the Health Care and Education Reconciliation Act of 2010 ( P.L. 111-152 ). On January 19, 2011, the House passed H.R. 2 , which would repeal PPACA. Nonetheless, it is possible that the 112 th Congress will examine other legislation to amend parts of PPACA. During any debate to amend PPACA, one issue that may arise is the eligibility of aliens (noncitizens) for some of the key provisions of the act. This report discusses alien eligibility for the provisions in PPACA that have restrictions based on immigration status: participation in high-risk pools, the requirement to maintain health insurance, the ability to purchase insurance through an exchange, and eligibility for premium credits and cost-sharing subsidies. The report concludes with an analysis of data from the Current Population Survey (CPS) that illuminate some of the possible effects of PPACA on the health insurance coverage of the noncitizen population. Table 1 presents the definitions of some of the terms related to the noncitizen population and several of the different immigration statuses. In addition, because alien eligibility under PPACA is governed by the term "aliens who are lawfully present," the table outlines which aliens are considered to be lawfully present. Using the March 2010 Current Population Survey (CPS), the Congressional Research Service (CRS) estimated that as of March 2010 there were approximately 37.6 million foreign-born persons in the United States, approximately 12% of the U.S. population. The foreign-born population was comprised of approximately 16 million naturalized U.S. citizens and 21.6 million noncitizens. The literature often cites estimates published by the Pew Hispanic Center. Researchers at the Pew Hispanic Center used the same data but adjusted the survey weights to account for perceived noncitizen undercounts in the survey. They also assigned a specific immigration status (e.g., legal permanent resident, unauthorized alien) to each foreign-born survey respondent and used a methodology to estimate the illegally present population. The Pew Hispanic Center estimated that in March 2010 there were approximately 40.2 million foreign-born persons in the United States, and of the foreign-born population, approximately 14.9 million (37%) were naturalized U.S. citizens, 12.4 million (31%) were legal permanent residents (LPRs), 1.7 million (4%) were temporarily in the United States (i.e., nonimmigrants), and 11.2 million (28%) were estimated to be unauthorized (illegal) aliens. The following section discusses alien eligibility for the following provisions under PPACA: high-risk pools, the heath insurance mandate, the exchanges, and premium credits and cost-sharing subsidies. In general, aliens are separated into two groups for eligibility purposes under PPACA: aliens who are "lawfully present in the United States" are eligible for the provisions discussed below while aliens who are not "lawfully present in the United States" (i.e., unauthorized/illegal aliens) are ineligible. PPACA (§ 1101) required the Secretary of the Department of Health and Human Services (Secretary) to establish a temporary high-risk pool program to provide health insurance coverage for eligible individuals during the period beginning on the date the program was established and ending on January 1, 2014, the date when the exchanges will be operational. This program began offering coverage on August 1, 2010. Individuals are eligible for the high-risk pool if they have not been covered under creditable coverage during the six-month period prior to application for coverage in the high-risk pool and have a pre-existing condition as determined following guidance issued by the Secretary. To participate in the temporary high-risk pool program, a person must be a citizen or national of the United States or be lawfully present in the United States. Thus, unauthorized aliens are ineligible for participation in the high-risk pool program because they are not lawfully present in the United States. PPACA includes an individual mandate as of 2014 to maintain health insurance and has tax penalties for noncompliance. In other words, individuals—with some exceptions—who do not maintain acceptable health insurance coverage for themselves and their dependents would be required to pay a penalty. All aliens who are lawfully present are covered by the requirement to maintain health insurance. Unauthorized (illegal) aliens are expressly exempted from this mandate. In addition, the act specifies that a person is only considered lawfully present if the person is, and is reasonably expected to be for the entire period of enrollment, a U.S. citizen or national or an alien who is lawfully present in the United States. Until the exchanges are operational, it is unknown what the shortest period of enrollment will be and whether certain nonimmigrants who are in the United States for limited periods of time, in many cases under six months, would be covered by the mandate (e.g., tourists (B-visas), cultural exchange (J-visas), performers and athletes (O- and P-visas)). In addition, no penalty will be imposed on those without coverage for less than three months (with only one period of three months allowed in a year), so for aliens in the United States for less than three months (e.g., most tourists) there would be no consequences to not having health insurance. Because the penalties for noncompliance with the individual mandate are tax-based, the following section discusses the rules for taxation of noncitizens. In particular, understanding these rules might be important because there has been debate about the extent to which the Internal Revenue Service, in light of the limits PPACA places on enforcement, will be able to collect penalties from individuals who do not have other tax liability. To the extent that this might be a concern, it would seem to arise regardless of the individual's citizenship status. All foreign nationals working in the United States are subject to U.S. tax laws. For federal tax purposes, foreign nationals working in the United States are classified as resident or nonresident aliens. These terms are in the Internal Revenue Code (I.R.C.) but do not exist in the Immigration and Nationality Act (INA). As a result, the specific immigration statuses under the INA do not align directly with the terms resident and nonresident alien. In general, an individual is a nonresident alien unless he or she meets the qualifications under one of the following residency tests: Green card test: the individual is a lawful permanent resident of the United States at any time during the current year, or Substantial presence test: the individual is present in the United States for at least 31 days during the current year and at least 183 days during the current year and previous two years. For computing the 183 days, a formula is used that counts all the qualifying days in the current year, one-third of the qualifying days in the immediately preceding year, and one-sixth of the qualifying days in the second preceding year. While resident aliens are subject to the same tax treatment as U.S. citizens, nonresident aliens are subject to different treatment, such as generally being taxed only on income from U.S. sources. Nonetheless, their income that is "effectively connected" with a U.S. trade or business is generally taxed by the same rules and at the same rates as the income of U.S. citizens and resident aliens. There are several situations in which an individual may be classified as a nonresident alien even though he or she meets the substantial presence test. For example, an individual will generally be treated as a nonresident alien if he or she has a closer connection to a foreign country than to the United States, maintains a tax home in the foreign country, and is in the United States for fewer than 183 days during the year. Another example is that an individual in the United States under an F-, J-, M-, or Q-visa may be treated as a nonresident alien if he or she has substantially complied with visa requirements. Other individuals who may be treated as nonresident aliens even if they would otherwise meet the substantial presence test include employees of foreign governments and international organizations, regular commuters from Canada or Mexico, aliens who are unable to the leave the United States because of a medical condition, foreign vessel crew members, and athletes participating in charitable sporting events. Additionally, depending on where the individual is from, there may be an income tax treaty between that country and the United States with provisions for determining residency status. Under PPACA, "American Health Benefit Exchanges" will begin operation by 2014. An exchange cannot be an insurer, but it will provide eligible individuals and small businesses with access to insurers' plans in a comparable way. In addition, based on income certain individuals may qualify for a tax credit toward their premium costs and a subsidy for their cost-sharing; the credits and subsidies will be available only through an exchange beginning in 2014. The law allows all lawfully present noncitizens to purchase insurance through an exchange and bars unauthorized aliens from obtaining insurance through an exchange. Based on their income, certain individuals may qualify for a tax credit toward their premium costs and a subsidy for their cost-sharing; the credits and subsidies will be available only through an exchange beginning in 2014. All lawfully present aliens who meet specified criteria are eligible for the premium tax credit and cost-sharing subsidies. Unauthorized (illegal) aliens are ineligible for the tax credit and subsidies. In addition, the law provides specific rules for calculating the credits and subsidies for mixed-status families. Some have raised concerns that PPACA created an inequality between U.S. citizens and some noncitizens with incomes at or below 133% of the federal poverty level (FPL) with respect to eligibility to participate in an exchange and receive premium credits or cost-sharing subsidies. In general, all U.S. citizens and Medicaid-eligible noncitizens with incomes at or below 133% of the FPL will be eligible for Medicaid, while similarly situated Medicaid-ineligible lawfully present noncitizens will be eligible to participate in an exchange and possibly to receive the credits or subsidies. The following section explores the reasons for these differences. Under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), as amended, noncitizens' eligibility for Medicaid largely depends on their immigration status , whether they arrived in the United States (or were on a program's rolls) before August 22, 1996 , and how long they have lived and worked in the United States. Notably, to be eligible for Medicaid aliens must also meet the program's financial and categorical eligibility requirements. Most legal permanent residents (LPRs) entering the United States after August 22, 1996, are barred from Medicaid for five years, after which time they are eligible at the state's option. However, states may also choose to use state and federal Medicaid funds to cover pregnant women and children who are "lawfully residing" in the United States. In addition, states have the option to use state-only funds to provide medical coverage for other 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 the state's option. LPRs with a substantial (10-year) U.S. work history or a military connection are eligible for Medicaid without regard to the five-year bar. LPRs receiving Supplemental Security Income (SSI) on or after August 22, 1996, are eligible for Medicaid because Medicaid coverage is required for all SSI recipients. Nonimmigrants and unauthorized aliens are barred from Medicaid. However, states may choose to cover these individuals using state-only funds. Beginning in 2014, or sooner at state option, PPACA requires states to expand Medicaid to certain individuals who are under age 65 with income up to 133% of the FPL. Thus, in 2014 all non-elderly U.S. citizens and certain noncitizens with income up to 133% FPL will be eligible for Medicaid. This reform not only expands eligibility to a group that is not currently eligible for Medicaid (low-income childless adults), but it also raises Medicaid's mandatory income eligibility level for certain existing groups to 133% of the FPL and is considered the most significant expansion of Medicaid eligibility in many years. Nonetheless, PPACA did not amend the current immigration status-based restrictions (i.e., alien eligibility requirements) on receiving Medicaid (discussed above). As discussed above, beginning January 1, 2014, qualifying individuals will receive advanceable, refundable tax credits toward the purchase of an exchange plan. To be eligible for the premium credits, a taxpayer must have a household income that is above 100% of the FPL but does not exceed 400% of the FPL. In addition, lawfully present noncitizens who have household incomes that do not exceed 100% of the FPL and who are ineligible for Medicaid due to their alien status will be deemed to have income at 100% of the FPL and will be eligible for premium credits. Notably, if a person who applies for premium credits in an exchange is determined to be eligible for Medicaid, the exchange will have that person enrolled in Medicaid. Under PPACA, lawfully present noncitizens (including some LPRs within five years of entry) who are ineligible for Medicaid due to their alien status are eligible to participate in an exchange and for premium credits. Similarly situated U.S. citizens and lawfully present noncitizens who are eligible for Medicaid would be enrolled in Medicaid and would not be eligible to participate in an exchange, and, as a result, they would be ineligible for the premium credits. To enforce the alien eligibility requirements under the act, § 1411 of PPACA requires the Secretary of Health and Human Services (HHS) to establish a program to determine whether an individual who is to be covered through an exchange plan, or who is claiming a premium tax credit or reduced cost-sharing, is a citizen or national of the United States or an alien lawfully present in the United States. This requirement is similar to and compatible with the Department of Homeland Security (DHS) Systematic Alien Verification for Entitlements (SAVE) system established by § 1137(d) of the Social Security Act. The SAVE system is also the basis for the E-Verify electronic employment eligibility verification system, as discussed below. The verification system created under PPACA will use three pieces of personal data to verify citizenship and immigration status. The Social Security Administration (SSA) will verify the name, social security number, and date of birth of the individual. For those attesting to be U.S. citizens, the attestation will be considered substantiated if it is consistent with SSA data. For individuals who do not claim to be U.S. citizens but attest to be lawfully present in the United States, the attestation will be considered substantiated if it is consistent with DHS data. PPACA requires such verification of all individuals seeking exchange coverage regardless of whether they would be federally subsidized or would pay premiums entirely on their own. Some argue that because the proposed verification system does not include a biometric identifier, it could lead to identity theft; however, requiring applicants to provide documents with biometric identifiers could lead to the inappropriate denial of credits and subsidies to eligible persons. The system only verifies that the name, SSN, and date of birth match the SSA's records and that immigration documents match DHS records; as a result, a person (e.g., a U.S. citizen, an unauthorized alien) who is using the documents of an eligible person would not necessarily be denied access to an exchange or premium and cost-sharing subsidies. Nonetheless, while all lawfully present noncitizens have documents with biometric identifiers, U.S. citizens do not necessarily have such documents, and, as a result, requiring such biometric identifiers may make it more difficult for some eligible U.S. citizens to gain access to an exchange and the premium credits and cost-sharing subsidies. In a recent evaluation of the E-Verify system for employment, a system that is often compared to the new system under PPACA because it electronically verifies both U.S. citizens and noncitizens, researchers estimate that 6.2% of all queries relate to unauthorized aliens, and that in about half (54%) of these queries the unauthorized aliens receive an inaccurate finding of being work-authorized primarily due to identity theft. Thus, the researchers estimate that about 3.3% of all queries receive a false positive verification. In other words, it is estimated that of the unauthorized aliens that are run through the system, approximately 54% who are using false documents are not identified by the system. In an effort to better detect and deter identity fraud, DHS (which administers E-Verify) is taking steps that include adding more photographs to the system and developing methods to prevent stolen identities from being used in the system. As previously discussed, PPACA expressly exempts unauthorized (illegal) aliens from the mandate to have health coverage and bars them from a health insurance exchange. Unauthorized aliens are not eligible for the federal premium credits or cost-sharing subsidies. Unauthorized aliens are also barred from participating in the temporary high-risk pools. The following section uses analysis from the Current Population Survey (CPS) to provide an overview of the health insurance coverage of U.S. citizens and noncitizens, and to gain some insight into the possible effects of the changes in PPACA to Medicaid eligibility on the health insurance coverage of noncitizens. The data used in this study are from the March 2010 supplement of the CPS, the main source of labor force data for the United States. The CPS is a household survey sample of the non-institutionalized civilian population conducted by the Census Bureau for the Bureau of Labor Statistics (BLS). The data are weighted to reflect the population. All differences discussed in the text of this report are statistically significant at the .05 level unless otherwise specified. The comparisons in this report are based on three groups residing in the United States: (1) native-born U.S. citizens, (2) naturalized U.S. citizens, and (3) noncitizens. Although one of the issues surrounding health insurance coverage for noncitizens is the number of unauthorized aliens living in the United States, it is not possible using CPS data to differentiate between aliens who are in the United States legally or illegally, nor is it possible to differentiate between different categories of noncitizens (e.g., legal permanent residents, temporary workers, students, refugees, asylees). The CPS asks whether the respondent has had various types of coverage during the previous year. Thus, respondents may have more than one type of health insurance during the year. Theoretically, an uninsured respondent is someone who lacked any type of health insurance during the past year and the term does not capture people who were uninsured for part of the year. However, research has shown that the CPS estimates appear to reflect the number of people uninsured at a point in time (that is, when the survey was taken) rather than the number uninsured for the entire previous year. The types of health insurance used in this report are private insurance (both employer sponsored and individually purchased), Medicare, Medicaid, and military or veterans coverage. If the respondent reported not having any of these types of coverage, they are considered uninsured. As shown in Figure 1 , noncitizens are more than three times as likely as native-born U.S. citizens, and more than two times as likely as naturalized U.S. citizens, to be uninsured: 46% of noncitizens lacked any type of health insurance, compared with 14.1% of the native-born population and 19% of the naturalized population. Similarly, noncitizens have the lowest rate of private insurance coverage (37.1%), while native-born citizens have a slightly higher rate of private health insurance than naturalized citizens (66.3% and 60.5%, respectively). The noncitizen population also has the lowest rate of Medicare coverage, most likely due to the relatively young age of the population and the decreased likelihood that noncitizens would meet the eligibility requirements for Medicare. Naturalized citizens have the highest rate of Medicare coverage, which may be attributable to the fact that the naturalized population is, on average, older than both the native-born and the noncitizen populations. Noncitizens are slightly less likely to have Medicaid coverage (15.4%) than native-born citizens (15.9%), while naturalized citizens are the least likely to have Medicaid coverage (12.4%). Lastly, due to the fact that, in general, noncitizens must be legal permanent residents (LPRs) to join the Armed Forces, the noncitizen population has much lower rates of military/veterans coverage (0.8%) than the naturalized (3.2%) and native-born (4.4%) populations. Overall, noncitizens tend to be poorer than native-born and naturalized citizens. Thirty-five percent of noncitizens have family incomes that are less than 133% of poverty, compared with 19.2% of native-born citizens and 16.9% of naturalized citizens (see Table 2 ). As shown in Table 3 , expectedly, as family income increases, people are more likely to have private health insurance. Nonetheless, for all levels noncitizens are less likely than citizens to have private insurance, but this difference is smallest for those whose family income is more than 400% of poverty. Only 12.9% of noncitizens with family incomes less than 133% of poverty have private insurance, while 24.5% of native-born citizens and 21.7% of naturalized citizens with similar family incomes have private insurance. For those with family incomes that are more than 400% of poverty, 76.6% of noncitizens, 88.4% of native-born citizens, and 82.8% of naturalized citizens have private insurance. As discussed above (see Figure 1 ), although noncitizens are only slightly less likely overall to have Medicaid coverage (12.6%) than native-born citizens (14.4%), and naturalized citizens are the least likely to have Medicaid coverage (11.4%), when examining those at or below 133% of poverty, noncitizens are much less likely than the native born to be covered by Medicaid. For those with family incomes at or below 133% of poverty, 25.2% of noncitizens are covered by Medicaid, compared with 33.6% of naturalized citizens and 45.7% of native-born citizens. The difference between Medicaid coverage for those with family incomes above 133% and not exceeding 400% of poverty is much smaller, with 12.6% of noncitizens and 13.6% of native-born citizens being covered by Medicaid. For all income levels, noncitizens are more likely to be uninsured than U.S. citizens. For example, as Table 3 illustrates, for those with incomes above 133% and not exceeding 400% of poverty, 46.8% of noncitizens are uninsured, compared to 15.6% of native-born citizens and 21.9% of naturalized citizens. It is likely that due to the changes made in PPACA to Medicaid eligibility, the rates of Medicaid coverage for the U.S. citizen and noncitizen populations with incomes at or below 133% of poverty will increase. However, due to the alien eligibility requirements for Medicaid, which were unchanged by PPACA, this increase in Medicaid coverage (and the resulting decrease in the number of the uninsured) may not be as strong for noncitizens as for U.S. citizens. Nonetheless, the ability of lawfully present noncitizens who are Medicaid-ineligible to purchase insurance through an exchange may be a factor in decreasing the uninsured rate for noncitizen populations with incomes at or below 133% of poverty. | The 111th Congress enacted the Patient Protection and Affordable Care Act (P.L. 111-148, PPACA), and amended it a week later by passing the Health Care and Education Reconciliation Act of 2010 (P.L. 111-152). (PPACA refers to P.L. 111-148 as amended by P.L. 111-152.) On January 19, 2011, the House passed H.R. 2, which would repeal PPACA. It is possible that the 112th Congress will examine other legislation to amend parts of PPACA. One issue that may arise during any debate to amend provisions in PPACA is the eligibility of aliens (noncitizens) for some of the key provisions of the act. Aliens who are "lawfully present in the United States" are subject to the heath insurance mandate and are eligible, if otherwise qualified, to participate in the high-risk pools and the exchanges, and they are eligible for premium credits and cost-sharing subsidies. PPACA expressly exempts unauthorized (illegal) aliens from the mandate to have health coverage and bars them from a health insurance exchange. Unauthorized aliens are not eligible for the federal premium credits or cost-sharing subsidies. Unauthorized aliens are also barred from participating in the temporary high-risk pools. To enforce the alien eligibility requirements under PPACA, the act requires the Secretary of Health and Human Services to establish a program to determine whether an individual who is to be covered in the individual market by a qualified health plan offered through an exchange, or who is claiming a premium tax credit or reduced cost-sharing, is a citizen or national of the United States or an alien lawfully present in the United States. Some have raised concerns that PPACA created an inequality between U.S. citizens and some noncitizens with incomes at or below 133% of the federal poverty level (FPL) with respect to eligibility to participate in an exchange and receive premium credits or cost-sharing subsidies. In general, all U.S. citizens and Medicaid-eligible noncitizens with incomes at or below 133% of FPL will be eligible for Medicaid, while similarly situated Medicaid-ineligible lawfully present noncitizens will be eligible to participate in an exchange and possibly to receive the credits or subsidies. This report will be updated if warranted by legislative events. |
This report discusses electric power transmission and related policy issues. Transmission is a prominent federal issue because of a perceived need to improve reliability and reduce costs, transmission's role in meeting national energy goals (such as increased use of renewable electricity), and the potential efficiency advantages of "smart grid" modernization. Proposals before the 111 th Congress for changing federal transmission law and regulations to meet these and other objectives include S. 539 , the Clean Renewable Energy and Economic Development Act, introduced on March 5, 2009; and the March 9, 2009, majority staff transmission siting draft of the Senate Energy and Natural Resources Committee (the "Senate Energy Majority Draft"). Transmission development and regulation are complex and sometimes contentious policy areas. In addition to an overview of the electric power system, this report reviews six major transmission policy topics: Transmission planning. Transmission permitting. Financing and cost allocation. System modernization and the smart grid. Transmission system reliability. A concluding section summarizes the policy issues identified in the report. This section discusses the physical and technical characteristics of the nation's power system, and then regulation of electric power transmission. Figure 1 illustrates the major components of the electric power system. In brief: 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, and nuclear fuel. Transmission lines carry electricity from the power plant to demand centers. The higher the voltage of a transmission line the more power it can carry. 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 use distribution lines for final delivery. The vast majority of the transmission system in the United States is an alternating current (AC) system. This is largely because the voltage of AC power can be stepped up and down with relative ease. A small portion of the system runs on high voltage direct current (DC) lines. This technology is very efficient but requires expensive converter stations to connect with the AC system. The transmission grid was not built in conformance with a plan like the interstate highway system. The grid is a patchwork of systems originally built by individual utilities as isolated transmission islands to meet local needs. These small networks were unsystematically linked when utilities decided to jointly own power plants or to connect to neighboring companies to facilitate power sales. The grid eventually evolved into three major "interconnections," Eastern, Western, and the Electric Reliability Council of Texas (ERCOT, which covers most but not all of the state) ( Figure 2 ). Within each interconnection the AC grid must be precisely synchronized so that all generators rotate at 60 cycles per second (synchronization failure can cause damage to utility and consumer equipment, and cause blackouts). There are only eight low capacity links (called "DC ties") between the Eastern, Western, and ERCOT Interconnections. In effect, the 48 contiguous states have three separate grids with limited connections. Within the three interconnections, the grid is operated by a total of about 130 balancing authorities. These are usually the utilities that own transmission systems, but in some cases (such as ERCOT) a single authority supervises an entire regional grid. The balancing authorities operate control centers which monitor the grid and take actions to prevent failures like blackouts. The transmission grid is owned by several hundred private and public entities. Table 1 shows the miles of high voltage transmission line in the 48 contiguous states by region and type of owner. The table also shows the data expressed as ownership percentages (values in brackets). The table illustrates how ownership patterns vary greatly across the country. In the West and Upper Plains regions, public power owns more than 40% of the high voltage grid. In the other regions about 80% of the grid is owned by investor owned utilities. Figure 3 (below) shows the eight North American Electric Reliability Corp. (NERC) regions. As discussed later in the report, NERC and its regions play important roles in maintaining the reliability of the power system. Like the interconnections, some of these NERC regions extend into Canada or Mexico. However, this report is concerned only with the U.S. transmission grid. Electric power regulation is divided among federal, state, and regional authorities. The scope of federal authority is different for rates and reliability. The following discussion reviews: State regulation and self-governing public power. Federal regulation of the transmission system and the reliability of the bulk power system. State regulation of the electric power industry is usually centered in a public utility commission (PUC). The authority of the commissions is often limited to investor-owned utilities (IOU; i.e., private corporations, usually with publicly traded stock). The PUCs set retail rates, review utility operations, and, most importantly for the purposes of this report, issue siting approvals (permits) for new transmission lines. Publicly-owned utilities (POUs) are owned by municipal, state, and federal governments. The term is also sometimes applied to customer-owned rural electric cooperatives. POUs are typically small and operate only distribution systems, but some have large transmission and generation systems, such as the Tennessee Valley Authority. POUs are self-regulated by their governing boards, are generally not subject to state or federal economic regulation, and make their own decisions on adding new generating capacity and building transmission lines. This part of the report first discusses federal regulation of transmission, and then federal regulation of the reliability of the power system. Federal regulation of the power industry is exercised by the Federal Energy Regulatory Commission (FERC), an independent agency administratively housed within the Department of Energy. FERC regulates wholesale electricity rates, approves transmission line projects, and sets transmission rates. However, FERC's authority is limited in important respects: For the most part FERC's rate-making and transmission authorization authority is limited to IOUs in the 48 contiguous states outside of ERCOT. While FERC must approve transmission projects proposed by jurisdictional utilities and establishes rates, a project also needs a siting permit from every state the line will traverse. Critics have argued that multi-state permitting of transmission lines has delayed the construction of needed transmission lines. In the Energy Policy Act of 2005 (EPACT05), Congress gave FERC "backstop" siting authority. This authority operates as follows: The Department of Energy (DOE) is to conduct a triennial study of transmission system congestion. Based on this study, DOE may designate as National Interest Electric Transmission Corridors (NIETC) areas with severe transmission congestion. A special permitting rule applies to transmission projects proposed for a NIETC. If a state has not acted on the permit application for a NIETC project within a year, the developer can bypass the state and bring its application to FERC for approval. DOE completed its first congestion study in 2006 and in 2007 designated two NIETCs, one in southern California–Arizona, and a second covering a large part of the Northeast. As of early 2009 no use had been made by transmission developers of the backstop process. Moreover, in February 2009, the Fourth Circuit Court of Appeals ruled that FERC had overstepped its authority in implementing the backstop process. FERC had interpreted the law to mean that the backstop process could be used if a state has not acted within a year or if the state has affirmatively decided to reject the project . However, the court ruled that a state's decision to reject a project could not be appealed to FERC. On April 2, 2009, FERC asked the Fourth Circuit to reconsider its decision. Another aspect of FERC regulation is its efforts to encourage competition in the electric power market. In 1996, FERC mandated "open access" to the transmission system. Open access requires transmission owners to make available, at cost-based or market-based fees, available transmission capacity to any generator or power buyer that is or can be connected to the system. The objective is to prevent transmission owners from using their control of the power system from stifling competition. To further facilitate open access, in 1999 a FERC order encouraged the creation of regional transmission organizations (RTO; see Figure 4 ). RTOs take over operation of the transmission network in a region or large state, although utilities continue to own their systems. RTO's ensure open access to the grid, coordinate transmission planning, and establish mechanisms to pay for new transmission lines. The one sphere in which FERC's authority covers all entities in the 48 contiguous states is oversight of the reliability of the "bulk power system," including transmission. Before EPACT05, transmission system reliability was subject to voluntary power industry self-regulation, exercised through the North American Electric Reliability Council (NERC). As a voluntary organization NERC could not enforce reliability rules. In reaction to the northeastern blackout of 2003, EPACT05 ordered FERC to designate an official Electric Reliability Organization (ERO) to design and enforce new mandatory reliability standards. In 2006, FERC designated NERC – now reorganized as the North American Electric Reliability Corporation – as the ERO, giving NERC the legal enforcement authority it had lacked. All reliability standards and enforcement actions proposed by NERC must be approved by FERC. NERC has delegated some of its reliability functions to its eight regions ( Figure 3 ). Many analysts have identified a need to expand the national transmission system. For example, the official report on the 2003 northeastern blackout concluded that: As evidenced by the absence of major transmission projects undertaken in North America over the past 10 to 15 years, utilities have found ways to increase the utilization of their existing facilities to meet increasing demands without adding significant high-voltage equipment. Without intervention, this trend is likely to continue. Pushing the system harder will undoubtedly increase reliability challenges…. Special protection schemes may be relied on more to deal with particular challenges, but the system still will be less able to withstand unexpected contingencies. A smaller transmission margin for reliability makes the preservation of system reliability a harder job than it used to be. The system is being operated closer to the edge of reliability than it was just a few years ago. Assuming more transmission capacity is needed, some of the next questions are what types of lines should be built, where should they be constructed, and on what schedule. S. 539 , the Senate Energy Majority Draft," and other transmission policy proposals generally include a federally sponsored planning process, conducted at a regional or interconnection-wide scale and subject to FERC oversight, that would answer these questions. The planning process would include utilities, states, power developers, government agencies, and community representatives. The process would go far beyond current efforts by FERC to encourage transmission planning. In these proposals a primary object of the planning process is typically to identify high priority transmission projects that would be eligible for preferential permitting and financing. "High priority" is usually defined as meeting one or both of two goals: Expanding the grid to reach areas where renewable electricity plants can be built. Resolving grid congestion and reliability problems. The next two parts of the report discuss the following transmission planning issues: The objectives of the planning process. Planning authority. This discussion looks at the objectives of federal transmission planning from three perspectives: renewable energy development; congestion relief and reliability; and alternatives to transmission. Currently the most important source for new renewable electricity generation is wind power, but many of the best wind production areas are in thinly populated areas in the Midwest and northern plains that have limited access to transmission lines. The best region for solar development is the isolated desert southwest. Some planning process proposals, including S. 539 , are explicitly focused on expanding the grid to serve these remote renewable resource areas. In the S. 539 process, the purpose of the plan is to develop transmission lines to serve "National Renewable Energy Zones," and 75% of the generating capacity connected to the lines must be renewable (e.g., wind and solar energy). Other objectives, such as congestion relief, are included in the legislation but are not the primary aims of the bill. There are two basic concepts for expanding the transmission grid to reach remote renewable energy regions. One concept is to plan and construct a continent-spanning ultra-high voltage "overlay" system of AC or DC transmission lines that would be the electrical equivalent of the interstate highway system. This system of "transmission superhighways" would be designed to move large amounts of renewable electricity to customers across the country. No firm plans exist for such a system, but conceptual layouts have been proposed. The second, less ambitious, concept relies on interconnection-wide or regional plans for identifying discrete transmission projects to connect renewable energy zones to load centers. Renewable energy-focused transmission planning could accelerate the development of renewable power. However, some critics argue that such a renewable-centric approach to transmission planning would produce costly facilities. This is because a transmission line built for peak renewable power output would be underutilized much of the time (since the output of wind and solar power vary with the weather and time-of-day). Critics also claim that a renewable-centric planning approach might not adequately meet congestion relief and reliability objectives. Transmission congestion occurs when use of a power line is restricted (for example, to prevent overloading and failure of the line). Utilities and RTOs can work around transmission congestion by using alternative transmission paths or by changing power plant operations, but these steps (which often involve running expensive power plants that would otherwise be less-utilized or idle) can be costly. Studies suggest that the annual costs of transmission congestion range from the hundreds of millions to billions of dollars. The solution for congestion costs 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." Transmission system reliability is defined by NERC has having two aspects: whether a transmission system has enough capacity to continuously meet customer needs, and whether the system has the resiliency to withstand major failures, such as the loss of a key transmission line. As with congestion relief, the solutions to reliability problems do not necessarily involve building new transmission lines. For example, sometimes reliability can be enhanced by building new or expanded substations or by installing certain types of specialized equipment that helps maintain system voltage levels. When new transmission lines are needed for congestion relief or to improve reliability they can be expensive, multi-year projects. An example of a large transmission project for reliability is the 210 mile Trans-Allegheny Interstate Line (TrAIL) from southwestern Pennsylvania through West Virginia to Northern Virginia. This $820 million project involves construction of 210 miles of new transmission lines and substations. According to NERC, the project is needed to "relieve anticipated overloads and voltage problems in the Washington, DC area, including anticipated overloads expected in 2011." If the project stays on schedule, it will take five years from the start of planning to operation. One perspective on renewable development, reliability, and other power system goals is that new transmission is central to meeting these objectives. This point of view is illustrated by FERC testimony to Congress in early 2009: We need a National policy commitment to develop the extra-high voltage (EHV) transmission infrastructure to bring renewable energy from remote areas where it is produced most efficiently into our large metropolitan areas where most of this Nation's power is consumed. Certainly, developing local renewable energy and distributed resources is also important as we expand our capacity to generate clean power, but that is a separate issue from, and is not a substitute for, developing the EHV transmission infrastructure…. An alternative viewpoint is that a transmission-focused planning process may, almost by definition, not give enough emphasis to non-transmission approaches to meeting energy needs. This view is illustrated by the reaction of the New York and New England RTOs to the "Joint Coordinated System Plan," which outlines massive transmission construction to bring wind power from the Dakotas to the East Coast. In the view of the northeastern RTOs, the plan was badly flawed because it did not consider other options, including eastern wind plants, demand response, and building shorter transmission lines to renewable power in Canada. Another example of this perspective is an "infrastructure vision" report of the National Governors' Association, which emphasizes decentralized and technological solutions to power system issues rather than big transmission projects. Another option that may require less construction of interstate transmission lines is reliance on conventional coal, nuclear, and natural gas-fired generation. Unlike location constrained resources such as wind and solar power (i.e., they must be built where the energy source is found), coal, gas, and nuclear plants can be built near load centers and existing transmission networks. Transmission upgrades may still be necessary and expensive, especially for nuclear plants which tend to be very large, but these may still be less intrusive than long-distance interstate lines for moving renewable power from remote locations to customers. This alternative perspective, which gives equal weight to non-transmission solutions to power system needs, implies that the proposed interconnection-wide transmission plans actually should be combined electricity supply and demand plans. In this case the planning process becomes much broader and possibly much more complicated than transmission planning. Many transmission planning efforts are now underway at a regional level. These exercises are voluntary and generally cover at most a few states. The states are not obligated to permit any new projects that emerge from the plans. Proposals such as S. 539 and the Senate Energy Majority Draft would mandate unprecedented Eastern and Western Interconnection-wide transmission plans. These and other proposals would also establish new, federally authorized planning authorities that would be responsible for coordinating development of the plans and submitting the plans to FERC for review and approval. The proposals envision the interconnection-wide planning processes making use of the regional efforts, but it seems inevitable that the regional plans would lose influence in comparison to the federally-mandated interconnection-wide plans. The proposed planning authorities and their interconnection-wide plans would differ from the regional initiatives in two critical respects: First is the assumption that optimal planning for new high voltage transmission lines should be based on a view of an entire interconnection, not a narrower regional focus. In essence the existing "bottom-up" and voluntary planning approach would be replaced with an arguably more "top-down," integrated, and binding approach. Second, new transmission projects included in the interconnection-wide plans would include preferential permitting and financing. In particular, the projects would have a federal permitting option that would bypass state regulation. Proponents of interconnection-wide planning believe that it makes no more sense to plan the grid piecemeal than it would have been to build the interstate highway system without a national plan. However, centralized transmission planning under the aegis of FERC may be objectionable to the states, which would lose influence over power system planning. In summary, transmission planning issues for Congress include: What should be the objectives of the planning process ? For example, planning could be focused on renewable power development or on broader objectives, such as congestion relief and reliability enhancement. What should be the scope of authority of the planning entities ? Federal transmission planning could be run by interconnection-wide centralized authorities (the top-down approach) or be conducted primarily at a regional level (the bottom-up approach), or as a hybrid. What is the appropriate scope of the planning process ? Should the planning process extend beyond transmission planning narrowly defined to a include a broader array of solutions to power system issues, such as demand response, distributed power, or conventional power plant construction. Could preferential treatment tied to the planning process distort transmission investment ? The planning proposals typically make available certain benefits, such as a federal permitting option, to projects included in the plan. These benefits could lead developers to add unnecessary features and costs to qualify proposals to meet plan criteria (e.g., proposing only high voltage lines if the plans have a minimum voltage threshold). Avoiding these distortions will require careful oversight or, arguably, limiting the benefits associated with the plan (for example, putting all new power lines or none, whether or not they are in the plan, under federal government permitting authority). Is the scheme for managing and financing the planning process realistic? The planning process will need realistic schedules and budgets, both to develop the plans and for executive branch review. A concern is that a prolonged and contentious interconnection-wide planning process could delay transmission projects that would otherwise evolve out of smaller scale planning efforts. As discussed above, interstate transmission projects require siting permits from every state the line will traverse. If any state disapproves a project, it will at best be delayed for rerouting or at worst canceled. A contrast is often drawn between multi-state transmission permitting and FERC's sole permitting authority for natural gas transmission lines and liquefied natural gas terminals. Some observers believe that multi-state permitting has inhibited the development of new long distance transmission lines. According to FERC, between 2000 and mid-2007 only 14 interstate high voltage transmission lines, with a total length of 668 miles, have been built. This compares with current proposals to build many thousands of miles of new long-distance transmission. FERC's backstop siting authority (discussed above) was enacted to help expedite permitting. But this authority applies only in limited circumstances and areas, and in practice has never been used. Proposals for transmission reform, such as S. 539 and the Senate Energy Majority Draft, would expand FERC's siting authority. For example, S. 539 would still require a developer to initially pursue state permitting, but if a project "has failed to make reasonable progress in siting the facility based on timelines in the plan" the developer can take the project to FERC. The Senate Energy Majority Draft allows "National High Priority Transmission Projects" identified through a federally-sanctioned planning process to go directly to FERC for approval. A common element in these and some other proposals is that projects eligible for FERC permitting must be included in an interconnection-wide plan. Other projects would remain under state purview. Another approach is to simply give FERC permitting authority over all transmission projects, or at least all high voltage transmission projects. An alternative view is that the current permitting process is not broken and at most needs tweaking. The National Association of Regulatory Utility Commissioners (NARUC), an association of state PUCs, passed a resolution in March 2009 urging "Congress and the White House to move cautiously, if at all, in expanding federal jurisdiction over siting and planning of new transmission infrastructure." According to the NARUC president, "Siting and planning transmission is one of the most difficult yet essential jobs of a State regulator, and no federal agency will have the resources or local knowledge on its own to balance all the considerations that must be taken into account." Where FERC does have siting authority, as with natural gas pipelines and LNG terminals, it has sometimes been intensely criticized by state officials and members of Congress who believe FERC has made poor decisions. However, this may simply argue for giving an agency other than FERC any new federal transmission siting authority. In summary, in considering how much additional transmission siting authority, if any, the federal government should assume, Congress may want to consider the following policy questions: Should the grid be viewed from a national perspective? The grid began as local systems regulated by states. Now that the system has evolved into three separate synchronized interconnections, each spanning (other than ERCOT) many states, a question is whether a state-by-state view of the grid or a national perspective is most appropriate. The question is made pressing by proposals to make more use of the grid for long distance power transactions, such as for renewable energy. The issue does not necessarily have a single answer; for example, a state perspective may be appropriate for "routine" projects, while a national perspective could be applied to high priority interstate projects (however "routine" and "high-priority" are defined). Can transmission system reliability be separated from authority over new transmission construction? In EPACT05 Congress put the reliability of the grid under federal jurisdiction. By extension, should the federal government have control over the permitting of transmission lines aimed at enhancing system reliability (which could mean almost any new line in an interconnected power system)? As discussed in more detail later in the report, failures at one point in a synchronized system can spread widely, and these failures (in a worst case, blackouts) do not respect state lines. How important is it to accelerate the construction of new transmission lines? One criticism of current regulation is that it takes many years to permit a project. Expanding federal authority over permitting is viewed as a means of accelerating the process. The underlying assumption is that it is indeed important to build transmission lines faster. For example, if national priorities include quickly putting low carbon generating plants on line to reduce greenhouse gas emissions and to speed the introduction of electric vehicles, then a rapid permitting process may be critical. But with other assumptions about the shape of the future power market, acceleration of the permitting process may be less pressing, and therefore expanding federal permitting authority less important. (An example of such an alternative assumption would be more reliance on large nuclear or coal plants built near existing transmission networks, rather than many small wind plants in remote locations.) Management of the permitting process . Whether FERC or another agency is assigned a federal permitting role, it will need the resources to expeditiously process applications. Otherwise the whole point of giving more permitting power to the federal government would largely be obviated. Between 1977 and 1998, real dollar investment in the transmission system by investor-owned utilities generally declined, from about $4 billion annually to a trough of $2.1 billion annually by 1997 and 1998 (constant 2000 dollars; see Figure 5 , below). Although spending picked up to $4.2 billion by 2004 (constant 2000 dollars), Congress was still sufficiently concerned about transmission investment to include construction incentives in EPACT05 (in the form of more profitable rates for projects that met certain criteria). Some critics claim that FERC has awarded incentives to projects that did not need special rates. Nonetheless and for whatever reason, transmission investment has continued to grow since 2004, reaching a 30-year high of $6.5 billion (constant 2000 dollars) in 2007. More growth in annual investment may be needed. Estimates of the cost of expanding the transmission grid to increase renewable power delivery and other goals run into the tens of billions of dollars. For example (all figures in nominal dollars): The estimated transmission cost of the Joint Coordinated System Plan to bring Great Plains wind power to the East Coast range from $49 to $80 billion. A DOE study of expanding the use of wind power estimated transmission expansion costs of $60 billion by 2030. A study of transmission funding requirements for all purposes for the period 2010 to 2030 estimated total costs of about $300 billion. There are two major transmission financing policy issues: early financing for new projects, and how to allocate the costs of interstate projects to customers. Each issue is discussed below. The early funding or "chicken and egg" problem particularly applies to renewable power. Renewable power plant developers may have difficulty getting funding because the transmission to bring their power output to market is not in place, while the transmission projects cannot get loans because the generation that would justify construction of the new lines has not been built. This early funding issue is exacerbated by the typical development pattern for many renewable energy projects. The projects are built in phases over several years. However, it is not economic to build a transmission line in phases; the line must be built at once for the maximum anticipated capacity even if the full load will not be developed until years after the line is first put into operation. The FERC, RTOs, and the states have been developing regulatory solutions for the early funding problem, but there is no standard or widely used approach. The Western Governors' Association has proposed that the federal government and the federal power marketing administrations step in with direct funding and other incentives that will allow transmission developers to "supersize" planned lines to meet potential future generation, not just the renewable power expected to be built in the near term. Note that although the early funding issue and cost allocation issue (discussed immediately below) are currently viewed as largely problems for renewable energy development, they could also apply to new coal plants with carbon capture and sequestration (CCS) equipment. This is because one option for siting coal plants with CCS is to place them in remote locations where captured CO 2 can be stored or used for enhanced oil recovery. In this scenario, a long-term build-out of new coal capacity may face transmission funding issues similar to that of renewable development in remote areas. Perhaps the most contentious transmission financing issue is cost allocation for new interstate transmission lines – that is, deciding which customers pay how much of the cost of building and operating a new transmission line that crosses several states. DOE's Electricity Advisory Committee concluded that "cost allocation is the single largest impediment to any transmission development." The committee also noted that "cost allocation disagreements can also impact transmission siting; therefore, resolution of these two issues must be linked." This is an important point, and most current transmission proposals fold the cost allocation issue into the transmission planning process . For example, S. 539 and the Senate Energy Majority Draft both require the regional planning authorities to submit cost allocation proposals along with their transmission plans . If cost allocation proposals are not submitted or are rejected by FERC , then FERC can order its own cost-allocation scheme. Another suggest ion is to simply allocate the costs of new projects that are part of an interconnection-wide plan to all customers in the interconnection (sometimes referred to as "socializing" costs) . For example, every ratepayer in the Eastern Interconnection would help pay for a line from Maine to New Hampshire . The idea is that in a synchronized grid all ratepayers benefit to some extent from all transmission system enhancements . A related concept is that new transmission for renewable power yields environmental benefits to all ratepayers . And whether explicit or implicit, the notion is also that interconnection-wide cost sharing makes transmission projects more palatable by minimizing the rate impact on an y one group of customer s , and accelerates project approvals by substituting a simple cost allocation rule for lengthy rate hearings. A criticism of interconnection-wide cost allocation is that cost responsibility arguably becomes more diffuse and the incentives for cost discipline decline . A nother criticism is that especially favorable funding for transmission could bias policymakers and investors away from other solutions to electric market problems , such as demand response or local renewable power . Other cost allocation approaches are being explored across the country but no approach is standard or even widely used . Transmission financing issues for Congress include: Should the federal government help pay for new transmission lines? Some proposals call for the federal government, possibly acting through the federal utilities, to help pay for new transmission lines, pay for expanding projects to meet future needs, or actually build new transmission. How far should the federal government go into financing the expansion of the transmission grid? Should the Congress establish a national cost allocation ru le for new transmission projects ? I n order to expedite transmission development, the federal government may need to implement standard, generally applicable cost allocation methodologies . An approach included in several proposals would require all ratepayers in an interconnection to pay for new projects anywhere in the interconnection. The notion is that in an interconnected system all customers benefit to some degree from enhancements to the grid, but a preferential cost allocation mechanism for transmission may bias investment away from other alternatives. Distinct from proposals for expanding the grid are proposals for modernizing the transmission system. Modernization proposals are often made under the rubric of the "smart grid," a term that encompasses technologies that range from advanced meters in homes to advanced software in transmission control centers. There is no standard definition of the smart grid. For the purposes of this report, the smart grid can be viewed as a suite of technologies that give the grid the characteristics of a computer network, in which information and control flows between and is shared by individual customers and utility control centers. The technologies will allow customers and the utility to better manage electricity demand, and will include self-monitoring and automatic protection schemes to improve the reliability of the system. Although grid technology has not been static over the years, the smart grid concept would implement capabilities well beyond any existing electric power system. The smart grid primarily involves the development of software and small-scale technology (e.g., smart meters for homes and businesses that would interface with grid controls) rather than construction of new transmission lines. However, full implementation of the smart grid also requires new electricity rate structures, especially for residential customers, and as discussed below, this and other aspects of the smart grid may prove contentious. The following discussion is divided into three sections: A more detailed description of smart grid functions. A summary of current federal support for the smart grid. Smart grid cost and rate issues. Because the smart grid involves integrated operation of the power system from the home to the power plant, this discussion will go beyond the transmission system to cover the distribution network. Within this integrated system the smart grid has two scopes. One scope is transmission monitoring and reliability , and includes the following capabilities: Real-time monitoring of grid conditions; Improved automated diagnosis of grid disturbances, and better aids for the operators who must respond to grid problems; Automated responses to grid failures that will isolate disturbed zones and prevent or limit cascading blackouts that can spread over wide areas. "Plug and play" ability to connect new generating plants to the grid, reducing the need for time consuming interconnection studies and physical upgrades to the grid. Enhanced ability to manage large amounts of wind and solar power. Some (though not all) analysts believe deployment of the smart grid is essential to the large scale use of wind and solar energy. The second scope is consumer energy management . An essential part of this scope is the installation of smart meters (also referred to as advanced metering infrastructure or AMI). These meters and other technology would implement the following capabilities: At a minimum, the ability to signal homeowners and businesses that power is expensive and/or in tight supply. This can be done, for instance, via special indicators or displayed through web browsers or other personal computer software. The expectation is that the customer will respond by reducing its power demand. The next level of implementation would allow the utility to automatically reduce the customer's electricity consumption when power is expensive or scarce. This would be managed through links between the smart meter and the customer's equipment or appliances. The smart grid system would automatically detect distribution line failures, identity the specific failed equipment, and help determine the optimal plan for dispatching repair crews to restore service. The smart grid would automatically attempt to isolate failures and prevent local blackouts from spreading. The smart grid would make it easier to install distributed generation, such as rooftop solar panels, and to implement "net metering," a ratemaking approach that allows operators of distributed generators to sell surplus power to utilities. The smart grid would also manage the connection of millions of plug-in hybrid electric vehicles into the power system. The transmission and customer energy management scopes described above are integrated in the full smart grid concept. For example, if the transmission system becomes overloaded, the smart grid could respond at the distribution system level by automatically reducing customer demand. The Energy Independence and Security Act of 2007 (EISA) articulated a national policy to modernize the power system with smart grid technology, and authorized research and development programs, funding for demonstration projects, and matching funds for investments in smart grid technologies. These and related programs received $4.5 billion in funding in the 2009 stimulus bill. In addition, the Emergency Economic Stabilization Act of 2008 shortens the depreciation period for smart meters and other smart grid equipment from 20 years to 10 years (which increases each year's depreciation tax deduction for the equipment). The value of this tax change to the power industry is reportedly $915 million over 10 years. EISA assigned to the National Institute of Standards and Technology (NIST), a unit of the Department of Commerce, the lead in developing interoperability standards for smart grid equipment. This is a critical role, because it is essential that the smart grid technologies installed by one utility be able to communicate with those of another and with control centers. This work has been lagging. DOE, FERC, and NIST have reportedly begun interagency efforts to accelerate development of the standards, and NIST has created and filled a new National Coordinator on Smart Grid Interoperability to push the effort forward. Pursuant to EISA, once NIST's work is sufficiently advanced FERC is to establish, through a rulemaking, national smart grid interoperability standards. On March 19, 2009, FERC published for comment a proposed smart grid policy statement and action plan, intended "to articulate its policies and near-term priorities to help achieve the modernization of the Nation's electric transmission system, one aspect of which is 'Smart Grid' development." According to FERC, the statement focuses on "Prioritizing the development of key standards for interoperability of Smart Grid devices and systems; [and] a proposed rate policy for the interim before the standards are developed." Comments are due back to FERC in May 2009. Advocates believe the potential benefits from the smart grid are enormous. For example, the Electric Power Research Institute, a research arm of the power industry, estimated that implementation of the smart grid and related technologies could increase annual gross domestic product by 10% annually by 2020. The Galvin Institute, a proponent of grid modernization, claims that among other benefits a modernized grid would "reduce the need for massive [electric power] infrastructure investments by between $46 and $117 billion over the next 20 years." Nonetheless, because the smart grid concept and technology are still evolving and there are no operational systems to evaluate, the benefits and costs are uncertain. According to Xcel Energy, which is developing a large smart grid demonstration in Boulder, Colorado: Everybody says they have technology that can be applied to this project. How much really exists and how much of it still needs to be developed? Right now we think 60 percent of the data architecture is already there, while the other 40 percent will probably need tweaking. Then we will determine what is or isn't scalable [to larger installations]…. As an industry we haven't really demonstrated the benefit of combining all these technologies. Until we do, there will be skepticism. That's the real value of this project. It does seem likely that costs of rolling out the smart grid will be high. Just installing the metering equipment is expensive. Pacific Gas and Electric, a large utility in California, plans to install 10.3 million smart meters by 2012 at a cost of $1.7 billion. Estimates of installing smart meters nationwide are in the $40 billion to $50 billion range. Some utilities are incurring costs to replace smart meters installed just a few years ago with newer models, indicating both the rapidity with which the technology is changing and the absence of firm standards. Some consumer advocacy groups have expressed concern that utilities and regulators are pressing ahead with smart grid investments, especially the installation of smart meters, without knowing whether the benefits will justify the costs. A claim from critics is that some utilities are enthusiastic about immediate spending on smart grid technology because once the investment is reflected in the company's rate base it will result in higher profits. Another consumer advocate concern relates to the change in utility rate structures that will likely accompany implementation of the smart grid. As discussed above, one function of the smart grid is to signal consumers when electricity is expensive or in short supply. The question is whether the consumer will act on this information by reducing power usage. In typical utility rate structures, consumers pay a rate for power that reflects annual average costs. The consumer's rate does not vary from day to day or hour to hour. But if the consumer's rates do not reflect real-time power costs, then the consumer has no immediate economic incentive to respond to utility price signals. For this reason, the smart grid concept is accompanied by new rate structures, such as "dynamic" pricing in which charges to consumers reflect actual market prices (or marginal production costs) for electricity. As put by the President of NARUC, "You can't have a smart grid and dumb rates. We have been used to – for over 100 years – rates that are the same all day, every day. That's not the way electricity is produced." Dynamic rates mean that the price of power would be much higher in the afternoon of a hot summer day when demand peaks and the most expensive generating plants are on-line, than in evening of the same day or on the weekend. With dynamic rates, consumers would have an incentive to respond to utility price signals by reducing demand by turning down the air conditioner or delaying the laundry. If the capability exists, the consumer might sign-up for direct utility control of appliances. In theory, this demand response scenario has consumer benefits in the short-term (less use of expensive fuels and inefficient peaking power plants) and long-term (less need for new power plants to meet growth in peak load and reduced air emissions). However, in the view of critics these benefits are much more nebulous than the certainty that under dynamic rates consumers will face higher power costs. The critics also argue that lower income people may not have the schedule flexibility to shift cooking and laundry to less expensive hours of the day; however, there is some evidence that lower income people will actually be more responsive to price signals than higher-income households. Another argument is that the elderly or ill may face the choice of paying higher power bills or risking their health by turning down the air conditioning or electric heat. It is also unclear how much smart grid technology and cost needs to be incurred to get most of the available demand response benefits. For example, a dynamic pricing pilot program in Chicago used minimal technology (e.g., price notifications by phone) but still produced substantial reductions in peak demand. Some studies suggest that the more sophisticated the technology used in a demand response pilot program the greater the savings, but the optimal balance between technology cost and benefits is still unclear. Industrial customers will reportedly recommend adding a cost-benefit test for smart grid investments to FERC's final policy. Congress has already put in place federal programs to help develop the smart grid. Continuing policy issues for Congress include: Program oversight . The American Recovery and Reinvestment Act provided funding for previously authorized smart grid programs, including one key effort – development of interoperability standards by the National Institute for Standards and Technology – that has been lagging. Congress may want to monitor how these programs progress. Smart grid cost/benefit oversight . The balance of costs and benefits that the smart grid will produce for customers has been hotly debated. Many smart grid investment decisions will be made by state utility commissions. However, other investments and rate decisions will involve transmission systems and RTOs under FERC jurisdiction, or will relate to bulk power system reliability standards that are under federal jurisdiction throughout the 48 contiguous states. (This federal role will be even larger if an interconnection-wide planning process under federal supervision is made into law, because these plans will inevitably have to deal with grid modernization.) These responsibilities create ample room for Congressional oversight of the actual costs, benefits, and performance of smart grid investments. This section of the report will discuss the reliability of the transmission system from three perspectives: Problems in evaluating the current reliability condition of the grid; Modernization and reliability; Reliability and changes in the energy market. As discussed earlier, power system reliability has two dimensions: adequate capacity to consistently meet customer demands, and the ability to withstand disturbances such as failed transmission lines or power plants. It is currently impossible to judge the reliability of the national transmission system by either criteria because the data does not exist to make an assessment. According to the Energy Information Administration, "The Government does not have the [analytical tools] and data necessary to verify that existing and planned transmission capability is adequate to keep the lights on." This is not to say that transmission risks cannot be evaluated for specific parts of the transmission grid. These studies are performed routinely. What is missing is uniform, nationwide data on the frequency and causes of transmission outages that can be used to determine whether the overall performance of the system is improving or deteriorating, and what factors are driving these changes. A contrast can be drawn between the data available on generating plant reliability and operations versus that for the transmission system. For decades NERC has managed a highly detailed collection of data on the reliability of power plants, and other relevant data are available from EIA and the Environmental Protection Agency (EPA). In contrast to the wealth of information on power plant operations, minimal data has been collected by government or industry on transmission system reliability. The most significant existing source is information on major transmission outages collected on DOE's Form OE-417, which is compiled by EIA and NERC. A recent Carnegie Mellon University study of this data was able to conclude "that the frequency of large blackouts in the United States has not decreased over time," but could not determine why this is because of the lack of detailed information. This information gap leaves policy makers without a full understanding of transmission reliability risks or able to determine the best steps for improving reliability. To help fill this gap, NERC has launched a new Transmission Availability Data System (TADS) to provide the data "needed to support decisions with respect to improving reliability and performance." TADS reporting, which began in 2008, is mandatory for all high voltage transmission owners in the 48 contiguous states. NERC is still developing metrics to display and analyze the data in a meaningful way, and believes it may take up to five years before the data can be used to analyze trends." It may also take several years to judge whether TADS is collecting all the necessary data or if it needs to be revised or expanded. Pursuant to EPACT05, NERC and FERC have been promulgating and enforcing new, mandatory, power system reliability standards. Until a useful data collection and analysis system are in place, it will be difficult to judge whether these standards and other actions are actually improving the reliability of the transmission system. The transmission grid is sometimes portrayed as a decrepit victim of underinvestment; one recent press report described the grid as "frayed" like grandmother's quilt. There is, in fact, no clear evidence that the transmission grid is physically deteriorating. But this does not mean that the grid is universally well managed or is as up-to-date as it should be. The grid probably needs to be modernized to improve reliability. This is not necessarily the same as installing the full smart grid discussed above. The smart grid is an ambitious concept for integrated operation of the power system. The full smart grid is not needed to use a subset of "intelligent" technologies to improve the reliability of the transmission system. The need for modernization is illustrated by the causes of the August 14, 2003 northeastern blackout. The blackout, which interrupted service to 50 million people in the United States and Canada for up to a week, started with transmission line trips (automatic shutdowns) and resulting overloads on the FirstEnergy utility system in Ohio. The blackout was not the result of insufficient transmission capacity or deteriorated equipment. As identified by the joint United States – Canada investigating task force, the blackout was caused by factors such as the following: FirstEnergy and the NERC reliability region within which it operated did not understand the strengths and weaknesses of the FE system. FirstEnergy consequently operated its system at dangerously low voltages. FirstEnergy's system operators lacked the "situational awareness" that would have revealed the blackout risk as lines began to trip. The operators were blinded by monitoring and computer system breakdowns, combined with training and procedural deficiencies which led to those failures going undetected until it was too late. FirstEnergy did not adequately trim the trees under its transmission lines. As a result, three key transmission lines tripped when they sagged (as the lines are designed to do as they heat up with use) and came in contact with trees. The Midwest Independent System Operator (MISO), the RTO that manages the grid in FirstEnergy's service area, did not have the real-time information necessary to assess the situation on FirstEnergy system and provide direction to the utility. Once the FirstEnergy system collapsed, overloads and power swings spread out across the Northeast, causing a cascading series of transmission line and power plant trips that left tens of millions of people without electricity. One reason the outage spread over such a wide area was because many power plants were equipped with unnecessarily sensitive automatic protection mechanisms that tripped the units prematurely. The speed of the cascade allowed almost no time for manual intervention. The elapsed time from the start of the cascade (i.e., when failures began to radiate out from the collapsed FirstEnergy grid) to its full extent was about seven minutes. In summary, as discussed in the official blackout report and other analyses, the 2003 blackout was not caused by a utility having built too few transmission lines, or because power line towers and substations were falling apart. The blackout was apparently due to such factors as malfunctioning if not obsolete computer and monitoring systems, human errors that compounded the equipment failures, mis-calibrated automatic protection systems on power plants, and FirstEnergy's failure to adequately trim trees. One part of a strategy for preventing repetitions of the 2003 blackout is to modernize the grid from a reliability standpoint. This will not always entail building more power lines. One analysis written shortly after the 2003 blackout concluded that "The common contributing factor to the recent blackout, based on investigations to date, is confusion-communication breakdowns both technical and human….[W]e maintain that much can be solved by updating technology and by changing procedures followed within the operating companies. This fix is cheaper and much more immediate than huge investment in new power lines." Modernization involves installing new technology into the existing system so that: Operators have accurate real time data on the status of the power network. Operators also have advanced simulation tools to assist them in evaluating incipient problems and formulating responses. The grid can automatically respond to certain types of problems. This is sometimes referred to as the "self-healing" grid. Some of these technologies are being implemented. An example is two new control centers installed by the Western Electricity Coordinating Council (WECC), the NERC reliability region covering the western states. According to WECC: These centers have a view of the entire Western Interconnection. They can see every tower, line, and transmission element over 100 kV. They will be able to see the entire Western bulk system, identify its status, and respond to outages…. they have the tools now to see and head off problems as they develop and they have the authority to contact grid operators and direct them to take certain actions to protect the interconnection as a whole. On the other hand, the control centers will not be able to remotely actuate equipment such as transmission line circuit breakers. As is typically the case, a crew will still need to be sent to manually reset the equipment, so the control system is still several steps away from automated, "self-healing" responses to grid problems. In summary, depending on the case, building new transmission lines is not the only or best approach to enhancing power system reliability. In some instances investments in new monitoring and control technology may be the better solution. The transmission grid was built for a specific business and technical model: power plants would use transmission lines to move electricity to distribution networks for delivery to customers. The power plants were large "central station" facilities using fossil, nuclear, or hydroelectric energy sources, and were designed to run as-needed, when-needed. The power flow was one-way, from the power plant to the customer. This model is already changing: Variable Renewable Generation : One factor is the introduction of large amounts of wind power onto the grid. Unlike conventional power plants, the output of wind plants varies with the weather. Power systems were not designed to handle this kind of power supply variability and uncertainty. Total wind capacity is now large enough in some parts of the country, such as the ERCOT Interconnection (covering most of Texas), to be an important influence on how the power system is operated. The variable output of wind plants can be dealt with in a variety of ways, including improved wind forecasting, adding electricity storage and/or quick start natural gas-fired peaking plants to the grid, and drawing wind power from a wide geographic area to smooth out local changes in wind speed. However, these capabilities will have to be added rapidly to the grid if, as some expect, the use of wind power grows quickly. Demand Response : Another factor is the increasing use of demand response programs, in which large commercial and industrial customers agree to interruptible power service in return for lower rates. For example, in the Florida and northeastern NERC reliability regions, significant parts of peak demand (respectively, 6% and 4%) can now be met by customers reducing output rather than by operating power plants. Demand response reverses the conventional power system operating model: instead of changing power plant output to match demand, demand is reduced to match the available supply of electricity. An issue is how much real time information and control (also referred to as "visibility") system operators will have over industrial and commercial facilities that have signed on to demand response programs. Another issue is whether industrial and commercial loads will become less willing to participate in demand response programs if cycling of their operations becomes routine rather than a rarity. These issue are clearly not insuperable, given the success to date with these programs, but they may have to be dealt with on a much larger scale in the future. Distributed Generation : A third factor is the use of distributed generation (local power generation controlled by the customer), which can vary from rooftop solar units to large industrial cogeneration facilities. A distributed generation facility will sometimes take power off the grid. Other times it will have excess power to sell to the utility, reversing the normal flow of electricity. Buying power from customers is inconsistent with standard utility technology, accounting, and rates. This is especially true when the generation is hooked up to the distribution system, which was designed to make final delivery of power to customers, not receive power from the customer. Distributed generation poses control and visibility issues similar to demand response. Wide use of distributed generation will also pose institutional issues. One is that generation connected to the distribution system (in contrast to the transmission system) is not covered by NERC reliability standards. Second, realizing the full potential of distributed generation may require the states to implement net metering laws that allow owners to sell surplus power back to the grid. As with demand response, these issues are neither new or insuperable, although the scale may increase greatly. On the other hand, plug-in hybrid electric vehicles would pose a truly unique challenge, since their batteries would be a load on the power system at times and a source of stored electricity at other times. System operators would have to be able to decide on a daily or hourly basis how much they can rely on electricity storage scattered over thousands or millions of batteries, none of which are owned by the utility. Integrating non-traditional resources into the grid will be a reliability challenge. This is not because these resources are new. For example, distributed generation in the form of industrial cogeneration has been increasingly common since Congress passed the Public Utility Regulatory Policies Act ( P.L. 95-617 ) in 1978. The issue is integration of much larger amounts of these resources into a power system primarily designed around a different model. For example, NERC has concluded that "Demand response will become a critical resource for maintaining system reliability over the next ten years." In 2008 NERC reported proposals to connect 145,000 MW of new wind capacity to the transmission grid by 2017, equivalent to about 14% of current total generating capacity in the United States. Even if all of the proposed wind capacity is not built, many more wind plants will probably be connected to the grid. The most recent EIA long-term forecast, which assumes no changes to current laws, estimates that wind generation will increase by 300% by 2030. A characteristic that variable renewable generation, demand response, and distributed generation have in common is potentially less predictability (in respect to availability and level of service) than traditional resources. Improved real time monitoring, analysis, and control of the grid could help compensate for this issue. Another system-wide response may be to collapse the 130 balancing authorities that currently operate the transmission system into a smaller number that could call on a wider range of resources for managing electricity supply and demand. In response to the 2003 northeastern blackout, Congress gave FERC authority over the reliability of the bulk power system in the 48 contiguous states. Continuing policy issues include: Transmission system information gap . There is currently no good source of data that measures the reliability of the transmission grid or allows trend analysis. NERC is developing a new process for collecting and analyzing transmission reliability data. The progress of this effort may be of interest to Congress, because without good data it will be difficult to judge whether FERC's new reliability standards and other actions are actually improving the reliability of the transmission system. Modernization and reliability . The implementation of modernized technology and management may be an alternative, or necessary supplement, to building new transmission lines to improve the reliability of the grid. In considering new spending and planning approaches for the transmission system, Congress may wish to ensure that the right balance is struck between modernization and new construction. Reliability and the changing power market. The power system is changing from a model based on central station power plants to a more diverse range of resources, including variable renewable power, demand response, and distributed generation. Congress may want to exercise oversight to ensure that FERC and NERC are developing reliability standards for a changing grid. Also, certain kinds of distributed generation are not covered by federal reliability authority, a situation Congress may want to revisit in the future. This concluding section summarizes policy issues of potential interest to Congress. S. 539 and other proposals call for a much larger federal role in transmission planning, and suggest that planning should be conducted on a larger geographic scope than in the past. Policy issues include: What should be the objectives of the planning process ? For example, planning could be focused on renewable power development or on broader objectives, such as congestion relief and reliability enhancement. What should be the scope of a uthority of the planning entities . Federal transmission planning could be run by interconnection-wide centralized authorities (the top-down approach) or be conducted primarily at a regional level (the bottom-up approach), or as a hybrid. What is the appropriate scope of the planning process ? Should the planning process extend beyond transmission planning narrowly defined to a include a broader array of solutions to power system issues, such as demand response, distributed power, or conventional power plant construction. Could preferential treatment tied to the planning process distort transmission investment? The planning proposals typically make available certain benefits, such as a federal permitting option, to projects included in the plan. These benefits could lead developers to add unnecessary features and costs to qualify proposals to meet plan criteria. Avoiding these distortions will require careful oversight or, arguably, limiting the benefits associated with the plan (for example, putting all new power lines or none, whether or not they are in the plan, under federal government permitting authority). Is the scheme for managing and financing t he planning process realistic? An effective planning process will need realistic schedules and sufficient resources to timely develop and update transmission plans. Transmission line permitting is primarily under the control of the states. Current proposals would extend federal authority, perhaps by completing displacing the state role. Issues include: Should the grid be viewed from a national perspective? The grid evolved as local systems serving limited utility service areas. Now that the system has evolved into three separate synchronized interconnections, each spanning (other than ERCOT) many states. The question is whether a state-by-state or national view of the grid is most appropriate. The issue does not necessarily have a single answer; for example, a state perspective may be appropriate for "routine" projects, while a national perspective could be applied to "national interest" projects. Can transmission s ystem reliability be separated from authority over new transmission construction? In EPACT05 Congress put the reliability of the grid under federal jurisdiction. By extension, should the federal government have control over the permitting of transmission lines aimed at enhancing system reliability (which could mean almost any new line in an interconnected power systems)? How important is it to accelerate the construction of new transmission lines? One criticism of the current regulatory regime is that it takes many years to move a transmission project through the permitting steps. Expanding federal authority over permitting is viewed as a means of accelerating the process. The question is how important is it to quickly build transmission lines to meet reliability, environmental, and other objectives. Management of the permitting process . If FERC or some other agency is assigned a federal permitting role, it will need the resources to expeditiously process applications. Otherwise the whole point of giving more permitting power to the federal government would largely be obviated. Building new transmission lines could cost billions of dollars. Even more contentious than how to fund these projects is the question of how the costs of interstate transmission lines should be allocated to utility customers. Issues include: Should the federal government help pay for new transmission lines? Some proposals call for the federal government, possibly acting through the federal utilities, to help pay for new transmission lines, pay for expanding projects to meet future needs, or actually build new transmission. How far should the federal government go into financing the expansion of the transmission grid? Should the Congress establish a national cost allocation rule for new transmission projects ? An approach included in several proposals would require all ratepayers in an interconnection to pay for new projects anywhere in the interconnection. The notion is that in a interconnected grid all customers benefit to some degree from enhancements to the system, but a preferential cost allocation mechanism for transmission may bias investment away from other alternatives. The smart grid is a concept for modernizing the grid with information technology and intelligent features. Congress has already established and funded programs for encouraging development of the smart grid. Policy issues include: Program oversight . The American Recovery and Reinvestment Act provided funding for previously authorized smart grid programs, including one key effort – development of interoperability standards by the National Institute for Standards and Technology – that has been lagging. Congress may want to monitor how these programs progress. Smart grid cost/benefit oversight . The balance of costs and benefits that the smart grid will produce for customers has been hotly debated. Many smart grid investment decisions will be made by state utility commissions. However, other investments and rate decisions will be under FERC jurisdiction, so there is ample room for Congressional oversight of the actual costs, benefits, and performance of smart grid investments. In response to the 2003 northeastern blackout, Congress gave FERC authority over the reliability of the bulk power system in the 48 contiguous states. Continuing policy issues include: Transmission system information gap . There is no good source of data that measures the reliability of the transmission grid or allows trend analysis. NERC is developing a new process for collecting and analyzing transmission reliability data. The progress of this effort may be of interest to Congress, because without good data it will be difficult to judge whether FERC's new reliability standards and other actions are actually improving the reliability of the transmission system. Modernization and reliability . The implementation of modernized technology and management may be an alternative, or necessary supplement, to building new transmission lines to improve the reliability of the grid. In considering new spending and planning approaches for the transmission system, Congress may wish to ensure that the right balance is struck between modernization and new construction. Reliability and the changing power market. The power system is changing from a model based on central station power plants to a more diverse range of resources, including variable renewable power, demand response, and distributed generation. Congress may wish to exercise oversight to ensure that FERC and NERC are developing reliability standards for a changing grid. Also, certain kinds of distributed generation are not covered by federal reliability authority, a situation Congress may want to revisit in the future. | This report provides background information on electric power transmission and related policy issues. Proposals for changing federal transmission policy before the 111th Congress include S. 539, the Clean Renewable Energy and Economic Development Act, introduced on March 5, 2009; and the March 9, 2009, majority staff transmission siting draft of the Senate Energy and Natural Resources Committee. The policy issues identified and discussed in this report include: Federal Transmission Planning: several current proposals call for the federal government to sponsor and supervise large scale, on-going transmission planning programs. Issues for Congress to consider are the objectives of the planning process (e.g., a focus on supporting the development of renewable power or on a broader set of transmission goals), determining how much authority new interconnection-wide planning entities should be granted, the degree to which transmission planning needs to consider non-transmission solutions to power market needs, what resources the executive agencies will need to oversee the planning process, and whether the benefits for projects included in the transmission plans (e.g., a federal permitting option) will motivate developers to add unnecessary features and costs to qualify proposals for the plan. Permitting of Transmission Lines: a contentious issue is whether the federal government should assume from the states the primary role in permitting new transmission lines. Related issues include whether Congress should view management and expansion of the grid as primarily a state or national issue, whether national authority over grid reliability (which Congress established in the Energy Policy Act of 2005) can be effectively exercised without federal authority over permitting, if it is important to accelerate the construction of new transmission lines (which is one of the assumed benefits of federal permitting), and whether the executive agencies are equipped to take on the task of permitting transmission lines. Transmission Line Funding and Cost Allocation: the primary issues are whether the federal government should help pay for new transmission lines, and if Congress should establish a national standard for allocating the costs of interstate transmission lines to ratepayers. Transmission Modernization and the Smart Grid: issues include the need for Congressional oversight of existing federal smart grid research, development, demonstration, and grant programs; and oversight over whether the smart grid is actually proving to be a good investment for taxpayers and ratepayers. Transmission System Reliability: it is not clear whether Congress and the executive branch have the information needed to evaluate the reliability of the transmission system. Congress may also want to review whether the power industry is striking the right balance between modernization and new construction as a means of enhancing transmission reliability, and whether the reliability standards being developed for the transmission system are appropriate for a rapidly changing power system. This report will be updated as warranted. |
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